House debates

Tuesday, 28 March 2006

Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006

Second Reading

Debate resumed from 16 February, on motion by Mr Ruddock:

That this bill be now read a second time.

5:52 pm

Photo of Nicola RoxonNicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | | Hansard source

The Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006 changes the manner in which fees and charges are set for services provided by the Insolvency and Trustee Service Australia, otherwise known as ITSA. Fees and charges for ITSA services are currently contained in the Bankruptcy Act and bankruptcy regulations.

Photo of Peter SlipperPeter Slipper (Fisher, Liberal Party) Share this | | Hansard source

The clock shows that she has 59 minutes to speak.

Photo of Nicola RoxonNicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | | Hansard source

It is very difficult. The member for Fisher prides himself on this interactive debate.

Photo of Alex SomlyayAlex Somlyay (Fairfax, Liberal Party) Share this | | Hansard source

The member for Fisher will allow the member for Gellibrand to be heard in silence.

Photo of Nicola RoxonNicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | | Hansard source

Even with his best endeavours the member for Fisher would find it hard to make this bill an exceptionally interesting one. But, if the member for Fisher can intervene sufficiently for me to fulfil 59 minutes—

Photo of Peter SlipperPeter Slipper (Fisher, Liberal Party) Share this | | Hansard source

You do have 59 minutes and 38 seconds.

Photo of Nicola RoxonNicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | | Hansard source

and 38 seconds, that is fine. I know that the member for Flinders is keen to make his contribution too. No doubt he will rise to the challenge—

Photo of Ian CausleyIan Causley (Page, Deputy-Speaker) Share this | | Hansard source

Order! There is a technical problem with the clock.

Photo of Nicola RoxonNicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | | Hansard source

of his old debating days and fill an hour with great ease. We will no doubt have traversed every individual’s bankruptcy application by the time we get through those. I might say for the benefit of the timekeepers that it is most unlikely that I will be speaking for 30 minutes let alone the 60 minutes that I have been given. So I do not think there is any need to worry about the technical problems we seem to be having in the chamber.

This bill relates to a specialised area. When I made the joke in passing with the member for Fisher that it might be hard to speak on it for such an extended time, that was not to downplay the importance of making some of these changes and ensuring that our insolvency and trustee system works properly and, of course, that the fees and charges are changed by virtue of this bill in an appropriate way.

The fees and charges that are made for ITSA services are currently contained in the Bankruptcy Act and in bankruptcy regulations. Under the proposed new framework that is part of this bill the fees and charges will be determined by the Attorney-General through legislative instrument. We believe that this is an appropriate change given that ITSA is moving to a cost recovery model of funding. But of course under any cost recovery model it is important to ensure that the fees and charges are set at a cost recovery point and do not increase. If we do not make sure that this is the case, we will find that what should be cost recovery becomes some 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, importantly, still provides parliament with a mechanism to disallow any increase in fees, so it does not entail a substantial loss of scrutiny. I would like to take the opportunity in speaking in the chamber in this debate to encourage and invite insolvency practitioners, small businesses and other stakeholders to ensure that they contact us if they ever feel that ITSA’s fees and charges are spiralling out of control. We will be keen to take up this issue in this place at a later time, when each legislative instrument is before the parliament, if we find that ITSA, or the amount of fees and charges, is moving beyond cost recovery to something which is more aggressive.

It is of course one of parliament’s most ancient and important tasks to prevent unjustified imposts being imposed by the government. Labor are committed to our job of holding the government to account for any attempt at backdoor taxation. We are comfortable with the model that is proposed. We think that it is appropriate that the legislative instruments, obviously, will be disallowable in the parliament. And I use this opportunity to encourage people to come forward if they ever feel in the future that these fees and charges are getting out of sync with the cost recovery model. They should make sure that they talk to us and use the parliament and their representatives to ensure that these rates are being set at an appropriate level.

ITSA has been moving to a cost recovery process for several years now, and the details were included in the papers for the 2005-06 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. The bill will allow the following fees and charges to be set by the Attorney-General: fees to the official trustee for acting as 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 or debtors of a bankrupt; fees associated with registration as a registered trustee; fees relating to the National Personal Insolvency Index; and the rate at which realisation charge is payable. The realisation charge is a levy imposed on trustees. We understand that 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, and we urge the government to make sure that it continues to involve stakeholders in these processes. Labor supports the shift to cost recovery in 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 the stakeholders to make sure that the government engages in genuine consultation and to hold the government to account for any unjustifiable increases if we are in that position in the future.

In addition to providing the framework for the transition to cost recovery, the bill also makes two other changes: a change in the period for payment of realisation charges and interest charges from twice yearly to annually, and 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 are pleased to offer our support for the bill.

5:59 pm

Photo of Greg HuntGreg Hunt (Flinders, Liberal Party, Parliamentary Secretary to the Minister for the Environment and Heritage) Share this | | Hansard source

I rise to speak on the Bankruptcy Legislation Amendment (Fees and Charges) Bill 2006. I thank the member for Gellibrand for her characteristically eloquent contribution, although it was an uncharacteristically uncharitable contribution when she described the bill as being less than riveting. It does in many ways represent an important development, and I am sure that practitioners in the field will be enthused, excited and enlightened by its introduction and passage.

In short, the bill facilitates the implementation of the government’s cost recovery policy in providing personal insolvency services. It comes as a result of extensive consultation and as a result of a cost recovery review. It is very significant to note that further consultations will occur as the bill is implemented and as part of an ongoing structure of assessment, review and refinement. So there has been consultation and there will continue to be consultation.

In particular, the amendments proposed in this bill will allow the government to progress financial policy through the creation of legislative instruments at the appropriate time. In practice, this will provide a flexible and accountable way of reflecting the costs of providing personal insolvency services to the community. In addition, the bill contains other amendments which will enhance the delivery of personal insolvency services, including effective electronic service delivery, and there are some minor technical amendments to the Bankruptcy Act 1966.

The member for Gellibrand raised one clear point—the notion that the provisions in the bill should apply only to the notion of cost recovery and that they should not form the basis for the levying of an effective tax by stealth. We on the government side absolutely agree. We believe that there are adequate safeguards. We will oversee and enforce them rigorously, and without fear or favour. So the point that has been made is legitimate and fair: this should be a cost recovery measure; cost recovery should be full but it should not be excessive. We accept that proposition. It underpins the very philosophy with which we are proceeding. We have made sure that there are adequate safeguards in place. We will oversee them, and we will enforce them rigorously. So I accept those points that were made by the member for Gellibrand.

I thank both the member for Gellibrand and other members who have had input into the bill, not just through the course of the debate but through the course of preparation. I also thank all of those members of the financial services community who have had input into the drafting and preparation of the bill. In particular, I thank the officers of the Attorney-General’s Department for their role in helping to develop this legislation. I thank all of those involved in the preparation of the bill and in the debate, and I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.