Lee Melissa: Insolvency Amendment Bill — Third Reading 
Lee Melissa: Insolvency Amendment Bill — Third Reading 
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MELISSA LEE (National) 
: 
 It is a pleasure to rise to speak in the third reading debate of the Insolvency Amendment Bill and to follow the member who has just resumed his seat Charles Chauvel. I do not remember seeing him at the Commerce Committee but it was lovely to hear him talk about the no-asset procedure and how he hoped that it would not create problems in dealing with the loopholes in the Insolvency Act 2006. This bill does exactly that: it closes a loophole that was created in that legislation of 2006. 
This bill was introduced earlier in the year by the wonderful Minister of Commerce the Hon Simon Power to amend the Insolvency Act 2006 to preserve the integrity of the personal insolvency processes particularly the no-asset procedure and bankruptcy procedure and to provide more protection for creditors and potential creditors. This bill will protect not only people in low-income levels who are vulnerable but also the people who lend money to potential fraudsters. Earlier speakers have said that we need to protect people on lower incomes and that is definitely so. We do not want fraudsters to rip off people who are very poor. I am sure all members of the House agree with the objective of upholding the integrity of the personal insolvency processes and pretty much agree with most of the provisions in the bill. I do not see any of the members from the Opposition who participated in the select committee process here in the House but in the majority of cases we agreed on most things. 
At this juncture I would like to thank the officials who were wonderful in assisting the committee and to thank my committee colleagues who were very very cordial indeed—both National and Labour and other minority parties as well. 
Let me start by going over the no-asset procedure. The procedure was introduced in 2007 as an alternative to bankruptcy to assist people with no means of paying off debt between $1000 and $40000 and with no way of getting themselves out of this conundrum. To enable them to have a fresh start they could apply to go under the no-asset procedure. It was a great opportunity for someone who was in financial distress and could see no way to get out. The no-asset procedure was to help those people to effectively get a clean slate after 1 year and to rebuild their financial lives. It was a great opportunity for people who were genuinely in difficulty. However it also created a loophole as we have already heard in this House by allowing fraudulent debts incurred by individuals going into the no-asset procedure to be wiped. That was one anomaly that needed to be corrected and the Insolvency Amendment Bill will fix just that. 
The recommendations from the Commerce Committee will contribute to and strengthen this bill. The fact that fraudulent debts become enforceable again after a debtor is discharged from a no-asset procedure is fantastic. If people who are in this no-asset procedure for a year—and as we are proposing on the register for 5 years—incur interest they will need to pay back debt after their discharge. Some of the amendments are to prevent fraudulent debts under the no-asset procedure from being cancelled after a person is discharged from it. The current Act does not explicitly exclude fraudulent debts under the no-asset procedure as it does for bankruptcy. An example of fraudulent debt would be where a social welfare benefit had been obtained on false grounds such as by providing false details alternative identity etc. A reversion to the provisions in the Insolvency Act 1967 about gifts made in the 5 years prior to being declared bankrupt is another amendment. Those provisions put the onus of proving that the debtor was solvent at the time of the gift on to the recipient rather than the official assignee. 
This bill also gives more power to the official assignee to investigate a debtor who applies to go on the procedure by extending the period of discharge by a maximum of 25 days. Any new information on debts or information relating to concealed assets can be brought to the attention of the official assignee right up to the day that the debtor is discharged. That means that with this new information the procedure can be terminated. I think that is absolutely fantastic. 
Another aspect of the bill is to allow the official assignee the ability to recover gifts made by a bankrupt person to a third party prior to his or her bankruptcy. It is an accepted presumption that a person who is declared bankrupt would have been insolvent for some time before bankruptcy was declared. If one is able to make a gift to a third party then surely insolvency should be questioned. The gift should be seen in the light of a person’s bankruptcy as a way to hide assets; often he or she will set up trusts etc. to avoid paying his or her creditors. This bill puts the onus not on the official assignee to prove the solvency of the person who has made the gift but on the recipient of the gift. How can one make a gift to another when one is insolvent? This bill fixes that problem. 
The bill also amends the Insolvency Act in relation to insolvent gifts by extending the 2-year time frame to 5 years prior to the person becoming bankrupt. So if one becomes bankrupt tomorrow any gift one has given in the past 5 years can be taken back to pay creditors. That ensures that debtors cannot conceal assets from creditors by gifting them to another person. 
In earlier stages of this bill as it went through the House we heard a lot of opposition to the length of time the bill proposed a debtor’s name should remain on the no-asset procedure’s public register. The time period is not to harm poor or vulnerable people. This bill proposes to protect the people who lend money to fraudulent people. It proposes that fraudulent people stay on the list for 5 years. The names of people with multiple insolvencies—for instance two or more bankruptcies or a no-asset procedure and a bankruptcy—will stay on the register from 7 years to indefinitely. This measure is just for people with multiple insolvencies. 
The no-asset procedure was introduced to protect innocent people who had difficulty paying off their debts. The increased length of time that people with multiple insolvencies will remain on it is to make sure that people who do fraudulent activities are recognised as being fraudulent. Changes brought about by the Insolvency Amendment Bill will prevent fraudulent debtors from avoiding their legal obligation to repay debts and remove the potential to reward dishonest people which should not be happening. I commend this bill to the House.