Sussan Ley (Farrer, Liberal Party, Shadow Minister for Justice and Customs) Share this | Link to this | Hansard source

I am pleased to speak on the Personal Property Securities (Consequential Amendments) Bill 2009. In talking about personal property securities reform, I make the comment that it seeks to address the complexity of the over 70 Commonwealth, state and territory laws, common-law rules and rules of equity that currently govern security interests in personal property. PPS reform will provide a modern and efficient personal property securities framework, which is essential for any modern financial system. This is a consequential amendments bill on personal property securities and it follows very much from the principal bill, the Personal Property Securities Bill 2009, which was introduced in parliament on 24 June 2009. I recall that it was a priority matter for the previous Attorney-General, the member for Berowra. By harmonising existing laws, the bill will reduce the complexity of the existing arrangements for secured lending using personal property as collateral. The bill will also increase consistency in the arrangements for creating, dealing with and enforcing security interests in personal property. Before going into this bill I will go back to the principal bill, which was referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report after its introduction earlier this year. The committee’s report was published on 20 August 2009. The committee recommended that the principal bill be passed subject to a commitment from the government to, among other things:

… include in a consequential amendments bill to be debated in the Senate cognately with this Bill—

that is, the principal bill—

and intended to take effect immediately after the commencement of the 2009 Bill all changes to the Bill identified as a result of concerns raised with this committee and subsequently directly with the department during the recommended further period of consultation until 30 September 2009.

The government response to that recommendation is the bill that we are looking at here today, which contains in schedule 4 the changes to the principal bill which were identified by the committee.

I want to draw the House’s attention to comments made by the Liberal senators on that committee, who recommended that the government ‘develop and implement a comprehensive education campaign for small to medium business and others prior to the start-up date for the new personal property securities system’. I am pleased to say that that recommendation was accepted by the government, which undertook to develop and implement an education campaign prior to the commencement of the new personal property securities system.

Personal property is any form of property other than land or buildings. The PPS Bill will apply to transactions which have the effect of securing a payment or other obligation by taking an interest in personal property, regardless of the form of the transaction, the nature of the debtor or the jurisdiction in which the personal property or parties are located. This is known as the functional approach.

The PPS consequential amendments bill represents the next stage in the government’s harmonisation of Australia’s law on secured financing using personal property. This consequential bill will amend 25 Commonwealth acts that deal with the creation, registration, priority, extinguishment or enforcement of interests in personal property. The amendments proposed by this bill will also clarify the operation of legislation that will operate concurrently with the PPS Bill. This will facilitate the establishment of a single national regime for personal property securities.

As to the specifics of the consequential bill, it contains measures that are designed to: harmonise language and concepts with the PPS Bill where appropriate; support a seamless transition to the PPS register to be established by the PPS Bill, including removing provisions for the registration of security interests on a separate Commonwealth register; resolve conflicts between the PPS Bill and other Commonwealth legislation that provides for security interests or other interests in personal property; determine the priority between Commonwealth statutory interest in personal property other than security interests and security interests in the same property; clarify the rights of secured parties and other parties in particular situations, including statutory detention of personal property that may be the subject of a secured security interest; and ensure that the current rights are preserved on the implementation of the amendments. The consequential bill, we note, will not amend the Corporations Act 2001. That will be amended by a separate bill, following a separate public consultation process. The coalition supports the bill.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Personal Property Securities (Consequential Amendments) Bill 2009. In keeping with the best reforming traditions of the Hawke and Keating Labor government, the Rudd government are pursuing the most ambitious program of reform in business regulation in the nation’s history. We are moving towards a seamless national economy. One of the concerns I hear about constantly from small business in my electorate of Dobell, on the New South Wales Central Coast, is the red-tape burden that has grown and grown over a long period of time. One of my constituents who owns a small business likened it to The Blob, the 1950s science fiction movie. He said to me that it keeps gobbling up investment, jobs and opportunities. It is because of this that the Rudd government are out there making reforms to our economy so that that burden of red tape is lifted from small business, medium business and large business.

This is about moving towards a seamless national economy. The red-tape burden in Australia is stifling economic growth and productivity. We all know that today’s productivity growth is tomorrow’s prosperity. We all know that growth and increasing productivity mean more jobs for Australians. It is no secret to businesses on the Central Coast that red tape is strangling jobs in our region, as it is around the country.

In 2009 Australia is an economy subject to no fewer than nine regulatory regimes which overlay these regulations, with eight states and territories each seeking to regulate in their own way. In some cases, this is duplicated another time by national regulation imposed at the Commonwealth level.

In the 2006-07 financial year, more than 31,700 Australian businesses were operating in more than one state or territory. More than 4,300 operated in every state and territory, meaning they dealt with all nine different regulatory regimes. These statistics alone show how important it has been that, in the 18 months to two years since coming to office, this government has demonstrated its commitment to Australia having a seamless national economy.

The Personal Property Securities Bill 2009, introduced into parliament on 24 June 2009 and passed by the House on 16 September 2009, is exactly what this government’s deregulation agenda is all about. This bill will supersede a tangled web of red tape involving over 70 Commonwealth, state and territory acts. The Personal Property Securities Bill will establish one national law governing the securing of finance using personal property. Personal property securities reform is an area that has long required change. Other countries, notably New Zealand, Canada and the United States, have all implemented reforms in this area.

The Personal Property Securities Bill will establish a national personal property register on which security interests may be registered and searched; provide rules for the attachment of security interests to personal property; specify the circumstances where personal property free of a security interest would be required; include priority rules for governing priority between competing security interests; and provide a process for enforcement against secured personal property.

The Personal Property Securities Bill is the result of extensive consultation. A first draft of the bill was released for consultation in May 2008. An amended version of the bill was referred to the Senate Standing Committee on Legal and Constitutional Affairs in November 2008. Amendments have been made to the bill in response to the committee’s recommendations.

Personal property securities reform has been advanced in cooperation with the states and territories as part of COAG’s deregulation agenda. The bill was supported by a referral of legislative power from the states. An intergovernmental agreement on personal property securities reform was signed by COAG on 2 October 2008. New South Wales was the first state to refer its power, having passed its referral legislation in June 2009.

Let us have a look in a little bit more detail at the Personal Property Securities (Consequential Amendments) Bill, what it will do and why it needs to be implemented. The bill represents the next stage in the government’s harmonisation of Australia’s laws on secured financing using personal property. The consequential bill will amend 25 Commonwealth acts that deal with the creation, registration, priority, extinguishment or enforcement of interests in personal property. The amendments proposed by this bill will clarify the operation of legislation which will operate concurrently with the PPS Bill. This will facilitate the establishment of a single national regime for personal property securities.

The consequential bill contains measures designed to: harmonise language and concepts with the PPS Bill where appropriate; support a seamless transition to the PPS Register, including removing provisions providing for the registration of security interests on a separate Commonwealth register; resolve conflicts between the PPS Bill and other Commonwealth legislation that provides for security interests or other interests in personal property; determine the priority between Commonwealth statutory interests in personal property other than the security interests and security interests in the same property; clarify the rights of secured parties and other parties in particular situations including statutory detention of personal property that may be subject to a security interest; and ensure that current rights are preserved on implementation of the amendments. The consequential bill will not amend the Corporations Act 2001, which will be amended by a separate bill to be introduced later.

After the PPS Bill was introduced in parliament on 24 June 2009, the Senate referred the provisions of the bill to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report. The committee presented its report on 20 August 2009 and recommended that the government consider stakeholder submissions on the PPS Bill until 30 September 2009. The government provided that opportunity to comment, and minor amendments that have arisen through this further consultation process and other minor technical amendments have been incorporated in the consequential bill.

Personal property security reform is being advanced in cooperation with the states and territories as part of COAG’s deregulation agenda. As I said at the start of my contribution, this reform is in the best traditions of Labor governments during the 1980s and the 1990s. The Prime Minister recently said:

The … social reforms of the Hawke and Keating era were critically important to sustaining public support for the difficult work of modernising our economy to make it more competitive in a rapidly globalising world.

The greatest trait of Bob Hawke as Prime Minister was that he brought Australia together while we went through a period of massive economic upheaval. Whereas those overseas experienced extreme social division, Australia has had the leadership to bring about reform with public confidence. This is the type of leadership that the Prime Minister is providing and the type of leadership that the Leader of the Opposition simply cannot provide. Under the stewardship of the Rudd government, Australia is weathering the global recession better than most. This is due in large part to the stimulus program the government embarked on. The government acted early and decisively to support financial stability, nation building for recovery stimulus, jobs and training. Without the stimulus, Australia would have recorded three negative quarters, following other countries into recession.

The Central Coast economy would have been devastated without the government’s stimulus package. The construction, tourism and retail sectors that my region relies on would have been hit in a major way. One and a half million people work in the retail industry in this country. I represent a large retail workforce on the Central Coast. There is no other section of our economy on the Central Coast that employs more people than retail. Without the stimulus package, thousands of people would have been out of work. Treasury estimates that without the stimulus unemployment would have reached 10 per cent, and I can assure you that it would have been much higher on the Central Coast, where we already have high unemployment and we always have had high unemployment. The Central Coast is a region that has suffered with unemployment for a long, long time. The absence of a stimulus package would set our region further back, more than most.

Thankfully, the government did go down the stimulus path. As a result, we are the only advanced economy to have grown over the past year. Business confidence is at its highest level since October 2003. We have the second lowest unemployment of all the major economies, and we have the lowest debt and deficit of all the major economies. Australia is well placed to emerge from the global recession, but the road ahead will be long and tough.

The Australian Labor Party is the political party of vision and reform. We are the only party with the ability to bring the nation forward through the stormy economic times. We are the only ones with the ability to make tough economic decisions as required while not forgetting Australia’s belief in social justice and the fair go. We need to build for the future agenda. We need a building decade for productivity. This is an important bill in terms of the reforming agenda, and that is one of the reasons why it is important that this bill be passed.

We again look at the opposition in relation to their position on nation-building reforms. It was only two nights ago that, in the House, we saw the opposition vote against a national system of industrial relations. These are reforms that, in the previous government, they said they believed in, but we found through the debate two nights ago that they did not believe in the reforms that the country needed through having a single, national industrial relations system; what they did believe in was Work Choices. What they did believe in was the philosophy of the unfairness of a system that was tipped too far in one direction.

We saw that the shadow minister in his contribution quite clearly articulated that the opposition did not like unfair dismissal laws and did not support them. He was followed by the member for O’Connor, who pointed out that he thinks we should have AWAs, and that is why he could not support the reforms in relation to workplace relations. He also said that there should not be penalty rates for people working on weekends. So what we see from the opposition in relation to economic reform is that they mask their extreme ideology where it suits them in terms of, ‘We need to reform the economy,’ but when they are really put to the test on these issues they fail that test. They are not an opposition, a party, that is about reforming this economy. They are not a party that is about making Australia more productive. They are a party about pursuing an ideological position come what may, and that is all we can expect from the opposition in relation to almost any piece of legislation we have to deal with.

On this side of the House, what we are interested in and what we want to do is to make sure that we build for the future—that we continue to look at measures that can make sure that this next decade is a decade for building productivity. As I said, this bill is part of that reform agenda because it lessens the red tape burden that many businesses suffer. Currently there are over 70 Commonwealth, state and territory laws as well as the common law and rules of equity governing security interests and personal property. These different laws vary in their application according to the form of the transaction, the nature of the debtor or the jurisdiction in which the property is located. This adds significantly to the transaction costs. Personal property securities reform is an important part of COAG’s deregulation agenda.

The fact that this government is actually able to sit down with the states and reach agreement on these national reforms again is in stark contrast to what we saw in the last 12 years of the Howard government where it was, ‘Do it our way; there is no other way.’ They were never prepared to sit down and work with the states in terms of reforming the economy. They had this ideological position and they were going to do it that way, and the states were, for them, only there to be part of the blame game, and that is entirely what the opposition sought to do.

We, on this side of the House, think that it is important that we sit down with the state governments, because if you want to achieve real reform in any area, then you need to work with those governments to make sure those reforms not only are achieved but are lasting, and that is again what this legislation is about. By harmonising the current laws and creating a single national online register, the reform will have real impact on business and consumers. Transaction costs will be reduced and businesses will be able to use more types of personal property to secure lending, resulting in them being able to secure lower interest rates.

The bill will amend 25 Commonwealth acts that deal with the creation, registration, priority, extinguishment or enforcement of interests in personal property. The amendments are necessary to facilitate the establishment of a single national legal regime for security interests in personal property. The amendments will clarify the operation of legislation that will operate concurrently with the Personal Property Securities Bill 2009 once enacted. The bill also makes minor amendments to the Personal Property Securities Bill, which was passed by the House on 16 September.

The Personal Property Securities (Consequential Amendments) Bill contains measures designed to harmonise language and concepts with the Personal Property Securities Bill. The amendments will reduce complexity and increase consistency in the arrangements for creating, dealing with and enforcing security interests in personal property. Importantly, the amendments will support a seamless transition to a single national Personal Property Securities Register by amending provisions in Commonwealth legislation that provide for the registration of security interests on a separate Commonwealth register. For example, the Shipping Registration Act 1981 will be amended to change the current regime for creating and registering mortgages over ships. Existing mortgages over ships, currently registered on the Australian Register of Ships, will be migrated to the Personal Property Securities Register. The result will be that the Personal Property Securities Register will be the sole register for the registration of mortgages and other security interests in ships.

Amendments will also be made to the Designs Act 2003, the Trade Marks Act 1995 and the Patents Act 1990. The registration of security interests on registers created by those acts made after the commencement of the PPS scheme will have no effect on the registered owner of the intellectual property interest. This will encourage registration of security interests in intellectual property on the PPS register and resolve any conflict between the PPS register and the intellectual property registers.

The bill will also reinforce the privacy provisions applied to the PPS Register. The Privacy Act 1988 will be amended to confirm that unauthorised uses of register data are ‘interferences with privacy’ under the Privacy Act and are subject to the Privacy Commissioner’s powers of investigation. The amendments effected by the bill will resolve possible conflicts between the PPS Bill and Commonwealth legislation that provides for other interests in personal property. The bill will make it clear that the PPS scheme cannot be used to frustrate other legitimate interests in personal property.

In relation to the Commonwealth’s maritime and fisheries legislation, for example, this bill ensures that enforcement action taken under such legislation will not be circumvented by a secured party attempting to enforce a security interest under the Personal Property Securities Bill. This bill will also ensure that current rights and interests are preserved after the new PPS scheme commences operation. In particular, where Commonwealth legislation has clearly provided for the priority of an interest in relation to a security interest in the same property, that priority will be preserved upon implementation of the Personal Property Securities Bill. An example is the priority of statutory liens held by Airservices Australia under the Air Services Act 1995.

Some additional amendments to Commonwealth legislation will be needed before the PPS scheme commences. The Corporations Act 2001 will need to be amended as part of personal property securities reform. Prior to the introduction of those amendments, the government will conduct a consultation process on the proposed amendments in accordance with the intergovernmental Corporations Agreement. That consultation process will begin shortly.

I would like to sum up what this consequential bill will do. It will facilitate the establishment of a single national regime for secured lending over personal property. By harmonising legislation across the Commonwealth statute book, the bill will provide greater consistency and support a seamless transition to the new national personal property securities regime. A recent World Economic Forum survey ranked Australia second among global financial centres. Making Australia’s secured transactions law more certain and consistent and less complex and costly will facilitate international investment in Australian businesses. This will further strengthen Australia’s position as a leading global financial centre. I commend the bill to the House.

Robert McClelland (Barton, Australian Labor Party, Attorney-General) Share this | Link to this | Hansard source

in reply—In responding to the debate, I would like to thank members for their contributions. This bill is an important part of personal property securities reform. It will make certain the operation of existing Commonwealth laws following the reform. PPS reform will harmonise Australia’s secured financing laws and will further strengthen Australia’s position as a leading global financial centre.

PPS reform is an important part of the Council of Australian Governments deregulation agenda. There are currently over 70 Commonwealth, state and territory laws, common law and rules of equity governing security interests in personal property. There are around 40 different registers on which security interests in personal property might be registered. These arrangements are unnecessarily complex and result in high transaction costs. This reform will harmonise and rationalise the law to establish a single national regime for secured lending over personal property, relieving business and consumers of a significant red-tape and cost burden. The PPS regime will establish a single national online register to record security interests in personal property.

As members have acknowledged, the Personal Property Securities (Consequential Amendments) Bill 2009 will amend the Commonwealth acts that deal with the creation, priority, extinguishment or enforcement of interests in personal property. These amendments clarify the operation of legislation that will operate concurrently with the Personal Property Securities Bill 2009. This will assist in adding certainty to, and reducing the complexity of, this area of the law. The bill also amends legislation to remove requirements to register security interests on the Australian shipping register and Commonwealth fishing registers. Those interests will instead be registered on the PPS Register. A single register will mean that businesses only need to search and register on one register, regardless of the type of personal property or the location of the debtor. Both lenders and borrowers will benefit from this new, streamlined approach. Consumers will also benefit from being able to make any necessary pre-purchase inquiries in one place.

PPS reform will also facilitate the use of different types of personal property as collateral in accessing secured lending. This is likely to be of particular benefit to small businesses. Australia’s secured transactions law will become more closely aligned with legislation in the United States, Canada and New Zealand. This is an important initiative in the context of our current economic climate. This regime will open up new opportunities for Australian businesses to access more competitive domestic and international financing.

The bill also seeks to address concerns raised by stakeholders through the recent Senate committee inquiry into the provisions of the PPS Bill. I thank the inquiry and senators for their contribution. Some minor technical amendments to the PPS Bill have been incorporated in the bill. The amendments have been included in the bill rather than moved as government amendments to the PPS Bill in order to avoid the need for a further referral of power from the states.

I should acknowledge that this bill was prepared with the assistance of my ministerial colleagues and I thank them for their commitment to reform of this area. In conclusion, by harmonising the law and creating a streamlined approach to secured lending, PPS reform will generate real benefits for all parties involved in secured finance.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.