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Wednesday, 9 February 2005
Page: 24


Senator ELLISON (Minister for Justice and Customs) (11:10 AM) —I thank senators for their contributions to the debate on the Bankruptcy and Family Law Legislation Amendment Bill 2004 [2005]. I say at the outset that the government welcomes the opposition’s support for the bill. Senator Ludwig raised a number of issues and I will deal with each of those in turn shortly. This bill will assist in resolving the longstanding uncertainties in the interaction of bankruptcy and family law. The bill will provide creditors and non-bankrupt spouses with protections and procedures that were not previously available for the resolution of their competing claims, and this is very important. Under existing law both creditors of parties in family law matters and spouses have faced uncertainty and complexity in navigating the interaction between bankruptcy and family law. This bill provides a concurrent jurisdiction so that competing claims in these areas of law can be determined at the same time and in the same forum. The bill will also address the misuse of family law schemes to defeat the interests of creditors and will allow a court exercising family law jurisdiction to recognise the interests of creditors in appropriate cases. Further, the bill offers an improved regime for the collection of contributions from bankrupts, particularly in cases where that has previously been difficult to enforce.

The amendments represent a considered response by the government to the recommendations of the 2002 joint task force on the use of bankruptcy and family law schemes to avoid tax. These are significant reforms that necessarily involve careful development and extensive consultation with experts in the areas of insolvency law, business and family law. This bill has also been subject to parliamentary scrutiny by the House of Representatives Standing Committee on Legal and Constitutional Affairs, and some family law amendments were considered by the Senate Legal and Constitutional Legislation Committee as part of a previous family law bill. The amendments in the bill have been further refined to take into account the recommendations of those committees responding to the views of significant stakeholders in the areas as well.

I mentioned some issues that Senator Ludwig raised. Senator Ludwig commented on the fact that the bill does not contain the anti-avoidance provisions which have previously been dealt with. Furthermore, Senator Ludwig criticised the approach—the general procedure, the drafting and the instruction of the drafters of this bill. The original bill was released as an exposure draft to provide consultation with the community. The government listened to comments from the community, the stakeholders, and made a decision to withdraw the bill at that stage because of the unintended consequences that were being pointed to as a result of the consultation that took place. Senator Ludwig said that you need considered good work on this issue, and the government is the first to agree with that—it says that this is a complex area and we must get it right. In the last day or so we released a discussion paper which outlines options to strengthen the anti-avoidance provisions, and I believe that this is in keeping with the recommendations made by the House of Representatives Standing Committee on Legal and Constitutional Affairs. With this discussion paper we are concentrating on the anti-avoidance provisions. Senator Murray made a comment on this very issue and I want to assure him, the opposition and all those concerned that the government is totally committed to taking action to target high-income earners avoiding their debts and taxation. There is no question about that commitment.

What we need to do is get it right. That is why we have looked at the anti-avoidance part of the bill and put it to the community by way of a discussion paper. We are proceeding with those aspects of the bill which are very important—namely, the symmetry between family law and bankruptcy law. That is something I experienced as a legal practitioner before coming into the Senate. The fact is that those two areas of federal law operate in tension with each other, and sometimes that has consequences which I believe do not serve the interests of justice. This bill does have the commendable purpose of sorting out that aspect of bankruptcy law and family law. We are saying that rather than holding up these worthwhile objectives let us refine the anti-avoidance provisions by way of a discussion paper and provide options for the strengthening of those anti-avoidance provisions. That is what we are doing. I understand that the opposition has amendments. We will deal with those, no doubt, along with other amendments in the committee stage. But this is a very important bill in the areas of family law and bankruptcy law and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.