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Thursday, 13 May 2010
Page: 3628

Mr KEENAN (11:17 AM) —I rise to speak on the Personal Property Securities (Corporations and Other Amendments) Bill 2010. The initial suite of personal property securities legislation was passed with coalition support in 2009. The various states and territories have long had their own mechanisms for the registration and management of securities given over personal property to secure financial obligations. Familiar examples include fixed and floating charges, bills of sale, chattel mortgages and registers of hire-purchase agreements. It has also long been recognised that there is a need for national harmonisation of these arrangements to provide greater certainty for borrowers and lenders and to increase efficiency within the sector. The former Attorney-General, the honourable member for Berowra, Philip Ruddock, gave this issue particular priority during the term of the previous, Howard government.

In October 2008 COAG signed an intergovernmental agreement to effect the proposed legislation as part of the National Partnership Agreement to Deliver a Seamless National Economy between the Commonwealth and the states and territories. The principal act applies, with very limited exceptions, to all types of personal property, including motor vehicles, contractual rights, intellectual property rights and uncertified shares. It provides for rules for the creation, priority and enforcement of security interests and establishes a national register of them. There are detailed specific provisions in relation to certain classes of property.

The principal purpose of this bill is to make amendments to the Corporations Act 2001 to harmonise the language and to ensure conceptual consistency between the two acts. These amendments comprise terminological changes to the provisions referring to charges and other security interests. References to charges, mortgages, liens and pledges in the Corporations Act will be replaced with ‘security interests’. ‘Floating charges’ will become ‘circulating security interests’. ‘Fixed charges’ will become ‘non-circulating security interests’. Similar changes will be made in the references to holders of security interests. The old terms will be retained to refer to security interests to which the Personal Property Securities Act does not apply.

Furthermore, this act provides for the extension of the Corporations Act concept of property to include property subject to the retention of title agreement. Currently, the holder of a security interest over the whole, or part of the whole, of the property of an insolvent company is entitled to appoint an administrator. Under the amendments where the whole, or substantially the whole, of the property of a company comprises property subject to the retention of title agreement, the holder of that interest will be entitled to appoint an administrator in the event of insolvency.

Concerning the repeal of chapter 2K of the Corporations Act, chapter 2K provides for the registration of company charges. That function will be subsumed by the personal properties security act regime. The provisions as to charges void against an administrator or liquidator will be retained. The bill further goes to the retention of existing rights in the Corporations Act. Examples include provisions regulating priority in the distribution of proceeds, administrators’ rights of indemnity and the priority payment of certain unsecure creditors. The bill also provides for streamlined transitional provisions.

This bill wisely reflects the recommendations made by the Senate Standing Committee on Legal and Constitutional Affairs, which has reported several times on the proposed legislative regime. We in the opposition understand the benefits and importance of establishing a simplified, national personal property securities regime and, as I said, that was something pursued by the previous Attorney-General and by the previous government. Therefore the opposition supports the passage of the bill through the parliament.