Nash Stuart: Insolvency Amendment Bill — Third Reading 
Nash Stuart: Insolvency Amendment Bill — Third Reading 
[Volume:658;Page:7670] 
STUART NASH (Labour) 
: 
 I stand to support the Insolvency Amendment Bill. It amends the Insolvency Act 2006 to address a small number of issues that have arisen since its enactment. The bill preserves the integrity of the new no-asset procedure by preventing the discharge of fraudulent debts and bankruptcy by restoring the official assignee’s ability to recover gifts made by a person prior to bankruptcy. The bill amends the public register provisions to increase the period for which a person discharged from the no-asset procedure is on the record and to provide for permanent public records where a person has had multiple insolvency events. This is generally a good bill and Labour supports it but we think it would be better to review the processes that were put in place around the no-asset procedure to ensure there are no unintended consequences rather than have piecemeal amendment to the time spent on the register. It was not supported by the Privacy Commissioner who is reviewing the time that credit agencies can retain this information. 
The Insolvency Act 2006 which was enacted as a result of a major reform of New Zealand’s personal and corporate insolvency laws came into effect in December 2007. The Ministry of Economic Development proposed that the Act be amended to maintain the integrity of personal insolvency processes and bankruptcy and further to enable better access to respective public registers regarding a debtor’s previous insolvency. The no-asset procedure provisions of the Act are proposed to be amended to firstly prevent the discharge of fraudulent debts under the no-asset procedure; secondly allow the official assignee to extend the time a person is under the no-asset procedure when late information in relation to a debtor’s entry including valid objections is received just prior to a debtor’s expected date of discharge; thirdly allow a no-asset procedure debtor’s information to be kept on the no-asset procedure public register for 5 years from the date of entry to the no-asset procedure; fourthly reinstate the no-asset procedure debtor’s details on the no-asset procedure public register permanently when a debtor subsequently enters a bankruptcy process; and fifthly amend the bankruptcy provisions to better protect the interests of creditors by strengthening the ability of the Auditor-General to cancel gifts and to enable public registers to permanently retain details of individuals who have entered into insolvency processes on two or more occasions. 
As mentioned the bill proposes to lengthen the time that information about a debtor remains on the public insolvency register from 1 year to 5 years in the case of a no-asset procedure— 
David Garrett 
: Really? 
STUART NASH 
: —yes really; it is true and it is the case—and from 7 years to indefinitely in the case of multiple insolvencies. That is defined as two or more bankruptcies—“three strikes and you’re out”; it is probably why the ACT Party is supporting this bill—or a no-asset procedure and a bankruptcy. The Commerce Committee heard that lengthening the time a no-asset procedure debtor remains on the public register would dilute the important distinction between bankruptcy provisions and the no-asset procedure. The procedure was introduced to provide a one-off opportunity for financially distressed individuals to avoid the stigma of bankruptcy and to rebuild their lives. It is the view of the Privacy Commissioner that a total of 3 years on the public register for a no-asset procedure debtor would be more consistent with the purposes of the procedure and more proportionate to the period that individuals are publicly listed following a bankruptcy. 
Labour feels it would be better to deal with that matter separately and not in this bill. There has not been proper consultation and it was a knee-jerk reaction to an article in the paper. There is no international consensus on this in overseas jurisdictions. The Labour Party believes that there should have been further consultation on this part of the bill before proceeding to make what are significant changes to the public register provisions and significant changes to the lives of people who find themselves in financial distress. It was noted that the provisions are not an essential component of this bill which was essentially designed to deal with fraudulent debts and as a result had a shorter report-back requirement than would normally be expected. It is the Labour members’ view that there has not been sufficient consultation with key stakeholders which is reinforced by concerns raised by the Office of the Privacy Commissioner. Therefore Labour would have preferred that the public register provisions be separated from the rest of the bill. 
I would like to mention this slightly unusual part of this bill: the retrospective application of fraudulent debt provisions. There is a general principle that statutes and regulations operate prospectively—that is they do not affect existing situations. That principle is set out in the Interpretation Act 1999 which provides that enactments do not have a retrospective effect. This bill proposes to apply the proposed new law in relation to the treatment of fraudulent debts under a no-asset procedure retrospectively to all no-asset procedures that remain undischarged on the date the bill was introduced into the House and to all new no-asset procedures that were entered into after that date. The committee was of the view that very limited retrospective application is justified in this case as it retains the integrity of the no-asset procedure process by preventing a debtor from being rewarded for a fraudulent act or behaviour and therefore does not affect any person’s legitimate interest. 
There is something else that I would like to reiterate ever so slightly and that is the length of time a person is on the public register. As I mentioned the committee heard that a lengthening of the time the no-asset procedure debtor remains on the public register would dilute the important distinction between bankruptcy provisions and the no-asset procedure. The procedure was introduced to provide a one-off opportunity for financially distressed individuals to avoid the stigma of bankruptcy. There were some on the committee who accepted advice that it is a matter of balancing the interests of debtors who seek to move on with their lives which we understand and creditors who require reliable information about a debtor’s history to make informed business decisions. The committee considered that the approach proposed in the bill strikes a reasonable balance between those interests. The diversity of reasons for financial distress means that the length of time the information remains on the public register will inevitably be more appropriate for some debtors than others no matter what the chosen period is. 
I reiterate that Labour believes there should be further consultation on that part of the bill before proceeding to make significant changes to the public register provisions. It was noted that those provisions were not an essential component of this bill. Essentially the bill was designed to deal with fraudulent debts and as a result had a shorter report-back requirement than would normally be expected. It is Labour members’ view that there has not been sufficient consultation with key stakeholders which is reinforced by the concerns raised by the Office of the Privacy Commissioner. Labour would thus prefer that the public register provisions be separated from the rest of the bill.