Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the report.

I rise to take note of the Corporate insolvency in Australia report, dated July 2023, which was presented out of sittings. In the absence of the Chair of the Parliamentary Joint Committee on Corporations and Financial Services, Senator O'Neill, I'd like to personally thank her for her excellent chairing of the inquiry into Australia's corporate insolvency laws. This is a substantial body of work—hundreds of pages. It's quality research into the current status of Australia's insolvency laws, and I'm so pleased to have had the opportunity to participate in this inquiry under Senator O'Neill's chairing.

I'm very pleased that the committee could come together and make a number of recommendations on a unanimous basis. In fact, the report is prepared on a unanimous basis; there's no dissenting report and there are no additional comments. This is the work of committee. I thank all committee colleagues. I would also like to thank all those organisations, individuals, businesses, unions, professional organisations and government agencies who made submissions to the inquiry. The content and rigour of those submissions were absolutely outstanding. They allowed the committee to carefully consider the many issues in this space. I also thank all the members of the secretariat for their wonderful work in supporting the preparation of this material. This maybe should be considered the magnus opus of the parliamentary joint select committee. It's such a considerable body of work, and I'm sure it's going to be referred to many years into the future.

I'd like to speak briefly on some of the recommendations. Recommendation 1 reads:

The committee recommends that as soon as practicable the government commission a comprehensive and independent review of Australia's insolvency law, encompassing both corporate and personal insolvency—

That's the law under the Corporations Act and also the law under the Bankruptcy Act—

The committee is also recommending that the government progress several other near-term actions as identified in the executive summary.

From my perspective, one of the most pleasing things was that, whilst the committee identified the need—post the Harmer report, which occurred more than three decades ago—for an overarching independent review of Australia's insolvency regime, we also identified that, notwithstanding that an independent inquiry needs to be set up in the longer term to look at these matters, there are a number of things we can do in the short term to address some of the issues raised.

I do commend Senator O'Neill with respect to her collaborative approach on that, because I think that, whatever side of this chamber you're on, there's always that tension between reviews of laws, whether or not you should wait for a comprehensive review to deal with everything in the area or whether there are things that you can do in the short term—quick fixes and low-hanging fruit to be plucked. We've identified some of that in the course of this inquiry. On page xxiii of the report, there's a very good table that's been prepared on near-term actions which could be acted on in the short term and then issues which have been identified for the comprehensive review over the longer term, which will take, no doubt, a number of years to complete.

I want to speak to some of those near-term actions and the recommendations which we hope on a unanimous basis the government will give careful consideration to in the short term. The first is recommendation 7 in relation to recommendations which have previously been made about the safe-harbour rules introduced in the Corporations Act. There was a review undertaken on those protections for companies in or approaching financial distress, and we suggest that the government should give careful consideration to implementing all of the recommendations from that safe-harbour review.

Next, there were two processes implemented in the times of COVID: the small business restructuring pathway and the simplified liquidation pathway. They were intended to make processes to restructure or potentially go into liquidation far more efficient for smaller businesses facing financial difficulties. One of the observations made by the committee was that, when those processes were first mooted by the previous government—of which I was a member—there were suggestions made and feedback given by experts across the board that there needed to be tweaks to those systems to make them more effective. Those suggestions, which weren't necessarily acted upon as they should have been, still apply. Hopefully, there can be changes to those systems and those expedited pathways to make them more fit for purpose.

Recommendation 15 made short-term recommendations:

The committee recommends that the comprehensive review include consideration of the nature and extent of the harm posed by ‘untrustworthy pre-insolvency advisors’, and whether further regulation or enforcement measures are needed to address this issue. The committee further recommends that in the interim…

That means 'in the short term'. This is a crying need. It goes on:

…the government take prompt action to improve the regulation and active enforcement of pre-insolvency advisers.

There are advisers out there at the moment in the community who are pitching themselves to small businesses in distress, and they are giving them unethical advice which will not help those small businesses and their owners in either the medium or long term. We need to maximise our efforts to weed those people out of the system, because they are causing harm to people in positions of financial vulnerability. We need to do something to protect those people.

The next recommendation I wanted to refer to was in relation to the Personal Property Securities Act 2009. There was a review of this act undertaken back in 2015, about five years after the act was first introduced in 2009. Now we are sitting here in 2023. Obviously, my side of politics was in government for the majority of that time, but there has still been no government response to that review, notwithstanding that it was conducted in 2015. There's still no government response. It made a lot of recommendations. Some could be implemented in the short term, and some fixes to our personal property securities regime should be done to make it fairer and more efficient.

So I encourage the government to have a look at that review. I think all of us should reflect on the fact that, if we do a review of legislation, it's incumbent upon us, whether at the time we're in government or opposition, to make sure that that review is considered by government and that the recommendations are acted upon. That's why we as a chamber so often advocate for these sorts of reviews—to make sure that the unintended consequences et cetera can be addressed. So I do encourage the government to look at that review.

Lastly, there was a lot of evidence received in relation to trusts and how our insolvency system deals with trusts. It is a very complicated area, and I'm not proposing to go into it in depth. Suffice to say that, when the Harmer review of our insolvency laws was undertaken approximately 30 years ago, a number of recommendations were made, and still those recommendations, in large part, have not been acted upon. Again, this is an area where a need for reform was addressed decades ago, and we haven't had the reform. So there needs to be a fix in relation to how our corporate insolvency and personal insolvency laws work in the context of trusts.

There are also some areas of quick reform which are detailed in the report which I think the government could act upon and which this chamber could consider, potentially on a unanimous basis, to save unnecessary bureaucratic processes which are using funds which were in insolvent estates which could be better distributed to creditors. I seek leave to continue my remarks later.

Leave granted; debate adjourned.