Clendon David: Insolvency Practitioners Bill — First Reading 
Clendon David: Insolvency Practitioners Bill — First Reading 
[Volume:666;Page:13549] 
DAVID CLENDON (Green) 
: 
 I am pleased to speak on behalf of the Greens on the Insolvency Practitioners Bill. It has been useful to hear some of the contributions so far and in particular to hear some of the background and the history to this. Clearly there has been a problem here for some time and this is the latest attempt to address that problem. The bill clearly sets out to create a negative licensing system giving the Registrar of Companies the authority to restrict certain individuals from providing or continuing to provide corporate insolvency services. The registrar would be able to take into account failures to comply for the previous 5 years and would be able to move to prohibit receivers from practising for up to 5 years or require them to practise under the supervision of somebody who is acceptable to the registrar. There is also a provision in the bill for receivers to have the right to appeal any move to put them on a negative register which is only appropriate given that it could be a matter of livelihood for some of these practitioners. 
The nature of the problem being addressed is spelt out in the explanatory note of the bill and that is that the process involved in liquidating companies—that is dealing with voluntary administrations or receiverships—requires that practitioners possess a high level of knowledge a high level of skills and an equally high level of integrity to ensure the best outcomes for all the parties affected in these cases. 
Reference is also made to a general consensus among practitioners and observers that a small number of their peers cannot be relied upon to perform or to provide or to exercise adequate care and that the small number of practitioners is constantly and continually underperforming. The law as it currently stands offered only very limited restrictions on who can be appointed as a liquidator as a receiver and it seemed possible and perhaps even inevitable that on occasion practitioners with very limited knowledge of commercial law or the procedures set out in relevant legislation can be appointed to manage or wind up an insolvent company. That general view has clearly been reflected in some of the comments we have already heard. 
Finally it is clearly noted that some practitioners currently appointed repeatedly fail to discharge their statutory obligations to creditors and in ways as expressed by the Minister of Commerce that are certainly unethical and must border on the illegal in terms of the practices that were described. 
The solution proposed in this bill is that practitioners whose work is deemed to be inadequate or who fail to comply with their duties to their clients can be prohibited from acting in this capacity or be obliged to work under supervision. The argument is made that the sector is too small having only a hundred or so—or somewhere between 100 and 200 practitioners—for it to warrant the establishment of a positive upfront accreditation or licensing system and that such an approach would not be cost-effective. The point is made in the bill that setting up registration or some sort of an accreditation system would cost something to the tune of several hundred thousand dollars a year per practitioner to operate and that given that the practitioners are priority creditors in the winding up of a company this cost could further deplete the limited funds available to creditors. I question that view although I would appreciate clarification on it. That would suggest that each practitioner would indeed take funding of several thousand dollars in each insolvency case and surely the practitioner would be registered. There would be cost to maintaining a register so in fact it would not be the case that in each event there would be a cost imposed on the funds available from a dissolution or a receivership. It is also observed that there will be some cost in establishing a register of people who have been banned or suspended from practice. Indeed that cost would be borne by the registrar. 
An appeal to short-term cost savings cannot disguise the key point in our key objection to this bill which is that the remedy proposed is a classic “bottom of the cliff” approach. It waits for a person to demonstrate his or her inadequacy rather than establishing in advance that a person has the necessary qualifications skill ability confidence of his or her peers and integrity to practise and to deal with issues at this level. It is our view that short-term cost savings are seldom appropriate drivers for good policy. Clearly there would be costs involved in the supervision of those who had failed to perform adequately and are deemed to be in suspension or operating only under the supervision of the registrar or somebody appointed by him. So the dollar figure that has been suggested of a few thousand dollars a year to manage a positive accreditation programme is clearly a gross figure and not a net figure. 
The reactive measure of waiting for trouble to occur before responding will simply see costs transferred from the upfront creation management and maintenance of a positive accreditation system and could quite conceivably lead to costly and after-the-fact court proceedings. This would seem to be opening a door creating a possibility that only those creditors wealthy enough to afford to go to the courts will have the opportunity to protect their interests from bad receivers from practitioners who lack integrity in their work. A positive accreditation system upfront licensing and some sort of regime to accredit individuals or companies is commonplace across a range of professions and trades. 
Hon Lianne Dalziel 
: Fifty people? 
DAVID CLENDON 
: Fifty 100 fewer than 200—small numbers admittedly but the principle is such that no one would go to a barrister or a lawyer who was not properly accredited. Real estate agents are required to be accredited; tradespeople plumbers and builders are required to be accredited. Why would this significant area of practice be any different? The scale alone of some of the situations dealt with by practitioners should provide sufficient reason to demand an upfront assurance that the quality and integrity of the service providers have been evaluated. Receiverships are routinely dealing with millions of dollars worth of assets and/or debts. The consequences of inadequate or inappropriate decisions and actions on the part of practitioners can be devastating to the affected parties. 
Clearly no licensing or accreditation system can provide 100 percent reassurance—witness the fall from grace on occasion of lawyers and others involved in accounting and legal practice and the like. Nevertheless it seems perverse to put a reactionary after-the-event mechanism in place in the hope that it will provide adequate protection. 
The receiver’s duties involve significant levels of trust and integrity. A positive licensing and accreditation system would not be out of place for a financial service in a country in which the general public have very little confidence in that industry. It is essential that such confidence is established. The Greens acknowledge that there is a problem to be solved but we do not see the solution in this bill and so will not support its moving beyond this first reading. Thank you.