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Wednesday, 28 February 2018
Page: 2238

Mr PORTER (PearceAttorney-General) (12:24): I would like to thank all the honourable members for their contributions. I thank the shadow Attorney-General for his contribution on this bill and the member for Perth for his contribution on a bill completely unrelated to this bill. In any event, this is the Bankruptcy Amendment (Debt Agreement Reform) Bill 2018. The debt agreement system is an important part of Australia's consumer finance framework. It provides debtors with an opportunity to avoid bankruptcy and manage their personal debts while giving creditors a return on what they are owed.

With respect to consumer protection safeguards, it is notable that statistics from the Australian Financial Security Authority confirm that debt agreements are on the rise. As debt agreements continue to grow in popularity, it's obviously important to ensure that the system works as it was intended. Debt agreements should not be used to exploit vulnerable people or to short-change creditors. Instances of misuse can disproportionately impact the integrity of the system and undermine the positive function it serves. This bill ensures that necessary consumer protection safeguards are in place so that the debt agreement system provides a fair and effective outcome for debtors and creditors.

There has been a concerning trend in recent years of debt agreements lasting significantly longer than five years. That trend, it was observed, threatens to prevent those in financial difficulty from getting back on their feet. This bill will prevent people spending an excessive amount of time in a debt agreement and will ensure that debtors can only propose a debt agreement of a three-year period or less. In reducing the length of a debt agreement proposal, the Turnbull government is making sure that debt agreements are an avenue for debtors to achieve a fresh start.

Debt agreement administrators play a crucial role in the effective operation of the debt agreement system, and administrators must possess the skills and knowledge to properly perform their functions. Administrators must also have the character and integrity to gain the confidence of creditors and financial counsellors. This bill raises the required standards of administrators to ensure that the industry is capable and professional.

By way of conclusion, it should be noted that this is the first comprehensive overhaul of Australia's debt agreement system in more than a decade, and these reforms will ensure that debt agreements are administered by only those persons with the appropriate skill set and knowledge base. Following the reforms, new debt agreement proposals will only be able to be three years in duration, enabling people to get back on their financial feet sooner. The reforms are designed to ensure that the integrity of the industry is improved overall.

With the number of new debt agreements almost doubling in the last decade, debt agreements are proving to be an important, effective and popular alternative to bankruptcy for many individuals who are facing financial difficulties. These reforms will introduce necessary safeguards, bolster community confidence in the industry and ensure that the system allows people to achieve a fresh start. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.