Dalziel Lianne: Insolvency Amendment Bill — Second Reading 
Dalziel Lianne: Insolvency Amendment Bill — Second Reading 
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Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I rise to speak to the second reading of the Insolvency Amendment Bill. As chair of the Commerce Committee I think that we received very good support from the officials and I acknowledge that. Also the members of the committee were very keen to meet the deadline for report back—as requested by the Minister of Commerce the Hon Simon Power—in order that a timely amendment would be made to allow for retrospectivity which would not normally be applied in legislation. However with the Minister stating very clearly in the public release of the bill before it was introduced that it would apply from the date of the announcement he met the requirements of retrospective application in relation to the fraudulent debt provisions. 
The Labour members of the committee along with all members of the committee were very supportive of this change being made to the law. We were also very supportive of the gifting provisions that were clarified in respect of insolvent gifts. But the one issue we had great concern about was what seemed to be the addition of a provision that related to the length of time people are on public insolvency registers. That provision did not come from the same area of concern. The issues had clearly been raised with the Minister in respect of the matters that needed clarifying with regard to a discharge from the no-asset procedure in relation to fraudulent debt provisions but it certainly seemed to me and I think to others as well that this other amendment relating to the length of time people are on public insolvency registers had really not come from the same place. 
Sure enough when we sought to find out where that particular amendment had come from we found that it had come from a newspaper article that had been published some months before. It was as if we were just tacking the issue on to a bill that we were introducing to address a more pressing issue. I can understand why the Minister did that. Obviously a Minister likes to use the opportunity of the legislative time he or she gets in the House to get as much done as he or she possibly can. But I do not think it is a very good process when it goes towards changing a law that has only been in place for just over 12 months. Our concern was about changing the length of time that people were on the public insolvency register in respect of the no-asset procedure. It really does mean that there is not the same strong distinction between the no-asset procedure and bankruptcy as there was before. 
When the select committee received submissions a practitioner in Christchurch gave quite an extensive submission about the sorts of changes he would like to see in the insolvency law arena. In fact it tied in with one of the submissions we received from the budget advisory services. The submitter suggested that rather than just letting people off the hook as it were with bankruptcy or the no-asset procedure in both cases there should be a requirement to do some sort of budgeting course so that people would not fall back into this position. The Government is moving amendments in order to allow for people who are multiple insolvents and have gone through the insolvency process on several occasions. Would it not be better to try to get to the root cause of the problem which is the inability of people to deal with credit that they have obtained through a variety of means? By developing a very specific budgeting programme that would go alongside the no-asset procedure—or indeed the bankruptcy—we could end up with a situation where a person could earn his or her ability to come off the no-asset procedure. I think that would be an excellent addition because it would then be seen as a learning experience rather than just a forgiveness of the significant amount of debt that had accumulated. 
One of the things that came up at the select committee was that a number of members really questioned whether honest people—good decent people—could end up using one of these positions. It really seemed to reek of people who were being irresponsible and gaining credit when they were not in a position to repay. We then had a submission from the citizens advice bureau and they had some very compelling stories of the types of cases where the no-asset procedure although it really is the fence at the bottom of the cliff had been the saviour in terms of allowing somebody to get back on his or her feet. The particular example as I recall—and I wish I had brought my notes down to the House—involved a woman whose marriage had broken up. The couple had income protection insurance for a particular thing that had happened; I cannot remember whether she had to have an operation. The income protection insurance that she had did not kick in. There was a dispute and she could not afford to fight the insurance company. She actually ended up on a benefit and her life was completely turned upside down. We felt that we were hearing the story of somebody who had taken considerable steps to protect herself against the unforeseen and the unexpected but at the end of the day she had ended up with all of this debt. She would have been in a position to repay it before but because of the turn of events she was not able to repay it. So in that particular case the no-asset procedure was very much appropriate for her to use. The idea that she will be on the register for a significant period of time will say more about her lack of creditworthiness than the circumstances would disclose. 
The other example I had was a case in my electorate office where an individual had believed firmly that he had paid all of his debts to a legal firm that had been acting for him. His belief that he had paid for it all was absolutely sincere and genuine and I understand why he thought he had. What he did not realise was that the legal firm had conducted two additional pieces of work for him after he had paid what he thought was his final bill and therefore there was money owing. When the firm demanded the money from him he said he did not owe it any money and he ended up going to court. A $950 bill became $3500 by the time the court had finished adding on all of the bits and pieces. I literally had to get from the law firm all of the information it had and then I had to sit down and explain things to him and draw up a time line so he could understand why he owed this money. Why did the law firm not do this? Well it had a huge row with him because he said he had definitely paid the money. The reason he did not understand any of it was that he could not read. I was the first person who picked up that he could not read and that is why he does not get stuff like this. We have got him with a budget advisory service now and we are helping him work through all of these issues. 
Anyone who thinks that people who end up using the no-asset procedure or bankruptcy provisions are all somehow culpable and totally responsible for the circumstance that they find themselves in should think on it. There are people out there who get through life in a difficult way. They need additional support and sometimes this is the way that they can get themselves back on their feet. So I am disappointed that we are having the debate on the public insolvency registers along with the other material; we support the other parts of the bill. We still have some concerns about aspects of the legislation and we will deal with those in the Committee stage.