Clive Palmer (Fairfax, Palmer United Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Why is the Commonwealth the No. 1 petitioner of bankruptcies and liquidations in Australia, closing businesses down and moving people from productive employment to unemployment? Why does the government not introduce a chapter 11 provision similar to the US, where 85 per cent of companies that are in chapter 11 merge to keep people employed, exports going and government revenue flowing? Will the government lead the introduction of such a measure in Australia?

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to 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.

Opposition Members:

Opposition members interjecting—

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

The gentleman opposite is harking back to that happy time, from his experience. It was not so happy for me, I can assure you. Nonetheless, the honourable member makes a very good point and if he has any proposals or thoughts in this area of course the government, and I am sure all members, would be very pleased to hear them. Business continuity is a very important consideration in terms of corporate insolvency, but that has to be weighed up against the rights of creditors and their ability to recover their entitlements. Business continuity is a very big issue and I am grateful to the honourable member for raising it.