Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Hansard source

I rise to speak on the Bankruptcy Legislation Amendment (Superannuation Contributions) Bill 2006. As the minister has outlined, the principal effect of this bill is to allow the recovery of funds placed in superannuation by defaulting debtors if the placement of those funds was made with the intention of defeating creditors. In part, it deals with the problems identified by the High Court in 2003 in the case of Cook v Benson. The thrust of this bill is to bring superannuation contributions in line with other transfers of funds that have been effected to defeat creditors. The bill will work in two ways to stop this from happening. The first schedule contains provisions which will have the effect of making certain superannuation contributions invalid and provide for the conditions under which these contributions may be recovered. The second schedule makes other amendments, including in relation to payments made under rural support schemes and the role and functions of the inspector-general. The first schedule provides for two types of recoverable contributions: contributions made by a person who later becomes a bankrupt and contributions made by a third party on behalf of a person who later becomes a bankrupt.

The new provisions introduced by part 1 of the first schedule largely mirror an existing section within the act which applies to other transfers of funds. Briefly, they provide the basis on which the court determines whether or not the transfer of funds was made with the intent of defeating creditors. These include considerations such as whether or not it can be reasonably inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent. They also contain considerations which relate to whether or not the contribution was out of character. In line with existing subsections, the rights of innocent transferees are protected. There are also sections in the bill which relate to superannuation contributions made by a third party. The explanatory memorandum states that this is to take into account certain types of contributions, such as salary sacrifices.

Part 2 of the first schedule contains the amendments relating to the processes for the recovery of superannuation contributions. The official receiver will be granted the power to issue a notice to freeze a superannuation account under certain conditions in order to avoid the bankrupt person dealing with the fund in such a way as to prevent the superannuation being recovered. Section 128E will provide the receiver with a wide variety of powers to restrict the operation of a superannuation account.

There are provisions further on in the amendments which will allow a person whose superannuation account is frozen to apply to the official receiver to deal with the account in certain ways. Under specified conditions, the receiver may consent to such dealings. There are also provisions that allow for a court to set aside an account-freezing notice.

Another new section, 139ZU, provides for the circumstances in which a person has rolled over a contribution to another superannuation account.

Finally, schedule 2 makes some technical amendments to the act, and also provides for the protection of certain payments under rural support payment schemes. I commend the bill to the House.

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