Paul Fletcher (Bradfield, Liberal Party, Shadow Minister for Government Services and the Digital Economy) Share this | Hansard source

I rise to speak on the Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023. The coalition will be supporting this bill and, like the other urgent bill introduced into the House this week, the Crimes and Other Legislation Amendment (Omnibus No. 2) Bill 2023, we will facilitate its passage through the House.

This bill is intended to preserve the status quo. It addresses a technical issue concerning the dates on which a person is treated as being bankrupt under the law. In order to receive the benefits of bankruptcy, a person must file a document called 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 person's statement of affairs starts the clock on that person's bankruptcy. Under section 140 of the Bankruptcy Act, the person will be discharged from bankruptcy three years after the statement of affairs is filed. Where a person has a status as an undischarged bankrupt, important legal consequences 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 creditors. The person only gains the legal protections that go with bankruptcy once that period has commenced, and the trustee only has legal powers to deal with the person's property until it ends. In other words, the dates when a person's period of bankruptcy start and finish are critical.

There are technical and process issues that have important implications for the dates over which a person is bankrupt. Under section 149 of the Bankruptcy Act, the period of bankruptcy will continue for three years and one day after the statement of affairs is filed. The longstanding business practice of the Australian Financial Security Authority, or AFSA, and its predecessors has been to treat a person's statement of affairs as having been filed on the date it is accepted. This allows for back-and-forth between AFSA and the individual concerned to ensure the statement of affairs is complete and adequate. Once AFSA accepts a person's statement of affairs, it records that date on the National Personal Insolvency Index, at which point the period of bankruptcy is triggered. This is a sensible approach that has been widely accepted amongst the community.

What this bill does is ensure 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 a statement of affairs is the date on which it has been accepted by AFSA. This affirms the longstanding practice of AFSA and creates certainty for users of the bankruptcy system. It applies both prospectively and retrospectively to preserve the status quo.

Technically speaking, the amendments ensure the bankruptcy period of those who are or have been bankrupt is consistent with the dates recorded by the official receiver prior to commencement in 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 bankrupted persons, trustees and others.

There is a carve-out in relation to criminal law: retrospective validation does not apply to criminal proceedings. However, the coalition accepts the government's assurances that this carve-out simply means a person who believes they were wrongly 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.

This bill provides certainty and stability to Australia's bankruptcy system, and I commend it to the House.

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