Insolvency on the rise, as opposition attacks govt fund

New data has shown the number of insolvencies for 2023 overtook previous peaks in 2018 and 2019.

Nearly 10,000 companies were deemed insolvent in the past year, an increase of almost 1000 from 2018 and 2019 levels.

Of the insolvencies in 2023, almost 1000 took place in August alone.

Deputy opposition leader Sussan Ley said large numbers of manufacturing and construction businesses becoming insolvent were indicative of government neglect in the sector.

In the last six months of 2023, 1650 businesses in those industries went under.

"Insolvencies in manufacturing businesses have tripled under this government," she told reporters in Wodonga on Wednesday.

"It's so important that we as a country understand that we need to manufacture things here."

Ms Ley took aim at the federal government's national reconstruction fund, with the $15 billion project financing manufacturing initiatives in areas such as renewables, transport and medical science.

She said the program had not delivered key outcomes to boost manufacturing.

"(The fund) is not open for business. It hasn't delivered a single cent to a single business and the legislation passed the parliament a year ago," Ms Ley said.

But Prime Minister Anthony Albanese said more than 160 companies had already applied for funding as part of the scheme.

"We have the National Reconstruction Fund, which is up and running, which has published very clearly its guidelines for funding," he told reporters in Adelaide.

"This isn't an online form process, as if you were applying for a packet of chips from the supermarket, this is a process in which over 160 companies have already engaged with the National Reconstruction Fund."

Insolvency specialist Jirsch Sutherland partner Andrew Spring said many businesses were "robbing the future to pay for the past".

"This isn't an uncommon pitfall for businesses, but the current market is forcing even experienced operators into making this mistake," he said.

"In the current environment, we know some business owners are feeling the pressure to maintain price points, or even discount to maintain top line performance, while the cost of doing business continues to grow."

Australian Associated Press