Scrap Metal Industry Bill 2016

The Scrap Metal Industry Bill 2016 has been designed to provide regulation of the scrap metal industry through the installation of appropriate prohibitions, registration requirements and other regulatory measures to provide greater transparency, accountability and oversight for the industry. This is because the scrap metal industry has to date been largely unregulated, making it an extremely attractive avenue for criminals to make quick cash. The industry operates largely by a cash-for-scrap scheme, purchasing all manners of metal objects with little oversight by authorities. There are claims that this has fuelled vandalism and theft across the State.

While I support the intention of this bill to reduce crime, as shadow Minister for Small Business I must note that the Government is again increasing regulation in an industry with a history of very little oversight and seeking to increase the cost burden on businesses perhaps with little impact on reducing crime. Despite this Government's mantra that it is the record deregulator with "five off for every one on", which I note has been watered down to "two off for one on" in recent times, the Auditor-General has recently called the Government to account in a report that shows it has not been the deregulator it claims to be. In fact, the Auditor-General stated:

In 2015, the Government reported that its red tape reduction initiatives, implemented between 2011 and 2015, had resulted in $896 million in savings. While these initiatives resulted in some savings, the total value of savings is unknown because estimates for some initiatives were based on unverified assumptions, cost transfers or unrealised projections.

In the absence of an accurate red tape savings figure and a stocktake of regulation, the NSW Government does not have a clear view of what impact its reported red tape savings has had on the overall net burden of red tape in New South Wales.

The 'one-on, two-off' initiative to reduce legislative regulatory burden achieved its numerical target—with approximately four legislative instruments removed for each one added. However, in cost terms, the value of total legislative burden increased by $16.1 million over the same period despite a reduction in legislative instruments.

I think any small business owner would much prefer to incorporate five easy pieces of legislation into their business practice models than one complex piece. The Auditor-General said the audit found:

... There is no effective, central oversight of whether red tape reduction principles are being applied by departments to prevent and reduce red tape.

On the back of that, the Auditor-General made several recommendations, including that the Department of Premier and Cabinet establish a framework for reducing red tape, that it re-establish a program of targeted reduction of unnecessary regulations; that it take a transparent approach by starting with a comprehensive stocktake of the regulatory burden so that progress can be accurately tracked and reported; that it build on past work with targeted reviews of areas with more red tape; that it better monitor performance against better regulation principles; and that clearer processes and responsibilities be established to improve the quality of regulatory assessments. I have raised the Auditor-General's recommendations because small business in this State is suffering under the burden of excessive regulation. Despite the Government's claim, it is clear from the Auditor-General's report and from my consultations with businesses on the ground that no effective strategy has been adopted to reduce red tape, and this legislation imposes even more.

I will now deal with some of the red tape and regulations which this bill introduces and which will be an imposition on the good operators within the industry. The bill provides that scrap metal businesses must register and nominate a manager of each scrap metal yard used by the dealer as the point of contact. Further, it provides that any changes in registration information must be reported within 14 days of being amended, otherwise the business may face penalties. It also provides that a scrap metal dealer cannot buy any goods with cash, cheques payable to cash, or in kind with any goods or services. If they suspect that any scrap metal in their possession or any scrap metal sold to them may have been stolen or unlawfully obtained, they will have a duty to inform the police of their suspicion. That is obviously a good thing. They will also be required to keep transaction records containing the date of the transaction, the details of the person who sold the scrap metal to them, a description of the scrap metal, whether it consisted of a motor vehicle, and the method of payment. The records must also be retained for at least three years.

Should the business not be registered while carrying out scrap metal operations, or there is a reasonable suspicion that a serious criminal offence has been committed at the premises, the New South Wales Commissioner of Police may make an interim order that the premises be closed, and the local court may, on application from the commissioner, order the long-term closure of the premises for those reasons. Therefore, a business will be able to be closed on the basis of a reasonable suspicion. Police officers may at any reasonable time enter any premises that is a business dealing with scrap metal to undertake compliance inspections. However, they will not have the power to enter a premises that is used only for residential purposes without the permission of the occupier or the authority of a warrant.

The Labor Party has consulted with the scrap metal industry and the Australian Metal Recycling Industry Association about this legislation. The association supports moves that will assist in reducing crime, but it notes the absence of any consultation by the Government prior to the introduction of this legislation. It believes that without a rigorous regime of business inspections, audits and prosecutions, this legislation on its own will have no real effect in reducing the incidence of crime in the industry. I met with the NSW Small Business Commissioner and the Minister's staff earlier this week to discuss a range of issues relating to business and the lack of consultation with the industry prior to the introduction of legislation that will impose an increasing legislative and compliance burden.

I am concerned that the bar has been raised for good operators in many industries without any enforcement and compliance action being implemented to ensure that all participants comply with the legislation. This bill will increase the cost burden on the good operators while those engaged in illegal or criminal conduct will be able to sail through because of a lack of enforcement. I am also concerned about how the Government can help the industry. A model system is usually established when new regulations have been proposed by successive governments.

We are talking about people working in the scrap metal industry who do not necessarily have the high level of financial or even English literacy required to implement a system to ensure that they comply with the regulations. I will be interested to see whether the Minister for Small Business offers some assistance to the industry to help it to deal with the increasing regulatory burden that will result from the passage of this legislation.

That enforcement and compliance action must be consistently applied, particularly when a reasonable suspicion of criminal activity can result in the short-term or, by court order, the long-term closure of a business. We also need to move away from the idea that cash businesses operate for nefarious purposes. Industries often operate in that way because it suits their model of providing quick and easy access to consumers with low levels of financial literacy. If a business has not had a strong history with banks in raising significant loans, et cetera, they may not have access to facilities that create a paper trail, such as electronic funds transfer at point of sale [EFTPOS], which would remove some of the barriers for them.

I take this opportunity to emphasise the numbers game and regulation. Small businesses should not be burdened with the yolk of regulation in order to do the Government's work. It is the Government's responsibility to find criminals, and businesses, like all members of the community, should assist in reducing crime, particularly in identified areas that make it easier for criminals to participate. However, as I said earlier, one complex piece of legislation does not equal five simple regulations that are easy to comply with.

The Government needs to take its obligation to small businesses—the engine room of our State—and help them through this regulatory burden. It may have been a good step if the Government had consulted with industry groups, but that boat has already sailed. The Minister for Small Business needs to intervene in this rollout to ensure that small business is not disadvantaged by the State's desire to stop criminal activity. Whilst I support the bill, it is my hope that the Government will work with small business to ensure that these compliance and enforcement obligations are met and that it is not all for nothing for those businesses.

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