Good morning and thank you for the opportunity to speak to you about the latest developments in corporate insolvency legislation.

Now, more than ever before, it's crucial to ensure we have in place appropriate regulatory frameworks to ensure better and fairer outcomes for creditors.

In an environment where creditor confidence has been waning, it is more important than ever that we have insolvency procedures that produce fair, efficient and expeditious results for creditors.

I'm pleased to say our insolvency framework is fundamentally sound.

That, however, is not to say that there isn't room for improvement.

Today, I'd like to focus on two Government initiatives that will ensure greater confidence in the insolvency framework.

First, I'd like to cover the Government's proposals on the regulation of insolvency practitioners.

As you are all undoubtedly aware, this has been on the agenda for some time now, and we're aiming to have a bill before the House next year.

Secondly, I'd like to discuss our initiative to enhance the trans-Tasman insolvency framework, under the Single Economic Market outcomes framework.

In an environment where international linkages are exceedingly important, it's necessary for us to recognise the special nature of the trans-Tasman relationship, and indeed, the important place of trans-Tasman business for both Australian and New Zealand economic growth.

I am, and have always been, a strong advocate of greater harmonisation in the business laws of our two nations.

Enhancements to cross-border insolvency arrangements are an important step towards that harmonisation.

I would like to conclude by briefly addressing the other areas of the Government's work programme which addresses the challenges that have been exposed by the financial crisis.

The global volatility of the past 12 or so months has presented an unparalleled challenge for governments and businesses alike.

We've seen an increasing number of personal insolvencies, with the Insolvency and Trustee Service reporting a 49% increase in the number of personal insolvencies in the 2007/08 financial year.

We've also seen a remarkable number of businesses fail over the past year.

The Insolvency and Trustee Service alone administered 377 liquidations in the 2007/08 financial year.

That's a staggering 99% increase from the previous year.

These figures suggest that now, more than ever before, the regulatory framework for insolvency has to be effective for the efficient realisation and distribution of a debtor's assets.

Insolvency practitioners play a crucial role in ensuring creditors receive as much of their pre-insolvency entitlements as possible.

Creditors are likely to have lower returns if incompetent and unskilled individuals take up insolvency appointments.

Accordingly, it's critical to ensure there's a pool of competent and ethical insolvency practitioners in New Zealand who will be able to help maximise returns for creditors. This will help mitigate the risk of loss in insolvency proceedings, which, we're confident, will in turn provide greater confidence for investment.

Officials from the Ministry of Economic Development are finalising drafting instructions on an Insolvency Practitioners Amendment Bill.

As I said earlier, we're aiming for introduction next year.

It's designed to establish new requirements for insolvency practitioners.

These changes will enable the court (or the Registrar of Companies in some instances) to ban incompetent or delinquent practitioners from operating as liquidators, voluntary administrators, and receivers.

The effectiveness of New Zealand's insolvency regime will be further enhanced by the strengthening of the existing statutory provisions in relation to the appointment and replacement of insolvency practitioners.

For example, it's proposed that the court's powers to replace an insolvency practitioner will be widened to deal with issues of conflict of interest and independence in relation to a particular appointment.

This bill, when enacted, will establish necessary controls on insolvency practitioners and will be a good foundation from which a trans-Tasman regulatory framework for insolvency practitioners may be considered.

My officials are currently looking at options to build on this foundation.

More immediately, however,  the proposed amendments to our practitioners regime will provide creditors and others involved in the appointment of the insolvency practitioner with a greater level of confidence in the skill of such practitioners.

I'm confident this will foster greater investment in New Zealand business.

But getting our regulatory framework for insolvency practitioners right is only one part of the puzzle.

Another important aspect of the framework is to have in place appropriate systems for cross-border insolvency.

We're seeing a greater number of businesses and people enter into arrangements that span the Tasman, and as a result there's an increasing number of both corporate and personal insolvencies that have a trans-Tasman dimension.

Though both jurisdictions have recognised the special relationship between New Zealand and Australia in many areas -- and there is great deal of similarity between our two insolvency frameworks -- there is not, as yet, a framework for a single trans-Tasman insolvency proceeding.

Australia is New Zealand's single biggest, and closest, trading partner, and is, as such, an important source of capital for our businesses.

Our close economic relations, which span 25 years, are critical to the drive by both countries toward increasing productivity and growth.

A single economic market puts both countries in better stead when competing on a world stage.

This special relationship has been recognised in many areas of business law coordination such as mutual recognition of securities offerings and superannuation portability.

A better process to deal with business failure is yet another way to foster greater investor confidence in a trans-Tasman setting.

We want to make it easier for creditors in both countries to receive as much of their pre-insolvency entitlements as possible.

Both countries have adopted the United Nations Commission on International Trade Law's Model Law on Cross-border Insolvency. 

This Model Law seeks to provide a uniformity of approach to insolvency proceedings that have an international dimension. It does this by establishing common procedures for the initiation of insolvency proceedings.

It has improved confidence in trans-Tasman business and investment, and I'm sure this will continue.

The Model Law, however, is only a beginning. The shared foundations of our legal systems and our close economic relations put Australia and New Zealand in a unique position.

Further, the 2006 reforms undertaken in New Zealand have brought our insolvency laws much closer. This provides us with a solid foundation to go further than the Model Law.

My preliminary discussions with the Australians have led me to identify a number of areas which, if changed, would improve the efficient and effective operation of the trans-Tasman insolvency framework.

The five areas we have started to work on are:

1. Facilitating the trans-Tasman operation of Australian and New Zealand insolvency proceedings;

2. ensuring that insolvent firms or bankrupt individuals face equivalent outcomes on both sides of the Tasman and that each country recognises those outcomes;

3. making available to creditors the maximum amount of the frozen capital (debts) by the fair, efficient and expeditious conclusion of a cross-border insolvency proceeding;
   
4. ensuring that any enhancement to the cross-border insolvency process provides assurance to creditors that the difference in substantive laws between the two countries will not impede the distribution of assets in a fair and efficient manner; and

5. ensuring that any enhancement to the cross-border insolvency process would minimise transaction and compliance costs associated with operating in a trans-Tasman environment.

Though this work is still in its infancy, and the details of any terms of reference, project timeframes and processes are still to be finalised with our Australian counterparts, let me assure you that it will include public consultation.

And I'd encourage you all to contribute.

Because a successful enhancement of cross-border insolvency arrangements with Australia is not just the Government's responsibility. 

The success of our plans and the shape they ultimately take depends on the will and drive of our respective business communities and insolvency practitioners. We can only get this right with your help.

Aside from getting our framework for insolvency right, the recent upheavals in global markets have exposed a number of other areas in our business laws that could be made more effective.

This Government has acted swiftly and enacted various measures to bolster our resilience to volatility in the financial sector.

Earlier this year, Parliament passed the Securities (Disclosure) Amendment Act 2009 to make it easier for businesses to raise capital while continuing to ensure prospective investors have the information they need for decision-making.

We have advanced the new Securities Regulations 2009, which are due to come into force tomorrow. These will reduce compliance costs and improve flexibility for issuers, and enhance disclosure to investors.

Last month, Cabinet agreed to the development of new regulations for debt issuers proposing moratoria.

These will require debt issuers who are proposing to go into moratoria to produce clear and concise investment statements. These statements will provide investors with the details and merits of a moratoria proposal, the basis on which the relevant directors and trustees are recommending the proposals, and other relevant information.

Cabinet also recently agreed to a package of measures designed to improve the quality of trustees' supervision of issuers.

This includes a licensing regime for trustees that supervise debt issuers and certain collective investment schemes.

Under this new arrangement, the Securities Commission will license trustees according to a stringent set of approval requirements relating to matters such as the trustees' infrastructure, monitoring systems and processes, and financial strength.

The commission will also having an ongoing role in monitoring trustees to ensure they meet licensing criteria.

And we're in the middle of implementing the Financial Advisers and Financial Service Providers legislation.

The main obligations created by this legislation include the registration of all financial service providers to provide a means of identifying and monitoring them, and regulation of advisers by the Securities Commission to encourage professionalism and public confidence in the sector.

We aim to have this regime in force by the end of next year.

My officials have also started work on reviewing the Securities Act 1978.

They're looking into:

• The scope and objectives of our securities regime.
  
• The provision of investor information.
  
• The regulation of managed funds, and ...
  
• The institutional arrangements for the regulation of securities.

As I have said on previous occasions, my main focus is to develop a sound regulatory regime that supports efficient and dynamic businesses.

This involves well-informed investors who can invest their money with confidence, and businesses that can access capital so they can grow.

I'll continue to engage with business and the public to find the best way in which I can achieve those objectives.

As I prepared for today, I came across a quote I'd like to share with you:

"Just as automotive enthusiasts rarely rave about radiators, bankruptcy is not often a major topic in the discussion of economic development and globalisation -- until the engine boils over."

This past year has well and truly seen the engine of economic development boil over in many countries.

I'm pleased that the cogs of our insolvency framework continue to turn during the downturn.

It's now up to us to work together to grow New Zealand into a world-leading economy.

Thank you.