Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006 will facilitate implementation of the government’s cost recovery policy in providing personal insolvency services.

The Insolvency and Trustee Service Australia (ITSA) provides personal insolvency services to the community. In accordance with the government’s policy, ITSA has undertaken a review of its fees and charges to ensure they properly reflect the cost of providing those services. That review has also enabled the government to determine which activities should attract a fee and the type of fee to apply. It is appropriate that some services should attract a fee payable by the person receiving the service while others are more appropriately paid for through an industry levy. The government has also decided that some of ITSA’s services, in particular the cost of processing debtors’ petitions and debt agreement proposals, should continue to be budget funded. Stakeholders have been extensively consulted as part of the cost recovery review and will be consulted as part of any future reviews of fees and charges.

The amendments proposed by this bill will enable me, as the portfolio minister, to make legislative instruments to determine the fees and charges that are provided in the Bankruptcy Act 1966, the Bankruptcy (Estate Charges) Act 1997 and the Bankruptcy (Registration Charges) Act 1997. The bill does not set out the amounts of any fees and charges. The amounts of the fees and charges will be set in legislative instruments to be drafted. The new fees and charges will apply from 1 July 2006.

Enabling the minister to determine the fees and charges in a legislative instrument will allow greater flexibility to reflect price changes as they occur. ITSA intends to review its fees and charges biennially unless there are special circumstances warranting an earlier review.

The bill will empower the minister to determine by legislative instrument, the following fees and charges:

• the fees payable as remuneration to the Official Trustee for acting as trustee, controlling trustee or administrator in any administration under the Bankruptcy Act 1966;
• the fees payable to the Official Receiver for issuing a Bankruptcy Notice and exercising a power at the request of a trustee under the Bankruptcy Act 1966;
• the fees imposed on persons who are not creditors of a bankrupt or debtor for access to documents required to be filed by the Bankruptcy Act 1966;
• the fees payable for applying to be registered as a Registered Trustee, being registered as a Registered Trustee or obtaining an extension of the registration of a Registered Trustee;
• the fees relating to the National Personal Insolvency Index; and
• the rate at which realisations charge is payable.

Under ITSA’s cost recovery arrangements, the realisations charge will be set at a level designed to recover the costs of the regulation of practitioners, investigation of bankruptcy fraud and administration of assetless estates. The government has decided not to apply the realisations charge to money received in debt agreements. This will assist in ensuring that debt agreements continue to be available as a viable alternative to bankruptcy for many debtors. There will be no change to the existing policy that the realisations charge must not be higher than 15 per cent.

The costs of processing applications for, and extending, the registration of persons wishing to be registered as trustees under the Bankruptcy Act 1966 and changing the conditions that may be placed on their registration, are charges separately imposed under the Bankruptcy (Registration Charges) Act 1997. As the costs of application for registration and its extension, are able to be determined by reference to the actual costs of providing these registration services, these fees will properly be characterised as fees for service and not as taxes. The new fees will be determined by the minister by legislative instrument as fees for those services.

The bill will also make other amendments which will enhance the delivery of personal insolvency services, including:

• providing for an annual payment of the realisations charge and interest charge rather than a twice yearly payment; and
• ensuring ITSA is able to deliver more services electronically by removing possible impediments currently in the Bankruptcy Act 1966.

The bill also includes some minor technical amendments to the Bankruptcy Act 1966 to clarify or update existing provisions.

The amendments to be made by this bill have been developed following extensive public consultation. They will provide a flexible and accountable way to reflect the costs of providing personal insolvency services to the Australian community.

I commend the bill.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Mr Acting Deputy President, are we now dealing with the Bankruptcy Legislation Amendment (Anti-avoidance) Bill 2006 or the Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006?

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

We are dealing with the Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

On the basis that we dealing with the Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006, I seek leave to incorporate Senator Ludwig’s speech in the second reading debate.

Leave granted.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

The incorporated speech read as follows—

This bill changes the manner in which fees and charges are set for services provided by the Insolvency and Trustee Service Australia (ITSA).

Fees and charges for ITSA services are currently contained in the Bankruptcy Act and Bankruptcy Regulations.

Under the proposed framework, the fees and charges will be determined by the Attorney-General through legislative instrument.

This is an appropriate change, given that ITSA is moving to a cost recovery model of funding. Under any cost recovery model it is important to ensure that fees and charges are set at the cost recovery point and no more. Otherwise it becomes a type of backdoor tax.

The ITSA model for cost recovery – which we understand to have been developed in consultation with stakeholders – will involve a biennial review of fees and charges. Legislative instrument is an appropriately flexible method to ensure that the recommendations of these biennial reviews can be quickly adopted.

The use of legislative instrument still provides Parliament with a mechanism to disallow any increase in fees, so it does not entail a substantial loss of scrutiny.

In fact, let me use the opportunity of this debate to invite insolvency practitioners, small businesses and other stakeholders to contact the

Opposition if you ever feel that ITSA’s fees and charges are spiralling out of control. We will be keen to take up your cause in this place. It is one of Parliament’s most ancient and most important tasks to prevent unjustified imposts by Government. Labor is committed to our job of holding the Government to account for any attempt at backdoor taxation.

ITSA has been moving to cost recovery for several years now, and the details were included in the papers for the 2005/2006 budget.

Under the proposed funding model the cost of some services will be recovered through a fee payable by the person receiving the service while others will be paid through an industry levy.

This bill will allow the following fees and charges to be set by the Attorney-General:

• fees to the Official Trustee for acting as a trustee, controlling trustee or administrator
• fees to the Official Receiver for exercising power at the request of a trustee
• fees for access to bankruptcy documents by persons who are not creditors of a bankrupt or debtors
• fees associated with registration as a Registered Trustee
• fees relating to the National Personal Insolvency Index
• the rate at which realisation charge is payable.

The realisation charge is a levy imposed on trustees and we understand the Government’s intention is to set this at a level high enough to cover the costs of the regulation of practitioners, investigations of bankruptcy fraud and administration of assetless estates.

Certain services will remain wholly Commonwealth-funded, including processing debtors’ petitions and debt agreement proposals.

As I mentioned earlier, the fees and charges will be subject to a review every two years, or sooner if required. These reviews are to involve stakeholder consultation.

Labor supports the shift to cost recovery and this bill to enable that shift. However we will keep a close eye on developments to ensure that we have cost recovery and no more. We look forward to working with stakeholders to make sure that the Government does engage in genuine consultation and to hold the Government to account for any unjustifiable increases.

In addition to providing the framework for the transition to cost recovery, the bill will also make two other changes:

• changing the period for payment of realisation charges and interest charges from twice yearly to annually
• amending provisions related to forms to allow greater use of electronic service delivery.

These also seem to be sensible changes that will improve the operation of our bankruptcy system.

For these reasons, Labor is pleased to offer our support to this bill.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

In making my remarks on the Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006 I want to start by saying that I do not like this Senate process that we are under way with one bit. We do not need a guillotine if senators are going to treat debate on important bills relatively lightly. Without reflecting on any other senators, I wish the government had advised senators of the likelihood of us sitting later today, so that people with other engagements were able to rearrange their affairs and enter the chamber to address these matters.

This bill, however, could well have ended up in the non-controversial slot. I do not think it is contentious. The Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006 simply repeals the Bankruptcy (Registration Charges) Act 1997 and amends the Bankruptcy Act 1966 and the Bankruptcy (Estate Charges) Act 1997 to implement cost recovery arrangements for Insolvency and Trustee Service Australia by enabling the minister to make regulations to determine fees and charges on a cost recovery basis. It amends sections which impede electronic service delivery where currently only cheques are accepted—which seems somewhat outdated. These amendments allow for EFTPOS transactions and do away with some requirements for signatures so that electronic service delivery is streamlined—a useful modernisation measure—and provide for an annual payment by bankruptcy trustees of realisations, charges and interest charges at the end of the financial year rather than the current twice-yearly payment.

There is a chance that creditors might object to the fact that they will now have to pay to access documentation relating to bankruptcy, although it is often entities with a capacity to pay for this kind of service who do want to access documents. It might in theory prove a disincentive for personal creditors but the fees are set at a cost recovery rate—so hopefully not. A fee will be payable to access the National Personal Insolvency Index. This will mostly impact on creditor providers, such as banks, who wish to access the NPII to determine credit worthiness. Again, all these fees are on a cost recovery basis, so hopefully they will not blow out.

The regulations may provide the inspector general with a discretion re payment of fees, which would be a good thing as there may be an opportunity for the fee to be waived in some circumstances, which is hard to say prior to the drafting of the regulations. One of the reasons that I wish to speak to the bill rather than wave it through is that I hope that the minister in closing the debate will indicate whether there might be an opportunity when the regulations are drafted for the fee to be waived in hardship cases, which is a common practice in many jurisdictions and circumstances. The Democrats strongly support this bill.

Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

in reply—In closing the debate, can I say that, generally, there will be a discretion to waive fees. I think that accommodates the concern that Senator Murray has expressed. Senator Murray has outlined the purpose of the Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006, so I will not take it much further than to say that the bill will reflect the government’s cost recovery policy in providing personal insolvency services. There has been extensive consultation. The bill will enhance the delivery of personal insolvency services, including effective electronic service delivery, and make some minor amendments to clarify provisions of the Bankruptcy Act 1966. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.