(Bills - Second Reading Debate, 7 March 2018, Legislative Assembly, NSW Parliament)
The State Debt Recovery Bill allows a government agency or a local council to enter into an agreement with the Chief Commissioner of State Revenue so that Revenue NSW can recover debts on the agency’s behalf. Revenue NSW will be able to use its existing powers to garnishee wages, seize property and place a charge on land, as well as new powers under the bill to suspend some state issued occupational licences.
It is important that government agencies are able to recover debts but often debtors are people who have little money, low education or complex needs from health, mental health, addiction, trauma or intellectual disability and many have few prospects of improving their financial position.
Debt collection must be done in a way that acknowledges the serious challenges disadvantaged people face to repay debt with the aim to recover debt without causing serious hardship.
Community legal centres work with many vulnerable and disadvantaged people under pressure from debt and Community Legal Centres New South Wales has raised a number of serious concerns with the system proposed under the bill that could result in hardship for those in debt. Redfern Legal Centre which services my electorate has also identified significant problems with the bill that will impact on the vulnerable people the centre works to assist. I ask that the government address these very serious concerns.
Including Housing NSW debts in this scheme is not appropriate. Housing NSW debts should be expressly excluded from arrangements with Revenue NSW.
Housing NSW debts can arise out of honest mistakes because people with special needs on variable incomes don’t fill out forms properly or at the right time. Many social housing tenants have difficulties managing their affairs and can make honest mistakes that mean their rent is not set correctly. Housing NSW also regularly miscalculates rents owed due to its own mistakes.
Housing NSW tenants generally experience significant disadvantage and are more likely to be unable to repay debts on time. They are more likely to be referred under this regime and to be at risk of considerable hardship. It is important that Housing NSW continues to work with its tenants who owe money.
I am concerned that the bill allows for the service of notices by post with no grace for debtors should a notice be sent to an out-dated address. Many people, particularly those on limited means move regularly and the agency they owe money to may not have their new address. The Redfern Legal Centre advises me that many of its clients first become aware of their debt when Revenue NSW garnishes their account and their money has disappeared, as a result of a notice being sent to an old address.
Recovering state debts through the court requires a Statement of Claim to be personally served on the defendant or served by post. Where it is served by post but not received, it can be argued that the default judgement should be set aside. The bill should take the same approach and either require personal service of a notice, or include a clause that allows for a review ‘out of time’ if a debtor did not receive any of the previous notices.
I understand that the bill provides for one less notice and less time for a debtor to seek a review, pay a debt or raise hardship, than is currently available under the Fines Act. This is unfair. People must have more than one option to raise hardship: their circumstances can change over time and unexpected extenuating issues can arise such as illness or unemployment.
It is unclear whether the bill provides debtors with an opportunity to review a debt after it is paid. This is important because sometimes a debtor can realise that a debt was incorrect after it has been paid and options must be available in such situations.
I do not support provisions in the bill to remove a licence from a debtor as a form of debt recovery. Licences included in the bill are occupational and their suspension would be counterproductive to assisting a debtor repay their debts. A debtor could lose their income making it likely that the original debt will remain unpaid and further debts will accrue. They may end up needing government benefits to survive.
Furthermore, if a notice to suspend an occupational licence is sent to a debtor’s previous address, they won’t know that their licence is at risk or has been suspended. A debtor conceivably could lose a licence without knowing and continue to work, resulting in additional consequences. The bill does not include a requirement to give prior notice or any opportunity to be heard. This is unfair.
I understand from community legal centres that most people fail to pay their debts because of financial hardship and not because of avoidance. While the government says licence suspension will be used only as a last resort and that vulnerable people will be excluded, exclusions are not legislated. There is evidence that Revenue NSW does not have enough information about debtors to determine who is vulnerable: Community legal centres regularly see people whose small bank accounts have been wiped out in one go by Revenue NSW.
The government should work with community legal centres to ensure that the act protects vulnerable people from losing their licence to work.
The bill deems a ‘time to pay’ application to be refused when an application has not been determined in 30 days. This unfairly puts the onus on the debtor to reapply, which will be difficult for people experiencing disadvantage.
I agree with the Redfern Legal Centre that all debt recovery actions should be suspended while the Chief Commissioner is considering an application to revoke a debt recovery order. The Chief Commissioner should also be able to make a Work and Development Order as is currently available under the Fines Act so that people who have a mental illness, intellectual disability or cognitive impairment, are homeless, are experiencing acute economic hardship, or have a serious addiction have a viable option to clear their debt.
Powers in the bill to charge interest on state debts and recovery costs are unfair and should be removed. The model in the Fines Act to allow only charges for enforcement costs is preferable.
Debts under this bill are for unpaid services, not for breaking the law and there is concern that the sheriff will be able to make demands on people under the system to provide information or their name and address with penalties for failing to do this. These processes are usually reserved for criminal situations and are inappropriate for the debt collection process.
I welcome commitments to develop debt recovery guidelines which will include provisions to protect those suffering from hardship. I ask that the government develop these guidelines with community legal centres, which have experience dealing with hardship from debt.
These guidelines should also adhere to the ASIC/ACCC debt collection guidelines.
Government agencies and councils need to recover debts but debt is most often held by people who are vulnerable and disadvantaged. Any debt collection regime should aim to help people reduce their debt rather than collect it at any cost. I ask the government to respond to the concerns raised and work with community legal centres to make this regime fairer.
To read the speeches of other Members on the subject, click HERE