The Federal Opposition is today announcing new measures aimed at cracking down on dodgy company directors involved in what is known as phoenixing.

Phoenixing involves a company director stripping assets from a business just before it goes broke, not paying workers and creditors but then simply opening another company, with a different name and carrying on trading.

Like the mythical bird, the new company rises from the flames of the old one.

What is phoenixing? When a director strips cash and assets before hiding them and liquidating the company, then restarting

When a director strips cash and assets before hiding them and liquidating the company, then restarting Usually restarted under a different name, "like a phoenix from the flames"

Usually restarted under a different name, "like a phoenix from the flames" Done to deny creditors and ATO the money owed to them

Labor's employment spokesman Brendan O'Connor said the practice had cost too many people too much.

"That conduct has cost the economy, certainly workers have lost entitlements, lost redundancy, lost superannuation and other benefits," he said.

Mr O'Connor said one way to prevent the practice would be to issue every Australian company director with a Director Identification Number.

"It's in fact easier to become a director in Australia than open a bank account," he said.

No ID required to register a company in Australia

To register a company in Australia, you have to give the corporate regulator your name, address and date of birth — but you do not have to prove your identity with, for example a driver's licence, or reveal if you have owned any other companies.

One way some directors have got around the system has been by registering businesses with their name spelled slightly differently.

Mr O'Connor said getting a Director Identification Number would require a 100-point ID check, making it easier for the Australian Securities and Investments Commission to track directors.

"It means that they as the regulator will be able to identify the person and ensure that they're clear as to who is the director, too often you have fake directors, people setting up companies basically in a way to escape their obligations," he said.

But it is not just directors who are doing the wrong thing.

There are pre-insolvency advisers actively working with business owners to rip off creditors.

Labor's proposal does not address this issue.

"We've been leading the way in looking to prevent people working out ways to devise people avoiding their obligations … of course more can be done in this area," Mr O'Connor said.

"But too little to date has been done by the Turnbull Government … I think therefore at the very least we could start by having the Government join Labor and support these reforms."

Phoenixing is seen across the economy, but is particularly prevalent in the building industry.

In 2015 a Senate committee backed the concept of a Director Identification Number and Coalition Senators said the Government would consider the recommendations.