Philip Ruddock (Berowra, Liberal Party, Attorney-General) Share this | Hansard source

I thank those members who have spoken in this debate: the member for Gellibrand, the member for Moncrieff, the member for Rankin and, latterly, the member for Reid. For the record, may I say that the substantial issue raised by the member for Gellibrand was the progress of the Bankruptcy Legislation Amendment (Anti-avoidance) Bill 2005. In the 2½ years that I have been Attorney-General, I have been always anxious to see these issues progressed as expeditiously as possible. I have no wish to see people being able to engineer their affairs in a way which enables them to avoid proper obligations and still to benefit from their assets by using insolvency. To the extent that some members of the legal profession, who ought to set a higher standard, were known to be doing that, I have always been anxious to see those issues addressed. I find it extraordinary that such activity can go on among people who are officers of the court and who have a particular obligation to uphold the rule of law and that they would manipulate these issues in the way in which they did.

So I have been anxious to have these issues dealt with as expeditiously as possible, as has the government. However, we have also wanted to ensure that there are not unintended consequences. I would have thought the member for Gellibrand would have thanked me for ensuring that the House of Representatives Standing Committee on Legal and Constitutional Affairs had an opportunity to contribute to that discussion. It was as a result of committee deliberations that the bill was amended further and a high level of consultation has taken place in relation to that process.

It is in that context that, in closing this debate, I emphasise that this bill is about strengthening the existing anti-avoidance provisions in the Bankruptcy Act 1966. By increasing the time limits for the clawback provisions where the transfer was to, or the property was held in the name of, a related entity, these changes will make it harder for bankrupts to deliberately avoid these provisions in the lead-up to bankruptcy by off-loading assets to family members. It is in this context again that I note that further changes will mean that bankrupts who fail to keep proper books, accounts and records will be presumed to be insolvent for the purposes of the clawback provisions. That change acknowledges that, if a bankrupt is unable to produce books and records explaining their financial position at a particular time, it would be reasonable to allow the trustee to presume they were insolvent at that time.

Similarly, the application of division 4A of part VI of the act to natural persons will further protect the bankruptcy system from abuse by allowing creditors to access the bankrupt’s wealth that has been deliberately diverted in the lead-up to bankruptcy. Pursuant to these changes, the court may make orders in relation to the property or money of a natural person where, during the period of up to five years prior to the bankruptcy: the person acquired an estate in property as a direct or indirect result of financial contributions made by the bankrupt during that period, or the value of the person’s interest in particular property increased as a direct or indirect result of financial contributions made by the bankrupt during the period; and the bankrupt used or derived, whether directly or indirectly, a benefit from the property during the relevant period.

The amendments relating to transcripts and notes from examinations under sections 77C and 81 will mean that these will be able to be used in proceedings under the act, regardless of whether the person examined is a party to the proceedings. The amendment will assist trustees, particularly in relation to proceedings to recover property for the benefit of creditors.

As I indicated earlier, the amendments to be made by this bill were the subject of very extensive public consultation. The package of reforms is based upon suggestions from stakeholders. The changes strike the right balance between the rights of individuals to organise their affairs as they see fit and the rights of creditors to be paid. More importantly, the amendments contained in this bill will ensure that our bankruptcy system is safeguarded from deliberate abuse by bankrupts. I do not apologise for the efforts to get it right and I am grateful that this chamber is now going to give it expeditious consideration and that the opposition has indicated its support for the measure. I commend the bill to the chamber.

Question agreed to.

Bill read a second time.

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