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Thursday, 26 November 2009
Page: 13195

Ms LEY (4:40 PM) —I rise to speak on theBankruptcy Legislation Amendment Bill 2009. The coalition supports the passage of this bill. The main purpose of the amendments to be made by this bill is to modernise the national personal insolvency scheme and to make it more efficient. These are tough economic times which have an impact on many Australians. The 2008-09 financial year produced the highest ever level of personal insolvency—a total of 36,479 administrations. In the last year there was an 11 per cent increase in bankruptcies and the vast majority of these are non-business bankruptcies principally involving consumer debts. As mentioned in the explanatory memorandum, the bill includes amendments which recognise that the majority of bankruptcies relate to consumer debts and involve bankrupts with relatively few assets and little income. Given the circumstances surrounding most bankruptcies, the system could do more to encourage informed decision making and access to alternative solutions. The reality is that many debtors who are overwhelmed by debts find it difficult to deal with all their creditors and may not always have the time, the wherewithal or, to put it this way, the emotional engagement to do this at what is a very stressful time of life.

There are also opportunities to ensure that debtors receive information and advice from a wide range of sources which will assist in rational decision making. These issues are addressed by the amendments to extend to 28 days the period of effect of a declaration of intent to file a debtor’s petition and increasing the availability of debt agreements. The bill is intended to streamline and update the regime to reflect the change in the value of money since the last significant revisions in 1996. The most important of these are to increase the minimum amount for which a creditor may petition from $2,000 to $10,000. In addition, the threshold amount for debt agreements has been increased by 20 per cent.

The bill aims to bring about changes to fixing and reviewing trustee remuneration, strengthen penalties for bankruptcy offences, remove the concept of bankruptcy districts in personal insolvency administration, increase the minimum debt for a creditor’s petition to reflect changes in the economic environment, increase the stay period following the declaration of intent to file a debtor’s petition, and increase the debt income and assets tests thresholds for debt agreements to ensure the thresholds keep pace with increasing wages and the increasing availability of credit.

Concerns have been raised by industry stakeholders that the raising of the creditor’s petition threshold will excise a substantial portion of consumer debt from the bankruptcy regime and may compound cash flow problems for small businesses. Some insolvency practitioners, particularly those with a significant practice in arranging debt agreements, have complained that the lifting of the bankruptcy threshold will reduce the utility of the debt agreement limit.

Though the coalition supports the bill, we foreshadow amendments that may be made in the Senate following the committee’s report. The Senate Legal and Constitutional Affairs Committee is due to report on 2 February 2010. The coalition is committed to ensuring our bankruptcy laws are able to deal with personal insolvency issues quickly and efficiently so that those affected can get back on their feet and get on with their lives as soon as possible. We do recognise that there must also be protection for creditors to ensure that bankruptcy laws are not misused. I commend the bill to the House.