Ms FORREST (Murchison) - Mr President, I acknowledge the comments from the member for Elwick on a number of areas I was intending to cover, so I will not go into quite as much detail as I might have done.
From the outset I acknowledge this has obviously been quite complex legislation. That is why we are dealing with it this week, as opposed to last week. The briefings have been quite helpful in trying to explain the nuances of this legislation and, as the member of Elwick alluded to, we do not have legislation to be amended, it had to be a fresh bill - which in some respects is easier to try to take it all in context, but also potentially makes a larger body of work.
Mr Willie - Not much time to work out a principal act.
Ms FORREST - That is right, and to get all the policy settings right. Bear in mind that this is really to effectively adopt the national code of conduct. You have to reference that, and it is referenced in the bill. I acknowledge that it was a decision of Government, and those involved in drafting the legislation, to reference it, rather than try to include many aspects of it, and the rest of those will be dealt with through regulation.
I also acknowledge the Government has made a commitment regarding support for residential tenancies. There is already some support as well for residential tenants, and I understand that the Premier is meeting with Ben Bartl tomorrow to look at how best to support people in residential tenancies, and make sure there is a balance between the needs of landlords and tenants in this difficult time, in those circumstances.
Mr President, to address my mind to aspects of the bill. I am not as organised as the member for Elwick as I have not written out a speech, so it might wander a little.
I wanted to make some points about the content of the bill and pose a couple of questions that the member for Elwick has also raised. I know the bill outlines eligibility for the code. As the member for Elwick pointed out, if you can meet the eligibility criteria - particularly the two measures that are currently set in the bill, which relate to being eligible for the JobKeeper program, or being identified as an SME for the purposes of the guarantee of lending to small and medium enterprises - the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 of the Commonwealth, to give its full title - then those two things will automatically give you entry to this program. There will be other criteria prescribed.
The question the member for Elwick raised, and I would seek clarification on, is once you have proven eligibility in either of these ways by way of regulation, it will not change for the period of the emergency period, even if your circumstances improve.
Mrs Hiscutt - Mr President, yes, I can confirm that is correct.
Ms FORREST - Yes, I understand that. There may be businesses - and good on them if they can reinvigorate their business and take on a whole new line of whatever they may choose; we are seeing hand sanitiser being produced by gin distilleries, for example. That is good and effective, but I hope there may be some goodwill shown by some of those businesses, to realise they are making plenty of money and they can afford to pay their rent, and they may renegotiate with the lessor. This bill does not prevent that in any way, for those goodwill negotiations to occur.
Mrs Hiscutt - Mr President, we can confirm it does not prevent that.
Ms FORREST - Right. It is up to the lessee to be honest about that, and approach their lessor perhaps.
Mrs Hiscutt - I will have a talk.
Ms FORREST - I guess if the lessor became aware of the lessee's circumstance, they could enter into conversation with them and perhaps then go to mediation during that period, if that was to be the case?
Mrs Hiscutt - Yes, they certainly can under section 12(c).
Ms FORREST - Mr President, it also requires relevant parties to act in good faith, particularly when it comes to the mediation. To be frank, it is a shame we have to say that at these dismal times. Sometimes these sorts of circumstances bring out the absolute best in people; unfortunately it also brings out the absolute worst in some.
In the briefings we heard a contribution about how some landlords, particularly, have not acted particularly well, to the point of almost causing a serious mental health outcome for a lessee. We need to be very conscious of those things and encourage people to always act in good faith, particularly when people are struggling. Pretty much everyone in the world is struggling in one way or another at the moment, if not financially, perhaps in other ways.
The other aspects of the bill that prevent landlords from taking certain actions and allow for rent reduction through waivers and deferrals.
Mr President, the hardship cessation day is 12 months after commencement of the act, or sooner if determined by the Treasurer that the code no longer needs to be in effect. As I have said, we are in this for the long run anyway, and there are questions about whether this should be for 12 months or six months, in being in line with other jurisdictions. We were informed that other jurisdictions are predominantly in the code, and note it is a six-month period. Does the code only apply for the emergency period? If it is going to prevail beyond that, then it is not such an issue. If the code only survives for six months then how can we apply the code for 12 months? That is the question: is the code just for the emergency period or is it to endure?
Mrs Hiscutt - It is for the financial hardship period.
A member - It is not the same.
Ms FORREST - Yes. The national code's application in Tasmania only lasts for the financial hardship period. Is that what you are saying?
Mrs Hiscutt - That is correct.
Ms FORREST - So, in Queensland it might prevail for longer?
Mrs Hiscutt - They could have an outbreak and anything could happen.
Ms FORREST - Yes, that is what I am saying.
Mrs Hiscutt - All things being equal, that is how it will work, but it is to be assessed at the time.
Ms FORREST - The national code could prevail beyond six months. Anyway, these matters can be responded to in the Leader's response.
Mrs Hiscutt - It is 12 months. You are aware of that here?
Ms FORREST - No, I am talking about the national code. The national code we are told prevails for six months. Does it end then? If it does not automatically end, how is it extended?
Our financial hardship period is defined as 12 months. But the national code of conduct applies during our financial hardship area. If that only lasts for six months and the code then expires - this is what I do not understand about whether the code works or not or how it works because we then have six months without a national code but legislation that references it.
Mr Valentine - I might clarify it -
Ms FORREST - No. I am asking a question the Leader should be able to respond to. Everyone else will have their turn.
Mr Valentine - I am just going to read from the code, it is alright.
Mrs Hiscutt - The code is just a piece of paper; it does not expire - it is just a piece of paper that sets out what it should be. There is no expiry date on the national code.
Ms FORREST - That is what I am seeking clarification around.
Mrs Hiscutt - It is what gives us power to do this statute.
Ms FORREST - It might be easier if I made my speech, Mr President, and have the answers at the end, if I could. It is a bit distracting when I am trying to make a contribution here and being interrupted a lot.
The point I am making is in Tasmania we have a 12-month period for the code to be applied, unless it is changed by the Treasurer. The national code in most other jurisdictions only goes for six months, as we are told. I have not checked them all. Who would have had time to do that in this Chamber? I expect nobody. Assuming the code is something in place in each jurisdiction for the period they determined, but there must be some measure in other jurisdictions to extend it. If we find that there is a second wave of COVID-19 in New South Wales, Victoria, Queensland - any other state, or even in Tasmania we may find we need 18 months. What is the process around that?
I seek some clarity around how this is intended to work - not just for Tasmania but for other jurisdictions if we are applying a national code. I will get to our other frameworks here with mediation and arbitration - does that body prevail just for this period, or is it going to something that persists for longer to deal with any commercial lease that challenges or disputes it?
As I already alluded, to be a protected lease the lease must be a commercial lease and the lessee must be an eligible person and once eligible you remain eligible. In terms of provision of information to support negotiations, the Leader said there is an expectation that as soon as this legislation passes the parties will be encouraged actively to actually commence negotiations where there is an issue, particularly where either party is experiencing financial hardship. I assume most people will do that and hopefully this will be a successful process for most.
There is a requirement for providing the other party with information that is both accurate and
sufficient to enable negotiations to occur. I raised this in the briefing we had earlier in the week - there are penalties for people who may disclose information inappropriately. They may not disclose information inappropriately to determine how they might negotiate the new lease agreement. The risk, potentially, is that a lessor may be aware that a business was already struggling prior to the commencement of this period but they were working through it. They might have had a cashflow issue for a period. These things come and go in some businesses and sometimes they can trade their way through and then they are all right.
If you have to disclose a lot of this information to the lessor, with the lease up for negotiation early next year or outside of this period, and knowing this company was struggling and perhaps likely to go belly up because it has been so much harder during this period, they may use it to treat the lessee unfavourably after the end of this period, when they are renegotiating a new lease in the future. I guess there is no comeback there. It is a difficult situation to find themselves in, when they have disclosed sensitive information about the operation of their business. Is there a retrospective application of those provisions, such as that you cannot release or use that information to the detriment of the other party?
There was a question asked in the briefing, when we had other people presenting some of their concerns with regard to recovering the whole or part of a security bond or bank guarantee under or in relation to the lease. It was made clear to us in the briefing that this is only the case if the lease is a current lease and it cannot be cancelled or ended during the financial hardship period. If there was a mutual agreement that the lease be ended because a particular lessee had determined they could not keep going - they may have been thinking about that even before we reached the COVID 19 pandemic and they thought, no, we are not going to be able to trade through this, even with all the support we might be able to get - they can negotiate an end to the lease and the release of the bond, bank guarantees or anything else being held can be provided back to the lessee because the lease no longer exists. It is important to make that clear because it was uncertain and was unclear to members of the Property Council and the REIT. Could the Leader please clarify that is the case?
In terms of the rent reductions and the mechanism for enabling those to occur, some of this will be in regulations. If a person already had some unpaid rent before this period starts, that still exists at the end of it, such as a business with cashflow issues that may have fallen behind with their rent, thought things were going to pick up, then we had this COVID-19 pandemic and everything turned pear-shaped. All their good intentions to fund rent arrears become so much more challenging to fulfil.
When we get to the end of this financial hardship period, assuming they are still in business, do they have to pay a portion of the rent that has been deferred, with 50 per cent of that deferral waived or forgiven, and would that fall due after the period? If they have additional rent in arrears, they will also have to front up and pay that as well. This could put businesses in real trouble right after they have managed to get through the period. Is there is going to be any support or mechanism to assist some businesses that may be in that situation where they have got a bit of the double whammy of having already had some arrears, thought they were going to be able to manage it because of what was expected to happen, did not happen because of COVID- 19 and now they have got to the end and all is falling due at the same time.
I do not know how businesses would be in that position but I can imagine there could be some who were struggling along at that time.
To the point about regulations, there are a number of aspects in this bill that will be managed by regulation. I understand the desire not to have a huge amount of complexity within the bill to deal with some matters of functionality and they are generally rightly placed in regulations and the operational sort of aspects of this.
There will be a prescription around the area of eligible person. The member for Elwick spoke about this and how it is appropriate to pick up some of these businesses that may not, for many reasons, be eligible or qualify for JobKeeper rules. For some businesses I have talked to it is very hard. The demands to try to keep the business going and do all the paperwork and everything is almost beyond some of them.
Mr Willie - No doubt through the hardship period there will be different cases that arise that we did not even know about.
Ms FORREST - That is right and do not quite fit. If you listen to the media and the statements made by the federal government - I cannot remember the numbers; other members may remember them - there is a significan difference in how many people have expressed interest and how many people have actually applied. Whether they were not eligible and they realised after they expressed interest, or whether it all became too hard because the paperwork was pretty rigorous. It should be rigorous. I am not saying it should not be but it became a bit too hard for some people. We do need to be careful we do not let some of these businesses who really should be supported here slip through the gap. I understand from the briefing there will be consultation around this and that is appropriate and right.
There is also the requirement for regulations to be made in adopting the code. That was described as you could have had another 10 or 12 pages of technical detail in the bill. No doubt we would have struggled through. The Subordinate Legislation Committee will struggle through those at a later time. It talks about any prescribed matters in clause 18, with rent payable under protected lease to be renegotiated. The mechanism for that will need to comply with the national code, but it will sit under that so giving effect to the national code through a regulation is what is going to be the case.
We were told, again, there would be consultation on this to make sure the nuances are picked up and it does meet the requirements of the national code of conduct. I am sure there is work being done on this as we speak, because it is important to get this all out the door.
There are limitations. In section 18, in relation to the prescribed matters, there they can only prescribe regulations in this section. I will just read.
(5) The regulations may prescribe that this section does not apply in relation to a prescribed lessee, or a member of a class of prescribed lessees, in the prescribed circumstances.
It is a wordy sort of way of putting it, but it does confine to the national code as I understand it rather than being too broad because a regulation making power in clause 32 of the bill is very broad in many respects. It certainly names up the code there but it basically is a very broad regulation making power.
We were told in the briefing there is not an expectation that many regulations will be made under this regulation making power. Mostly it will be done under those two sections where it is referred to. I know the Leader might like to clarify that in her speech. That is fine but it also in the Leader's second reading speech she said -
The bill provides regulation making powers to support the administration and implementation of the act.
This includes regulations to modify certain definitions which I have spoken about and support the regulations and related provisions which I have spoken about. The purpose of the regulation-making power in the bill is in recognition of the complexity of the subject matter and the need to adapt, when needed, the efficient operation of the code.
She went on to say that any regulation made under this act - this is very important and I hope the member takes note of this, as the Leader said as well - will be subject to the existing scrutiny processes that exist for regulations, including the review of all the legislation committee. That is true, they all have to come to the Subordinate Legislation Committee.
The regulations section in this bill excludes some provisions of section 4 and 5. This is clause 32(7), the same clause in the bill we dealt with last week -
The regulations may specify that the requirement, under section 4 or 5 of the Subordinate Legislation Act 1992, for compliance with guidelines, or for the preparation of a regulatory impact statement, in relation to regulations made under this Act, does not apply in relation to a regulation specified in a regulation, or all regulations. [OK]
It is important that we understand what we are doing with this. I do not have a problem with excluding section 5 because that is the regulatory impact statement. I appreciate there is not time or that it is not appropriate because there are regulatory impacts everywhere at the moment, particularly financial impacts. Certificates are often issued under that clause to say that is has not been done because it was not warranted as necessary.
Section 4 of the Subordinate Legislation Act is very short -
Compliance with guidelines
The responsible Minister must ensure that before subordinate legislation is made the guidelines issued under section 3A are complied with so far as is reasonably practicable.
There is already an opportunity for the minister, the Treasurer, whoever is responsible, I imagine it is the Attorney-General, to say that it is not reasonably practicable to abide with all the guidelines. I want to read you part of the guidelines because this is important. We are talking about proper scrutiny. The Leader said it herself; they will be subject to the existing scrutiny processes for all subordinate legislation.
I will begin with guideline 3A(2), so it is in context -
A notice under subsection (1) may contain such guidelines as the Treasurer considers necessary or expedient for the purposes of ensuring that -
(a) the objectives of proposed subordinate legislation are clearly formulated and that those objectives are -
(i) reasonable and appropriate; and
(ii) in accordance with the objectives, principles, spirit and intent of the Act which would authorize the proposed subordinate legislation to be made; and
(iii) not inconsistent with the objectives of other Acts, subordinate legislation or government policies; and
(b) the advantages and disadvantages of the proposed subordinate legislation are properly identified and considered; and
(c) the impact of the proposed subordinate legislation on competition is properly identified and considered; and
I will not keep reading, but these are the guidelines that determine how subordinate legislation will be developed. Why would we want to exclude this process for something we have already admitted to having consulted? We have already committed to ensuring it is properly scrutinised before it is even made to ensure the businesses are picked up correctly and that the code is adopted correctly. If there are areas of the guidelines that are impracticable to comply with, all the Attorney General needs to do issue a notice to say that they could not comply with these aspects of it because of time constraints, et cetera.
The section relating to impact on competition is probably something we may think we cannot deal with at this time but we should be ensuring it is reasonable, appropriate and in accordance with the objectives, principles and in the spirit of the intent of the act. Where it cannot be complied with, you can bank statement to that effect.
It bothers me that we are removing that whole framework of the Subordinate Legislation Act, which contains the guidelines determining how they are made. I can almost guarantee the people who are working on these guidelines are doing this, Leader, so what is the problem? I am sure they are working in accordance with the objectives, principles, spirit and intent of the act because they have already said they are doing that. You said it in your speech. You said that is what you are doing. I have circulated the amendment, and I will listen to what the Leader has to say in her reply, but we should not be hollowing out the processes when we made a clear indication we are going to be adhering to them anyway.
Aspects of last week's legislation did needed a prompt response in terms of regulations that may need to be made under it. You can argue that it should have been done at that time as well, because you can still issue that exemption if you need to. Even if you have to bring in a regulation under these normal regulation-making power in clause 32 of this bill - if it is really urgent and time sensitive - the minister responsible can state that provisions could not be adhered, as per section 4, which says they are to be, 'complied with so far as is reasonably practicable'. If it is not reasonably practicable to comply with them, simply say so. I may be speaking about that again in the Committee stage. It is important we do not hollow out the process set in place for a very good reason. Those guidelines are there for a reason and they are set out for that purpose.
Other matters were raised by some people who briefed us this morning about the term after the period of financial hardship. This is to be clarified, the use of the words 'after here' is not to allow these measures to be taken after the end of the financial hardship period but to enable matters to be dealt with that occurred during that period. That was unclear to some of people we had in briefing us. If the Leader could clarify that, say, in clause 13, for example -
A lessor in relation to a protected lease must not, during or after the financial hardship period, take, or continue, any prohibited lessor action in relation to the lease on the grounds of a breach of the lease during the financial hardship period consisting of -
The clause then runs into subclauses (a), (b), (c), (d), and so on. It regards the time after the period in dealing with matters that occurred during the period. If they understand that they will be quite satisfied, but their concern was that this would continue and this word 'after' meant that things that occurred after it would be dragged in with it.
One point was made about the regulations. They said that they are nice and hollow, with tabling of regulations at the next sitting day of the House. No pressure, Leader, we have trouble with them tabling in the timely manner that is subscribed for many bills now. Anyway, I hope that works. We are sitting much less often these days. Hopefully, we will be returning to normal scheduling at some time in the not-too-distant future. It is important that, if they are going to put that in the bill, they need to comply with it so let us hope they do table it for the very next sitting.
I support the intent of the legislation. It is a complex body of work. As the member for Elwick said, it is also clever legislation but you cannot guarantee everyone will be supported in the way we believe they probably should be. There are always people who might fall through the gaps or people who might seek to find ways to benefit from it. The Government has done a pretty good job in putting this together. It is complex.