Huo Raymond: Insolvency Amendment Bill — Third Reading 
Huo Raymond: Insolvency Amendment Bill — Third Reading 
[Volume:658;Page:7077] 
RAYMOND HUO (Labour) 
: 
 The Insolvency Amendment Bill is generally a good bill. It aims to address four key issues that have arisen since the Insolvency Act 2006 was enacted. Firstly the bill aims to close a potential legal loophole and prevent fraudulent debts from being written off. Secondly it amends the public insolvency register to lengthen the time that information about a debtor remains on the public registers from 1 year to 5 years in the case of a no-asset procedure and from 7 years to indefinitely in the case of multiple insolvencies—that is to say in the case of two or more bankruptcies or of a no-asset procedure plus a bankruptcy. Thirdly the bill will also restore the official assignee’s ability to recover gifts made prior to bankruptcy in order to avoid making payments to creditors and will extend the period available to the official assignee in which to decide whether to terminate a no-asset procedure process. Therefore the amendment should make it easier for creditors to make better-informed lending decisions particularly in tough economic times. That all sounds valid and generally this bill is good but I do have some concerns and observations and wish to spend some time elaborating on them in this debate on the third reading of the bill. 
Making laws in all areas whether civil or criminal is a central part of the work of Parliament and the laws that are so made often have a catch-all effect. A statute is the express will of Parliament which reflects the views and the will of our constituency across the board. So to put my contribution in that context my first concern is that the difference between bankruptcy and the no-asset procedure may become diluted. 
The no-asset procedure was first introduced by the Insolvency Act 2006 as a less punitive option than bankruptcy. There are two main purposes: to give individuals a fresh start and to allow individuals to avoid the stigma of bankruptcy. To satisfy the Insolvency Act criteria for entering into the no-asset procedure a debtor must have no realisable assets must have a total debt of not less than $1000 and no more than $40000 and must have no means of being able to repay the debts. A no-asset procedure is currently discharged after 12 months whereas a bankruptcy is discharged after 3 years. Bankruptcies are currently held on a person’s credit file for 7 years making it difficult or virtually impossible to gain access to credit. Therefore entering into the no-asset procedure is meant to provide a fresh start for such people and to help them become contributing members of the community again without the stigma of bankruptcy. 
I appreciate there may be two possible scenarios. One scenario is bona fide debtors who need help and whom we should help to become contributing members of the community. The other scenario on the other hand which has been cited in the media is people who may think a no-asset procedure is a quick way to sort out a debt that they cannot pay. They may regard it in the same way as what the media has described as the view of Generation X: it views credit as being something like free money or as being a sort of substitute for parental generosity. At the Commerce Committee officials did a thorough analysis of that issue. 
To some extent I understand the underlying reasons for us to tighten up on those debtors’ credit files. However let us look at the two case studies put together by the Association of Citizens’ Advice Bureaux in its submission. Case study 1 was that of a single professional woman with an income of over $50000 who had to go on an invalids benefit because an illness that had been controlled for 10 years flared up. She was in debt to her bank and to a finance company but had insurance on both loans to cover that specific illness. The bank paid out on the insurance but the finance company did not. Within 3 months of the change in her circumstances her only solution was to apply for the no-asset procedure with a $29000 debt. The only creditor was the finance company. Just imagine through no fault of her own she had no choice but to resort to the less punitive no-asset procedure but her name will stay on her credit file if this bill becomes law not for 12 months but for 5 years. I say that will have a huge impact on her ability to rehabilitate her financial life. 
Case study 2 involves a young couple with three kids under 8 years old. They had credit contracts on cars a TV etc. and they rented their home. They were encouraged by the bank to consolidate their finances which they did with a personal loan. They got into further debt and the bank refinanced them by putting all of their debts on to a credit card. The couple separated subsequently. The credit card was in the male’s name only. 
Debate interrupted.