Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

I would like to thank the honourable member, Mr Bowen, for his contribution to this particular debate around the Corporations Amendment (Insolvency) Bill 2007. Well-designed insolvency laws are critical to any good-functioning economy. They are among the most basic laws that govern commercial life and are, I think, integral in ensuring that Australians can have some certainty when a company experiences some form of financial distress. In this regard, I note that Australia’s corporate insolvency laws are well regarded and essentially sound; they do not require fundamental revision. The government is therefore not proposing radical changes to the law in this bill; rather, this bill provides an integrated package of measured reforms which, together, are expected to have a significant impact on the efficiency and integrity of our corporate insolvency regime.

This bill responds to the recommendations of a number of committees, notably the Corporations and Markets Advisory Committee and, of course, the Parliamentary Joint Committee on Corporations and Financial Services. Both of these committees examined areas of corporate insolvency law. The bill also, of course, responds to many suggestions for improving the law that have been made by others, including creditors, practitioners and, indeed, members of the judiciary.

I would like to take this opportunity if I could to thank all of those who commented on this important bill and to note the role in particular of the Insolvency Law Advisory Group, otherwise known as ILAG, which did provide valuable and technical advice in the course of drafting this legislation. I also want to take the opportunity to note key industry stakeholders, such as the Insolvency Practitioners Association of Australia, the IPAA, who have welcomed the introduction of the bill and applauded the consultation process. They said:

The IPAA believes the legislation contains major improvements in the insolvency regime. It improves the efficiency, efficacy and fairness of the process. We commend the government’s consultative process, which has produced the balanced bill. We look forward to working with the government on the next round of reforms to other areas of insolvency.

The bill focuses on improving outcomes for creditors, deterring corporate misconduct, improving the regulatory framework for insolvency practitioners and finetuning the voluntary administration procedure. It also addresses public concerns about the independence of insolvency practitioners and practitioner remuneration. Key initiatives include mandating the priority of employee entitlements in deeds of company arrangement, clarifying the status and priority of the superannuation guarantee charge in insolvency and the introduction of a new statutory process for facilitating the winding-up of companies in corporate groups.

The bill will also require practitioners to provide creditors with sufficient information for them to assess whether a remuneration proposal is reasonable. The report will include a summary of the main tasks to be performed by the practitioner and, of course, the costs associated with them. Pooling will permit creditors to agree or a court to make an order that the assets of two or more companies in liquidation be combined so that the liquidation of the companies can proceed together as if they were indeed one company. This important facility will allow for more streamlined administration, consolidated accounts and consolidated meetings and minutes of meetings, thereby providing scope for cost reductions and better returns to creditors.

As part of the announced package of insolvency reforms, the government implemented two very important reforms in 2005-06. First, we allocated an additional $62 million over four years to improve the range of entitlements available to employees under the General Employee Entitlement and Redundancy Scheme, otherwise known as GEERS. Secondly, we also established an assetless administration fund involving expenditure of some $23 million over four years to target improper behaviour by directors in the lead-up to a company’s insolvency. The program is already delivering results.

Through this bill, the government is demonstrating that it is actively working to minimise the economic and social costs that can regrettably accompany a corporation’s insolvency. Those costs may include the disruption of trade and commerce, the loss of employment, the loss of savings, damage to suppliers and customers and the expenses of the insolvency process itself. This bill demonstrates that the government remains committed as always to improving the insolvency processes in the interests of all Australians and that we want to see the best possible results for all who may be affected by an individual company’s insolvency.

I want to take this opportunity to again thank all of the stakeholders who have participated in what has been a very good example of consultation. I also want to take the opportunity to thank the officials from the Department of the Treasury for all of the very hard work and the dedicated approach that they have taken to ensure that there has been effective consultation with our stakeholders. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.

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