Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Hansard source

I thank the honourable member for Fairfax for his question. The answer to the first part of the question, as to why the Commonwealth is a petitioner in bankruptcy proceedings, is of course that it is on account of the debts owed to the Australian Taxation Office, which clearly many companies find themselves indebted to, whether they are solvent or insolvent. The second part of the question, relating to chapter 11, raises a very good point. One of the great strengths of the American economy is its resilience—the way in which companies can hit the wall financially, dust themselves off, restructure and get going again. They have a great tradition of business continuity—there is no doubt about that. In Australia, by contrast, the position of secured creditors—which more often than not are financial institutions, as the honourable member would be well aware—is much stronger relative to other creditors.

While the various changes and reforms to corporate insolvency have resulted in more flexibility, there are powerful arguments, I believe, for looking more closely at these issues of business continuity. The chapter 11 procedures in the United States are, I have to say, like most business practices in America, very legalistic and I do not think anyone would recommend taking a facsimile of the American law and inserting it into Australia. But certainly employing greater measures to ensure greater business continuity is a very good issue to discuss, a very good issue to consider. When I was the opposition leader many years ago I did canvass a proposal along these lines.

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