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Thursday, 17 February 2005
Page: 44

Mr RUDDOCK (Attorney-General) (11:58 AM) —in reply—I thank the honourable members who have contributed to this debate on the Bankruptcy and Family Law Legislation Amendment Bill 2005—the members for Gellibrand, Fisher and Lowe. Before I proceed to deal with the clauses let me say on my own behalf and on behalf of government that we have no truck with people who avoid their proper obligations to contribute to tax. That was inculcated in me from a very young age by a father who had worked at a very senior level in government here in Canberra. He recognised that, if people want services from government, they have to make a reasonable contribution. As far as I am concerned I will deal expeditiously but properly with defects in the system as they come to notice.

The honourable member for Lowe should have acknowledged perhaps that, in relation to the matter of Rich and Rich, very shortly after I was appointed Attorney-General I moved to amend the relevant provisions of the Family Law Act to see that arrangements for entering into the organisation of people's family affairs would be reviewed by courts. It was something that could be dealt with expeditiously, and was. It led to a situation where the particular family arrangement in that case was aborted. I will continue to deal with those matters as quickly as I can. But I have to do it with advice and I have to do it in a way which I am satisfied is going to achieve the proper purpose. The fact is, as I mentioned in the parliament the other day, we have been dealing with the issues relating to barristers using bankruptcy as a way of avoiding their proper obligations. At the Commonwealth's instigation, states and territories are taking action to ensure that bankrupt barristers who avoid their debts cannot practice. It is a matter that we took up at SCAG to get the states and territories dealing with those issues, because they are responsible for supervising the profession. Where we brief barristers, we have asked all departments and agencies to ensure that they do not brief counsel who use bankruptcy as a means of avoiding tax. I made those points in answer to a question in the House earlier in the session.

In relation to the use of parliamentary committees—this was raised by the member for Fisher—I am one of those who does value their work when committees are prepared to work together in a bipartisan way and I do look at the comments that they are prepared to make. It is one of the reasons I made a reference, and will continue to make references, to relevant committees to get advice and assistance.

Ms Roxon —You took action before you had the report.

Mr RUDDOCK —No, it was to ensure that we were able to make clear what the government's response would be in relation to a matter where I believed there needed to be a public exposure and for the difficult questions to be able to be addressed with public comment. It became quite clear from the response that we had been getting what course needed to be followed. I dealt with it in the way which I did because of the arguments that had been presented before the committee, which I had heard.

Let me deal with the way in which legislation is progressed in this place. I am very cognisant of the need, and from time to time have acceded to requests, to delay the debates in this place so that the opposition can follow the consultative procedures that it wishes to engage in to ensure that its party members are fully across bills and can be appropriately briefed. At times, on request, I have recognised that. I would hope that the opposition would recognise that the government have certain procedures that we have to go through as well. While I might like to give people notice of what we are intending to do, I cannot do it before I have policy approval at senior level and before our own party room procedures have been followed. That means that there needs to be committee consideration of these matters and party room approval of a bill. When I have that I am in a position to be able to take the matter to the opposition, and I do. But one ought not to be critical of the way in which these issues are dealt with when we are merely undertaking the same sorts of procedures involving the members of the government parties which the opposition expects to be able to have accommodated in relation to its dealing with these matters.

The government welcome the support of the opposition for the bill in principle while recognising the continuing concern about anti-avoidance schemes to avoid taxation and other debts. These concerns are ones that the government have very strongly on board, but we do believe that there needs to be a considered and consultative approach to resolve some of the outstanding issues. The amendments in this bill are the government's substantial and considered response to the recommendations from the joint task force on the use of bankruptcy and family law schemes to avoid tax. These are important reforms developed in consultation with the experts in the area of insolvency, business and family law. The amendments will help to close legal loopholes which presently allow some high-income earners to avoid their debts. They will also help resolve longstanding uncertainties in the interaction of bankruptcy and family law.

One of the major benefits of this bill is that it provides a concurrent jurisdiction in family law and bankruptcy law so that competing claims in these areas of law can be determined at the same time and in the same forum. This gives greater transparency and fairness to both creditors and spouses in resolving their claims by offering protections and procedures that were not previously available. For example, under the terms of this bill, in a situation where a couple separate after one spouse has become bankrupt, the court exercising jurisdiction under the Family Law Act 1975 can now deal with the claims of the non-bankrupt spouse and recognise his or her interests. Also, the trustee in bankruptcy will be able to stand in the shoes of the bankrupt's spouse in family law proceedings to represent the interests of creditors. The bill also targets the misuse of family law schemes, such as binding financial agreements, to defeat the interest of creditors. Further, the bill offers an improved regime for the collection of contributions from bankrupts in cases that have previously been difficult to enforce, such as self-employed persons.

The bill has been considered by the House of Representatives Standing Committee on Legal and Constitutional Affairs. Some of the family law amendments in the bill previously contained in another family law bill have been considered by the Senate Legal and Constitutional Legislation Committee. The bill takes into account the recommendations of these committees and reflects the significant views of stakeholders on these amendments. The government has recently released a discussion paper and commenced consultation on the development of the best package of anti-avoidance reforms to address the problems of high-income earners avoiding their debt and taxation obligations. This bill is not the government's total response on anti-avoidance matters. The government does seek to allow proper consultation to occur so that these reforms can proceed as effectively and comprehensively as possible.

Item 6A of schedule 1 to the bill was inserted by another place as an opposition amendment. It is the only item in the bill dealing with anti-avoidance. The government intends to move an amendment to remove this item. It is, in our view, premature and an inadequate response to the problem of debt and taxation avoidance. It has not been the subject of consultation. I know it was a bipartisan recommendation of the inquiry by the House of Representatives Standing Committee on Legal and Constitutional Affairs that there be fresh consultation to strengthen the existing provisions of the Bankruptcy Act, and the government is in fact proceeding with that consultation. Finally, I again thank honourable members for their contributions to the debate and commend the bill to the House. I will move the amendment at the appropriate time.

Question agreed to.

Bill read a second time.