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Wednesday, 19 March 2014
Page: 2392

Mr FRYDENBERG (Kooyong—Parliamentary Secretary to the Prime Minister) (11:10): I move:

That this bill be now read a second time.

The Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 aims to continue the reforms of the Personal Property Securities Act 2009 while decreasing the administrative burden the PPS regime places on Australian businesses.

The Personal Property Securities Act was introduced with bipartisan support in 2009. A main reform of the PPS Act was that it established the Personal Property Securities Register and introduced a single national system for the creation, registration, priority and enforcement of security interests in personal property.

This regime fundamentally altered the way in which businesses, especially small businesses, are able to borrow, while providing greater confidence to lenders and securing their interests.

The PPS regime replaced 23 state, territory and Commonwealth property and securities registers and over 70 pieces of supporting legislation.

This alone involved the migration of 4.7 million registrations to the new, national Personal Property Securities Register. However, reform on this scale is not without its challenges.

As with all reforms of this scale, ongoing assessment and adjustment where necessary is important to ensure that the PPS system meet the needs of all Australian businesses.

In consultation with Australian businesses and particularly the hire and rental industry it was clear that although the PPS Act was a significant initiative it has created several issues including a significant administrative burden and substantial compliance costs and needs to be reformed.

This is why the government proposes to simplify the rules on when a lease will be deemed to be a security interest for the purpose of the PPS Act and to clarify the definition of a motor vehicle in the Personal Property Securities Regulations 2010.

The PPS Act deemed certain arrangements to be security interests for the purpose of that act. This includes the lease of goods where the lease term is for more than 12 months or an indefinite term, and the lease of serial numbered goods (for example, motor vehicles) for 90 days or more.

However, since the commencement of the act, it has become clear that the two deeming provisions can be a source of confusion and additional cost to business, as the lease of serial numbered goods can give rise to the need to make multiple registrations on the register in relation to the same lease.

The bill will repeal the provision deeming leases of serial numbered goods of 90 days or more to be security interests for the purposes of the act.

In addition to this amendment, the government will amend the PPS Regulations to clarify the definition of a motor vehicle. The current definition of a motor vehicle includes an item capable of travelling at speeds of at least 10 kilometres an hour or which has one or more motors with a total power greater than 200 watts.

As a result it has become clear that some items have been captured by this definition which would not, in an ordinary commercial sense, be considered to be motor vehicles. An example includes a vibrating plate, or wacker packer, as it may otherwise be known, that only travels at a speed of 0.5 kilometres per hour but which has a 3,700-watt motor and is therefore covered by the definition.

This definition will be amended to provide that a motor vehicle will now be something capable of travelling at speeds of at least 10 kilometres per hour and which has one or more motors with a total power greater than 200 watts.

Finally, the Attorney-General will announce the statutory review of the PPS Act to consider whether the entirety of that act creates an efficient and effective consolidation system governing personal property and securities ownership in Australia.

The regulatory burden imposed on the industry by the PPS Act in its current form, is more than is necessary for the achievement of effective and certain secured lending against personal property in Australia and therefore this burden should be lifted.

The Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 and associated changes will provide relief to industries captured by the PPS Act and, in particular, the hire and rental industry, an important industry with a total turnover of around $6.6 billion, that employs over 18,000 Australians and provides essential support to the building and construction sectors. It is expected to reduce the number of registrations that may need to be made and save business over $11 million per annum, most of which will be to the benefit of small businesses. I commend the bill to the House.

Debate adjourned.