Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Hansard source

I rise to also support this disallowance motion. I think Senator Wright has outlined clearly some of the reasons why this new fee is unfair. It is unfair on debtors. We know very well that voluntary bankruptcy is an important last-resort option for those who are unable to pay back unmanageable costs. It does happen; it is not something that people take lightly, but it is an option there. That is an important option. It still carries with it a very serious social stigma. Therefore, financial counsellors know when they deal with clients the awful effect of what that will mean for their clients that they are providing advice and support to, and therefore they do not make that decision lightly. It is not a course taken lightly at all.

Bankruptcy offers an orderly process in which all creditors are able to recover some of their outstanding debts, without costly debt collection and legal fees. That really is the key: without those costly collection and legal fees, it enables debtors to deal with their financial difficulty with some dignity. It is something where, whilst they do not take the decision lightly, it is in a sense a clearing of the decks and it allows them to start anew or start afresh. In doing that now, there is obviously this new fee on bankruptcy itself. It just makes those already at their rock-bottom face just another very hard financial hurdle. Yes, $120 may not sound like a lot; but when you already have however many hundreds or thousands of dollars of debt, a burden on top of that is simply probably too much to bear.

As Senator Wright pointed out, we are not talking about high-flyers here. We are talking about people who are often at their rock-bottom. People who opt for voluntary redundancy are often on incomes of less than $20,000. They are those poorer members of our society. On this level of financial hardship, with this $120 fee, for some of those people—if you think about it, they are on an income of $20,000 or less—that would be 30 per cent of their weekly income.

Those considering bankruptcy often have difficulty at things that we take for granted every day. They are things like being able to pay their rent. It is their basic expenses like rent, food, transport and the like. I was actually at the Fitzroy community legal centre last Friday and we were talking about this very matter. Some of the clients, some people that they support and deal with coming through their doors, are people facing financial hardship. It often does start with losing your job. This kind of downward spiral can occur from thereon in, where people end up getting into debt because they have not had that opportunity to find another job and the debt then keeps piling up. Their rent keeps becoming due, they need to get food on the table, there are transport costs, they may have a car, and it just keeps going on and on. You think about someone's life and how easy it is, if they were already on a low income, for them to end up in a debt situation.

I think that the government here has various options for recovering the costs of administrating bankruptcies and I do not think the current option that they have is the right one at all. I do think it is unfair. I think the recovery of a small amount of revenue for government should not come at the expense of some of the most desperate people in our country. That is really what we are talking about here and that is why I think this disallowance motion is really important.

In a sense, this new fee has the absurd effect of rendering some of those in financial hardship—that is, some of those debtors—as too poor to go bankrupt. It is a bit ironic, but that is really where they end up. I would think that a lot of them do not have access to a line of credit if they are declaring bankruptcy. They would be in a position where they would be compelled to pay a fee with funds derived from wherever else they have them. Obviously, for a lot of those people who are on very low incomes, the only area from which they could derive funds to pay such a fee would be their welfare payments. So, if they are paying this $120 fee from their welfare payments, how are they living? How are they providing themselves with food and ongoing needs such as shelter and the like? There are also charitable institutions. But, surely, we do not see the role of charitable institutions as one of providing those in need with money to pay a government fee. This is not the role of charitable institutions. Basically, they are the only two options that I can think of for people who are on very low incomes and who are in the situation of declaring bankruptcy. They would be the only two options that people would have to try and find the money to pay this absurd fee.

Senator Wright commented on discussions and so forth with the Attorney-General's Department, I think it was, and that there might be some movement in relation to this fee. The government might be reconsidering its options of how to recover such a fee. With whatever the government is going to be looking at, if that is a real outcome then it is fantastic; it is really good. It shows that this disallowance motion has certainly been worth its weight in gold in bringing about a change that will have an effect out there in the community for those people most in need.

We also need to consider this issue in terms of the financial hardship currently facing a number of people who are on low incomes. We have already outlined that people do not take lightly the idea of having to go down the voluntary bankruptcy path; but, at the same time, if they are now going to face cuts to basic welfare payments that they have had to sustain themselves when they have lost a job then how is this fair and how are they going to be able to get back on track? I am thinking here of the indexation of the pension and also of young people who are seeking Newstart. Those who lose their job will not be able to access a welfare payment. If they have already got some kind of debt that they have been unable to pay and then there is not even a welfare payment there to support them—the safety net that it is—then how are they going to get ahead and move on until the next job comes around the corner? This is reality for a lot of people. It is not a matter of someone just knocking on their door and offering them a new job. When you lose a job it does take time, often, in between jobs—before a new one comes around the corner. It is at this crucial point that people can fall off the edge in relation to their financial situation. They find themselves without any savings, living on a low income, having to pay rent, food and ongoing transport costs and the like and not being able to make ends meet.

Labor want to ensure that we have a safety net for people in this country, and that is why we have made our position very clear on the government's budget: it is a very unfair budget. Couple the budget with that fee for those people who have to make the really hard choice of declaring themselves bankrupt. It is just a ridiculous proposition to have someone too poor to declare themselves bankrupt because of a $120 fee that they have to pay.

Senator Wright also touched on the issue of cost-shifting to creditors or other agencies. This is another factor that the government needs to consider; it is another potential from this policy. It is one thing for governments to come forward with policy ideas to raise more revenue but they really need to think about who they are targeting. In this case, they are targeting some of the most vulnerable, lowest income Australians, who really deserve to be given a bit of support to get back on track so that they can again become contributors to our society, as much as they wanted to do in the first place. We support this motion.