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Monday, 30 November 2009
Page: 9615

Senator LUDWIG (Special Minister of State and Cabinet Secretary) (12:26 PM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

Bankruptcy Legislation Amendment Bill 2009

The principal purpose of the amendments to be made by the Bankruptcy Legislation Amendment Bill 2009 is to modernize the national personal insolvency scheme and to make it more efficient.

These are tough economic times which are impacting on more Australians. In the 2009-09 financial year, there was an 11 per cent increase in personal bankruptcies and the

2008-2009 financial year also produced the highest ever level of personal insolvency activity - a total of 36,479 administrations. The vast majority of these are non-business bankruptcies principally involving consumer debts.

Quite often, people become bankrupt through no fault of their own as unforeseen circumstances hit them. The Government is also concerned that too many creditors are still using bankruptcy as a tool in debt collection as opposed to a last resort. However, the Government is also conscious of the needs of business at this time to be paid and paid on time.

In these circumstances, it is more important than ever that our system for dealing with bankruptcy is both fair to debtors and creditors. It is also important to the broader Australian economy that we have strong but fair bankruptcy laws.

Our bankruptcy system must enable small and large businesses to efficiently and cost-effectively recover their debts. However, it must also ensure that individuals are not prevented from making a meaningful contribution to the economy because of the stigma of bankruptcy or because they are burdened by excessive debt and fees arising from bankruptcy.

In short, our bankruptcy laws must strike a balance between the need for fairness and the need to ensure a strong economy.

This Bill strikes that balance.

The provisions contained in this bill have been the subject of extensive consultation. Following discussions with industry stakeholders earlier this year, I released an exposure draft of the Bill on 25 August 2009 and invited interested parties to make submissions.

I received submissions from a wide variety of stakeholders including creditors, financial counsellors and members of the public. The provisions in the Bill relating to trustee remuneration and offences were also the subject of extensive consultation in 2007 and 2008.

I turn now to a few specific aspects of the Bill that I wish to briefly outline.

The Bill provides that the minimum amount upon which a creditor can petition for a debtor’s bankruptcy will increase to $10,000. Bankruptcy is a complex and costly process and it is inappropriate to use bankruptcy to recover debts of not much more than $2,000.

The current minimum amount for a creditor’s petition was originally set in 1996. Currently a creditor can petition for bankruptcy when a debtor owes at least $2,000. The increase in the minimum amount to $10,000 is not merely intended to reflect the increase in the value of money since 1996. Rather it is also intended to reflect the significant increase in the overall levels of personal debt since 1996.

As I have stated, the Government is conscious of the importance to business, especially small business, of prompt payment of bills. However, bankruptcy should be a last resort for creditors and debtors alike.

Creditors have other options available to collect small debts and should have systems in place to manage the debts owed to them. Options include negotiated payment arrangements, civil debt recovery, garnisheeing income and seizing assets. These are more appropriate than bankruptcy for recovering a small debt. Furthermore, last financial year, only 20 per cent of bankruptcies related to debts between $2000 and $10000.

The Bill provides for an increase in the stay period for a declaration of intent to file from seven days to 28 days. When a debtor files a declaration of intent to file creditors are barred from taking any action to collect any debts during the stay period.

Increasing the stay period from seven days to 28 days will give debtors a more realistic opportunity to properly assess their options. A debtor can use the stay period to consult with a financial counsellor, a legal practitioner or to negotiate with his or her creditors.

The amendments will also require the Official Receiver to notify creditors where a debtor files a declaration. This may be the first time some creditors become aware of the extent of the debtor’s financial problems. This amendment will allow creditors to be proactive in assisting the debtor to find an alternative to bankruptcy.

When a debtor files a declaration of intent to file they will be required to lodge a statement of affairs. The requirement to lodge a statement of affairs will protect the interests of creditors.

The Bill provides for a 20 per cent increase in the income threshold for debt agreements. A debt agreement is a voluntary agreement between a debtor and creditors proposed by the debtor.

With increases in wages and availability of credit in recent years, it is appropriate that the income thresholds for debt agreements be moderately increased. This increase will make debt agreements more widely available.

In recent years debt agreements have become an increasingly popular alternative to bankruptcy. They provide a viable alternative to bankruptcy for many debtors and they provide far superior returns to creditors when compared with bankruptcy.

It is in both the interests of a bankrupt and their creditors, that an estate is not unnecessarily diminished by the fees incurred in its administration. Trustee remuneration should be reasonable and reflect the value of the work. As a result, this Bill provides a more streamlined and fairer process for fixing and reviewing trustee remuneration. It also ensures that creditors have proper oversight of a trustee’s administration of a bankrupt’s estate.

In particular, the Bill:

  • provides a minimum entitlement to remuneration which recognises the basic work that every trustee must do in administering an estate;
  • reinforces the basic principles that remuneration above that minimum entitlement must be approved by creditors and that all remuneration must be paid from the estate;
  • provides trustees with certainty concerning approval of their remuneration; and
  • provides an effective and accessible mechanism for reviewing remuneration and costs incurred by the trustee.

Finally, the Bill also includes provisions related to offences. These amendments will help ensure that any criminal or improper activity by bankrupts is dealt with appropriately.

These amendments will also assist in highlighting the different treatment for bankrupts who engage in criminal activity compared with those who are simply unfortunate.

In summary, the Government is committed to ensuring our bankruptcy laws are able to deal with personal insolvency issues quickly and efficiently so that people can get back on their feet as soon as possible. However, the Government also concerned that there are proper protections for creditors and that bankruptcy laws are not misused.

I commend the Bill.

Health Insurance Amendment (New Zealand Overseas Trained Doctors) Bill 2009

The Health Insurance Amendment (New Zealand Overseas Trained Doctors) Bill 2009 will amend the Health Insurance Act 1973 (the Act).

The Bill proposes to streamline the operation of section 19AB of the Act. Section 19AB provides that Medicare benefits are not payable in respect of professional services provided by an overseas trained doctor or a former overseas medical student, except in certain circumstances.

Changes resulting from the Bill

Overseas trained doctors and former overseas medical students who were first recognised after 1 January 1997 have generally been restricted from providing professional services that attract Medicare benefits for a period of 10 years.

This is commonly referred to as the ‘10 year moratorium’.

New Zealand citizens and permanent resident doctors practising in Australia are currently subject to this restriction.

Overseas trained doctors and former overseas medical students may be granted an exemption from these restrictions. A primary consideration in granting such a section 19AB exemption is that an applicant must work in a district of workforce shortage.

Section 19AB of the Act is therefore a key mechanism by which the Government influences the distribution of the medical workforce in rural and remote areas of Australia, so that areas of workforce shortage have appropriate access to medical services.

The 10 year moratorium has proven to be an effective mechanism in ensuring that overseas trained doctors provide services to those communities in greatest need, which tend to be rural and remote.

The proportion of overseas trained doctors is significantly higher in rural and remote areas - 41% of all doctors in these areas have trained overseas. This has been due in part to Medicare provider number restrictions imposed by the Act.

Despite the recent increases in medical students and emerging increases in medical graduates, our communities continue to be reliant upon overseas trained doctors. In this respect, we are no different to other OECD countries with Canada, the United Kingdom, New Zealand and the United States of America, the percentage of foreign-trained doctors has increased significantly.

There are four measures proposed in this Bill.

(1) The Bill proposes to remove the restrictions imposed by the Act on New Zealand citizen and permanent resident doctors in relation to their access to the Medicare benefits arrangements.

The amendment will lift those restrictions so that New Zealand citizens and permanent resident doctors who obtain their primary medical degree from an Australian or New Zealand medical school will no longer belong to the category of ‘overseas trained doctor’ and ‘former overseas medical student’. Consequently, they will no longer be restricted by the 10 year moratorium imposed by the Act.

It is important to note that New Zealand resident and citizen doctors will still be subject to the requirement that they have appropriate recognition of their qualifications in order to access the Medicare benefits system.

(2) The Bill will rename the term ‘former overseas medical students’, which is defined in the Act as students of Australian medical schools who were not an Australian citizen or permanent resident when they enrolled in their primary medical degree at an Australian medical school.

This term will be renamed ‘foreign graduate of an accredited medical school’ to more accurately reflect its meaning The current provision in the Act that subjects this category of doctors to the 10 year moratorium remains unchanged.

(3) The Bill proposes to introduce a time limit for seeking a review of a decision to refuse an application for a section 19AB exemption or a decision to impose conditions on an exemption.

Currently, the Act provides no time limit for applying for a review of a rejected exemption application. The amendment will insert a provision into the Act which will allow applicants to apply for a review of a decision within 90 days of a refusal. The amendment will also include a 90 day period for a review of a decision to impose one or more conditions on a section 19AB exemption.

(4) The Bill also proposes to rectify an anomaly in the Act which currently counts the 10 year moratorium from the time the overseas trained doctor achieves Australian permanent residency or citizenship.

Most overseas trained health professionals enter Australia through the temporary skilled visa categories for initial periods of up to four years. For example, the temporary Medical Practitioner Visa Subclass 422 was extended from two to four years in 2003. In addition, since 2005, medical practitioners have been able to access the Business Long Stay Visa Subclass 457 which allows a visa holder to remain in Australia for up to four years.

During the four years some medical practitioners seek additional assessment and apply to migrate to Australia permanently following a positive assessment by the relevant professional body and/or registration board.

The way in which the 10 year moratorium is currently counted excludes the years of tenure as a temporary resident, so overseas trained doctors may be prevented from providing professional services which attract Medicare benefits for in excess of 10 years.

This amendment proposes that the 10 year restriction will commence from the time the medical practitioner is first registered as a medical practitioner in Australia, and will cease after 10 years, provided the medical practitioner has gained Australian permanent residency or citizenship during that period.

The 10 year moratorium will continue to be used, along with the reforms to be implemented under the Rural Health Workforce Strategy, to recruit and retain GPs in rural and remote Australia- however, these measures make sure the system is a fairer system that recognises the service to districts of workforce shortage.

As part of our $134 million rural package in the 2009 Budget- the 10 year moratorium will also be scaled, so that the more remote you go, the shorter the moratorium. From 1 July 2010, more than 3,600 overseas trained doctors who have restrictions on where they can practise will be able to discharge their obligations sooner, the more remote the location in which they choose to work.

The 10 year moratorium, therefore, will no longer be as stringent as it has been since its introduction in 1997.

This package of reforms to this section of the Act complements the significant workforce reforms already underway- making the system more transparent, fairer and consistent with Government policy.

Workforce reform

Our workforce reform program has to date delivered the biggest ever investment in workforce through a $1.6 billion COAG partnership that will help to deliver training for the huge increase in Australian trained graduates which will increase from 12,700 this year to 14,700 in 2013.

This funding will help support undergraduate clinical training for 13,800 medical students, 38,500 nursing students and 18,000 allied health students in 2010.

We are also providing $28 million to help train around 18,000 nurse supervisors, 5,000 allied health and VET supervisors, and 7,000 medical supervisors.

Alongside this, we are increasing the availability of specialty workforce places, by boosting the total number of GP training places to more than 800 from 2011 onwards - a 33 per cent per cent increase on the cap of 600 places imposed by the former government and providing more specialist training places outside the traditional public hospital settings.

This year’s Federal Budget also delivers more than $200 million to help tackle the shortage of doctors and health workers in rural and remote Australia, and to improve access to the health and medical services of seven million Australians who live in regional or remote areas.

At the same time, we are streamlining the multiplicity of rural programs to make it easier for doctors and easier for communities to understand and access the initiatives that will help to build the rural health workforce for the future.

New access to choice in maternity services and Nurse Practitioner services will also be enabled through Bills which are currently before the Senate.

The commencement date for these provisions to take effect is 1 April 2010 or on Royal Assent, whichever is the later date.

Trade Practices Amendment (Infrastructure Access) Bill 2009

The Trade Practices Amendment (Infrastructure Access) Bill amends the National Access Regime in Part IIIA of the Trade Practices Act 1974. The Bill is designed to improve regulatory certainty and streamline administrative processes associated with the National Access Regime.   

This Bill does not aim to strengthen or weaken the criteria for application of the National Access Regime. It delivers on commitments made by the Council of Australian Governments under the Competition and Infrastructure Reform Agreement, and includes other reforms, to streamline the National Access Regime.

The National Access Regime seeks to promote competition in markets that depend on the use of infrastructure that cannot be economically duplicated.  Without such regulation, owners of this infrastructure might deny access to their facilities by prospective users or charge monopoly prices for their services.

The Regime is not designed to replace commercial negotiations between facility owners and access seekers. Rather, it seeks to enhance the incentives for negotiation and provide a means of access on reasonable terms and conditions if negotiations fail.

Under the Regime, there are three ways for a business to gain access to a service.

The first approach is when a service has been declared under the National Access Regime.

When a service is declared, the ACCC can make a binding arbitration determination if commercial negotiations between the access seeker and service provider are unsuccessful.

The second is through an industry-specific state or territory regime that has been certified as effective according to the agreed criteria.

The third is when access is provided under the terms and conditions specified in an approved undertaking given by the service provider.

Responsibility for administering the arrangements is divided among the National Competition Council, the ACCC and the Australian Competition Tribunal. Various state and territory regulators are responsible for administering certified state access regimes.

Since its introduction in 1995, the National Access Regime has proven to be an innovative and important piece of economic regulation.

Although determinations under Part IIIA have been relatively few in number, the Regime influences the framework for the provision of access in most of Australia’s key infrastructure sectors.

However, infrastructure owners and access seekers have argued that processes under the Regime are too lengthy and costly.

Indeed, some owners of nationally significant infrastructure have expressed concerns that the Regime is generating regulatory risks that may hinder investment in essential infrastructure.

The Government acknowledges that delays and costs in decision-making under the Regime may be having an adverse effect on important infrastructure investment that is needed to underpin economic growth and national productivity.

In 2001, the Productivity Commission reviewed the National Access Regime.

The Productivity Commission supported the retention of the Regime but made recommendations to improve the Regime’s operation and improve the certainty and transparency of regulatory processes.

The majority of these recommendations were endorsed by the former Government and effected though amendments to the Trade Practices Act in 2006. 

That year COAG agreed to the Competition and Infrastructure Reform Agreement.

Under this agreement, all jurisdictions agreed to streamline regulatory processes in their access regimes.

This included incorporating binding time limits and a limited form of merits review for regulatory decisions. 

In November 2008, COAG agreed to the National Partnership Agreement to Deliver a Seamless National Economy which reaffirmed COAG’s commitment to complete outstanding reforms under the Competition and Infrastructure Reform Agreement.

This Bill implements the Australian Government’s commitments under the agreement.

I will now deal in turn with each of these reforms starting with binding time limits.

The 2006 reforms to the National Access Regime introduced target time limits for the decisions of regulators.

However, there remains a widespread view that more needs to be done to improve the timeliness and effectiveness of regulatory decision-making under the Regime.

COAG has also committed to implementing binding time limits in access regimes.

This Bill provides that regulators must make decisions under the National Access Regime within a statutory time period. 

For the National Competition Council, ACCC and Australian Competition Tribunal, this is generally a period of six months.

For Ministers, a decision must be made within 60 days of receiving a recommendation from the National Competition Council. This is in line with the existing statutory time frames for declaration decisions.

In calculating the time for making decisions, certain periods of time will be disregarded through ‘clock stoppers’.

The main clock stoppers would occur when the regulator and the parties to the decision agree to stop the clock, or when the regulator requests information or invites public submissions.

Where Ministers or the ACCC do not make a decision in the expected period they will be deemed to have made a decision according to the provisions of the Bill.

The ACCC will be deemed to have made a decision that access is not to be regulated under the National Access Regime.

Consistent with a 2001 Productivity Commission recommendation, Ministers who do not make a decision will be deemed to have made a decision that accords with the National Competition Council’s recommendation. 

It is not practical to deem a decision by the National Competition Council, as its role is to make recommendations, or the Tribunal since its role is to review decisions.

Accordingly, these bodies may extend the time limit for making decisions. However, I anticipate that extensions would rarely be used.

I now turn to the merits review process.

There are concerns that current review processes under the Regime are too lengthy.

Concerns have been raised about the ability of parties in a review to provide additional information to the Australian Competition Tribunal that had not been provided to the original decision-maker in their deliberations.

In light of this, COAG agreed that where merits review is available, the review should be limited to considering the information provided to the original decision-maker.

The Bill provides that where merits review of decisions under the Regime is available, the Australian Competition Tribunal may only have regard to the information taken into account by the original decision-maker. 

The Tribunal may only seek additional information to clarify information provided to the original decision-maker or from the National Competition Council or the ACCC in their role of assisting the Tribunal.

Uncertainty about whether the Regime will apply to new infrastructure may hinder investment decisions.

The Regime does not currently allow a person who is considering building an infrastructure facility to determine with certainty whether or not the proposed facility would be declarable. 

The Bill provides for an upfront decision that a service to be provided by a proposed infrastructure facility is ineligible to be a declared service.

To be considered ineligible, it must not meet the test for declaration under the Regime.

Once the Minister decides that a service is ineligible, it cannot be declared for at least 20 years, or longer as provided for in the Minister’s decision.

A similar mechanism is also available under the National Gas Law for ‘greenfields’ pipeline projects.

This reform will enhance regulatory certainty for potential investors in major new infrastructure.

To improve regulatory certainty, the Bill will also enable a service provider to submit an access undertaking to the ACCC which includes one or more terms that will apply for a certain period beyond the expiry date of the undertaking.

These terms, referred to in the Bill as ‘fixed principles’, will help to ensure that investors and access seekers have greater certainty regarding the terms and conditions of access to the service under future access arrangements.

Once accepted by the ACCC, the fixed principle must be included in any subsequent undertaking covering that particular service for as long as the fixed principle is in operation. The fixed principle may only be varied or withdrawn with the consent of the ACCC.

Regulatory risk for infrastructure investors could also be reduced if access undertakings were allowed to contain fixed principles which apply to any subsequent access undertakings for that infrastructure service.

When important variables are fixed, service providers and access seekers can more easily extrapolate the terms and conditions for access under future arrangements.

For example, a fixed principle could apply to the method of calculating of the value of an asset base in current and subsequent undertakings. This would allow access providers and seekers to extrapolate access prices in future access arrangements, thus delivering greater certainty in investment planning.

A similar mechanism is available under the access regulation of gas pipelines under the National Gas Law.

 The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 currently before the Parliament also includes provision for the ACCC to determine fixed principles in relation to access determinations for telecommunications services under Part XIC of the Trade Practices Act.

The Bill includes a number of other mechanisms to improve the efficiency of decision-making under the Regime.

Currently, the ACCC does not have the power to accept access undertakings which have been revised following the service provider agreeing to amendments. Instead, for a revised undertaking to be accepted it must be withdrawn and resubmitted. 

Not only does this cause delays and increase costs but it may give rise to a perception that an infrastructure provider, which has voluntarily agreed to provide third-party access, has acted improperly.

This may reduce incentives for infrastructure providers to submit access undertakings. 

The Bill streamlines consideration of undertakings by allowing the ACCC to accept such undertakings when certain amendments have been made.

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 currently before the Parliament also includes provision for the ACCC to accept special access undertakings subject to amendments under Part XIC of the Trade Practices Act.

The Bill will introduce measures to streamline the declaration test under the Regime.

The declaration test under the Regime requires Ministers and the National Competition Council to be satisfied of certain matters.

Firstly, the Health and Safety matter will be removed.

This required the National Competition Council or Minister to be satisfied that if the service is declared access can be provided without undue risk to human health or safety.

This matter is misplaced as a consideration for declaration, because health and safety issues are properly managed by other relevant regulation, irrespective of whether access is available for third parties.

If in exceptional circumstances it is a relevant consideration, the ACCC can consider these issues in an arbitration of an access dispute. 

Secondly, the Effective Access Regime matter will be amended so that designated Ministers must only consider State or Territory access regimes that have been certified as effective under the National Access Regime by the Commonwealth Minister.

Currently, any access regime that may cover the service must be considered and assessed against the certification principles in clause 6 of the COAG Competition Principles Agreement.  This can be an extensive exercise. 

This reform will streamline the National Competition Council and Minister’s assessment of declaration applications by only requiring an assessment of whether certified state or territory regimes apply to the service.

This reform is consistent with the commitment by States and Territories under the Competition and Infrastructure Reform Agreement to seek certification of their access regimes for nationally significant infrastructure by the end of 2010.

Once a regime has been certified, access seekers must use the certified state or territory regime.  The service cannot be declared, nor can an access undertaking be approved under the National Access Regime.

I now turn to amendments to declaration applications.

The Bill clarifies the National Competition Council’s existing ability to accept variations to applications where appropriate.

The National Competition Council will be able to accept variations to declaration applications where the variation would not cause undue delay or unduly prejudice the interests of others.

The Bill also allows the National Competition Council to make decisions by circulation of a document for signature.

A decision without a meeting must be a unanimous decision of all councillors (except those who are unable to vote on the resolution due to a pecuniary conflict of interest).

This will improve the National Competition Council’s decision-making processes.

Decision making processes of the Australian Competition Tribunal will also be improved by the Bill.

Currently, any decision to declare a service is automatically stayed by an appeal to the Tribunal.

This creates a strong incentive for service providers to commence appeals and then delay their completion.

To address this concern, the Tribunal will be empowered to determine whether a stay is appropriate.

If a stay is not granted, access seekers may begin to negotiate with the service provider, and may lodge an access dispute with the ACCC if negotiations are unsuccessful.

The ACCC will be able to commence arbitration but will not be able to make a final decision until the Tribunal makes a decision on the review.  If the Tribunal overturns the decision, the arbitration is terminated.

This will speed up the resolution of access disputes as preliminary matters may be settled in advance of the Tribunal’s final decision.

Another improvement to the operation of the Tribunal relates to the ability to award costs in review of declaration decisions.

Unlike most court proceedings, and unlike matters arising in the Tribunal in relation to the regulation of gas pipelines, there is currently no provision for ordering costs in reviews of declaration decisions.

Allowing the Tribunal to order costs will reduce incentives for delaying tactics, frivolous review applications and other inappropriate behaviour.

In conclusion, this Bill contains a number of modest but important measures to increase regulatory certainty and improve decision-making processes under the National Access Regime.

With the release of the latest population projections, suggesting a population of 35 million by 2049, Australia is facing a huge infrastructure investment challenge. That challenge is compounded by the imperative of ensuring there is efficient national export infrastructure to enable Australia to respond to the opportunities presented by the phenomenal growth of China and other countries in our region. As a Parliament, we need to ensure there are strong private sector incentives to make the infrastructure investments Australia needs and to promote the efficient use of that infrastructure.

I would like to thank my predecessor, the Hon Chris Bowen MP, for his efforts in developing this reform package.

I would also like to thank Premiers and Chief Ministers for providing their views on the reform package.

I appreciate the efforts of the National Access Regime regulators in assisting with the development of the Bill.

Ordered that further consideration of the second reading of these bills be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.