The Hon Andrew Leigh MP
Assistant Minister for Productivity, Competition, Charities and Treasury
Credit Where It’s Due: Insolvency, Trust and Economic Dynamism
Australian Restructuring Insolvency and Turnaround Association National Conference
Gold Coast
Friday, 19 June 2026
I acknowledge the Yugambeh people, traditional custodians of the land on which we meet, and pay my respects to Elders past and present. I also acknowledge any First Nations people with us today.
Thank you to the Australian Restructuring Insolvency and Turnaround Association for the invitation to join you.
This is a room that sees the economy from a particular angle. Economists tend to see businesses as dots on a chart. Government departments might see them as ABNs, PAYG obligations and line items in national accounts. Consumers see them as the café downstairs, the builder next door or the app that either works beautifully or ruins a Saturday afternoon.
You see them when the numbers no longer add up.
That gives this profession a rare kind of knowledge. You see the spreadsheets, the security interests, the family guarantees and the conversations that begin with someone saying: ‘I thought we had more time’.
You also see what happens when the system works. A viable business can be restructured. A creditor can get a fairer return. A debtor can understand their obligations. A fraud can be stopped before it corrodes confidence. A person whose life has been knocked sideways can regain a place in the economy.
That is why insolvency deserves to be understood as part of Australia’s economic infrastructure.
We usually reserve that phrase for ports, roads, railways, broadband and electricity grids. But there is also institutional infrastructure: the courts, the payments system, the register of companies, the tax system, the credit system and the insolvency system.
When institutional infrastructure works, most people scarcely notice it. When it fails, everyone pays attention. Often with lawyers.
The insolvency system is one of the mechanisms that allows a market economy to take risk without turning every failure into a social disaster. It helps people borrow, lend, invest and build because they know there is an orderly way through financial distress. It helps capital move from less productive uses to more productive ones. It helps workers, suppliers, landlords and lenders understand where they stand.
For a dynamic economy, entry and exit both count. A country that makes it easy to start businesses and hard to close them is a bit like a hotel with a grand marble lobby and bricked-up fire exits. It may look impressive at the front desk. It will function poorly under pressure.
Last month, the Albanese Government asked the Productivity Commission to examine regulatory barriers to business dynamism. That inquiry will look across the business life cycle: entry, expansion, restructuring and exit. It will consider regulatory and administrative burdens, access to capital markets, business registration, licensing, and the design, operation and integrity of corporate and personal insolvency frameworks. If you have strong views on these issues, I encourage you to make a submission at pc.gov.au before 3 July.
The inquiry is deliberately broader than insolvency alone, since there is value in placing insolvency inside the wider story of economic renewal.
Because the insolvency stage is connected to every other stage.
It affects whether an entrepreneur takes the first step. It affects how creditors price risk. It affects how a director thinks about restructuring. It affects whether a small business owner facing failure gets advice early or waits until the letters pile up and the phone becomes something to avoid.
A productive economy relies on constant renewal. New firms need to enter. Efficient firms need to expand. Businesses that can recover need room to restructure. Businesses that have reached the end need an orderly exit.
That final phrase, ‘orderly exit’, sounds bloodless. In practice, it can mean a parent’s second mortgage, an apprentice’s last pay cheque, a supplier’s unpaid invoice and a director’s sense of identity. The human stakes are real. So are the economic ones.
The history of insolvency law tells us how far we have come.
In some ancient societies, debtors were treated with a brutality that now sounds almost theatrical (Edelman, Meehan and Cheung 2019). In Athens before Solon’s reforms, debt could lead to enslavement. Early Roman law was scarcely gentler: failure to pay could mean imprisonment, enslavement or worse. One grim provision was said to allow creditors to divide up the debtor’s body. Whether that was literal law or legal theatre, it was an arresting reminder that the Romans had a high-stakes approach to debt recovery.
But Roman law also began to develop a more recognisable idea: that an honest debtor might surrender their property to creditors and gain protection from further punishment. That was an early ancestor of bankruptcy – the notion that impossible debt should have a legal exit, rather than becoming a life sentence.
English law took another step. The first English bankruptcy statute in 1542 empowered the Lord Chancellor and various Privy Councillors to imprison debtors and distribute their assets. It was still harsh, but it contained a principle that remains central today: orderly distribution among creditors. Discharge first appeared in English law in 1705, and by the nineteenth century, reforms had expanded court supervision and curtailed imprisonment for debt.
This evolution was driven partly by economics. As trade expanded, societies needed credit. As credit expanded, societies needed rules for failure. If every commercial risk carried the possibility of imprisonment, enslavement or dismemberment, capital markets had a fairly serious customer acquisition problem.
Debt gradually came to be seen less as a moral stain and more as a commercial reality. Credit became part of public finance, entrepreneurialism, private investment and international trade. Bankruptcy law moved from punishment towards fairness and renewal.
The corporate form also changed the story. The law came to recognise certain bodies that could own property, sue and be sued, and outlive their members. Joint-stock enterprise helped pool capital; limited liability made investment less terrifying. And once companies could live beyond their founders, the law needed rules for how they could die.
Australia inherited much from the English model. After Federation, the Constitution gave the Commonwealth powers relevant to insolvency and corporations, but corporate regulation remained largely state-based for much of the twentieth century. The Hawke Government’s Corporations Act 1989 was a significant move towards national consistency. Later referrals of power from the states enabled the Corporations Act 2001, giving Australia the national corporations and insolvency scheme that governs companies today.
This history is more than a lawyer’s family tree. It reminds us that insolvency law changes because the economy changes.
A system designed for merchants with ledgers and ships has to adapt to an economy of software, data, platforms, intellectual property, family trusts, personal guarantees and small businesses whose personal and corporate finances are closely intertwined.
Modern insolvency should encourage business formation. It should treat creditors consistently. It should protect the system from misconduct. It should give people a realistic pathway back when life, luck, markets or judgement turn against them.
That requires laws that are comprehensible, proportionate and coherent.
It also requires culture.
Trust in insolvency is created in legislation, tested in administration and sustained by the profession.
Most practitioners do their work with care and integrity. They deal with people in distress, creditors with legitimate claims, employees seeking certainty, and courts expecting candour. That is difficult work. It is rarely the stuff of Matlock, Suits or Rake. Insolvency has fewer dramatic confessions and more asset schedules. I appreciate the skill it requires.
But confidence is fragile. A small number of bad actors can impose costs on everyone else. When creditor meetings are manipulated, when false debts are used to shape voting outcomes, when proposals obscure rather than reveal the true financial position, the system becomes less trusted. The price of that distrust is paid by honest practitioners, responsible creditors and people who need the system to work.
That is why collective stewardship is central.
Government has a role. Regulators have a role. Courts have a role. Professional bodies such as the Australian Restructuring Insolvency and Turnaround Association have a role. Practitioners have a role.
The phrase ‘Officers of the Court’ is a serious one. It means that practitioners carry duties that go beyond the interests of the loudest creditor, the most anxious debtor or the most creative adviser in the room. Registered trustees and personal insolvency firms sit inside a system that depends on integrity. You administer law in circumstances where people are often frightened, angry or exhausted.
At its best, the profession turns distress into process. It takes something chaotic and makes it legible. It gives people rules, timeframes, obligations and rights.
That is a public function as well as a professional service.
The Australian Financial Security Authority has emphasised the same idea in its regulatory approach. Chief Executive Tim Beresford has spoken about collective stewardship: a strong personal insolvency system is one in which culture and regulation support confidence in the system and the flow of credit in the economy (Beresford 2026).
Good culture reduces the need for heavy compliance. Bad culture invites it. That principle applies across the economy. A system with strong norms can move faster because participants trust one another. A system with weak norms becomes slower, more expensive and more legalistic.
The best regulation is often the regulation that responsible conduct makes easier.
That brings me to personal insolvency reform.
Our Government’s four-part reform package is aimed at a more equitable, balanced, modern and humane personal insolvency framework.
First, it will increase the threshold for involuntary bankruptcy. The current threshold has not kept pace with changes in credit markets and the cost of living. Bankruptcy is a serious legal status with serious consequences. It should be available where necessary, but used proportionately.
Second, it gives debtors more time to respond to bankruptcy notices. Financial distress can make ordinary administration hard. People miss letters, avoid calls and delay opening documents. That is a poor coping strategy, but a common human one. More time can allow for advice, negotiation and settlement before formal bankruptcy becomes the path.
Third, the package removes the proposal or acceptance of a debt agreement as an act of bankruptcy. Trying to deal with unmanageable debt should not itself create a trapdoor into bankruptcy. Early engagement should be encouraged.
Fourth, it reduces the default period of listing on the National Personal Insolvency Index to seven years. Transparency has value, but permanent shadowing can hold people back from housing, employment and credit long after the administration has done its work.
I acknowledge the role of the former Attorney‑General, Mark Dreyfus, in laying the groundwork for these reforms.
Together, these reforms reflect a simple principle: accountability and renewal can coexist.
This is not about weakening obligations. Creditors deserve fair treatment. The integrity of the system must be protected. Misconduct should be pursued. But where a person is trying to deal honestly with financial distress, the law should support resolution rather than deepen exclusion.
That same balance underpins the Australian Financial Security Authority’s vulnerability strategy.
Insolvency often arrives with vulnerability attached. People may be experiencing illness, family violence, mental stress, language barriers, cognitive impairment, housing insecurity or business failure. Some creditors can also be vulnerable. A small supplier owed money by a failed business may be carrying payroll obligations and a mortgage of their own.
Supporting people experiencing vulnerability does not mean going soft. It means helping them understand the system well enough to meet their obligations and exercise their rights.
A debtor who cannot understand correspondence cannot comply with it. A bankrupt who is too overwhelmed to engage may end up making the administration longer and more costly. A creditor who does not understand the process may miss the chance to participate effectively.
Good vulnerability practice is therefore good system practice.
It means plain language. It means appropriate referrals. It means flexibility where legislation permits. It means recognising trauma without turning practitioners into counsellors. It means understanding that a person in crisis may need a path into compliance rather than a lecture about compliance.
As good insolvency professionals know, empathy can improve administration. Clearer communication can improve returns. Better early engagement can reduce disputes.
Humanity and efficiency are sometimes presented as opposites. In insolvency, they are complements.
The Personal Property Securities Register provides another example of infrastructure that works best when it is accurate and current.
The Personal Property Securities Register underpins secured lending and commercial transactions across the economy. It helps lenders manage risk, businesses access finance and buyers check whether assets are encumbered. It is used for cars, equipment, inventory, receivables and other forms of personal property.
But a register is only as useful as the quality of its entries. If registrations remain after the underlying obligation has ended, they can cause real harm. A small business may be unable to refinance equipment. A vehicle sale may stall. A lender may hesitate. A borrower may face higher costs because a stale record makes the position look riskier than it is.
Old registrations are the institutional equivalent of leaving a traffic cone on the road after the roadworks are finished. Everyone slows down, nobody quite knows why, and eventually someone starts using language unsuitable for a family-friendly conference speech.
The Australian Financial Security Authority has been working to reduce those harms. Since active outreach began in the fourth quarter of last year, the Australian Financial Security Authority has contacted more than 120 secured parties with large volumes of at-risk registrations. Targeted engagement with major lenders has resulted in more than 215,000 non-end-dated registrations being removed.
Clearing dead wood from the register reduces friction in credit markets.
Administrative accuracy is a productivity issue. A stale registration, an unclear process, a duplicative form or a slow response can look small. For a business trying to secure finance, sell stock or keep trading, it can be the difference between movement and stasis.
Productivity reform often sounds grand: tax, infrastructure, competition, technology. But sometimes it is a database with fewer ghosts in it.
Gender equity is another area where the details reveal the direction of travel.
The insolvency profession, like many professions built around law, finance and crisis management, has long had a gender imbalance. That is changing, but slowly.
The Australian Financial Security Authority has increased the target distribution of estates to female registered trustees to 25 per cent, up from the initial 20 per cent target set in 2022. Female representation among registered trustees has risen from around 7 per cent a decade ago to around 17 per cent today.
That is progress. It is also a reminder of the distance still to travel.
A profession that reflects the community it serves will generally understand that community better. It will draw on a wider range of talent. It will be better placed to respond to varied forms of distress, communication and risk. It will be stronger ethically and commercially.
The Australian Restructuring Insolvency and Turnaround Association has recognised this through its diversity and inclusion work, including its Balance Taskforce. I commend that leadership. In a profession where credibility rests on judgement, independence and trust, diversity expands the pool of people able to carry those responsibilities.
There is also a pipeline issue. Estate allocation can help women get a foothold in a profession where traditional referral networks matter. Mentoring, sponsorship, flexible work design and visible leadership are part of the same story.
Leadership appointments count too. Our Government has appointed Michele Bullock as the first woman to lead the Reserve Bank of Australia, Danielle Wood as the Productivity Commission’s first female chair, Jenny Wilkinson as the first woman to lead the Treasury and Sarah Court as the first woman to chair the Australian Securities and Investments Commission. Across the workforce, the gender pay gap is now at an all-time low.
As we know, talent is widely distributed, but opportunity has not always been. Widening access is good for fairness, and good for productivity.
All of this returns us to confidence.
Confidence is easy to take for granted when things go smoothly: the loan that proceeds, the restructuring that happens early, the creditor who accepts the process, the debtor who engages, the investor who takes a calculated risk.
When confidence weakens, the effects are concrete. Credit gets tighter. Costs rise. Transactions slow. Entrepreneurs hesitate. People stay in unproductive arrangements because exit looks too expensive, too uncertain or too humiliating.
That’s why insolvency policy is relevant to productivity.
Joseph Schumpeter recognised this in 1942 when he popularised the idea of creative destruction: renewal through the replacement of old activities by new ones. Economists can sometimes sound too breezy about that phrase. Destruction is never abstract to the people inside it. A closed business is a loss of work, status, community and savings.
The aim of insolvency policy is to make destruction less destructive and creativity more likely.
It should allow viable firms to restructure before value is lost. It should allow non-viable firms to exit without needless delay. It should preserve system integrity. It should deter phoenixing and other misconduct. It should help people re-enter economic life after failure.
That is a demanding set of objectives. There will always be trade-offs. A system that is too forgiving can invite abuse. A system that is too punitive can deter risk. A system that is too slow can destroy value. A system that is too cheap and loose can sacrifice scrutiny. The challenge is calibration.
This is where your experience is essential. Practitioners understand how reforms operate on the ground. You know which obligations genuinely protect creditors, and which ones add cost with little benefit. You know where personal and corporate insolvency systems collide for small business owners. You know how much depends on getting advice early. You know the difference between a director who made a poor judgement and one who stripped a company for parts.
Government benefits from engagement with professionals who see these issues every day.
That does not mean government will always agree with every proposal from the profession. It does mean reform is better when it is informed by people who understand the machinery.
The Productivity Commission’s inquiry into business dynamism is part of our broader agenda to lift productivity and living standards. A dynamic economy needs a trusted insolvency system because risk-taking depends on what happens when risk goes wrong.
The best entrepreneurs are not people who believe failure is impossible. They are people who know failure is survivable.
The best creditors are not people who imagine every loan is safe. They are people who know the rules for priority, recovery and enforcement are predictable.
The best insolvency practitioners are not people who thrive off failure. They are people who help the economy process failure in a way that preserves value, fairness and confidence.
That is valuable work. It requires technical skill, appropriate empathy, commercial judgement and emotional steadiness. It requires independence in rooms where everyone wants something. It requires attention to detail in circumstances where delay and error have consequences.
I began by describing insolvency as economic infrastructure. Let me finish there.
A bridge needs engineering. A register needs accuracy. A market needs trust. An insolvency system needs laws, institutions and a profession willing to steward them.
Our Government will continue working with the Australian Financial Security Authority, the Australian Securities and Investments Commission, Treasury and the profession to modernise insolvency, remove redundant listings from the Personal Property Securities Register, tackle illegal phoenixing, support people experiencing vulnerability, strengthen integrity and advance gender equity.
We do that because insolvency is about more than endings.
Handled well, it allows a business to restructure, a creditor to recover, a debtor to comply, a worker to move on and an entrepreneur to try again.
Ancient insolvency law once asked how much punishment a debtor deserved. Modern insolvency law asks a better question: how do we resolve failure fairly, preserve confidence and make renewal possible?
That is the work you do. Thank you for doing it with skill, diligence, kindness and integrity.
Acknowledgements
My thanks to officials at the Australian Treasury and the Australian Financial Security Authority for valuable feedback on an earlier draft.
References
Beresford, Tim. 2026. Address at the 2026 Equifax webinar, 26 February.
Edelman, James, Henry Meehan and Gary Cheung. 2019. ‘The evolution of bankruptcy and insolvency laws and the case of the deed of company arrangement’, Lloyd's Maritime and Commercial Law Quarterly, 4: 571-602.
Schumpeter, Joseph A. 1942. Capitalism, Socialism and Democracy. New York: Harper & Brothers.
ENDS