Page 3201 - Week 09 - Tuesday, 19 August 2008
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MR HARGREAVES (Brindabella—Minister for Territory and Municipal Services, Minister for Housing, Minister for Multicultural Affairs) (12.10): The government will not be supporting the amendment.
Amendment negatived.
MR SESELJA (Molonglo—Leader of the Opposition) (12.10): I move amendment No 3 circulated in my name [see schedule 3 at page 3294].
This amendment removes the power of the housing commissioner to appoint an administrator solely for the purpose of winding up the provider and distributing its assets. The government’s proposed section 25S (2) (b) is sufficient. Under that provision there would be scope for an administrator to fix any poor management decisions and trade an organisation out of trouble. By contrast, 25S (2) (c) would allow the commissioner to prejudge an audit by an administrator and would preclude any option of trading a body back into settled waters.
The Corporations Law includes very detailed and well worked out arrangements to cover all aspects of insolvency and wind-up, including appointment of administrators for wind-up. By contrast, this provision is just 13 words. In short, it is a very loose arrangement. The priority of creditors should be dealt with by an independent process, but under this bill the government can be just one of several creditors and yet may take total control over appointment of an administrator.
The independence of the process is thrown into question if the government appoints an administrator to wind up an organisation, especially if the government is also a major creditor and a rival to other creditors. There is a risk that the commissioner may have a favoured firm for provision of administration services. We have seen many times that this government likes sole-source tenders, and small agencies in a town can tend to choose the same organisations.
If one administrator is simultaneously controlling the operations of more than one housing provider, they may have a conflict of interest. The government itself has a conflict of interest. Community providers tell me that they run cheaper operations than Housing ACT does. The government disputes this, but there can be no doubt that there are potential issues of competition between government and the non-government sector. Therefore there is potential conflict between the government’s role as regulator and its role as a service provider in the market.
Given the potential conflict, I would prefer that the decision to wind up a provider was made at arm’s length from government. It would be logical for the decision to initiate a wind-up to be made by the administrator or by creditors who will be pre-empting the facts for the commissioner to decide upon a wind-up prior to the appointment of an administrator, prior to an independent assessment of the trading position of the organisation and prior to any consultation with creditors.
The bill does not have a focus on options for stay of liquidation, removal from liquidation to voluntary administration or moving back to solvency. The bill provides
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