Rich Katherine: Insolvency Law Reform Bill — In Committee 
Rich Katherine: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:6042] 
KATHERINE RICH (National) 
: 
 The points made by the Minister Lianne Dalziel are very interesting but they are quite wrong. I will start by taking issue with her phrase that a “fresh start” is being offered people who become bankrupt. That is nothing more than a euphemism because quite often a number of Kiwis rack up debts through recklessly taking out loans even though they have no ability to repay them. This Government is saying it is OK to write off 40 grand of debt. 
The second point—and I think it shows a difference between National and Labour—is that the Minister is indicating a total disregard for business. Ninety-five percent of New Zealand businesses are small businesses many of them are mum and dad operations and some of them in good faith sell products to people who on the surface look like they can pay for them and have a good credit history. These are the operators and business people who will be in the gun for selling products to people who cannot repay them—up to $40000. I do not think that is fair. I think allowing someone to recklessly rack up debts then be let off the hook to the tune of $40000 shows a total disregard for what it is like to be in business to carry risk and to lie awake at night worrying about whether the bills can be paid. That is a serious sum if one is a plumber or runs the local dairy or runs the local furniture shop. 
The final point where I think the Minister has it quite wrong is the little barbed comment she made about Pansy Wong doing no constituency work. That member looks after most of the Asian community from Kaitaia to Bluff and deals with a wide range of issues—from immigration to welfare to business—and it is kind of smug and insulting to say she does not do that kind of work. 
This bill was probably at least worth putting on the agenda because personal bankruptcy laws have not been looked at since the early 1960s. We saw that some work done in the 1960s culminated in the Insolvency Act of 1967 but there has not really been a good look at it since that time. The number of bankruptcies we see in this country has changed dramatically. In the 1980s there were about 800 personal bankruptcies and we have seen that increase dramatically to about 3000 per year—that was the 2005 figure but it is probably more now. The type of bankruptcy we are seeing has also changed. It used to be bankruptcy as a result of a small business falling over; today many bankruptcies are the result of people racking up too much debt on the credit card. 
The no-asset procedure aims to deal with people who have no money no assets and no prospect of paying a debt off. It might seem a cute tidy way of dealing with those people but members on this side of the Chamber are worried about the messages it sends to other New Zealanders—that it is OK for people not to be responsible for the debts they incur that it is OK for people to take out goods on hire purchase with no prospect of paying for them that it is OK for people not to deal with issues of personal responsibility because the Government will let them off for up to $40000. 
 That is a serious amount of money for most New Zealanders. I feel for some of the creditors who have sold products to these people because there is no prospect of their getting back any of the money. The Minister Lianne Dalziel might say: “Oh well it will make those businesses think twice.” but I think that indicates a total lack of interest in the day-to-day workings of small businesses and a lack of realisation of what it is like to have a customer standing opposite who wants to buy a lounge suite and who looks like he or she stacks up but who when things turn to custard cannot pay his or her bill. Most small-business operators have children. They want to put bread and butter on the family table just like anybody else. This Government is giving up on these debtors. It is forgiving debts of up to $40000. It is basically setting up a training programme for people to move on to the big game of proper bankruptcy after they have had their first warning by entering this 12-month no-asset procedure. 
Luckily the Commerce Committee did tighten up a few things. The committee members felt that there were no penalties for people who give misinformation or do not keep their part of the bargain. At least that change was made even though we were concerned about some other aspects. But I think ultimately Part 5 is really about what message we are sending to Kiwis. We are saying it is OK for them to incur debts of up to $40000. They will be forgiven that they will be told it is OK and they can have another go.