Thank you for the invitation to join this year's Australian Financial Security Authority Summit. I acknowledge the Gadigal people of the Eora Nation on whose lands you are meeting, and the Ngunnawal people, on whose lands I am recording these remarks.
Every successful market economy rests on trust. People borrow, build, trade and invest because they have confidence that agreements will be honoured, that disputes will be resolved fairly, and that rules will be applied consistently. When that trust is strong, capital moves and innovation follows. When it erodes, activity slows and caution takes hold.
The personal insolvency system is one of the quiet foundations of that trust. It allows people to take risks, knowing that if things go wrong, there is a fair and lawful framework to resolve debts. It allows creditors to lend and supply, knowing they will be treated equitably. It allows those who have experienced hardship or business failure to re‑enter the economy and contribute again. It keeps capital and talent circulating.
When the system functions well, its impact is almost invisible. When it falters, the effects are felt quickly: delayed transactions, rising costs of finance, damaged confidence and fewer new ventures. It is therefore not just a legal framework. It is part of how we support participation, opportunity and renewal.
With that in mind, let me outline the structure of my remarks today. I will begin by discussing the role that the personal insolvency system plays in supporting a dynamic economy. I will then examine professional culture and enforcement, including recent cases that have tested the system and the regulator's response. After that, I will turn to the Personal Property Securities Register and how improvements can reduce friction in credit markets. I will then discuss reforms to achieve a more balanced and humane personal insolvency framework. Finally, I will reflect on opportunities for further improvement and the importance of continued collaboration across the sector.
The central theme is simple: a fair and trusted insolvency system is a foundation for confidence, renewal and economic participation.
Productivity and dynamism
In August, Treasurer Jim Chalmers' Economic Reform Roundtable brought together economists, business leaders and unions to examine the drivers of Australia's long‑term economic performance. One of the key themes that emerged from that discussion was the importance of dynamism. Productivity growth is shaped by how well the economy supports new ideas, new entrants and new firms. Yet over recent decades, Australia has seen a slowing in firm formation and a smaller share of fast‑growing young firms.
Research shows that young firms account for around 6 in 10 new jobs in Australia. A small number of high‑growth firms are responsible for a disproportionate share of productivity gains. These firms tend to start out more productive than their peers and increase that advantage as they expand. But they only succeed in environments where taking a risk is feasible, and where failure is survivable.
A dynamic economy is one in which entry and exit both work efficiently. Where business failure is handled in a way that is fair, orderly and not socially catastrophic. A system that is punitive discourages innovation. A system that is easily manipulated for private advantage erodes trust. The role of the personal insolvency system is therefore not just to clean up after failure, but to shape the conditions under which innovation, entrepreneurship and responsible risk‑taking occur.
The personal insolvency system helps determine whether people are willing to start businesses, employ staff and seek credit. It influences whether creditors price risk in a way that is proportionate. And it affects whether capital is recycled into new, productive activity, or becomes tied up in disputes.
Professional culture and enforcement
Trust is not created by legislation alone. It is created by behaviour and by culture within the profession. Most administrators, advisers and lawyers work to high standards and perform their duties with care. But a small number of cases show what happens when the system is used in ways that undermine fairness.
One recent example is the matter involving Jon Adgemis. Mr Adgemis' hospitality group expanded quickly and later experienced significant financial strain. A personal insolvency agreement was proposed to settle his debts. Personal insolvency agreements can be a useful alternative to bankruptcy when they present a realistic and transparent basis for creditor recovery.
In this case, the proposed return was 0.15 cents in the dollar, 1/50th of the 8 cents in the dollar return in a typical personal insolvency agreement. The Australian Taxation Office was reportedly owed about $162 million. Given the disparity between the proposal and normal outcomes, the Inspector‑General intervened to ensure that the financial position was fully examined and that creditors received accurate and complete information. That intervention was about maintaining the integrity of the framework. These agreements must reflect genuine financial circumstances to command trust.
A different pattern appeared in the matter involving John Voitin. In that case, false creditors were created using fabricated documents. Offshore entities were used to influence voting outcomes at creditor meetings. The objective was to pass personal insolvency agreements that did not reflect the true financial situation. This was not misunderstanding or error. It was a deliberate attempt to manipulate core processes. The result was conviction and imprisonment.
These cases are not common, but their impact is large. They damage confidence. They increase suspicion in the system. They ultimately increase the cost of credit. They make the work of honest practitioners harder.
As Chief Executive Tim Beresford has noted, AFSA is seeking to address these challenges through a two‑part strategy.
The first part is strengthening professional culture. AFSA has worked closely with the profession to support clearer expectations, ethical norms and responsible decision‑making. Practitioners must see themselves as custodians of the system's integrity, not as tacticians operating around its edges.
The second part is credible enforcement. AFSA has increased oversight of high‑risk proposals, used its examination powers, intervened in creditor processes where necessary and referred matters to enforcement agencies when conduct has deliberately contravened the law. This is not heavy‑handed regulation. It is proportionate. When culture is strong, compliance is lighter. When culture breaks down, enforcement must be firm. That is what sustains confidence.
The Personal Property Securities Register
I turn now to the Personal Property Securities Register. The PPSR underpins more than $450 billion in secured lending. It is searched more than 13 million times a year, with more than 2 million new registrations annually. It is central to everyday commercial activity. Used car dealers rely on it before transferring vehicles. Equipment financiers rely on it when leasing machinery. Builders, farmers and small manufacturers use it to demonstrate that title is clear when supply chains extend across several parties. Without it, many routine transactions would become slower, riskier and more expensive.
The system works best when the register is accurate, current and easy to interpret. One challenge is the large volume of registrations that remain in place after the underlying obligation has ended. In some sectors, registrations simply accumulate. When expired registrations are not removed, buyers and lenders can be left uncertain about whether an interest is still active. That uncertainty can delay the release of finance or even cause transactions to be abandoned. For small businesses operating on tight timeframes, these delays translate directly into lost orders, missed opportunities and higher working capital costs.
The implications extend beyond business lending. The efficient resale of second‑hand electric vehicles will be a significant part of Australia's net zero transition, because the second‑hand market accelerates uptake and lowers the cost of entry. But if vehicles that have been fully paid off remain listed on the PPSR, buyers and dealers can be forced into lengthy verification processes to prove title is clear. That slows turnover, increases transaction costs and makes it harder for households to participate in the shift to cleaner transport. AFSA has been working with lenders to encourage timely removal of registrations.
Another challenge is the under‑use of the register for intangible assets. As the economy becomes more service‑based and knowledge‑intensive, business value often lies less in physical plant and more in software, data rights, trademarks, copyright and future receivables. These can be valuable forms of security, but many firms are unsure how to register them, and many lenders are cautious about recognising them because usage practices are inconsistent. The result is that capital which could be deployed into expansion remains tied up. AFSA has identified this as an area where clearer guidance, model terms and improved user education can make a practical difference.
Fair pathways to recovery
I also acknowledge the role of the former Attorney‑General, Mark Dreyfus, in laying the groundwork for a more balanced and humane personal insolvency framework. In 2024, he proposed a package of reforms designed to bring the system into closer alignment with contemporary expectations of fairness and economic participation. The government is now proceeding with those reforms.
The package includes increasing the threshold for involuntary bankruptcy. The previous threshold had not kept pace with inflation or changes in credit markets. In practice, this meant that individuals could be forced into bankruptcy over relatively modest debts. Raising the threshold provides a more proportionate response and ensures that bankruptcy is used only in cases where there is no other practicable path to resolution.
The reforms also provide additional time for debtors to respond to bankruptcy notices. Financial distress is often accompanied by personal strain, reduced capacity to engage with paperwork and, in some cases, disrupted housing or employment. Allowing more time for response recognises these realities and increases the likelihood that debts can be settled or negotiated without the need to proceed directly to bankruptcy.
Another change removes the act‑of‑bankruptcy status from the proposal or acceptance of a debt agreement. Under the old settings, an attempt to enter into a debt agreement could itself trigger bankruptcy, even where the debtor was acting in good faith to reach a settlement. Removing that feature supports responsible early engagement between debtors and creditors, and encourages resolution before matters escalate.
The reforms also reduce the default period of listing on the National Personal Insolvency Index to 7 years. The Index is an important transparency mechanism, but its visibility has long‑lasting effects on people's ability to secure housing, employment and credit. Reducing the listing period strikes a more reasonable balance between the public interest in transparency and the individual's ability to return to economic life.
These changes sit within a broader principle: financial failure should be managed, not punished. Most people who experience insolvency do so because of job loss, relationship breakdown, illness, business downturn or economic shock. The system should not erase accountability, but neither should it lock people out of the economy indefinitely. The aim is to resolve debts fairly and support people to contribute again through enterprise and participation.
Future direction
In 2023, the Parliamentary Joint Committee on Corporations and Financial Services, chaired by Senator Deborah O'Neill, brought down a report that found that Australia's insolvency framework has become complex, fragmented and difficult to navigate. The committee observed that while many individual reforms over the past 3 decades have been sensible, the cumulative effect has been a system that can be hard to understand, particularly for small businesses and individuals encountering financial distress for the first time. The committee also noted that most stakeholders agree the current framework is not operating as effectively as it could. Creditors, debtors and practitioners often report that the system is costly, slow and uncertain. The committee recommended that the government undertake a comprehensive and independent review of insolvency law to ensure the system is fit for contemporary economic conditions.
A particular concern highlighted in the parliamentary report is the interface between corporate and personal insolvency. In many small businesses, the financial affairs of the individual and the company are closely intertwined. When a small business enters difficulty, the owner may face both corporate administration and personal bankruptcy considerations. Yet the pathways for each are distinct, with different processes, obligations and outcomes. The report found that for small enterprises, this can feel like navigating 2 systems at once at the very moment when stress is highest. Any future improvements will need to account for how small business owners actually experience financial distress in practice.
Stakeholders across the sector - insolvency practitioners, legal and accounting professionals, small business representatives, advocates and lenders - have expressed interest in reforms that make the system easier to navigate and more coherent in structure. While perspectives differ on the exact solutions, there is a widely shared appreciation of the need for clarity in the purpose of the system, proportionality in regulatory obligations, and transparency in process. There is also recognition that Australia's economy increasingly relies on services, intangibles and entrepreneurial activity. A modern insolvency system needs to support business renewal and productive risk‑taking, while still ensuring that misconduct is detected and creditors are treated fairly.
It's clear to us that a system that handles financial distress with clarity and humanity is one that better supports business formation, innovation and dynamism.
Conclusion
Economies grow when people are able to take risks, learn from experience and try again. They slow when caution becomes the default and failure becomes a permanent label. The personal insolvency system helps keep our economy on the side of renewal rather than retreat. It gives people a structured way to deal with setbacks, provides creditors with transparency and accountability, and keeps capital and talent circulating.
Everyone in this room works at the point where financial pressure becomes personal. Insolvency involves livelihoods, families, identity and trust. The way the system is designed and administered shapes how people experience that moment. A system that is clear, coherent and humane gives people a path through difficulty. A system that is overly complicated or open to misuse increases stress at a time when people are already under strain.
Professional culture, well‑calibrated enforcement, modern infrastructure and proportionate reform are central to maintaining confidence in the system. When practitioners regard themselves as stewards, confidence grows. When misconduct is identified early and addressed, integrity is sustained. When the PPSR is accurate and easy to interpret, capital moves more freely and transactions proceed more smoothly. When reforms reduce unnecessary barriers and support reintegration, people are able to re‑enter economic life and contribute. And when the system is more coherent for small businesses navigating both personal and corporate distress, recovery becomes more achievable.
A fair and trusted system encourages people to begin again. A clear and humane process allows them to regain their footing. When expectations are consistent and misconduct is addressed, the efforts of those who act responsibly are reinforced. When the system's infrastructure is maintained, capital flows to productive uses.
That is the work we share. Thank you for your commitment to it.
