Legislative Assembly for the ACT: 2018 Week 05 Hansard (Tuesday, 8 May 2018) . . Page.. 1604 ..
the government’s revenue to make sure it does not disappear—for example, if the developer went into liquidation in the meantime.
I will briefly comment, as Mr Parton did more extensively, about the Property Council’s views on the bill. The Property Council has highlighted a number of concerns which mean that they think deferral will not work in practice. Basically, their concern is that because the government’s revenue will be protected by a first charge against the property, that will mean that if the project goes under financially the government has first call on any funds that come out of the liquidation. That is what “first charge” means.
The Property Council believes from its discussions with financial institutions that the financial institutions would be unwilling to lend money for a project when the government has a first charge because the financial institutions usually require a first charge for themselves before they lend any money. I guess the quick comment, for anyone who has been listening to the royal commission on banks, would be that you would have to believe that if the banks thought they could make money out of it, they would lend. I do not think this is an insuperable problem for anything that the banks thought was actually a viable project.
Given that most projects are funded partly by loans, if financial institutions do in fact refuse to lend where there is a government first charge, as the Property Council has said, very few developers will be in a position to take up the deferral. However, I do understand why the government wants a first charge. Property developments regularly run into financial problems. Unsecured debts on property developments are quite risky.
If the ACT government did not insist upon a first charge against the property, I suspect that the outcome would be frequent situations where the government does not get paid. As we would all be aware, there are similar situations in other company insolvencies where the ATO has first charge above the other creditors.
On balance, the Greens think that we need to get the deferral arrangements in place. Once they are in, developers and financial institutions can get to grips with the detail of how it works and we will see if and how it gets used in practice. This will highlight whether or not further changes are needed and, if so, what they actually could or should be in practice.
The Greens will be supporting the bill as it is. However, I thank the Property Council for the work they put in explaining their concerns to me. We considered their concerns carefully in coming to our decision to support the bill. I would very much welcome hearing from them in a year or two as to how deferrals are working or not working in practice.
In conclusion, I say that, at the least, as Mr Parton said, I cannot see that in any way this legislation could be negative. I am hopeful that in fact it will be positive.
MR BARR (Kurrajong—Chief Minister, Treasurer, Minister for Economic Development and Minister for Tourism and Major Events) (4.35), in reply: I thank