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Thursday, 14 November 2002
Page: 6442

Senator ABETZ (Special Minister of State) (6:44 PM) —I thank honourable senators for their contribution in this debate. I just flag at the outset that we, as a government, I think will be opposing all of the amendments and propositions put to us but we will not be seeking to divide on them. That should not be understood as meaning that we are not serious about pursuing the bill as drafted by us and that we do not accept that amendments have been put forward.

As I said before, I thank honourable senators for their contributions and I will seek to deal with them in order. The first contribution was made by Senator Ludwig. I simply indicate to him that I think Brian Burke has had sufficient allegations made against him without having had such a heinous allegation as you have just made in this chamber visited upon him as well.

Senator Ludwig —You know very well who I was referring to.

Senator ABETZ —Yes, I thought you might have been referring to another Mr Burke. Senator Ludwig made a number of points in relation to section 271, the gambling provision—and I note Senator Murray has moved a similar amendment. That has in fact been in the act since 1966, on my advice, so it has been around for 36 years. Labor have had 15 years in office during which time they could have dealt with it, but they were not interested in dealing with it. I will go through some of the issues that the Senate ought to take into account in relation to this.

Senator Murray —Times change!

Senator ABETZ —Times do change and what has unfortunately changed, Senator Murray, is the fact that we have a bevy of state Labor governments around on a feeding frenzy on gambling. I would not be surprised if some of them have said, `Wouldn't it be a good thing to remove this provision from the Bankruptcy Act because it might act as a disincentive for people to gamble.' I believe it just shows again that Labor is unfortunately soft on this issue.

In reality—and that is what we need to deal with here—600 bankrupts last year stated that gambling was the cause of their bankruptcy. Yet the actual number of prosecutions under this provision was small. It is a very tall high bar for the prosecution to be able to get over to prove both `rash and hazardous'. The statistics are: 2001-02, one person charged and a conviction recorded; 2000-01, one person; 1999-2000, one person; 1998-99, none; 1997-98, one; and 1996-97, three. So we are dealing with a very small number of people.

Senator Ludwig —Or a lazy government.

Senator ABETZ —A lazy government? In other words, we ought to be prosecuting more; is that what you are saying, Senator Ludwig? I thought you wanted to remove the section from the bill. Then when I point out how very few get prosecuted we are told that we are being lazy. That amazes me. The important thing about this section in the bill is that it acts as a great disincentive because some people who seek to play the bankruptcy law say, `I lost a lot of money in recent times through gambling,' and, once the provision is read to them and the possibility of a conviction for `rash and hazardous' gambling is pointed out to them, all of a sudden the truth is told, money is found in other places, and creditors benefit. The fact that the Labor Party—and, even more surprisingly, the Democrats—would seek to have this provision removed, which has been an effective tool—

Senator Ludwig —On anecdotal evidence.

Senator ABETZ —Believe it or not, Senator Ludwig, I do not stand here and just make up these things. In fact I have the benefit of being given advice from ITSA. I indicate to you that, in one recent case investigated by ITSA and recommended for prosecution, there was no evidence whatsoever of gambling prior to the person becoming aware that a bankruptcy notice was about to be issued. This person then went on a gambling spree which left no money for creditors. According to Senator Ludwig and the Democrat amendment, that is good public policy. We as a government say no to that.

Senator Ludwig talked about the review of part X. I simply suggest that there is a review currently underway which will identify any needed changes through a process of extensive and rigorous consultation. Might I respectfully suggest that that is better than a knee-jerk, ill-considered and rather hasty change of the kind moved by the opposition. If I am correct, those consultations have been taking place as we speak. They have been in Perth and Adelaide, and in my home state of Tasmania today. As we speak, these consultations are actually taking place. I submit to the Senate that it would be better for the Senate to have the benefits of that review before we decide on making any hasty change to the legislation.

Senator Ludwig also referred to early discharge and suggested that this be extended from the current six months to two years. One of the present disqualifying factors from applying for early discharge is that the bankrupt's unsecured debts exceed 150 per cent of the income derived by the bankrupt during the year immediately before bankruptcy. That is section 149Y. This provision can discriminate against some bankrupts.

Senator ABETZ —You are quite right when you consider a situation where a husband and a wife have gone bankrupt with joint debts and the husband earns an income while the wife is engaged in home duties or child rearing duties and has no income. He would be allowed to be discharged but of course the wife would not. Section 149Y will frequently disqualify the wife while the husband may still apply. The opposition amendments do nothing to address that situation. Senator Ludwig also suggested that financial counsellors had not been consulted properly. The financial counsellors' peak body is represented on the bankruptcy consultative forum, and the forum was consulted extensively in relation to the bill. Senator Ludwig also referred to certain high-rolling barristers who have disgraced their profession and should have been—

Senator ABETZ —I am not sure if there are any in Tasmania, Senator Ludwig. I would hope not. I am not aware of any, but that does not meant that they do not exist. We know they exist, but whether they exist in Tasmania, I do not know. The fact is that they do exist in Australia and it is important for the government to deal with these high-income professionals in an appropriate way. A joint task force was established to investigate abuses of the bankruptcy and family law schemes to avoid payment of income tax. The government is well on the way in relation to that.

Senator Murray suggested it is wrong to have a punitive approach to gambling and that the offence of 271 should be repealed— which is the same point that Senator Ludwig made. I indicate that not all gamblers are in fact addicts. In one case prosecuted by the DPP, there was no evidence of gambling by the debtor, as I indicated earlier, until he was actually served with a bankruptcy notice. It is rarely prosecuted and the elements of the offence are such that only the most serious cases are prosecuted, and of course the Director of Public Prosecutions has a discretion as to whether to pursue it. The existence of the offence acts as a deterrent to dissuade bankrupts from concealing assets while saying that all their property has been frittered away on gambling.

Senator Kirk made some points in relation to early discharge, and I think we can deal with that further in the committee stage. Senator Kirk also said that the income threshold for debt agreement would be doubled—that is, increased by 100 per cent.

Senator Ludwig —Fifty per cent.

Senator ABETZ —Exactly, Senator Ludwig; it is 50 per cent. What she indicated to us was not correct. The previous bill did propose that, but it is somewhat coincidental that she just happened to make the same mistake as the shadow Attorney-General made whilst debating this bill in the lower house recently. Might I suggest to Senator Kirk—I think she used to lecture in law, didn't she?—that there is such a thing as `reading other people's assignments and then just regurgitating it'. I suggest to her that she ought should to do her own research and not rely on the shadow Attorney-General for her advice. Might I add, however, she would be better advised to listen to Senator Ludwig because he did get it right. Out of the three of them who contributed, I confess Senator Ludwig did get it right, and I congratulate him on that.

Senator Kirk also referred to household goods. The opposition's proposed amendment would exclude `necessary household or personal expenses'. I suppose I am a fairly frugal sort of person, and the Labor Party's necessities may well be my luxuries. So how we or the courts would define `necessary household or personal expenses' would be a great one for the courts and lawyers to have fun with, and chances are some of these bankrupt barristers—if they were allowed to practise again, which I doubt—might be able to get some income again trying to argue about these provisions and what is actually necessary for them as opposed to a luxury for them. That is something that I will undoubtedly hear more about from the Labor Party during the committee stage. I thank honourable senators for their contributions.

Question agreed to.

Original question, as amended, agreed to.

Bill read a second time.

The ACTING DEPUTY PRESIDENT (Senator Lightfoot)—Order! It being 7 p.m., we will now proceed to orders of the day relating to committee reports and government responses and Auditor-General's reports.