Retail and Commercial Leases (Miscellaneous) Amendment Bill
The Hon. J.A. DARLEY (16:50): I rise to speak on the second reading of the Retail and Commercial Leases (Miscellaneous) Amendment Bill. I understand that this act was first introduced in 1995 to provide protections for small businesses. The parliament at the time thought that small businesses need specific provisions to assist them, and passed a bill to regulate retail and commercial leases with a focus on small business. I understand that this bill will be the first time the act has been changed significantly since it was introduced almost 25 years ago. The changes came about as a result of a review of the legislation by retired District Court judge, Alan Moss, who consulted broadly about the act before making a number of recommendations.
The bill makes a number of changes to provide better protections and modernise the regulation of retail and commercial leases. It makes it clear that certain information must be provided to the new lessee, including a copy of the prospective lease and a disclosure statement. Whilst the act currently requires for these documents to be provided, the bill increases and introduces the penalties respectively. These are sensible amendments and I support these changes.
The matter that I have had most contact about is with regard to the threshold outlined in the act. The act only applies to those leases where the rent is under the threshold. I understand that the thought is that those with a lease over the prescribed threshold rent are big and ugly enough to fend for themselves without the protections of the act.
I understand that, initially, the act was drafted in a way in which it was always expected that leases would fall in and out of the act, as it was always anticipated that the threshold would change. However, in reality up until a few years ago the threshold had not changed at all since the act was first introduced in 1995. When the threshold was suddenly changed from $250,000 to $400,000, it caused problems for tenants, landlords and agents alike, who were suddenly faced with shifting responsibilities and outgoings as longstanding leases that were not covered by the act were suddenly covered and vice versa.
The government proposed to tackle this by outlining in the bill that, if the lease is registered, whatever the threshold is at the time of signing the lease then this is what the threshold will remain for the life of the lease, regardless of any external changes to the threshold. If a lease is not registered, then the lease is subject to coming in and out of the act, depending on changes to the threshold and the rent.
I do not support leases coming in and out of the act. As I said before, I have been contacted by many constituents who have been confused and aggrieved by this mechanism, and believe it would be much better if there was certainty rather than a moving target. As such, I will be filing amendments to make it clear that, if you are in at the time of signing the lease then you are in; if you are out then you are out.
The bill also provides that the threshold should be reviewed by the Valuer-General on a five-yearly basis. Given my experience as a former valuer-general, I was very curious about this provision, and have been advised by the minister that the Valuer-General anticipates that they will be able to undertake this task by liaising with industry to determine whether rents have gone up or down and then adjusting the threshold accordingly.
I believe that this is a long-winded and resource-intensive method to have the thresholds reviewed and adjusted, especially as I understand that rents usually increase by the consumer price index, or thereabouts, annually anyway, other than when rents are revised at market levels. As such, I have drafted amendments to take this burden away from the Valuer-General and instead have the threshold adjusted by CPI annually. If the CPI goes down, then the threshold will stay the same as the previous year, rather than going down.
Finally, I flag that I will be filing amendments to allow land tax to be passed on at a single-holding rate to those with leases under the threshold for new leases from the commencement of that provision. Currently, the act states that, if the rent is under the threshold, then land tax can be taken into consideration in determining the rent, but it cannot be explicitly passed on to the tenant. This is what happens for leases where the rent is over the threshold.
I believe it is ambiguous that land tax can be taken into account when determining the rent and that it would be much more transparent to allow landlords to pass on land tax on a single-holding basis. That is to say that the tenant would only be required to pay land tax calculated on the site value of the land that their lease relates to, rather than having to pay a portion of the landlord's land tax, which may be much higher due to the landlord's other land holdings.
I will speak more to my amendments during the committee stage. However, I wanted to put on the record that I support the bill and the second reading.