Flavell Te Ururoa: Insolvency Amendment Bill — First Reading 
Flavell Te Ururoa: Insolvency Amendment Bill — First Reading 
[Volume:653;Page:2014] 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
Kia ora. Kia ora koe i tenei po. Kia ora tatau e hoa ma. 
[ 
Thank you. Greetings this evening. Greetings to us fellow colleagues as well 
.] 
Sometimes I am sure that the listeners who tune into Parliament on the parliamentary channel wonder at the value of terminology such as the official assignee the no-asset procedure preferential creditor Crown preference and the like. The clutter of that sort of jargon can often blur the perfect meaning. So it is no wonder that a previous attempt at legislation on this matter the Insolvency Law Reform Bill in 2006 attracted only one public submission from the Joint Insolvency Committee. I am told that this joint committee was established by the New Zealand Law Society and the Institute of Chartered Accountants of New Zealand. 
Upon doing some research and investigation into this particular matter the issue of fraudulent debts the corruption of moral bankruptcy and the like I found some information on a famous march on Washington in August 1963. In that march the late Martin Luther King described the Constitution and the Declaration of Independence as a promissory note to which every American would fall heir—the guarantee of the inalienable rights of life liberty and the pursuit of happiness. We know that Dr King was pretty famous and at that time he said these words which are quite neat words actually: “It is obvious today that America has defaulted on this promissory note insofar as her citizens of color are concerned. Instead of honouring this sacred obligation America has given the Negro people a bad check a check which has come back marked ‘insufficient funds.’ But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation.” 
I wanted to share those words when speaking to this bill because the issues of integrity of accountability of honesty and of truth and justice are right at the core of any move to prevent the write-off of fraudulent debt. I say there is no better way to understand fraud than to draw on the links that we know are still relevant in the equal treatment under the law for all people. This Insolvency Amendment Bill on the floor of the House today is designed to close up a potential legal loophole. It amends the Insolvency Act 2006 to prevent people from discharging debts that were acquired fraudulently. In doing so the legislation boasts that it will ensure the integrity of the no-asset procedure. That procedure which is basically an alternative to bankruptcy was created to help people who find themselves in financial difficulty. What it does I am told in practice is to write off debts of up to $40000 for people who find themselves in difficulty and who do not have any realisable assets to pay off those debts. To qualify for the no-asset procedure individuals have to meet a number of stringent criteria including of course the fact that they have no assets. 
The no-asset procedure was all about a fresh start a new beginning to assist people to restore themselves on the pathway forward. It was an intervention that meant they could once again be contributing and productive members of society without having to face the stigma of being declared bankrupt. But the trouble is that the no-asset procedure was never meant to be a way out for those who had obtained debts fraudulently yet that is what has transpired. It is one of the anomalies of the Act that legislation that came into effect to deal with the discharge of fraudulent debts was in itself rewarding dishonesty. We welcome therefore the move to grant financially distressed individuals relief from debts that they may have incurred but not debts or liabilities that have themselves emerged as a result of fraud. 
The bill goes further than that and advances the issue of reporting and registration of those who have had debts discharged under the no-asset procedure. The bill stipulates that the public register should be amended to record the names of those who have had their debts discharged under the no-asset procedure. The information will be retained for 4 years on the public register after a person has been discharged from the no-asset procedure which all seems fairly sound to us. It also proposes that a permanent public record will be kept of those who have been involved in multiple insolvency activities. Information pertaining to an individual applies if a person has had two or more insolvency events and that also applies retrospectively. 
We would be very interested to hear at the select committee from individuals who have been through bankruptcy as to their perception of the extent of the harm that may cause to their future prospects. A key focus for the Maori Party through all the public policy is on the restoration and maintenance of whanau order. We supported the original Insolvency Law Reform Bill because we believed it had a focus on the rehabilitation of companies and the restoration of individuals. We would not want to see those values compromised in the interests of business relations per se. Although we totally support any investment in business growth and encourage whanau to enter into commercial enterprises we also want to ensure that whanau well-being the greater good of the collective is taken into account when considering individual situations of fraudulent activity. 
The key is to try to prevent financial strife from occurring in the first place. So it makes for an interesting synergy today that this bill follows fast on the heels of the Taxation (Business Tax Measures) Bill. We know that tax laws have often contributed substantially to financial distress. The taxation requirements are too costly and cumbersome producing an environment in which small businesses cannot keep up. In addition there is frequently no flexibility from the Crown via the Inland Revenue Department which assumes first place in the queue of creditors to the detriment of other creditors. Although this insolvency bill does nothing to change the tax laws we are obviously in support of the measures included in the business tax measures bill which will have a direct link to preventing financial failure. 
We hope that this insolvency bill will make it a whole lot easier for creditors for debtors and for whanau. It will allow creditors the opportunity to make better-informed lending decisions—an opportunity that cannot be understated in these difficult economic times. It will enhance the integrity of the no-asset procedure which in itself will have a positive impact on the returns to creditors. We hope that the processes introduced in this bill will achieve the difference we need to make in order to keep companies afloat and will impose the minimum costs on users yet at the same time will support innovation and entrepreneurialism. We do not believe that business failure should be excessively penalised by an overly corrective insolvency regime. Our greatest hope is that individuals who suffer the slur of bankruptcy are once again able to participate fully in economic life. It is because of those reasons that the Maori Party will support this bill at its first reading.