Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

The Australian Labor Party will support the Insolvency Law Reform Bill 2015. However, we call on the minister to release the insolvency practice rules—the legislative instrument giving effect to much of the legislation—and other foreshadowed insolvency legislation to provide the industry with confidence.

The Insolvency Law Reform Bill makes substantial changes to the way insolvency professionals are registered, disciplined and regulated. There is broad agreement among the industry that, following some high profile cases of misconduct by corporate insolvency practitioners, reforms are needed to modernise the industry and improve standards. Draft legislation on the issue, including measures recommended in the 2010 Senate Economics References Committee report, The regulation, registration andremuneration of insolvencypractitioners in Australia:the case for a new framework, was released by the last Labor government in 2012.

The Insolvency Law Reform Bill 2015 has been criticised by the Australian Restructuring Insolvency and Turnaround Association as being 'a missed opportunity for substantive reform'; although they are generally supportive of the contents of the bill.

There is a whole series of key changes in the Insolvency Law Reform Bill 2015, and they include strengthening registration requirements for insolvency practitioners to require applicants to be interviewed and assessed by a committee and for registration to be renewed every three years. Regulators, ASIC and AFSA, may issue show cause notices for alleged misconduct, requiring practitioners to explain why they should remain in the industry. There will be an increase in penalties for practitioner misconduct, including for failing to maintain adequate insurance. ASIC will have further powers to seek information or records from insolvency practitioners and require practitioners to notify regulators of certain matters. Creditors will be given the right to remove a practitioner appointed to an insolvency through a simple resolution, without court involvement. The legislation refers some of the fine detail of the registration, discipline and regulation process to a set of Insolvency Practice Rules, which are to be made by the minister via legislative instrument.

Labor agrees with the intention of this legislation and supports modernising the insolvency practice framework, which is why we supported this process of reform when last in government. However, we call on the minister to promptly release the Insolvency Practice Rules to provide confidence in the industry that their new framework will have the intended effect of improving the insolvency practitioner regime. The government have also indicated their intent to make further changes to the insolvency regime as part of their innovation statement. The government should release any intended legislation and their response to the Productivity Commission inquiry on Business Set-Up, Transfer and Closure as soon as possible, to minimise compliance costs of several separate changes to the framework.

Across Australia, there are 7,007 registered liquidators. Last year, these insolvency practitioners worked on around 9,177 instances of companies entering into external administration. While the current insolvency framework does a fairly good job of balancing the interests of creditors and businesses in distress, there have been some high profile cases of misconduct by corporate insolvency practitioners. As a result, insolvency practitioners received the lowest rating for perceived integrity in the latest survey of ASIC stakeholders.