Curran Clare: Insolvency Amendment Bill — In Committee 
Curran Clare: Insolvency Amendment Bill — In Committee 
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CLARE CURRAN (Labour—Dunedin South) 
: 
 I rise to take a call on Part 1 of the Insolvency Amendment Bill before the Committee. I wish to deal with the same issue that my colleague the Hon Lianne Dalziel raises and also with the wider issue of insolvency and preventing insolvency in New Zealand rather than just preserving the integrity of the new no-asset procedure. 
The Commerce Committee heard as members have heard submissions about the impact of the recession on people’s lives whereby they find themselves in circumstances often through no fault of their own where they have accumulated large amounts of debt that they are unable to repay. The no-asset procedure was an appropriate mechanism for them to be able to continue with their lives and be contributing members of society. It was essentially about providing them with an opportunity for a fresh start. That was the intent of the no-asset procedure. 
I see the effects of this recession in my electorate as no doubt every member in this House does every day. In Dunedin unemployment has doubled in the last 3 months and has risen by 161 percent in the last year. Food banks in Dunedin are reporting a doubling at least of demand on last year’s level and the citizens advice bureau and budget advisory service are also reporting increases in the issues that are emerging. Alongside that there are worrying reports of a sharp rise in insolvencies across our community especially among young people. This highlights the need for a wider focus on the causes of insolvency and the need for budgeting education for young people who are leaving school and also leaving home. 
A recent report in late June in the  
Herald on Sunday 
 entitled “Young gifted and broke” stated: “Teens aged as young as 16 are being declared insolvent as the number of people succumbing to debt balloons.” This article reported that “A 16-year-old three 17-year-olds and 16 18-year-olds were among the 810 people under 25 declared insolvent in the 2009 financial year—more than double the 2005 figure.” The article said that insolvencies which include bankruptcy and the no-asset procedure “shot up by 77 percent overall from 2986 in the year ending 30 June 2005 to 5292 so far this year. The most dramatic jumps were in the youngest and the oldest age groups. New insolvencies among people aged under 25 rose by 114 percent to 810. The figure for those aged 75 and older soared by 153 percent to 48. Many of the younger insolvents took advantage of the No Asset Procedure (NAP) scheme which cancels most debt if it totals no more than $40000 and the debtor has not previously been bankrupted or used NAP.” The article also quoted Auckland-based Presbyterian Support budget service manager Maureen Little who believes that the no-asset procedure scheme should include compulsory budgeting education which is something that a wider consideration of the causes of insolvency could consider. 
Labour supports this bill but it has expressed concern as members have heard several times tonight about the proposed change to lengthen the time that the debtor remains on the public register from 1 year to 5 years in the case of the no-asset procedure and from 7 years to indefinitely in the case of people with multiple insolvencies. We have concerns that lengthening the time that a no-asset procedure debtor remains on the public register will dilute the important distinction between the bankruptcy provisions and the no-asset procedure. That procedure was introduced as members have heard to provide the one-off opportunity for financially distressed individuals to avoid the stigma of bankruptcy and help them to rebuild their lives. We note that the provisions to lengthen that time were not an essential component of this bill and my colleague Lianne Dalziel has just talked about the fact that it came from one newspaper article. This bill was designed to deal with fraudulent debts.