Philip Ruddock (Berowra, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Bankruptcy (Estate Charges) Amendment Bill 2007 will amend the Bankruptcy (Estate Charges) Act 1997 to impose the realisations charge and interest charge on moneys paid pursuant to debt agreements under part IX of the Bankruptcy Act 1966.

The realisations charge and interest charge are currently payable by trustees in relation to bankrupt estates and personal insolvency agreements under the Bankruptcy Act. These charges offset the cost of regulating insolvency practitioners. The charges are not currently payable by debt agreement administrators. The cost of regulating the debt agreement system is effectively subsidised by revenue from these charges received in bankruptcies and personal insolvency agreements.

The government no longer considers that cross-subsidisation is appropriate given that debt agreements make up a significant proportion of personal insolvency activity in Australia. In addition, amendments to be made by the Bankruptcy Legislation Amendment (Debt Agreements) Bill 2007 will introduce a new regulatory framework for debt agreement administrators. The government’s cost recovery policy requires the beneficiaries of that service, in this case creditors, to meet the costs of providing that service.

The amendments will not increase revenue from the charges as the rate of the realisations charge will be reduced for all types of personal insolvency administrations. In practice, it is largely the same creditors who are paying the realisations charge in bankruptcies and personal insolvency agreements who cover the cost of regulating debt agreement administrators. Applying the charge to debt agreements will broadly result in the same creditors paying the same amount of money but over a larger range of administrations.

The amendments to be made by this bill will bring debt agreements into line with other forms of personal insolvency administration.

I commend the bill to the House.

Debate (on motion by Mr Edwards) adjourned.