As part of Turnbull’s $1.1 billion ‘everyone put your thinking hats on’ plan, the bankruptcy period will be reduced from three years to one year.
The bankruptcy system is already a government created fantasy which allows people to recklessly stink at business (or swindle other people’s money), hide the loot, take a bankruptcy breather for three years while the ‘official’ assets are handed out at cents in the dollar – and then get straight back on the horse again like nothing ever happened (or simply retire to Mallorca, take your pick).
Essentially, bankruptcy is a government wealth redistribution scheme which transfers wealth from workers and creditors to the bankrupt. That is, from the people who actually did something of value to the person that did bugger all. The moment a trustee in bankruptcy is involved, the right to sue the bankrupt is essentially lost and replaced by a share in the left over piddlings.
The whole point of the system is supposedly to encourage people to take some risk in business (and drive ‘innovation’), knowing that they’ll get a government created clean slate in
three years one year if it all goes wrong. In reality, any such scheme which takes money from the productive and hands it to the unproductive can only ever be described as welfare – and there are plenty more deserving people in need of welfare than those who have been crappy with money.
If there aren’t enough natural consequences for poor behaviour then you will get poor results. This is what happens when there is a complete lack of accountability. And all this is before you tackle the extent to which it’s fair to artificially deny a worker or creditor the full fruits of their labour. Should the slate ever be wiped clean? Or should an extended time to pay the lot (even if it takes a lifetime) be the only indulgence granted?
It’s one thing to have a three year bankruptcy period (already very generous). But by reducing the period to one year, Turnbull has now guaranteed that there will be many more innocent and needless victims. I wouldn’t be surprised if it also breeds distrust and slows down business dealings as people look to better secure themselves – the exact opposite effect of what Turnbull intended.