As a senior member of a busy specialist insolvency firm, I am a regular user of the insolvency legislation. Last year new legislation was implemented in the guise of insolvency law reform. Apparently it represented 10% of all Federal legislation passed that year. There is a lot of it.

Last week I had to hunt down the meaning of a particular provision. I lost count, but it must have required twelve or more different cross references to determine the meaning of the relevant provision i.e. it required careful examination of more than twelve other provisions, including definitions, one of which was included in a different Act altogether, to determine the meaning of the original provision.

Such excursions are common.

Contributing to the sheer volume of the legislation is the enormous amount of duplication. There are numerous examples of virtually identical provisions for each of the different formal insolvency processes.

The legislation has all the hallmarks of the proverbial camel that could have been designed by committee.

This got me wondering. After all, you would have to try really hard to make it this complicated. What is the real motivation here? How many grads were co-opted on to the committee?

20% of Australia’s workforce is employed in the public sector. In New Zealand, where the insolvency legislation is significantly less complex, it is only 13%.

Is this an example of how successive Governments have imagined they are usefully creating jobs and growth?

Incidentally, in my opinion, this massive amount of new legislation adds much more in the way of bureaucratic burden than any gains that may come from practitioner regulation or creditor involvement, but that is another story.

Instead of focusing on volume, the legislature would do well to concentrate on quality. Instead of wasting everybody’s time with a virtually continuous application of sticking plasters, it should overhaul the whole of the legislation starting from first principles. The result would cut in half the unwieldly volume of the current dog’s breakfast.

David Blanchett
24 January 2018