Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

I too rise to support the Personal Property Securities Bill 2009. It is a bill which will establish one national law governing security interests for personal property and will create a register of personal property securities, in which security interests would be able to be registered and searched in one vicinity.

As the Attorney-General said in his second reading speech, the government went to the election with an ambitious deregulation agenda and promised to reduce the amount of regulation burden borne by Australian business. In doing that, it aimed to undo the amount of red tape, which was becoming very wearying for business interests throughout the Commonwealth. It was also a very direct effort to ensure that we grow the productivity of the country and assist the development of small business by relieving them of those burdens. In the 28 months since coming to office the government has amply demonstrated its commitment to that agenda.

By way of background, it is important to note that this bill is a result of an extensive consultation process and has received significant support from various stakeholders, including the industry financiers, the legal fraternity and certainly business generally. In April 2007, COAG endorsed the need for a national system to deal with the creation and enforcement of security interests for personal property. The first draft of the Personal Property Securities Bill was released in May 2007. COAG signed an intergovernmental agreement in October 2008, making it clear that it was committed to this issue. The amended version of the bill was referred to the Senate Standing Committee on Legal and Constitutional Affairs in November 2008 and amendments have been made to the bill in response to the committee’s recommendations.

This brings me now to deal with the substance of the bill itself. The personal property securities reform is very long overdue in terms of the securitisation elements of industry. Other countries, such as New Zealand, Canada and the US, have moved to implement reforms in this area. Personal property security reform is about securing finance—lending that is secured by property other than land.

You might recall that only this week the government made other inroads in terms of security when we introduced legislation in relation to margin lending. It is more than just businesses that go out to secure loans to raise capital for various ventures, and that was another matter that flowed from a general agreement through COAG. One of the things in terms of consistency in the provisioning of securities associated with margin lending was the well-established and recognised need throughout the Commonwealth for one set of harmonised laws governing these things. You cannot have a multiplicity of state and territory arrangements which only serve to be confusing, not only for the lenders but also for the borrowers. That legislation, introduced earlier this week, is another example of what we are doing in moving in that direction.

In a legal sense, personal property is any form of property that is not land or buildings. Land or buildings would be known as real property or real estate. Personal property includes tangible property such as motor vehicles, machinery, office furniture, currency, artworks and stock in hand. But it also includes intangibles such as contract rights, uncertified shares and intellectual property rights.

The overall purpose of the Personal Property Securities Bill 2009 is to rationalise the current arrangements, which include more than 70 pieces of Commonwealth, state and territory legislation and apply to more than 40 different registers of security interests in personal property. We know that they vary in application and according to the forms of the transaction, the nature of the debtor and the jurisdiction in which the property transaction or the property is physically located. It all has potential to add costs to the transaction, and that is bad for business. Having to search across all the various registers adds significant legal costs to lenders and, in turn, borrowers. The complexity of the existing secured lending arrangements and the lack of consistency between them is a major source of uncertainty. By harmonising these laws, these bills will have a significant impact for businesses and consumers by providing greater certainty for both lenders and borrowers.

Of equal importance, under the current economic circumstances, providing consistent national laws for personal property securities will enhance our ability to position our country as a financial centre. Banks and financiers should be able to gain greater access to international finance, which in turn will assist the growth of businesses and help stimulate growth and employment in this country. Small businesses themselves will be direct beneficiaries of the new system, which will enable them to use personal property as collateral for the first time, thereby increasing their access to finance and reducing costs within their businesses.

These reforms are wonderful news. I have got somewhere in the vicinity of 10,000 small businesses in my electorate. Not all of them will be accessing arrangements such as these, but I know a number of them certainly will. These arrangements, in terms of providing greater access to lending using personal property, come on top of a vast array of reforms that have been introduced by this government to assist small business. One of the huge growth areas in the south west of Sydney and the employment generator is small business itself.

So, things that we have brought down to assist small business since coming into power include direct financial assistance to small business through expanding and enhancing the small business tax breaks. There are $720 million in tax reductions to provide cash flow during the 2009-10 period, which comes on top of the boost provided by the government through a discounted rate of Pay As You Go, or PAYG, tax instalments in the December 2008 quarter. These all take pressures off businesses at a time when they need it most, at a time that we want them to maintain employment.

Small business has also been assisted by the advice and support centres that have been established and the support that we have given directly to Business Enterprise Centres. I am very fortunate. I have one in my electorate that covers both Liverpool and Campbelltown. That organisation received direct funding from the Commonwealth. I know what it does in relation to small business. I know not only how much time and effort goes into establishing the businesses but how much this organisation goes towards helping these businesses make the transition from an initial idea to a working model that is capable of expanding and hopefully employing additional people. I would like to commend the work of my BEC, which has now been running for more than 15 years. The CEO, David Waudby, and its chair, Bruce Hanrahan, do a sterling job for small businesses throughout the south-west of Sydney.

A key element of the law will be the creation of a personal property securities register, allowing for the central registration of and search facilities for security interests. It will replace the existing, confusing array of electronic and paper based state and territory systems. These reforms are long overdue. Surprisingly, some registers currently being used have been in use now, in terms of personal property, since 1920 to 1930. I concur fully with what the Attorney-General said in his second reading speech: this is a 21st-century reform for 21st-century circumstances.

The bill will allow consumers to search, at low cost, to see if the property they are considering purchasing is encumbered. In the case of motor vehicles, it is proposed that the register will provide information such as the make, model et cetera, to help people to make informed choices, in addition to registration numbers and chassis numbers. As I said, this will make sure that people know that what is being put up for security is not encumbered elsewhere. This measure is clearly very important for customer protection and will be very much welcomed by hard-working families.

There is, however, a need for an orderly transition to the new system. The significance of this reform to business cannot be underestimated, and the government is committed to making sure that business and the financial sector are prepared for the introduction of the new system. The transitional arrangements are that the system will go online once all the information has been placed onto the new system. That is going to take a little while, but it will happen before the register goes live and is made available to the public.

In conclusion, the bill will, in the end, bring down the costs of obtaining credit. It will also increase the propensity of lenders to lend, particularly to small business, thereby increasing the availability of credit within the market. By reducing the complexity and introducing greater consistency amongst the different kinds of secured finance, the bill will generate a wide range of benefits for all parties who need to secure personal property to raise finance. I commend the bill.

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