The Claim
“Started charging people who put in bankruptcy applications, and increased the levy on money earned post-bankruptcy.”
Original Sources Provided
✅ FACTUAL VERIFICATION
TRUE. The Coalition government did introduce bankruptcy application fees and increased the realisation charge in 2014.
Effective April 1, 2014, the Abbott government introduced a $120 fee for filing bankruptcy protection applications, and a $150 charge for bankrupt individuals seeking to travel overseas [1]. The government projected this would generate $25 million over four years ($3.5 million in the first partial year, then approximately $7 million annually) [1].
Additionally, the government increased the "realisation charge" (a levy on amounts recovered by trustees in bankruptcy administrations) from 4.7% to 6% [1]. This charge applies to money earned or assets realised post-bankruptcy that exceed certain thresholds.
The changes were announced in the December 2013 Mid-Year Economic and Fiscal Outlook (MYEFO) and implemented through the Bankruptcy (Fees and Remuneration) Determination 2014, made on March 28, 2014 [2]. Attorney-General George Brandis had portfolio responsibility for these changes [1].
Missing Context
What the claim doesn't tell you:
Historical context of free bankruptcy: Prior to April 2014, filing for bankruptcy was free for individuals who lodged their own debtor's petition [3]. The new fees represented a shift from a taxpayer-funded system to a user-pays model for personal insolvency administration.
The realisation charge was not new: The realisation charge had existed since 1997 under the Bankruptcy (Estate Charges) Act 1997 [4]. The Coalition increased the rate from 4.7% to 6%, but did not create this levy.
Cost recovery rationale: The government positioned these changes as cost recovery measures for the Australian Financial Security Authority (AFSA), which administers personal insolvency. The realisation charge revenue goes to consolidated revenue, not directly to AFSA [4].
Credit card payment irony: Consumer advocates noted that AFSA accepted credit card payments for the bankruptcy filing fee, potentially meaning the fee could ultimately be borne by the bankrupt person's lender - creating a circular situation where someone pays to go bankrupt using credit they would then bankrupt on [1].
Source Credibility Assessment
The original source is ABC News (Australian Broadcasting Corporation), which is Australia's publicly funded national broadcaster [1]. ABC News is generally regarded as a mainstream, reputable news source with editorial standards and fact-checking processes. The reporter, Pat McGrath, was a business reporter for ABC at the time. ABC has no stated partisan alignment, though like all media, can face accusations of bias from various political perspectives. The article quotes both government sources (implicitly, through AFSA documentation) and critics (Consumer Action Law Centre, academic experts), providing some balance.
Labor Comparison
Did Labor do something similar?
Search conducted: "Labor government bankruptcy fees policy 2007-2013"
Finding: The Rudd and Gillard Labor governments (2007-2013) maintained the existing personal insolvency system without introducing bankruptcy application fees. The Bankruptcy (Estate Charges) Act 1997 - which established the realisation charge that the Coalition later increased - was actually passed under the previous Howard Coalition government, not Labor [4].
During the Labor years, bankruptcy remained free to file for individuals lodging their own debtor's petition. Labor did not increase the realisation charge rate during their term in government.
Comparison: This policy appears to be a Coalition-specific initiative. The user-pays approach to personal insolvency administration was not pursued by the preceding Labor government, though it's worth noting that cost recovery approaches were common across government services during this period as a general budget consolidation strategy.
Balanced Perspective
Government justification: The Coalition framed these changes as cost recovery measures for a system previously funded by general taxpayers. The $120 filing fee and increased realisation charge were designed to shift some of the administrative cost burden to those utilizing the bankruptcy system [1].
Criticisms and concerns: Consumer advocates, including the Consumer Action Law Centre, strongly criticized the changes. Gerard Brody described it as "trying to get blood from a stone" and noted that people considering bankruptcy are typically "at the end of their tether" with "insurmountable" debt [1]. The concern was that fees would discourage people from seeking legitimate debt relief, potentially pushing them toward informal debt agreements or continued financial distress.
Academic perspective: University of Adelaide insolvency law expert Christopher Symes raised concerns about both the fees and broader bankruptcy travel restrictions, questioning the fairness of requiring bankrupts to forfeit passports and pay for travel permissions [1].
Process criticisms: Consumer groups noted the consultation process was brief and the implementation timing (announced late Friday, effective the following Tuesday) limited meaningful stakeholder input [1].
Is this unique to the Coalition? The specific bankruptcy application fee appears to be unique to the Coalition government. However, cost recovery/user-pays approaches were common across Australian government services during the 2010s as part of broader budget consolidation efforts. The realisation charge itself has existed since 1997 and has been adjusted by multiple governments.
TRUE
7.0
out of 10
The claim is factually accurate. The Coalition government did introduce a $120 bankruptcy application fee effective April 1, 2014, and increased the realisation charge from 4.7% to 6%. However, the claim lacks context about: (1) bankruptcy previously being free to file, (2) the realisation charge existing since 1997 (not being a new Coalition creation), and (3) the cost recovery rationale provided by the government. The policy was a shift to user-pays for personal insolvency administration, which was not pursued by the preceding Labor government.
Final Score
7.0
OUT OF 10
TRUE
The claim is factually accurate. The Coalition government did introduce a $120 bankruptcy application fee effective April 1, 2014, and increased the realisation charge from 4.7% to 6%. However, the claim lacks context about: (1) bankruptcy previously being free to file, (2) the realisation charge existing since 1997 (not being a new Coalition creation), and (3) the cost recovery rationale provided by the government. The policy was a shift to user-pays for personal insolvency administration, which was not pursued by the preceding Labor government.
Rating Scale Methodology
1-3: FALSE
Factually incorrect or malicious fabrication.
4-6: PARTIAL
Some truth but context is missing or skewed.
7-9: MOSTLY TRUE
Minor technicalities or phrasing issues.
10: ACCURATE
Perfectly verified and contextually fair.
Methodology: Ratings are determined through cross-referencing official government records, independent fact-checking organizations, and primary source documents.