Kelly O'Dwyer (Higgins, Liberal Party, Minister for Small Business) Share this | Hansard source

Firstly, I would like to thank those members who have contributed to this very important debate, including, in the chamber today, the member for Ryan, the member for Hughes and also the member for Griffith. The Insolvency Law Reform Bill 2015 implements a package of reforms that will strengthen and streamline Australia's personal bankruptcy and corporate insolvency regimes. A strong and efficient insolvency regime is fundamental to a responsive and productive economy. The reforms in this bill will contribute to increased confidence in the professionalism and competence of Australia's insolvency practitioners, promote competition in the market for insolvency services and remove unnecessary costs from insolvency proceedings. This bill addresses concerns about the regulation of insolvency practitioners that have been raised in a number of parliamentary inquiries, including, most notably, the 2010 Senate Economics References Committee inquiry into the regulation of insolvency practitioners.

The changes will also reduce legal complexity, risk and duplication by bringing the corporate and personal insolvency regimes more in line with each other. By aligning, simplifying and removing unnecessary regulatory obligations on both insolvency practitioners and creditors, this reform package is expected to have a net deregulatory saving of around $50 million per year.

To boost confidence in the professionalism, competence and regulation of insolvency practitioners, amendments in this bill will raise the standards for registration as an insolvency practitioner. Following commencement, practitioners will be required to be interviewed and assessed by a three-person expert committee prior to registration to demonstrate their competence. Practitioner registrations will be required to be renewed every three years rather than continuing indefinitely. There will also be new requirements to undertake insolvency-specific education and to obtain and maintain appropriate professional indemnity and fidelity insurance. These changes will bring the registration process for corporate insolvency more in line with that of personal insolvency. In addition, decisions on registration as a corporate insolvency practitioner will now be able to take into account the applicant's conduct in their personal insolvency practice.

Amendments in this bill will also strengthen mechanisms to monitor practitioners and discipline them where there has been misconduct or wrongdoing. The Australian Securities and Investments Commission, referred to as ASIC, will now have the power to give a 'show cause' notice to a corporate insolvency practitioner in particular situations—for example, where it believes the practitioner has breached a condition of his or her registration. If ASIC is not satisfied with the response, it may refer the matter to a disciplinary committee, which will have a range of options available to discipline the practitioner, including stripping the practitioner of his or her registration.

The reforms in this bill aim to promote market competition on price and quality by making practitioners more accountable to creditors and empowering creditors to protect their own interests. The amendments will give creditors the ability to determine when and what information they are provided by an insolvency practitioner, and ASIC will be able to direct a practitioner to comply with a creditor's request for information. Under changes in this bill, it will also be easier for creditors to remove poorly-performing practitioners. The amendments provide for creditors to remove practitioners through a resolution of creditors rather than having to go through the lengthier and more burdensome process of seeking court orders. These changes will give creditors more power to monitor and take positive steps where they believe that the actions of the liquidator do not represent good value for money.

Many of the changes in this bill are aimed at removing unnecessary obligations on practitioners and streamlining current processes. These changes will reduce costs and increase efficiency in insolvency administration, helping to improve the return to creditors. For example, the existing obligations on external administrators to hold initial, annual and final meetings will be removed, with creditors having expanded rights to obtain reports or require meetings when desired.

The amendments will also facilitate more efficient communication by allowing, for example, the use of electronic means to provide documents rather than requiring hard copies to be provided. To streamline the remuneration approval process, the bill introduces a new statutory default remuneration amount for each insolvency. This amount will be $5,000 indexed annually and recognises key tasks which every practitioner must perform at the beginning of the administration. Remuneration determinations will continue to be subject to review by the court, for corporate insolvency administration, and by the Inspector-General in Bankruptcy, for personal insolvency. The government will soon release and consult on the updated insolvency practice rules that accompany this bill.

The changes in this bill represent significant reform of Australia's insolvency regime. However, this is only the first phase of the government's plans to strengthen and streamline the system. The government will continue to engage with the business community on additional reforms to improve the insolvency regime and remove unnecessary costs in insolvency administrations— with the second phase focussing on business rescue and small business insolvencies. I commend this bill to the House.

Question agreed to.

Bill read a second time.

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