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Friday, 15 November 2002
Page: 6531

Senator LUDWIG (2:20 PM) —I move opposition amendment (8) on sheet 2676:

(8) Schedule 1, page 41 (after line 27), after item 178, insert:

178A Subsection 265(8)

After “has contracted a debt”, insert “other than to meet necessary household or personal expenses”.

This amendment departs from part X and seeks to amend section 265(8) of the Bankruptcy Act. It is worth while setting out this provision to give some colour to the provision that we seek to amend. I also spoke to this matter in my second reading contribution. I understand Senator Murray did as well, and perhaps Senator Abetz did also, but not favourably. Section 265(8) of the act states:

A person who has become a bankrupt and, within 2 years before he or she became a bankrupt and after the commencement of this Act, has contracted a debt provable in the bankruptcy of an amount of $500 or upwards without having at the time of contracting it any reasonable or probable ground of expectation, after taking into consideration his or her other liabilities (if any), of being able to pay the debt, is guilty of an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 1 year.

The bill proposes to amend this section by moving the minimum threshold requirement of $500. As I said yesterday, Labor's concern is that the abolition of the threshold may result in the prosecution of debtors who have incurred small debts of an amount less than $500—as in the example I gave yesterday of unpaid electricity bills or overdue rent or some such necessity of life. It is further evidence of this government being out of touch with the basic needs of struggling families and those who work but who do not earn a lot of money. Their inability to meet the costs of these necessities of life should not result in their becoming liable to prosecution.

There is an interest in bringing the insolvency law into harmony with the Corporations Law as well, as I have said today. The approach should not be inflexible, though; after all, corporations do not have to incur the basic personal expenses necessary to live. The controversy that I mentioned earlier today is that you do sometimes have to distinguish between personal issues and corporations issues. So, where it is necessity to harmonise, it is worth trying to harmonise. Where you want to be able to distinguish and meet personal needs, I think you can, as a caring government—which you claim to be, but which I do not believe—take a slightly different approach.

Accordingly, Labor's amendment would ensure that a person cannot be prosecuted for incurring a debt in respect of a reasonable or necessary personal or household expense, without any reasonable expectation of being able to pay the debt. I think it is one of those areas where it is only a small amendment, but I think it does provide some comfort to those people. It is also one of those times when you can demonstrate, Senator Abetz, that you are what you say you are—a caring government—and that you do not wish to prosecute people for those sorts of minor offences; that you do understand that people do have necessities of life that they need to provide for; and that you do not think that there are people out there who would run up all these small debts, willy-nilly, without some responsibility. If you think that, I think you take a very small end—if not, an invisible end—of the market and decide that is how you will address these issues. The opposition believes that, in these sorts of provisions, good faith applies and it should be supported. We ask the Senate to support the amendment.