Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

I table the explanatory memoranda relating to the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

BANKRUPTCY LEGISLATION AMENDMENT (SUPERANNUATION CONTRIBUTIONS) BILL 2006

The Bankruptcy Legislation Amendment (Superannuation Contributions) Bill 2006 will amend the Bankruptcy Act 1966 to provide that bankruptcy trustees can recover superannuation contributions made to defeat the claims of creditors.

These amendments respond to the High Court’s decision in Cook v Benson, the effect of which has been to make it very difficult for bankruptcy trustees to recover superannuation contributions made by a person in the lead up to bankruptcy, even where those contributions were made specifically with the intention to defeat creditors. This represents a significant threat to the integrity of the bankruptcy system because it means that a person facing bankruptcy can transfer assets into superannuation to ensure they are not available to pay creditors. It also means that superannuation assets are treated differently from other assets which would be available to the trustee. As jointly announced by the Attorney-General and Minister for Revenue and Assistant Treasurer on 27 July 2006, the amendments will apply to superannuation contributions made on or after 28 July 2006.

The amendments provide an appropriate balance between the need to encourage people to save for retirement and the need to protect creditors from unscrupulous debtors who can currently attempt to avoid paying their debts by converting wealth into superannuation in the lead up to bankruptcy. They will allow superannuation contributions to be recovered only where there has been deliberate action by the bankrupt to avoid paying creditors.

The amendments have been developed following extensive public consultation. The approach taken by these amendments avoids the complexity of earlier proposals and is consistent with the Government’s plan to simplify and streamline superannuation.

The amendments are based on section 121 of the Act which deals with transfers of property by a person who subsequently becomes bankrupt where the transfer was made with the intention to defeat creditors. The new provisions will ensure superannuation contributions made with the same intent are recoverable on the same basis as other transfers. They will apply to superannuation contributions made by the bankrupt for his or her own benefit or for the benefit of a third party. In addition, they will apply to contributions made by a third party for the bankrupt’s benefit where the bankrupt was complicit in an arrangement with that third party to defeat creditors. This may occur, for example, where the bankrupt had entered into a salary sacrifice arrangement with his or her employer to build up superannuation assets in the lead up to bankruptcy instead of other assets which would have been available to pay creditors.

In line with section 121, the new rules will allow the trustee to assume that superannuation contributions were made with the intention to defeat creditors where the bankrupt was insolvent at the time of making the contributions. The Court will also be empowered to consider the bankrupt’s history of making superannuation contributions in determining whether the requisite intention existed at the time. If the bankrupt had no history of making substantial superannuation contributions but made such contributions shortly before becoming bankrupt, this may indicate that the contributions were made to defeat creditors.

Where contributions are void under the new provisions, the Official Receiver will have the power to issue notices to the trustee of the superannuation plan requiring payments to be made to the bankruptcy trustee. These powers are already exercised by the Official Receiver under section 139ZQ of the Act in relation to other void transfers. Because there is a risk that the bankrupt may move money out of a superannuation plan before the trustee has finalised investigations and instigated recovery action, the trustee will also be able to request the Official Receiver to issue a superannuation account-freezing notice to prevent any dissipation of funds. There will be time limits on the effectiveness of these notices to ensure trustees do not unreasonably delay recovery action. The bill also makes it clear that the trustee of a superannuation plan who complies in good faith with a notice given by the Official Receiver is not exposed to any civil or criminal liability as a result of that compliance. Furthermore, the amendments provide that a superannuation fund will not have to repay any fees and charges associated with the contributions or any taxes it has paid in relation to the contributions.

The bill includes provisions allowing the Court to order payments to be made where the bankrupt has rolled-over the original contribution. This will ensure that a superannuation fund cannot be required to pay money which it no longer holds but will prevent an opportunity for bankrupts to avoid the operation of the new provisions.

The bill also contains amendments designed to protect certain types of rural grants in the event of the recipient’s bankruptcy. The Bankruptcy Act already protects certain types of grants (for example, grants pursuant to the Dairy Exit Program and the Farm Help Re-establishment Grant Scheme. Currently, the Act must be amended every time a new class of grant becomes available which should be exempted from a bankrupt’s divisible property. To avoid this, the bill will include a power to prescribe these grants in regulations. This means regulations can be made at the time a new class of grant is created, without having to wait for the Act to be amended.

Finally, the bill also includes some minor and technical amendments to improve the operation of the Bankruptcy Act.

I commend the bill.

STATUTE LAW REVISION BILL (No. 2) 2006

Statute Law Revision bills are simple but important tools to pursue more effective and accessible laws. The process of reviewing, correcting and updating the body of Commonwealth legislation is a function well executed by the Office of Parliamentary Counsel who prepares these bills. On occasion, scrutiny of the statute book extends beyond the correction of minor errors and the clearing away of obsolete Acts. This bill, for example, will ensure that our laws are contemporary by removing references to outdated expressions and gender-specific language.

The timely corrections and repeals effected by Statute Law Revision bills improve the quality and accuracy of Commonwealth legislation and facilitate the publication of consolidated versions of Acts.

The bill has five schedules. Schedule 1 amends minor and technical errors contained in 18 principal Acts, such as incorrect spelling, punctuation or numbering. Schedule 2 amends errors contained in 13 amending Acts. Many of these errors are misdescribed amendments that either incorrectly describe the text to be amended or specify the wrong location for the insertion of new text.

Schedule 3 repeals a total of 17 obsolete Acts. Part 1 proposes to repeal 15 Acts that are administered by the Minister for Transport and Regional Services. Part 2 proposes to repeal two Acts that are administered by the Minister for Industry, Tourism and Resources, and Part 3 proposes to remove references to the Acts that are repealed by Parts 1 and 2.

Schedule 4 repeals obsolete references to the out of date terms “official managers” and “official management” and Schedule 5 removes

gender-specific language from the Customs Act 1901.

There are various commencement dates for the provisions listed in Schedules 1 and 2. The effect of the commencement provisions is that the errors are taken to have been corrected immediately after the error was made. All other provisions commence on Royal Assent.

While none of the amendments proposed by the Schedules will alter the content of the law, the bill will improve the quality and public accessibility of Commonwealth legislation.

I commend the bill.

Ordered that further consideration of these bills be adjourned to the first day of the next period of sittings, in accordance with standing order 111.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.