Liberal Senator Jacinta Nampijinpa Price has questioned the Australian Securities and Investments Commission after it blamed the increase in small business insolvencies on the businesses’ own “poor financial control” rather than the Albanese government’s mismanagement of the economy.
On Friday, ASIC fronted a Senate estimates committee to address data that shows insolvencies have increased by 200 per cent since 2022.
Recent ASIC data shows the Albanese government has presided over the highest level of corporate insolvencies since Covid, with first-time insolvencies increasing from 7,362 in FY20 to 14,722 in FY25.
The number of businesses going insolvent soared from 3,812 as of April in the 2021-22 financial year to 11,715 at the same point in the 2025-26 financial year.
That amounts to a 207 per cent increase.
ASIC Commissioner concedes number of insolvencies is ‘concerning’
Shadow small business minister Jacinta Nampijinpa Price asked ASIC Commissioner Kate O’Rourke about the “fairly dramatic” increase during the three-year period between the 2022 and 2025 financial years.
Ms O’Rourke said ASIC data for the first nine months of the 2025-26 year showed there were 10,613 first-time insolvencies which was a “high number”.
“But we do see that as being 2.5 per cent lower than the 10,880 companies recorded for the same period a year ago. So I think we are in a world where there is a slight decrease on that nine-month amount,” she said.
“Nonetheless, a very high number and a concerning number economically.”
Post-pandemic ‘normalisation’ excuse has ‘diminished’: ASIC
Ms O’Rourke argued that it was important to know the number of companies in operation as the “denominator” that underpinned the statistics.
The ASIC Commissioner said the ratio of companies entering administration from March 2022 to March 2026, came “slightly down” to about 0.4 per cent and about 2.5 per cent lower than compared to last year.
However, Ms Price pushed back and asked if ASIC accepted that the “human impact remains significant” regardless of the way the statistics were represented.
“Yes,” Ms O’Rourke said.
Ms Price then asked at what point a sustained period of about 15,000 annual insolvencies cease to be a post-pandemic “normalisation” and more of a “structural concern”.
The ASIC Commissioner conceded the Covid “driver” had “diminished” over time before placing the blame on sector or geographic specific variables as the source of “financial stress”.
“I think that does go to some of the drivers, and you’re right that in earlier years, that Covid-related driver was one of them and it has diminished over time,” she said.
“Some of other aspects of either sectorally specific, geographically specific or business specific issues that can generate the financial stress and loss can increase in predominance over something like Covid lag.”
Businesses blamed for their own insolvencies
Ms Price put the pressure back on ASIC to address the Albanese government’s effect on business and whether it agreed with the RBA’s assessment that weak demand, high interest rates and resumption of ATO enforcement were the main contributors to insolvency.
Ms O’Rourke took the question on notice.
Ms Price then asked about any emerging sectors of concern, to which Ms O’Rourke said ASIC focused on data that applies to all sectors.
She said there had been a “significant uptake” in small businesses restructuring their debt before continuing to trade.
ASIC Chair and Accountable Authority Sarah Court then advised Senator Price on her earlier question as to what the main contributors to insolvency were.
“The four reasons that have come up in our latest series of insolvency statistics are firstly inadequate cash flow or high cash use,” she said.
“Secondly, what’s described as poor strategic management of the business.
“Thirdly, trading losses.
“And fourthly, poor financial control including lack of records. So those are the reasons that the small businesses themselves have identified as to why they’ve entered into insolvency.”
Senator Price sides with small businesses in uphill economic battle
After ASIC placed the main responsibility for small businesses going bust on their own “poor strategic management”, Senator Price said small businesses told her a “very different story”.
“ASIC pointed to poor strategic management, trading losses and cash flow problems as leading causes of insolvency. But small businesses tell a very different story,” she told SkyNews.com.au.
“They are being squeezed by higher interest rates, higher electricity prices, rising insurance costs, weaker consumer demand and increasing pressure from tax debt recovery.”
Ms Price questioned whether thousands of small business owners had suddenly become “poor managers at the same time”.
“Or are they operating in an increasingly difficult economic environment?” she asked.
“When insolvencies have increased by almost 200 per cent since FY22, it is hard to argue the problem is simply poor management. Broader economic pressures are clearly playing a significant role.
“After four years of Labor, small businesses deserve an economy that rewards effort, investment and aspiration, not one that makes survival harder with every passing year.”
Ms Price also pointed to the sector with the highest number of insolvencies – construction.
“At a time when Australia needs more homes than ever, ASIC confirmed that construction remains the sector with the highest number of insolvencies,” she said.
“Everywhere I go, builders, subcontractors and small operators tell me the same thing: costs are rising, margins are shrinking and confidence is falling.
“You cannot solve a housing crisis while the very businesses needed to build those homes are under increasing pressure.”
What the data says
More than 45,000 businesses have entered insolvency for the first time in the entire period of the Albanese government.
Since Labor came to power, the construction industry saw the most insolvencies over the four-year period, from 1,639 in 2021-22 to 4,888 in 2024-25.
For four consecutive years, about one quarter of all corporate insolvencies have occurred in the construction sector.
“These figures are yet another sign of the pressure small businesses are under after four years of Labor,” Ms Price told SkyNews.com.au.
“Small businesses have been hit by rising costs, higher interest rates, weaker consumer demand and growing pressure from tax debt recovery.
“Many operators who survived COVID are now struggling through a prolonged cost-of-living and cost-of-doing-business crisis that shows no sign of easing.”
Experts have also pointed to the ATO’s post-pandemic debt recovery efforts as a significant contributor to the rising level of insolvencies.
Speaking to SkyNews.com.au, CreditorWatch Chief Economist Ivan Colhoun said the two biggest drivers of the insolvencies since Covid were interest rates and energy prices.
“From 2015 to 2020 interest rates and energy prices came down, growth was pretty good,” he said.
“Then you had Covid, and obviously there was huge government support, interest rates went to zero and the ATO was very lenient as it wasn’t chasing companies with tax debts.
“Then when we came out Covid, these things started going in the other direction, ATO began its reinforcement activities and interest rates went up a lot.”
However, Mr Colhoun noted that while the rates of insolvency were higher, the change was “not as dramatic” as suggested by ASIC’s data.