Michaelia Cash (WA, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

I rise to speak on the Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023, and I advise the chamber that the coalition will be supporting this bill. And as with the other urgent bill that was introduced into the House this week and has just gone through the Senate, we will facilitate its passage.

This bill is intended to preserve the status quo. It addresses a technical issue around the dates on which a person is treated as being a bankrupt under the law. In order to take the benefits of bankruptcy, a person must file a document known as a statement of affairs. This is a document that sets out the person's financial position to allow a trustee to administer the bankrupt person's estate. The filing of a bankrupt person's statement of affairs effectively starts the clock on that person's bankruptcy. Under section 149 of the Bankruptcy Act, a person will be discharged from bankruptcy three years after the statement of affairs is filed. Where a person has a status of an undischarged bankrupt, important legal consequences then flow. For example, the estate of the undischarged bankrupt will be administered by a trustee, and, subject to the limitations set out in the law, the bankrupt's property is divisible amongst the creditors. The person gains the legal protections that go with bankruptcy only once that period has commenced, and the trustee has legal powers to deal with the person's property only until it ends. In other words, the dates when a person's bankruptcy period starts and finishes are critical because of the legal implications.

There are technical and process issues that have important implications for dates over which the person is bankrupt. In order to take the benefits of bankruptcy, as I've stated, the person must file the document known as the statement of affairs. The statement of affairs sets out the person's financial position to allow a trustee to administer the bankrupt person's estate. The filing of the person's statement of affairs effectively starts the clock on the effect of the bankruptcy. The longstanding business practice of the Australian Financial Security Authority, known as AFSA, and its predecessors has been to treat a person's statement of affairs as having been filed on the date that it is accepted. This allows for back and forth between AFSA and the individual concerned to ensure that the statement of affairs is both complete and adequate. Once AFSA accepts a person's statement of affairs, it records that date as the date on which the National Personal Insolvency Index kicks in, and it is at that point, legally, that the person's bankruptcy is then triggered. This is a beneficial approach that has been widely accepted amongst the community.

What does this bill actually do? The bill ensures that the law reflects the current practice and the settled understanding of most in the sector. It makes it clear that the filing date for the statement of affairs is the date on which it has been accepted by AFSA. As I said, this will merely confirm what is the status quo and affirm the longstanding practice of AFSA and create certainty for the use of the bankruptcy system. It does apply both prospectively and retrospectively to preserve the status quo. Technically speaking, the amendments ensure that the bankruptcy period of those who are or have been bankrupt is consistent with the dates recorded by the official receiver prior to commencement with respect to the bankruptcy. This will provide certainty to everyone who relies on the dates in the National Personal Insolvency Index to ensure their decisions and actions are valid. It benefits the bankrupted persons, the trustees and others.

There is a carve-out, though, in respect of criminal law, and retrospective validation does not apply to criminal proceedings. We accept the government's assurances that this carve-out simply means that a person who believes they were wrongfully convicted of a crime due to a mistaken understanding as to whether or not they were bankrupt at a particular time will be able to challenge a conviction. That is the assurance that we have been given by the government in relation to that particular carve-out in the legislation.

As I said, it is a simple bill. It is a technical bill, and it provides certainty and stability to Australia's bankruptcy system. The coalition will be supporting it, and I commend the bill to the Senate.