Don Farrell (SA, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

I rise to speak on at the Bankruptcy Amendment (Debt Agreement Reform) Bill 2018. Labor supports this bill, which provides further regulation of the industry administering debt agreements. The bill amends the Bankruptcy Act 1966 by limiting the class of persons who can offer services as registered debt agreement to administrators, trustees or official trustees. Limiting who can be a debt agreement administrator by reference to schools and capabilities will provide an additional safeguard against sharp practice, which disproportionately affects disadvantaged, marginalised and vulnerable people who are at a higher risk of being damaged if exposed to unscrupulous or iniquitous practices.

The debt agreement to administration industry and any individuals who are administering their own agreement will be given nine months, following royal assent to this bill, to gain the necessary skills and effect transitional requirements. This provides creditors and debtors with the certainty they require to transition any existing arrangements.

After it was first introduced in the House of Representatives, Labor worked closely with governments to negotiate improvements to the original form of the bill. In doing so, Labor considered carefully the recommendations of the Senate Legal and Constitutional Affairs Legislation Committee. Labor supports the inclusion of a provision which requires debt agreement administrators to specify expressly in any debt agreement the expenses which may be charged by the administrator. The repayment of debt, often by disadvantaged people with limited financial literacy, should not be an exercise in profit gouging by debt agreement administrators. We support giving both debtors and creditors access to the debt agreement and administrator's proposed expenses so they assess the reasonableness of the expenses and, if necessary, seek independent financial or legal advice.

Labor supported in principle the setting of a cap on the percentage of debtors' after tax income that can be agreed to be paid in the repayment schedule of the debt agreement in the original form of the bill. To best achieve this, Labor supported the committee's recommendation that the original form of the bill be amended to require the minister to have regard to the cost of living for low-income households in setting the percentage cap. Similarly, Labor supported amendments to the original form of the bill to allow for debt agreements implemented under a three-year cap to be capable of being extended by up to an additional two years by agreement.

These amendments to the original bill are designed to ensure that where there is a substantial and unforeseen change in circumstances vulnerable people who are no longer able to complete their repayments over three years will have an opportunity to extend the repayment timeframe. In addition, in recognition of the fact that debtors with a family home stand to lose more under bankruptcy than other debtors, debtors with an interest in their principle place of residence will be able to propose a debt agreement for up to five years, instead of three years, as originally proposed by the government.

Labor welcomes the measures in schedule 1 that seek to limit the possibility of conflicts of interests and increased transparency of the corporate arrangements of companies and persons who offer services as registered debt agreement administrators, including the disclosure requirements for related entities.

Labor supports the measures in schedule 3 of the bill, which provide for more rigorous registration requirements, including that the inspector-general interview applicants after processing their paper applications and that the trustee or registered debt agreement administrator takes out professional indemnity and fidelity insurance. Labor also supports the other measures in schedule 3, which empower the inspector-general to obtain information from banks and financial institutions confirming whether or not a separate bank account is being maintained for the purpose of managing the debtor's repayments under the debt agreement. Labor will always support measures that require the proper discharge of statutory duties and safeguard vulnerable people. This is a good measure. It is aimed at preventing the misuse or misappropriation of money held on trust to pay down the debt by registered debt agreement administrators or official trustees. In addition to the substantive amendments referred to above, a number of other minor amendments have been made to the original form of the bill. Those amendments serve to clarify the operation of the bill and ensure that it is consistent with other legislation. Labor also supports these amendments. I commend the bill to the Senate.