Tisch Lindsay: Insolvency Bill Companies Amendment Bill Insolvency (Cross-border) Bill — Third Readings 
Tisch Lindsay: Insolvency Bill Companies Amendment Bill Insolvency (Cross-border) Bill — Third Readings 
[Volume:634;Page:6185] 
LINDSAY TISCH (National—Piako) 
: 
 It is interesting that the last speaker talked about playing politics with this issue. We are approaching it from a very pragmatic point of view. We supported many of the parts of the Insolvency Law Reform Bill. There were only two parts in particular that we had difficulty with and they were Part 5 and Part 8. 
The centrepiece of the legislation is the voluntary administration scheme which will replace the seldom-used compromise scheme. National members stated in our minority report that the scheme is aimed at enabling companies in financial trouble to trade out of their difficulties. The lack of incentives and the difficulty in getting the consent of a majority of creditors have been cited as reasons for not utilising compromise schemes in the past. 
There were a number of submitters and they were unanimous in their view that unless the Government addressed the issue of the priority status for the Inland Revenue Department the voluntary administration scheme would not work. In fact it would be severely compromised. That was the point we made at the time which came up during the Committee stage when we sought some clarity about this matter and when we asked for the Minister in the chair at the time to give us some guarantees which were not forthcoming. So overall we will be voting against this legislation. 
The other area we had great difficulty with was the newly introduced no-asset procedure scheme whereby an individual can choose to enter the scheme for 12 months in return for a write-off of up to $40000 at the expense of creditors. This reminds me of the period during 1987-88 when the Government of the day introduced the mortgage discounting scheme. I was formerly a farm appraiser in the Rural Banking and Finance Corporation and was called back during that period of the mortgage discounting scheme to look at situations where mortgagors were having great difficulty. There was a downturn in farm incomes land values had slumped and some farmers had negative equities so the mortgagees—the lenders—would call the mortgagor to account around the table and we would look at how we could refinance and try to work or trade our way through in some of those areas. At that stage the Rural Bank was giving $40000 for farmers to walk off their farms so they could buy houses in town. That was Government money in those days because the Rural Bank was a Government-owned operation. The Government is no longer involved in that sort of lending and rightly so; it should not be involved. But in those days it was a very important way of being able to give a small contribution and one could actually buy a house for $40000 in town. So there were negative equities and no assets—the liabilities far exceeded what the assets were—and that was an example in point. 
But when we look at what this measure is doing whereby debtors can now write off up to $40000 the question has to be asked about who will pay. Who will fund this? While it is all very well for Government members to say that it will allow businesses to grow and proceed and that they will be successful in the long run the chances are that that will not happen. I was involved in a restructuring role for many years and I can tell members that a lot of businesses failed not because their prospects were not good but because they were overcapitalised and underfunded or because they did not understand what the market was saying to them. That is the reason why businesses fall over and the people involved should not have been in business to start with. 
It has been so easy to get into business and many people have gone into it for the wrong reasons. A lot of people who have been made redundant and come out with huge redundancy payments have bought themselves a business. What they have done is buy themselves a job but they may not have the skills or the business acumen to be there. That should never be allowed to happen but it does happen because it is very very easy for people to start businesses in New Zealand. 
So National’s concerns are first the voluntary administration scheme and secondly the no-asset procedure. We think that that is wrong; it sends the wrong messages. We ask where the responsibility actually lies. Does it mean that anyone who gets into trouble now will be able to opt out because of the new regime? 
As I said at the beginning we actually agreed with most parts of this legislation but the Government did not take heed of what submitters said. It did not take heed of the questions we asked during the Committee stage which were about issues that we had identified and that submitters had identified. But those issues were not addressed. On that basis National will be voting against the third reading of these bills.