STATUTES AMENDMENT (PERSONAL PROPERTY SECURITIES) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 24 November 2010.)

Ms CHAPMAN (Bragg) (16:38): The opposition will be supporting this bill. I indicate that the bill before us today—

The DEPUTY SPEAKER: Sorry, member for Bragg, could you just indicate whether you are the lead speaker?

Ms CHAPMAN: I can, yes, and I am. Actually, I think I will be the only speaker, but my inspiring speech may bring forward others who will be keen to make a contribution. The Statutes Amendment (Personal Property Securities) Bill follows the Personal Property Securities (Commonwealth Powers) Bill, which we dealt with back in September 2009, and that was the first of a proposed series of legislation to effect the decision made at a standing committee of attorneys-general on 6 and 7 August 2009. They, in turn, had made a decision based on the recommendation of a report of the Australian Law Reform Commission back in 1991. So this is stage two of a 20-year-old recommendation, which the Howard government had initiated back in 2007 and then, as I say, over time it reached a standing committee of attorneys-general in 2009.

In principle, the proposal that this legislation continues to endorse is on the basis that the attorney-general of the day had accepted that there would be a benefit in harmonising Australia's laws on secured financing using personal property, and that the transfer of the registration process from a number of different registers that operated in state jurisdictions would offer that harmony. This, presumably, is followed by promises of having a cheaper, more efficient system.

I will not dwell today on whether that will be achieved. Obviously, one hopes that a single national regime which applies consistency across Australia to any transaction that creates a security interest in personal property will indeed follow. I am not confident that it will be any cheaper. I am happy to suggest that what will follow is that a national register will make it a little easier for the institutions that operate across the border.

The new registry will take some time to establish, and so there is a commencement date of, I think, 1 May, and I am advised that that is to facilitate the necessary preparatory work for the major departments to be in readiness for this transfer. Essentially, that is the closing down of our registers and then going online at the national level.

The opportunity, also, as this progresses, is to contemporise the manner in which we register and make available access to the information on the register. Essentially, this new PPS registry is intended to provide online access and that will, therefore, facilitate 24-hour access to any of the users, and they will be able to register financing statements, attach documents to financing statements, amend existing financing statements, cancel financing statements, manage secured party groups, search the register, obtain search results, and obtain reports.

Again, if the online service is established, and operates well, then one can foresee that 24-hour access to this registry, and being able to obtain this information or change or register that information, will be an improvement for consumers. In South Australia, registries under the Goods Securities Act 1986, the Bills of Sale Act 1886, the Co-operatives Act 1997, the Liens on Fruit Act 1923, and the Stock Mortgages and Wool Liens Act 1924 will all be subsumed.

However, some registries, it is agreed, should be retained and operated by the state. I do not have that list immediately in front of me but, essentially, my recollection from the second reading explanation of the Attorney-General is that these would cover areas of fishing, aquaculture and mining where there is a very specific statute-making provision for the administration of those industries including licensing and permit arrangements, and that is something that will be retained at the state level, both in regulation and administration, including the registry of licences. Essentially, they are in the petroleum, mining, fishing and aquaculture industries.

I understand from the Attorney-General that there may be some further exclusion to cover future indentures relating to the mining industry and, subject to his comments on that, I anticipate that the opposition will also be supporting that.

A concern that the opposition had during the consultation process was that, when it received a briefing on this bill confirming that this was a continuation of a COAG agreement—it was part of the process that was previously started—the only people who seemed to be advised about this new legislation were government departments. The department of transport, which I will use as an example, was quite legitimately and appropriately advised. It holds a number of securities particularly over motor vehicles and, of course, it is proper that it was consulted. Our concern was not that the departments were consulted, but that other non-government agencies were not consulted.

As a result, the Hon. Stephen Wade of the other place made approaches to a number of other organisations. They included the Australian Bankers' Association, the Australian Finance Association, the Co-operative Federation of South Australia, Elders stock agents, Landmark stock agents, and Motor Trade Association. These are all legitimate parties. I now indicate that most of them confirmed that they either did not have a problem with it ultimately or were in support of the legislation.

I place on the record my concern—and I think this is also shared by the Hon. Stephen Wade—that these people were not asked at all in the first place, and they should have been. These people also have to get ready for any change to a national system, especially if their organisations have retained records that have not always been on electronic record. There are plenty of dungeons and basements of buildings full of old security documents, many of which have probably expired in time, but nevertheless it is a process which they need to undertake to go through their documents, just as the Department of Transport has done and has taken a reasonable time to do. So in future we urge the government to properly consult on these matters and not just go to those that they might be directly responsible for such as government departments or agencies or other institutions that are under the umbrella of this parliament.

The other matter I wish briefly to refer to is the question of what is in and what is out. When we debated this matter back in 2009 with the first part of the legislation which identified that there would be a referral of state powers to the commonwealth to deal with this issue, it was made absolutely clear that there was not going to be any change to the definition of personal property. 'Personal property' is goods and chattels and the like but specifically excludes land, which I am sure would be obvious to all members, but it also excludes water and fixtures.

I note from the debate and briefings around the current legislation that there is also some question about whether, in future, fixtures would be included as an entity upon which a personal security might attach. Members would be aware that currently, if one has a piece of real estate and it is improved with a dwelling or a shed or an airstrip or a fence, these are all known as fixtures and they are excluded for the purposes of being available as security. Largely, the definition of interrelationship there requires that there be some attachment to the land for it to be disqualified from being identified as personal property.

It is fair to say that there is a whole regime of taxes and a whole regime of law which relates to those improvements or fixtures and, therefore, the increased value of the land that is relied upon for the purposes of mortgages or security over that land with improvements. So if there is to be a transfer of what we now know as fixtures into the personal property realm, we open a whole new regime not only of what is available for security and register under this national scheme but what might be taken away, either deliberately or inadvertently, as what is now proper security for existing liabilities which would no longer be covered.

I will give you an example: if a fence on a piece of property is identified as a fixture, the value of that piece of property with the fencing is the basis upon which a loan is advanced to the landowner, that amount takes that value into account, it is secured over the property. If fences transfer into personal property, as part of an increased definition of fixtures, then essentially that would evaporate the value of that security for the purposes of the land mortgage. I hope that is a simple example that illustrates the concern that we would have if there was to be a change of law on the definition of personal security.

Equally, we have other items which may in the future come into fruition as being defined as personal property. One of them, which has been floating around for some time, is the question of water. At present, if you have 10 dams full of water and you have a good rainfall, you cannot go to the bank and say, 'Look, I want you to value my water for the purposes of obtaining a loan.' You can try, but the reality is you will not get a loan based on the value of your water in those dams.

In the event that governments introduce a regime where there is a licence, permit or prescription attached to water in a dam on a piece of property and that the value of that licence, prescription or permit may be able to be transferred, sold or encumbered, then that may well create another entity upon which we would look to enter that in as a piece of personal property; that is, extend the definition to cover it. However, we are yet to see that.

At present, water sitting in someone's tank or sitting in someone's dam is not a piece of personal property as defined for the purposes of registering of securities. Even if it is foreshadowed by governments in the state jurisdictions that they may proceed to enter into or provide for that in the future, then I would be certainly concerned to want to participate fully in the debate as to whether that water should be defined as personal property in those circumstances, and, if it did, whether, in fact, like mining, agriculture and fishing licences, we would retain as a state jurisdiction the right to deal with those.

In anticipation that there may be other amendments to cover that I hope I have made our position clear, that is, we will not be signing up to that until we have had a full debate on it. With those comments, I indicate that I will be supporting the bill and would expect the opposition members to follow suit.

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice, Minister for Urban Development and Planning, Minister for Tourism, Minister for Food Marketing) (16:53): I thank the member for Bragg for her contribution. This matter, I am pleased to note, is one that in substance finds agreement with the opposition. As the honourable member has noted, it is a matter that has its origin in the processes of COAG and other national bodies.

I just wish to foreshadow to members that I will be seeking to move the bill in a slightly amended form, and I will deal with those proposals in the committee stage, unless people would prefer to me to deal with them now.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 16 passed.

Clause 17.

The Hon. J.R. RAU: I move:

Page 10, after line 7 [clause 17,inserted section 47]—After line 7 insert:

(2) The Governor may, by regulation—

(a) provide that this Act is to apply to prescribed bills of sale, or bills of sale relating to property of a prescribed kind, as if it had not been amended by the Statutes Amendment (Personal Property Securities) Act 2010 (the amending Act) or as if specified amendments made by the amending Act had not been made; and

(b) make any consequential provision necessary in connection with a regulation under paragraph (a).

(3) The Registrar may provide such information concerning bills of sale, or other information recorded by the Registrar in connection with registration under this Act, as the Registrar considers appropriate to the person responsible for maintaining a register under another Act if the information is provided in accordance with an arrangement entered into by the Minister with the Minister responsible for the administration of the other Act.

The background to this might be helpful to those opposite. This was, as so many things have been in the last few years, a commonwealth initiative. To the extent that there was consultation in the matter, the consultation was driven by those people who were the progenitors, if that is the right word, of this reform. So it may or may not be that consultation was not as adequate as members opposite might have hoped for but that was not a matter within the control of the government here.

Anyway, this amendment to clause 17 comes about in this way. The reforms are scheduled to commence in October of this year. Information on state registers will be transferred to the personal property securities register and the state registers will close to new registrations. The Statutes Amendment (Personal Property Securities) Bill 2010 will amend relevant legislation to exclude some statutory licences from the operation of the Personal Properties Securities (Commonwealth Powers) Act 2009.

Consequently, bills of sale over excluded licences will not be transferred to the personal property securities register when it commences in October. Arrangements for those interests to be registered elsewhere are underway. Amendments to the Natural Resources Management Act 2004, that will establish a register and regime for dealing with interests over water licences—and I pause here to say it may or may not, depending on what transpires here, and I note the honourable member's remarks about that, but assuming they were passed but not commenced—and similar amendments to the Fisheries Management Act 2007 and Aquaculture Act 2001 are under consideration.

As commencement of the necessary registers and amendments may not coincide with commencement of the PPS reforms, this amendment will ensure that existing and new bills of sale over excluded licences remain and continue to be registered on the bills of sale register until that information can be transferred to the appropriate registers.

So, I guess in answer to the remarks the honourable member made previously in the second reading contribution, there are two separate questions. The first is: what will, in fact, be a licence that is sitting around the place but not picked up yet, and that is a debate that we may well have about water. However, the point we are trying to make here is that, whatever they might be, we do not want them to disappear into a void.

So, this is essentially a preserving provision that says whatever they might be, however they might have arisen (and we are just speculating here that they might arise, conceivably, in an untimely way under the Natural Resources Management Act as a water licence or they might, conceivably, arise under the Fisheries Management Act or Aquaculture Act), if and when those circumstances arise and the transfer across cannot be achieved, there is a repository, if you like, for those rights. So that is the intention of that amendment and I have moved that amendment accordingly.

Ms CHAPMAN: I thank the minister for his explanation and indicate that I will not be holding up the passage of this legislation in this house but, on behalf of the opposition, we will certainly reserve our right to deal with this matter differently in another place. However, I will say this: there seem to be two areas the government is attempting to deal with here. One is items which currently exist on a state register which have not been identified as excluded and may not be picked up. They were found later—and they may only be very small—but they do currently exist and they are going to slip through the net unless we have a catch-all clause. In that regard, I anticipate that the opposition will not be opposing that.

We would have hoped that, by this stage of the progress of investigation of matters, we would have identified what they might be. Nevertheless, the government will have an opportunity to continue to search for those, and I am sure it would be happy to advise the house if it became aware of them so that they could be picked up at the time we deal with this in another place.

The second area to which I have referred in my second reading contribution is the provision for the transfer to the national body or, in this case, to actually secure it ultimately in a list as an addition to current securities within the categories of exclusion. I am not quite sure which but, either way, they relate to the establishment of a permit, licence or a prescription which is not yet in existence and which we have not yet debated or concluded either by legislation or by some ministerial regulation, namely some subordinate legislation.

Whether they even come into existence is a matter yet to be determined and, if they do, we have the power, as a legislator here, to provide for a statutory amendment bill to cover that. In my view, that is the proper order in which to deal with that. We should not be attempting to have a catch-all clause to cover something that might come into effect between now and October.

The other aspect of that is that I think we need to have a discussion—especially about something as important as water, about which there has been considerable discussion and debate—about whether water is going to be a tradable entity in the future and whether that is water out of the River Murray, out of a bore or out of someone's dam or tank, or anything else. These debates are yet to be had.

Whilst I would personally say that, if there is any kind of prescription or licensing of water, I would be very concerned if we were to transfer the regulation to a national body of any kind. I would certainly argue in my party room the need to secure the management, regulation, administration, support and/or any registration of the licensing here in South Australia.

At the moment, the Natural Resources Management Act and, I think, the Fisheries Act and the Aquaculture Act are the acts being referred to as likely to pick up these permits, licences, prescriptions—whatever they are going to be defined as—between now and October. They are state acts, so I assume that they will be in this tranche of legislation which is currently in the exemptions category.

In any event, in my view, the issue of whether they come within the definition of personal property and then whether they are administered at a state or federal level is something we should debate if and when that comes into effect. So, I just foreshadow that. It may be that my party room has a different view. It may be that persons in another place have a different view, but I simply say that this is the caution with which I approach this amendment. I indicate that I will make no further statement, and perhaps wiser heads than mine in another place will make a contribution.

The Hon. J.R. RAU: As I understand it, there is no intention whatsoever in South Australia—or indeed any other state—to allow the national register to affect water. Every jurisdiction has made it clear that it wishes water to remain a matter for them. The other thing is that the water register, as I understand it, is presently under construction, the legislation for its establishment is already there, so we are anticipating the possible completion of that construction exercise before October, in which case some place where the register can be held will be necessary.

Each of the examples here are examples of things which are intended to be excluded from the national register. These are not things we are wishing to hand over to the national register: quite the contrary. I hope that in some way addresses the matter that the honourable member has raised.

Amendment carried; clause as amended passed.

Clauses 18 to 53 passed.

New clause 53A.

The Hon. J.R. RAU: I move:

New part, page 22, after line 8—After Part 21 insert:

Part 21A—Amendment of Roxby Downs (Indenture Ratification) Act 1982

53A—Insertion of section 5A

After section 5 insert:

5A—Certain rights etc are not personal property for the purposes of Commonwealth Act

The following are not personal property for the purposes of the Personal Property Securities Act 2009 of the Commonwealth:

(a) a Special Tenement;

(b) a right, entitlement or authority granted by or under this act that is of a kind declared by the regulations not to be personal property for the purposes of the Personal Property Securities Act 2009 of the Commonwealth.

The specific issue here is in relation to the mining industry, in particular. This is consistent with amendments to the Mining Act 1971 and in response to recent instructions from the Department of Primary Industries and Resources.

The Roxby Downs (Indenture Ratification) Act 1982 will be amended to exclude special tenements from the operation of the PPS act. In other words, they will continue to be something that we look after. New part 21A is to explicitly comprehend that fact. Provision is also made for further exclusions to be made by regulation, which, pursuant to section 10 of the act, requires agreement of the parties to the indenture.

I think it is fair to say that this is pretty well focused on the Roxby indenture and what might or might not transpire there. Again, the effect of it is to bring that into our orbit as a state, rather than allow it to pass into the PPS arrangements. I believe there has also been a request from BHP that this matter be the subject of an amendment to make clear that position.

Ms CHAPMAN: Again, while the opposition has not considered this specifically, on the Attorney-General's explanation it appears to have merit. It is a matter that has been anticipated. The fact that BHP has asked for it probably indicates its confidence, seeing as the current assessment processes at the Northern Territory, state and commonwealth levels are progressing favourably and it does anticipate some opportunity to have a mining licence issued at the end.

With this further redevelopment, and ultimately the indenture, I assume that will come here for the endorsement of the parliament. In any event, the specific provision for such indentures—either as a special tenement or as an indenture—should indeed remain excluded, as we currently make provision for other mining operations. I do not anticipate that there will be any objection to this in another place.

New clause inserted.

Remaining clauses (54 to 66) and title passed.

Bill reported with amendment.

Third Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice, Minister for Urban Development and Planning, Minister for Tourism, Minister for Food Marketing) (17:12): I move:

That this bill be now read a third time.

Bill read a third time and passed.