Second Reading SpeechDr Emerson (Minister for Small Business, Independent Contractors and the Service Economy, Minister Assisting the Finance Minister on Deregulation and Minister for Competition Policy and Consumer Affairs)
That this bill be now read a second time.
The bill is the second suite of consequential amendments to Commonwealth legislation brought about by the passage of the Personal Property Securities Act 2009.
Personal property securities reform is an important part of COAG's deregulation agenda.
By harmonising the current laws and creating a single national online register, the reform will have a significant positive 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.
Consumers will be able to protect themselves by more easily checking whether major purchases, such as motor vehicles, have money owing on them.
The main purpose of the bill is to amend the Corporations Act 2001.
These amendments are necessary to establish a clear and consistent single national legal regime for security interests in personal property.
The bill will amend the Corporations Act to close the ASIC register of company charges once the new PPS register begins to operate.
The bill will also ensure the conceptual consistency between the Corporations Act and the Personal Property Securities Act.
Importantly, it will do this while preserving the rights of parties under the Corporations Act.
The bill also makes minor amendments to the Personal Property Securities Act.
These amendments will simplify the transitional provisions in the act.
The PPS Act will also be amended to clarify that the act is, in its application to the enforcement of security interests in agricultural products, consistent with the state and territory legislation it will replace.
Finally, the bill will make minor amendments to other Commonwealth legislation.
Before I turn to look at the bill in more detail, I must acknowledge the work of the Senate Standing Committee on Legal and Constitutional Affairs, which has taken a keen interest in PPS reform.
The bill I introduce today contains amendments to the PPS Act made as a result of submissions to the committee and to the Attorney-General's Department following the committee's August 2009 report on its inquiry into the PPS Bill.
The efforts of the committee and the wide range of stakeholders who have participated in the extensive consultation on PPS reform undertaken by the government have contributed much to the final form of the legislation.
I should also note that in relation to the Corporations Act amendments, the Commonwealth has complied with clause 506(1) of the Corporations Agreement 2002 and has obtained the approval of the Ministerial Council for Corporations prior to introducing this bill into parliament.
Amendments to the Corporations Act
The amendments to the Corporations Act will achieve four objectives.
First, Chapter 2K of the Corporations Act, which established the register of company charges, will be repealed.
When the new PPS scheme begins operation in 2011, registrable company charges will be registered on the PPS register.
Charges currently registered on ASIC's register of company charges will be migrated to the PPS register.
The bill ensures that the data on the register of company charges will continue to be available as a record of existing charges for a period of seven years, should recourse to the original data be needed.
Second, the amendments will amend the terminology of the Corporations Act to make it consistent with the PPS Act. This will include removing the distinction between different forms of security interest, so as to treat transactions that secure payment or performance of an obligation as security interests, regardless of their legal form.
The third objective is to ensure the Corporations Act treats property provided by a supplier on a 'retention of title' basis as secured property. Many businesses supply goods on this basis, retaining title to the goods until the purchase price is paid. Treating such supplies as secured property is consistent with the PPS scheme's approach of treating transactions that in substance secure payment or performance of an obligation the same way, regardless of the form of the transaction.
Finally, the amendments will ensure that certain existing rights under Corporations Act are not interfered with.
Importantly, the special priority in favour of employees to their employment entitlements over unsecured creditors will be maintained.
Amendments to the PPS Act
The PPS Act includes transitional provisions which deal with the status of security interests under the new law from the commencement of the PPS Act until the end of 24 months after the registration commencement time.
These provisions will have particular significance during the period when both old and new security interests are in existence. The government is therefore keen to ensure the provisions are as simple as possible.
Following stakeholder comment, this bill includes measures to streamline the transitional provisions.
The bill does this by treating all security interests during the 'transitional period' as if they were created under the PPS Act.
If enforcement action were to be taken in relation to a pre-PPS Act security interest in the 'transition period', they would be enforced under the current law, rather than under the PPS Act.
Similarly, where there is a priority contest between two pre-PPS Act security interests, the contest will be determined under the current law.
The bill also clarifies how crops and livestock may be used as security.
The proposed amendments reflect current state and territory law and will have the effect of ensuring there are enforcement rights for parties to security agreements involving crops and livestock.
Amendments to other Commonwealth legislation
The bill would make other minor amendments to Commonwealth legislation.
The Proceeds of Crime Act 2002 would be amended to ensure that the priority provided to amounts owing to the Commonwealth in relation to proceeds of crime actions would continue after the PPS Act commences full operation.
The Proceeds of Crime Act and Mutual Assistance in Criminal Matters Act 1987 would be amended to ensure that the priority of the Commonwealth to amounts owing for action to recover the proceeds of crime would continue after the PPS Act took effect.
The Proceeds of Crime Act would also be amended to ensure that the Commonwealth Director of Public Prosecutions could, subject to the PPS regulations, use the PPS register to protect property subject to proceeds of crime interests.
Finally, a range of other Commonwealth legislation would be amended to reflect changes made by this bill to the transitional provisions of the PPS Act.
This is the last significant bill to be introduced to implement the important PPS reforms. As the minister said when introducing the Personal Property Securities Bill in the House last year, PSS reform will increase certainty for all users of secured finance by removing barriers that preclude businesses and individuals from using personal property as security.
By reducing complexity and introducing greater consistency between the different kinds of security interests, the new PPS system will generate wide-ranging benefits for all parties who use their personal property to raise finance.
PPS reform will meet the needs of businesses and other users of secured finance.
It will simplify the way they conduct their business and, more importantly, it will contribute to the productivity growth and jobs in this country.
Debate (on motion by Mr Andrews) adjourned.