The Labor Party has signalled its support for the federal government’s proposed changes to Australia’s strict insolvency laws. Carissa Simons gives an update on its progress.
The Turnbull Government’s insolvency reforms have passed the House of Representatives with the tentative support of the Labor Opposition.
Speaking to the Bill in the Lower House, Shadow Treasurer Chris Bowen said the ALP recognised and acknowledged the “intent of this legislation to ensure that directors who honestly and diligently seek to turn around a business are not penalised from doing so.” He went on say, “when a struggling business is successfully turned around, it is good for everyone, especially employees and creditors.”
However, the Opposition flagged that it would refer the legislation to a Senate inquiry due to some concerns including those raised by the Australian Shareholders’ Association, and a desire to explore the differences between the Productivity Commission-recommended model and the one that the government has proposed following extensive consultation.
Mr Bowen also thanked the AICD for briefing himself and various colleagues on the content of the Bill, the need for a safe harbour for directors and the protections contained in the bill for employees and creditors.
AICD will be participating in the Senate Inquiry, for which submissions close on 12 July. Members with an interest in the reforms, and those with personal experience of the need for reform have been encouraged to participate in the inquiry or get in contact with the AICD’s Advocacy team via Matt McGirr: firstname.lastname@example.org.
Once the Senate Inquiry concludes – the Bill will be put to the Senate for a vote. We expect this to take place in August or early September. The AICD will keep members informed as the legislation progresses.
AICD Policy Adviser, Matthew McGirr, explains what safe harbour reform entails and what it would mean for companies.