COVID-19 Emergency Response (Further Measures) Amendment Bill

In committee (resumed on motion).

Clause 4.

The Hon. K.J. MAHER: This has become slightly messy, and again there is a reason for that. When you introduce a bill on the Tuesday of a sitting week and expect it to pass that week, which we are prepared to do, this is sometimes how it can occur. The Hon. Rob Lucas is taking his medicine for his government doing that, which is good.

I flagged that I was intending to move an amendment before we adjourned this on motion. An amendment has been drafted which, if it is not filed, there is a button being pressed to file it as we speak. I think all relevant parties have a copy of what that amendment looks like, and I will read it out for the benefit of everyone in the chamber. At clause 4, page 5, after line 18, where a new subsection (2a) and (2b) were inserted after subsection (2), I am proposing to delete both subsections (2a) and (2b) of the bill as amended and replace them with subsection (2a) as follows:

(2a) In ordering any rent relief under regulations made under this section, the court is to have regard to the leasing principles set out in the National Cabinet Mandatory Code of Conduct—SME Commercial Leasing Principles During COVID-19.

The other amendment that was passed, which is a consequential amendment that defines rent relief, still remains—I am not proposing to amend that.

As was spoken about earlier tonight, this in effect imports the language from the regulations in New South Wales into the legislation in South Australia. We believe that the principle of proportionality is reasonable. It is one that was agreed to by the national cabinet, which included the Premier of South Australia. We have not heard anywhere that there were objections in the lead-up to 30 March or the 7 April formal putting out of the national code from the Premier, who sits on the national cabinet. There is no suggestion that there was any criticism of the national code. We have since heard criticism of the national code and the idea of proportionality.

The national code endorses, as does the Prime Minister of Australia, that the concept of proportionality strikes the right balance in helping protect, often, small tenants in commercial leases. We think it is important that this is put in the legislation. Given the very strong views stated by the Treasurer, we think it is important that it is put in legislation and not in any way left up to regulation. Quite frankly, the only thing that we as members of this chamber can do about regulation is to disallow the whole lot, to make a scheme that comes into force inoperative. We think that is an entirely suboptimal thing to have to do if we disagree with what the government eventually decides to do in regulation and that this is the only way to be sure we are applying this principle of proportionality that we now learn is in other jurisdictions.

I invite the Treasurer to place on record what he has told the chamber previously about proportionality. We were told in the hours leading up to now that it was a terrible idea, that every jurisdiction in Australia hates it and none were going near it. We now find in the only other regulation we have had a look at, which is New South Wales, it is front and centre of what they are doing. Given what the Treasurer told the chamber about the view that no other jurisdictions were doing this—which we find to be not entirely correct; in fact, quite the opposite—we think it is absolutely crucial that these principles are put into legislation and not put into regulation.

If these are put into legislation and the government does not bring into force the act or, in particular, this section of the act—I would ask the Treasurer if it is possible to bring into force sections of the act and not others—and if this section of the act or the act in its totality is not brought into force, it is on the government for not giving relief to, often, many small commercial tenants. With that, I move the amendment that has now been filed, as I read out, to delete subsections (2a) and (2b) of clause 4 and replace it with (2a) in the terms that I have read out and in the terms that have now been filed. I move:

Amendment No 1 [Maher–1]—

Page 5, after line 18 [clause 4, inserted section 7]—After subsection (2) insert:

(2a) In ordering any rent relief under regulations made under this section, the court is to have regard to the leasing principles set out in the National Cabinet Mandatory Code of Conduct—SME Commercial Leasing Principles During COVID-19.

Amendment No 2 [Maher–1]—

Page 7, after line 2 [clause 4, inserted section 7(7)]—After the definition of relevant Act insert:

rent relief means any form of relief in respect of the liability or obligation of a lessee under a commercial lease to pay rent (including waiver or deferral of rent).

The Hon. R.I. LUCAS: I agree with the Leader of the Opposition that it is a slightly messy process, but let's hope that we can resolve the mess. Mr Chairman, I will seek your guidance in a tick about where we are actually up to in terms of the amendments, because I have actually moved on rescission and I think the leader is now moving an amendment. We are nevertheless opposing the leader’s amendment, but in terms of what the process is, I will leave you and your officers to work through how we vote.

I am not going to repeat the arguments. We know the positions and the arguments in relation to this. However, the new issue the Leader of the Opposition has raised is that in the regulations, at the stage of the parties negotiating—not at the stage of the court ultimately making a decision—what are the guidelines that guide landlords and tenants in terms of how they conduct themselves and negotiate in good faith? In New South Wales, as a guideline there—although I do not know that it has actually arrived yet—regulation 7(4), Obligation to renegotiate rent, etc., provides:

The parties are to renegotiate the rent payable under, and other terms of, the commercial lease having regard to—

(a) the economic impacts of the COVID-19 pandemic, and

(b) the leasing principles set out in National Code of Conduct.

That is the reference that the member has referred to in New South Wales; that is, at the stage of negotiation between the lessor and the lessee there are various things they take into account in terms of their negotiation, one of which is having regard to the principles. It is not mandatory, it is not enforceable, but nevertheless it is something they have to have regard to in relation to the issue.

In opposing the Leader of the Opposition's original amendment and his revised amendment that he has just flagged, what I have raised with the leader, which he is not prepared to accept, but I am raising with the Hon. Connie Bonaros, the Hon. Frank Pangallo and others, is that we will move in the spirit of compromise to the same position as the New South Wales government.

In our regulations, which we hope to gazette tomorrow to start the firing pistol in relation to all of this, under the heading of 'Obligation to parties to commercial leases to negotiate in good faith'—and we have provided the draft regulations to members in their briefings earlier this week, which is the same stage that New South Wales have their provision in—it currently reads:

The parties to a commercial lease…must [during the prescribed period] make a genuine attempt to negotiate in good faith the rent payable under, and other terms of, the commercial lease…having regard to—

(a) the economic impacts of the COVID-19 pandemic on the parties to the lease;

That is very similar to the New South Wales (a). Then:

(b) the provisions of the Act and these regulations;

And we are now proposing to add (c), which is similar to the New South Wales one, which says, 'shall have regard to the provisions of the National Cabinet Mandatory Code of Conduct—SME Commercial Leasing Principles During COVID-19 published on 7 April 2020'. I think that is a workable compromise that we think landlords and the government can live with. It meets, in part, the intentions of the opposition and other crossbenchers.

I accept the opposition wants it in legislation because they do not trust the undertaking that I might give on behalf of the government, and that is fair enough. I think it is unfair, but it is fair enough for them to think that. On behalf of the government I give an undertaking, absolutely, to insert in regulation 6 the new paragraph (c), which will read 'the provisions of the National Cabinet Mandatory Code of Conduct—SME Commercial Leasing Principles During COVID-19 published on 7 April 2020'.

At this late hour, I think that is a reasonable compromise. In the event that I renege on my commitment or I am struck dead between now and Executive Council in the morning—heaven forbid—or whatever, and it did not translate, the parliament always has the power to disallow the regulations anyway. I have given a personal assurance to the Hon. Ms Bonaros and the Hon. Mr Pangallo that that will be part of the regulations the government institutes. It is a commitment not just from me but on behalf of the government in relation to it.

With that, I would urge members to oppose the new amendment from the Hon. Mr Maher and also to, I assume—in what order, I am not sure—delete the original amendment that was passed earlier on the basis of the undertaking I have now given on behalf of the government, when we gazette new regulations hopefully tomorrow morning at 9 o'clock or 9.30, to include that new provision I have now placed on the public record.

The Hon. K.J. MAHER: I think I need to respond. The Hon. Rob Lucas is playing it a bit fast and loose with how he is characterising things here. We heard earlier on tonight that no other state is having regard to proportionality: 'Believe me, no one at all. All of us treasurers hate it, and no other state is implementing it.' That is what he had the chamber believe earlier today. That is what he was trying to sell to us earlier today. The only other one that we have had a look at is New South Wales and it was the opposite of what the Treasurer was trying to convince the chamber.

I would ask the Treasurer: does he stand by his comments that every single other jurisdiction that has implemented it does not like the idea of proportionality and is not implementing it, because the only one that we can see flies in the face of what he said? Having been proved wrong on that, the Treasurer is now trying to convince the chamber, 'Alright, you caught me out; New South Wales do it. I might have been playing a bit fast and loose with the truth when I said no-one else is doing it. Fair enough. New South Wales gives regard to leasing principle No. 3—in particular, leasing principle No. 3—but that's only when the parties are negotiating.' That is his new tactic now to try to convince us it only relates to when parties are negotiating that they should have regard to this idea of proportionality and the national principles.

I invite the Treasurer to inform the chamber and particularly the crossbenchers what the effect of regulation No. 9 is, if it is not to give effect to the National Code of Conduct that has proportionality as its primary concern for courts and tribunals. The Hon. Rob Lucas, secondly, wants us to believe, after being found out last time, that the New South Wales regulations only apply this idea of proportionality to negotiations. I would be most grateful if the Treasurer could explain what in fact, then, regulation No. 9 in the New South Wales regulations does.

The Hon. R.I. LUCAS: Gladly. Again, we are only delaying the debate here. Ultimately, it will be a decision for the crossbenchers, because our position is different from the Leader of the Opposition's. The clear difference is that all New South Wales has done is said 'shall have regard to'. There is no enforceability. I am very surprised that, as a lawyer, the Leader of the Opposition does not know the difference between legal wording which says 'shall have regard to' and the legal enforceability of something. The Leader of the Opposition's amendments were, 'Any rent relief ordered by a court should, as far as practicable,' etc., 'be proportionate.' They were the original amendments that were being moved by the Leader of the Opposition.

We can talk about 'fast and loose' and whatever else, but the government's position remains the same; that is, no other jurisdictions, Labor or Liberal, have implemented word for word the mandated national code. I do not think even the Leader of the Opposition is contesting that particular statement. No other jurisdiction is doing that in the way that the national code requires proportionality in terms of the final decisions in relation to whatever 'binding mediation' means; that is, a strict proportionality. New South Wales does not deliver that either. It says 'shall have regard to', which is significantly different to the provisions of the national code.

Another thing I am advised is that the regulation No. 9 the member is talking about in New South Wales has nothing to do with rent relief at all. It talks about recovery of possessions of premises, it talks about terminations of leases and it talks about the exercise or enforcement of another right of a lessor. It has nothing to do with rent relief, contrary to the inference or the impression the Leader of the Opposition was seeking to give to the crossbenchers.

The Hon. K.J. MAHER: I would be keen to see the Treasurer's review of the Tasmanian tenancy legislation passed on 8 May, particularly in relation to whether the Hon. Elise Archer, Attorney-General and Minister for Building and Construction in Tasmania, is correct when she says that the purpose of their system in Tasmania is to give rent reductions and that 'the lessor must provide the lessee of a protected lease a reduction in rent in line with the provisions provided in the code'.

Is he aware of what Tasmania has done, or is he a bit blank and fuzzy about what Tasmania is doing? I would be very keen for the Treasurer to inform the chamber, because that is the only other one. I am just reading it now, but it does seem to reference the national code pretty clearly and strongly. The distinct impression the Treasurer was trying to give us was that other states were not doing do that. It seemed to be two for two that contradict what the Treasurer tried to sell earlier.

The Hon. R.I. LUCAS: We can go around and around. As I have just highlighted, in relation to New South Wales the claims that the Leader of the Opposition made were wrong. He was saying in relation to rent relief, regulation 9 said thou shalt have regard to—

The Hon. K.J. Maher interjecting:

The Hon. R.I. LUCAS: Yes, you did, in relation to the national code, and it has nothing to do with rent relief contrary to—

The Hon. K.J. Maher interjecting:

The Hon. R.I. LUCAS: The government is not going to convince the Leader of the Opposition in relation to its position, I accept that. The opposition is not going to convince the government in relation to its position. I think our positions are generally known now in terms of this. We have given an undertaking to the parliament, but in particular to the crossbenchers that, consistent with New South Wales, we will amend our regulation 6 along the lines that I have already indicated, which is consistent with the regulation that now exists in New South Wales, that is, to have regard to the provisions of the national code and in particular the leasing principles.

The Hon. C. BONAROS: Can I say for the record, frankly, neither the government or the opposition are going to convince SA-Best. We are looking at this from our perspective and trying to get a resolution here that we think meets the concerns that have been raised by the opposition and the concerns that have been raised by the government. I will reiterate what I said before, that is, I think whichever approach we take the outcome is going to be the same.

Clause 6 of the regulations currently provides the obligations of parties to commercial leases to negotiate in good faith. The Treasurer has just given an undertaking—and I am happy to take him at his word, and he knows that there is a disallowance that will come if he does not follow through with his commitment today—that he is happy to add in there provisions along the lines of what the Hon. Kyam Maher has outlined in his amendment, that is, a new paragraph which says that there will be provisions of the code of conduct SME commercial leasing principles during COVID-19. That is consistent with the changes to the amendment that the Hon. Kyam Maher just moved.

I go back to the point I made earlier this evening, that is, clause 9 of those regulations already enables the court to consider, irrespective of whether the Treasurer likes it or not, the issue of proportionality. In my reading of it, the clause is broad enough already, that is subclause (8), to include proportionality and I think, on the Leader of the Opposition's own interpretation of subclause (b), the reduction in turnover of the business of the lessee during the prescribed period already covers the issue of proportionality.

Whatever we decide here about using the word explicitly—proportionality or otherwise—the reality remains that if a matter proceeds to court there is nothing preventing the court from taking into account the issue of proportionality. It will do so under subclause (b) when it considers the reduction in turnover of the business of the lessee during the prescribed period, and it can do so under subclause (g), any other matter that the court thinks fit.

In that regard, I am confident that the issue of proportionality can be canvassed by the courts but I will go one step further and say that I think there is some benefit in providing the additional clause earlier than when a matter reaches court by inserting it in clause 6 of the regulations because that is when the parties to a lease are actually negotiating in good faith.

I think, in some respects, the compromise that has been reached by the Treasurer—and I appreciate it has taken a while to get him here—does potentially go a step further than even he anticipated insofar as it will force this matter to be considered before we even get to court. On that basis, I am confident that the Treasurer (a) will stick to the undertaking that he has given, and (b) will ensure that no issue including proportionality is left out of any negotiations. On that basis, we are happy to accept the Treasurer's undertaking and agree to the proposal that he has put to us, which obviously means not supporting the opposition's amendment.

I just have one comment to make in relation to suboptimal regulatory regimes and inoperative schemes. I remind the Leader of the Opposition and indeed the government that we are always in here arguing for clauses to be inserted into legislation as opposed to regulations. We always think that is a better way of making laws. There is nothing good about the way that we are making these laws. I have made that abundantly clear since we started considering these COVID-19 emergency response bills.

The entire substance of this scheme in this instance is contained in regulations. We are only supporting a bill which sets out a very thin framework and the entire substance of what we are agreeing to in this instance is actually being dealt with by regulations. If those regulations are suboptimal, if they are inoperative, if they are problematic, does not stick to the undertaking he has given tonight, then as we know those regulations—the entire scheme—will be subject to a disallowance motion. For those reasons, I am confident that the compromise the Treasurer has proposed—and I will again point out that it has taken us a whole to get here—is a suitable compromise in this instance.

The Hon. T.A. FRANKS: For the record, although this is part of the legislation that is being handled by my colleague the Hon. Mark Parnell, he has given me some instructions, given he is currently on a Zoom conference, that we are still supportive of the Labor amendments to the act in terms of reaching a compromise. I understand that when the Treasurer refers to the crossbench—perhaps he might further differentiate the crossbench on one side to the other.

I am not comforted by promises that issues will be addressed in regulations. I am not comforted by the fact that we will not come back for several weeks. I am not comforted by the fact that we were only given a briefing on this bill on Tuesday. I am not comforted by the fact that, time and time again, things we have in this debate have been found to be half-truths or untrue.

The Hon. K.J. MAHER: I have a very quick question. The Treasurer can correct me if I heard wrong, but did the Treasurer mention that the intention is for an Executive Council meeting to consider regulations tomorrow?

The Hon. R.I. LUCAS: Well, if parliament passes the bill.

The Hon. K.J. MAHER: If parliament passes it. Maybe place on the record the government's intentions about when these regulations will be made and when they will come into force?

The Hon. R.I. LUCAS: We are always subject to the will of this parliament. Subject to the parliament passing a bill today, which we are hopeful of, it is the government's intention to get assent to the act tomorrow and to gazette the regulations. We do want to start the starter's gun, or whatever it is, on the guidelines for the Small Business Commissioner, who has been patiently yelling down the phone at us, asking what the guidelines are for him to govern the mediations. Then, ultimately, it will be up to the Magistrates Court. Yes, it is the government's intention to gazette regulations tomorrow.

The CHAIR: The first question I am going to put is that previously inserted new subsections (2a) and (2b), as proposed to be struck out by the Treasurer, stand as part of the clause. My understanding is that the opposition and the government would vote no.

Motion carried.

The CHAIR: The next question I am going to put is that new subsection (2a) as proposed to be inserted by the Hon. K.J. Maher be so inserted. If you are supporting the Leader of the Opposition, you will vote aye. If you are not supporting the Leader of the Opposition, you will vote no.

The committee divided on the amendment:

Ayes 7

Noes 8

Majority 1

Amendment thus negatived.

The CHAIR: The next question I am going to put is that the definition of 'rent relief' previously inserted by the Hon. K.J. Maher and as proposed to be struck out by the Treasurer stand as part of the clause. If you are voting with the Leader of the Opposition, you will say aye. If you are voting with the government, you will say no. It is consequential.

Amendment negatived; clause as amended passed.

Bill reported with amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (19:45): I move:

That this bill be now read a third time.

The Hon. T.A. FRANKS (19:45): I rise to make a third reading contribution to this bill. During the debate on this bill, as members know, I raised the clause around the removal of children. I asked many times for clarification on the consultation on this and I note that at 6.13pm tonight I received a piece of correspondence that has been addressed to the Attorney from the Law Society's Chief Executive, Stephen Hodder, on behalf of the Law Society. I will not read the entire document, but I will note that it is dated today and that we received it at 6.13pm because I am sure that that was as fast as they could turn this around.

I will note that, while it refers to their previous response with regard to commercial leases, this makes further comment with respect to the proposed amendments that relate to the removal of children. I note that it states:

5. The Society notes that the Amendment Bill contains the following amendment to the Act with respect to the removal of children:

Without derogating from section 25, an authorised officer may, for the purpose of ensuring compliance with any direction under that section, remove a child from any premises, place, vehicle or vessel to a place of residence of the child or to a hospital or quarantine facility, as the authorised officer thinks fit (and may, in doing so, use force as reasonably necessary).

The society goes on to note:

…the State Coordinator or an authorised officer may remove, or cause to be removed, to such place as the State Coordinator or authorised officer sees fit, any person or animal, or direct the evacuation or removal of any person or animal.

Furthermore, under the act already, the act gives:

…the State Coordinator or an authorised officer the power to use such force as is reasonably necessary in the exercise or discharge of a power or function under section 25 of the Emergency Management Act.

The society goes on to state at point 8 of the letter:

8. The Society questions the need for the amendment, not just because such powers already exist under the Emergency Management Act, but why these specific (albeit temporary) powers with respect to children are being sought by the State Coordinator.

9. In particular, the Society questions the need for such provisions, i.e. have police been having to frequently physically remove groups of children and young people away from public areas? If so, is there data that can be provided to justify the need for specific powers to remove children? Or is this a measure that police anticipate they may need to exercise as restrictions start to lift in South Australia?

10. Overall, insufficient information has been provided with respect to the need for these provisions and the Society has a number of questions around them. For example, as children and young people are a vulnerable group in our society, what safeguards are in place, given that police may use reasonable force to remove? Will subsequent reporting requirements also be put in place—particularly where children are not returned home to their families but taken to hospitals or quarantine facilities? How will an authorised officer determine a child's place of residence? Also, how are these powers likely to impact Aboriginal children or children under the care of the Guardian? Will children who are removed under these powers also be subject to fines/penalties for breach of relevant SAPOL directions relating to public gatherings?

The letter concludes with:

11. Given the significant breadth of the current emergency powers in South Australia, the Society questions the need for these specific powers. While it is anticipated that the powers are sought to remove children congregating in large groups and not complying with social distancing requirements (which can already be done under the Emergency Management Act), it is concerning that specific provisions that relate to children, including the use of force to remove them, have been introduced with little information to justify why such measures are necessary and proportionate.

I seek leave to table this letter so that it is at least in the record of the debate on this bill.

Leave granted.

The Hon. T.A. FRANKS: I think it is a travesty of process that we have not been given any reason for these extraordinary powers, that no due diligence has been given to their implications and that groups such as the Law Society have not been heeded or respected in terms of any consultation on these powers.

I think it is beholden on us, as legislators, to take up some of the suggestions that the Law Society has been making. We have approved some extraordinary powers. We do have a COVID oversight committee, but we do not have the reporting regime that New South Wales has on the use of their powers.

Without having those strategic and specific reporting powers, I urge members of this council, and in the other place, to not continue to accept the argument of 'the police want it' as the argument that means that the police get it. I want a puppy for Christmas, but I am not sure that I will get it; and certainly the parliament should not, without good reason, be giving the State Coordinator the Christmas present of being able to use force against children.

Bill read a third time and passed.