Wong Pansy: Insolvency Law Reform Bill — In Committee 
Wong Pansy: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:6041] 
PANSY WONG (National) 
: 
 Part 5 is quite a substantial part so we will take quite a few calls. I will start off by raising the concerns of the National Party which does not support Part 5. 
One of the major issues of concern to us is the introduction of a provision called the no-asset procedure. We were told by the officials that the reason for introducing the no-asset register is to allow a person who has no previous bankruptcy experience and no assets etc. to simply enter into the register for a period of 12 months and at the end of that period to be discharged of his or her debts. The debt can range up to $40000. They claimed that that was proposed for two reasons. First nothing positive is achieved by placing people who have no income or assets into bankruptcy and it does not help the creditors to get their money back. Secondly it will reduce administration costs. 
We certainly have a problem with the concept that if a person who has incurred a debt agrees to enter into the no-asset register the creditor will end up with nothing. The indebted person has no obligation to try to repay his or her debt. I can just see that a lot of students will be eligible. In fact my very hard-working intelligent colleague Chris Tremain as soon as he heard about this provision said that it could become known as the student loan write-off provision. When one thinks about it one realises that tertiary students are very well qualified under this provision. First of all they are encouraged to incur debt because there is no interest on it. Then they are encouraged to enter into the no-asset register because if they enter themselves in the register after 12 months their debts will be written off. Presumably if it is good enough for the Government to write off debts owed to businesses it will be good enough for the Government to apply the same principle to itself. 
But the concern about that concept is that it undermines once again personal responsibility. I believe that a person who incurs a debt incurs an obligation to pay that debt. The fact that the Government endorses the concept that a person can incur debt of up to $40000 enter on to a register for 12 months say “That’s it; it’s a clean slate.” and start from the beginning is certainly not a good thing. We were told that some retailers endorse that but I am not sure that all retailers would like that measure. Some retailers—maybe those of a smaller size—may find it more difficult to do business once they get a credit assessment of certain individuals decide to extend credit to them then find themselves at the stage where those individuals may not have to repay their debt. We certainly find that the Government should not send the message to individuals that it is OK to incur debts because they could at the end of the process have no obligation to repay them. There are a lot of small businesses in New Zealand; we all know that small to medium-sized businesses make up 92 percent of businesses in New Zealand. In fact for a lot of them their annual profit may only come to about $30000 to $40000 and to write off a significant debt is certainly not of comfort to our small businesses. 
We are flabbergasted that the no-asset procedure is being introduced.