Almost one year later, the Government has yet to initiate law reform based on the PJC’s recommendations.

Australia is falling behind leading economies arising from the inability to consider the recommendations, or to include it on the Government’s agenda.

Without doubt, the PJC Inquiry into the effectiveness of Australia’s corporate insolvency laws to protect and maximise value for the benefit of all interested parties and the economy was the best, of many, insolvency inquires in the last decade.

Kudos to PJC Inquiry Chair, Senator Deborah O’Neill. Senator O’Neill quickly became a subject matter expert, and is and remains a very impressive and effective communicator and Chair.

Parliamentary Joint Committee Inquiry on Corporations and Financial Services (PJC)

The PJC conducted an inquiry into Australia’s corporate insolvency laws, culminating in a report with several key recommendations. The overarching theme was the need for a comprehensive review to harmonise and simplify insolvency law, addressing both corporate and personal insolvency systems.

I co-authored submissions to PJC, appeared before the PJC, and later convened a panel discussion with participants, including Senator O’Neill, and Federal Ombudsman Bruce Billson, Australian Small Business and Family Enterprise Ombudsman.

On 12 July 2023, the PJC released a Report with 28 recommendations to government.

Lack of Government Response

The government has yet to initiate law reform based on the PJC’s recommendations.

There were 28 recommendations, including:

1. Comprehensive Review: The government should commission an independent review of insolvency laws, focusing on their principles, effectiveness, and interaction between personal and corporate systems. This review should report its findings within three years​.
2. Immediate Actions: Several reforms should be advanced prior to the comprehensive review, including implementing the recommendations from the 2021 Safe Harbour Review and changes to small business restructuring and simplified liquidation pathways​.
3. Data Collection and Analysis: The Australian Securities and Investments Commission (ASIC) should collect high-quality, granular data on insolvency and provide timely access to this data for better oversight and policy formulation​.
4. Regulation of Pre-Insolvency Advisors: Improved regulation and enforcement of pre-insolvency advisors are necessary to mitigate potential harm from untrustworthy advisors​.
5. Support for Liquidators: Address the funding issues related to the significant amount of unfunded public interest work performed by liquidators, estimated to cost around $100 million annually. This includes potential changes to the Assetless Administration Fund and considering the establishment of a Public Interest Administration Fund​.
6. Inclusion and Diversity: Reform the experience requirements for liquidators to address gender imbalances and broader diversity issues within the profession​.
7. Corporate Insolvency Pathways: Review and potentially reform voluntary administration and members’ voluntary liquidation processes to ensure they are efficient and effective​.
8. Employee Protections: Ensure that employees’ entitlements are protected and misuse of schemes like the Fair Entitlements Guarantee (FEG) is prevented​.

These recommendations aim to create a more streamlined, transparent, and fair insolvency system that better serves all stakeholders involved​.

More change is needed, and soon. The Government, and also, Treasury, should give priority to facilitating discussion on implementing PJC recommendations.

Our economy, including small businesses will function better with change.