Exactly one year ago, on 30 January 2012, Australia’s new Personal Property Securities (PPS) regime commenced. On the same day, the PPS Register began its life as a national, 24/7, online noticeboard for the recording of security interests in personal property.
The far-reaching PPS reform was welcomed by most, especially those who take a longer term view, focusing on cost savings and other business benefits. In 2012, the Productivity Commission assessed the reform as follows:
It remains to be seen as to whether the Productivity Commission’s assessment is accurate.
The far-reaching PPS reform was welcomed by most, especially those who take a longer term view, focusing on cost savings and other business benefits. In 2012, the Productivity Commission assessed the reform as follows:
- It is estimated that PPS reform will involve one-off transition costs to businesses of around $150 million, but will then reduce business costs by around $70 million per year. That is, it will take less than three years for net benefits to exceed transition costs for businesses.
- It is estimated the net one-off transition cost to the Commonwealth Government was $55 million. However, the new national system is expected to result in a net cost saving across all governments of around $1 million per year in total.
- It is noted that PPS reform creates the necessary infrastructure for businesses to develop new financial products that cover a wider range of personal property. This may in turn reduce the cost of finance to small and medium sized businesses - a further prospective benefit of the reform.
It remains to be seen as to whether the Productivity Commission’s assessment is accurate.
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