The Commonwealth government’s review of the Personal Property Securities Act (PPSA) has been published.  The report, authored by Mr Bruce Whitaker, was tabled in Commonwealth parliament on 18 March 2015 (1).

The report addresses a range of potential changes to the PPSA, each of which had been developed as part of a collaborative review in consultation with stakeholders.

The report’s recommendations reflect the extraordinary range and depth of issues that have arisen in response to the PPSA’s enactment and interpretation in Australia.  They suggest measures to address the ongoing challenges presenting themselves to Australian businesses regarding the PPSA’s operation and effect.

Despite a perceived increase in the awareness of the PPSA, the response from stakeholders suggests that understanding the PPSA’s operation remains a significant, elusive and expensive challenge for many (2).  The report recommends introducing new awareness and education campaigns, specifically to address the shortcomings in these areas (3).

The recommendations, of which there are nearly 400 in total (4), epitomise the far-reaching difficulties of drafting legislation that is designed to apply to transactions in substance rather than form.   The ultimate outcome of this is that the provisions of the PPSA do not necessarily reflect the manner in which secured finance functions in Australia (5).

Ultimately, Mr Whitaker recommends that the PPSA be retained, but with modifications to its provisions in order to streamline it and clarify certain areas of ambiguity.  As might be noted, the report’s recommendations extend across the gamut of issues facing personal secured financing transactions in Australia, ranging from equipment hire arrangements, bailments, leases, licences, financial instruments, IP, cross-border application and enforcement of security interests in insolvency.

In general terms, the report’s recommendations are to:

  • Simplify the content of the PPSA and the regulations, by using more streamlined language and removing provisions that are of marginal benefit;
  • Simplify the Personal Property Securities Register, by reducing the number of decision points for users and making the remaining decision points more intuitive and easier to answer. In its present form, there is the perception the register is too complex, being full of jargon and unfamiliar concepts (6);
  • Revisit the existing exclusions to certain transactions that fall outside the operation of the PPSA and, if possible, extend the operation of the PPSA as broadly as possible;
  • Use more customary and intuitive terminology, avoiding the use of concepts or terminology that see unfamiliar use in Australia, and which have been adopted from similar PPSA-based legislation in New Zealand and Canada;
  • Better explain and clarify the concepts used in the PPSA, such the concepts of attachment and collateral;
  • Review whether the policy objectives of the legislation on which the PPSA was based, which originated in New Zealand and Canada, properly reflect what may be appropriate to the current business environment in Australia (7).

Mr Whitaker considers there will be no “magic bullet” in this endeavour.  His report recommends that improvements to the PPSA will come through a number of mostly small changes. Further recommendations are made that such changes be enacted so far as possible as a “package” (to eliminate potentially unanticipated consequences of partial implementation), that considerable care be taken to ensure that any proposed changes do not upset existing rights, ensuring that any amended PPSA is internally consistent and adequately responds to the concerns that the proposed changes are designed to address.

The report comprehensively deals with an exceptionally broad range of issues that have arisen throughout secured financing transactions in Australia in the 3 years since the PPSA’s introduction.  Nevertheless, the report also highlights the various issues and areas of ongoing difficulty that will require confrontation in the coming months and years in ensuring the PPSA meets its intended objectives, realises its potential and minimises the burden on those it is intended to assist.

If you would like more information on how the PPSA could affect your business, contact Robert Ross, director of Composite Law for advice.


(1) Review of the Personal Property Securities Act – Final Report, Mr Bruce Whitaker (“report”)

(2) Paras 3.1.1, 3.1.2, Ibid.  Difficulties of understanding are not necessarily confined to small businesses; difficulties have also been expressed by the rural sector, the retail sector, the building and construction industry and importing and wholesale businesses:, Ibid.

(3) Paras, 10.1.1, Ibid

(4) Annexure E, Ibid.

(5) Para 10.1.2, Ibid.

(6) Paras, 6.1.1, Ibid.

(7) Para 3.4, Ibid.