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Wednesday, 27 March 1985
Page: 856


Senator HAINES(10.31) —The Bankruptcy Amendment Bill 1985, as has already been pointed out by both the Minister for Resources and Energy (Senator Gareth Evans) and the Opposition spokesman, Senator Durack, is a revised version of a Bill which was introduced into the Parliament in May last year and which makes a number of significant amendments to the Bankruptcy Act 1966 across a wide range of areas. As the Minister explained, the amendments follow a review of the operation of the Act and the Government's decision to modify the legislation implementation of the review of government functions decision in 1981. The amendments in this Bill are changes to the 1984 Bill and arise from extensive discussions following the introduction of the 1984 Bill last year. They rectify, I believe, a number of inadequacies in the original version of the Bill.

My major concern when the Government introduced the Bankruptcy Amendment Bill in 1984 was that private trustees would have retained little or no role in the scheme of things and that petitioners would have no real choice. As a consequence, I spent a significant amount of time in the middle of last year-in August, September and later on-consulting those people who had a vested interest in the maintenance of private trustees, industry people concerned, the Government and the Attorney-General's Department. The people I consulted included accountants who dealt in this area, lawyers who were involved in the area, representatives of credit bureaux, credit managers of large organisations and so on. Having spoken to those people and determined the clauses in the 1984 Bill that they were concerned about, I was pleased early this year to be able to write to them informing them of the change of heart that the Government had had and the changes that had been made to the 1984 Bill before it was reintroduced in 1985. In that letter, inter alia, I said:

. . . the really contentious clauses in the old Bill-

that is the 1984 Bill-

are to be deleted (namely clauses 13, 19, 20 (a) and 20 (c), 32-34, 37, 42 (1) &42 (2), although the clauses have been watered down.

At the end of the letter I pointed out:

I would appreciate it if you could let me know as soon as possible if you and your colleagues see any major problems left in the Bill.

I had a number of responses. Presumably, those people who did not respond could see no major problems left. Nobody I contacted of the people I had seen around the country last year complained of any significant problems being left in the Bill. The answers I received supporting the changes went along the lines of a letter from a building industry credit bureau which said:

We were indeed pleased to hear that you had achieved so very much of what we had sought in relation to the Bill, and we commend you both for your grasp of the subject matter and the manner in which you presented same.

Neither I nor my colleagues can now see any major problem left with the Bill.

I think it is important to note that those who were consulted believe that there are no major problems left with the Bill. They are, after all, the ones who have to bear the brunt of anything which is done in this Parliament. The various areas in which changes are being effected already have been outlined by the Minister and addressed, to a certain extent, by Senator Durack. I would like to comment on some of them. In particular, I am pleased to note the changes relating to trustees, this area being the main concern I had, as I indicated a moment ago, with the earlier Bill. The amendments to the Act which came into operation in 1981 were designed to encourage greater private sector involvement in the administration of bankruptcies under Parts IV and XI.

Experience since that time has revealed a number of disturbing matters to which the Inspector-General's report on the area drew attention. Private trustees appeared to be reluctant to exercise their powers of reporting and examination. There was increasing evidence of undesirable practices by some trustees. Very properly, therefore, the original, now the revised version of the Bankruptcy Amendment Bill, incorporates amendments designed to entrench in the Act the qualifications necessary for a person to be registered as a trustee and allow for a better level of continuing supervision.

Other improvements include the requirement for regular reporting and the updating of bonds by registered trustees in bankruptcy. On the other hand, the original version of the Bill gave rise to concern by failing to retain a real role for private trustees. The revisions to the Bill rectify this. I am pleased to note the Minister's statement that it is not the policy of the Government to exclude registered trustees from the administration of bankrupt estates. The new version of the Bill provides a better balance between the undoubted need to subject private trustees to adequate scrutiny and regulation and a continued role for them in the administration of bankrupt estates. To accommodate these revisions, four amendments have been made to section 12 of the Act by clause 4 of the Bill. These amendments expand the investigatory role of the Inspector-General by adding to it a power to investigate the conduct, trade dealings, property and affairs of a bankrupt in respect of both the period before and the period after the bankruptcy. They allow an investigation by the Inspector-General of the performance of duties by a trustee as well as an investigation of conduct. They make specific reference to the preparation and filing of a report showing the result of an investigation and enable the Inspector-General to appoint an official receiver to act as his agent for the purpose of conducting the inquiry or investigation.

Clause 10 has also been revised to effect changes to section 19 of the Act. This recasting of the section was necessary to distinguish between those duties that can be performed only by the official trustee or registered trustee and those that can be performed by the Official Receiver even where the official trustee is not trustee of the estate. The result will be as follows: The duties of notification, the ascertaining of assets, et cetera, will be performed by the trustee. The duty to investigate will be performed by the trustee. But where he or she is a registered trustee and has decided that an investigation is not desirable, he or she shall satisfy the Official Receiver that the decision is reasonable. The duty to summon the first meeting would be performed by the trustee. Duties relating to the public examination could be performed by the Official Receiver or the trustee on the same basis as the duty to investigate. Finally, a duty to ensure that a bankrupt files his statement of affairs under section 54 is imposed on the trustee.

I believe these revised amendments and those made to related sections of the Act have ensured that private trustees will continue to have a real role and that petitioners will have a real choice. This is the important element. Senator Durack indicated that the Opposition's priority was to the privatisation of the area. Certainly the 1984 Bill introduced by the Government indicated quite the reverse of that and I think was legitimately, as Senator Durack indicated, a sort of socialist doctrine in the area. On the other hand, the 1985 Bill reverts to giving a continuing and viable role to private trustees and does give a real choice to the petitioners concerned. I think that was indicated when I mentioned earlier the sort of response I had after consultation with people involved in this area. At the same time, other amendments ensure that suitably qualified people are registered as trustees and that adequate accountability is required of them.

Apart from the areas that I have just mentioned, there are a number of other amendments in the Bill which are to be commended. The strengthening of provisions which give special protection to maintenance creditors is to be welcomed. The removal of anomalies and the achievement of greater uniformity with the Companies Act is sensible, to say the very least. As I have indicated, the modification of the Review of Commonwealth Functions decision is quite acceptable to us now that the problems arising in the original version of the Bill with regard to private trustees have been rectified.

At the same time it would be remiss of me if I did not say that a more thoroughgoing review of insolvency law is desirable. The Minister has already pointed out that a review is being undertaken by the Law Reform Commission. But he has also unfortunately commented that any review undertaken by the Government must await the report of the Commission and that this will be some years in the future. I recall having a rather acrimonious discussion with the Minister when he was Attorney-General--


Senator Gareth Evans —Not possible; we were never acrimonious.


Senator HAINES —No, but on the odd occasion we got a little scrappy. We discussed reviews of the Family Law Act, particularly following the High Court of Australia decision on Mallet and Mallet. I was met then with the same response, that the Law Reform Commission was undertaking a review of the Act and that it would have to wait until then. However, as I pointed out, in the area of family law the report was not due until the end of 1985 and, given the speed with which things move around this place, that meant that the report would perhaps hit the Senate some time in 1986 and maybe there would be legislation in 1987; in the meantime a number of families would be significantly affected, not only by the Mallet and Mallet decision but also by other sections of the Act which need updating. I would hate to see the problems that still exist in some areas of insolvency law continue for many years in the future, which were the Minister's words, simply because we are waiting on a report from the Commission.

The sorts of problems that there are-one or two have come to my attention recently-include the difficulties confronting unsecured creditors. This has been particularly noticeable in South Australia with regard to primary produce suppliers. I am thinking in particular of grape growers in the Riverland whenever a winery goes into liquidation. These people are on the end of the list and frequently receive no payment, yet they work and provide the necessary produce for the wine company to operate and for the wage and salary earners within that industry to get their income. To put them on the end of the line is grossly unfair. We are also confronted regularly with people who get around the provisions of the Bankruptcy Act by transferring their assets to others.

The urgency of these and other problems must not be forgotten by the Government. They cannot be batted away to leg on the ground that the Law Reform Commission is investigating the whole sorry tangle. The problems ought to be considered as a matter of some urgency by this Government. If the Government can see fit to make the amendments it has made in this Bill, I think it is not beyond it to look at some other areas where urgent attention is required. In the meantime, the Australian Democrats support the interim measures that have been undertaken by the 1985 version of the Bankruptcy Amendment Bill and only hope that the Government will turn its attention to addressing some of the other shortcomings in the field of insolvency law in the very near future. (Quorum formed)