Although not of any legal effect, terminology that has been commonplace in Australia will be replaced by new concepts contained in the Act. For example:

The Act will create an entirely new class of 'deemed security interests' – security interests that are more akin to (or are) ownership interests. PMSIs will include leases/bailments of goods for more than one year (90 days in the case of cars, boats and planes) and retention of title supply arrangements.

In these circumstances, despite the ownership interest of the lessor/supplier in the relevant goods, a security interest will be created. If this is not registered (or not registered within a specific timeframe), the lessor/supplier could lose that collateral to another secured party enforcing their security interest. The 'But it's my stuff' defence will hold no water under the Act.

We do not expect that lawyers will be registering security interests on behalf of clients. Because (in all likelihood) the personal property securities register (PPSR) will require a unique identity code and password to be ascribed to each secured party user and each registration, we expect that secured parties themselves will be tasked with registering financing statements (as is the common practice in New Zealand). The details included in financing statements are extremely important and the consequences for getting them wrong can be dire so this will need to be appropriately managed by secured parties.

Financing statements will need to be regularly monitored. They risk becoming ineffective (and so compromising the perfection of the security interest to which they relate) if any details of the grantor or the secured property (collateral) become incorrect (even, for example, following the change of a grantor's name after marriage). In addition, financing statements will expire (after 25 years in the case of commercial property or seven years in the case of consumer property).

It will be possible to register a financing statement before a security agreement is signed (or even drafted). Consequently, it will probably become standard practice for secured parties to 'perfect' their security interests during negotiation of the finance documents (where possible).

There are two key points to note:

Separate financing statements will be necessary for different classes of collateral. This could lead to several registrations being required for the one security agreement (depending on the particular facts) – an administrative burden given that secured parties will likely attend to this themselves (see above, 3. Registration of security interests).

It will be necessary for financing statements relating to PMSIs to specify that (and to the extent that) they are PMSI registrations. There is the risk of serious consequences for getting this wrong.

Unperfected security interests will be void on the grantor's insolvency.

There will be new rules for, among other things:

Therefore, in each secured transaction it will be necessary to consider what the secured property is comprised of and how it might be dealt with. The Act is very prescriptive and imposes harsh consequences for failing to adhere to its rules and processes. In addition, the type of collateral will even determine which rules for a conflict of laws apply.

Enforcement of security interests in personal property will be governed by the codified rules in the Act. However, these rules:

The new unfair terms regime will commence on a day to be fixed by proclamation, which cannot be before 1 July 2010. The provisions do not apply to contracts entered into before the date on which the provisions commence, unless the contract is renewed or varied, in which case the unfair contract term provisions will apply to those terms as renewed or varied.

From the commencement date, a term in a consumer contract will be void where both:

Under the Australian Securities and Investment Commission Act 2001 amendments, such a term will be void where the standard form consumer contract is for either:

Consumer contracts are contracts for the supply of goods or services, or a sale or grant of an interest in land to an individual (that it, a natural person) whose acquisition of the goods or services or interest is wholly or predominantly for personal, domestic or household use or consumption.

To determine whether a particular contract is a consumer contract, the courts will be concerned with the acquirer's subjective purpose for the acquisition. That is, the test looks to the individual's subjective intention, not the nature of the good or service or the purpose for which it is ordinarily used. This is a different test to that which defines a 'consumer contract' in the context of the existing implied terms regime under the TPA.

All contracts will be presumed to be standard form contracts unless otherwise established. In determining whether the presumption is rebutted in a particular case, the courts will consider any of the following:

A term will be unfair if it:

To determine whether a term is unfair, the courts need to take into account both the:

Terms which penalise one party for breach or termination or limit one party's rights (for example, rights to sue or rights to adduce evidence) may also be unfair.

A term in a consumer contract which is unfair will be void. However, the relevant contract will continue, if it is capable of operating without the unfair term. The regulator or any other party (including, for example, affected consumers) may apply to the court to have a term declared an unfair term.

The court may make remedial orders (for example, injunctive relief, damages, and so on) where a party seeks to apply or rely on a declared unfair term.

The unfair contract term provisions of the Australian Consumer Law apply to new consumer contracts entered into on or after commencement (that is, not before 1 July 2010).

The unfair contract term provisions will not apply to:

Businesses should review all standard form contracts to determine whether they might be 'consumer contracts' and whether any terms of those contracts may be viewed as 'unfair' under the new unfair terms regime.

Guidelines on unfair terms in consumer contracts in the context of the Victorian regime published by Consumer Affairs Victoria provide guidance relating to unfair terms, including examples of unfair terms. Businesses should also look to the specific guidelines being developed by the ACCC and ASIC in connection with the introduction of the regime. A draft of the ACCC guidelines is available here.

In September 2008, the Australian Federal Government established the Australian Financial Centre Forum. Its objective was to investigate initiatives to position Australia as a leading regional financial services centre.

The core question posed to the Forum, comprising a panel of leading financial sector experts, was whether government policy settings allow the Australian financial sector to take best advantage from its strengths and opportunities, namely economic and financial stability, a highly skilled financial sector and proximity to growth.

The Forum's report (Johnston Report) was released on 15 January 2010 and delivered 19 policy recommendations. The key theme of these recommendations was to shift the perceived inward focus of the Australian financial sector to a position of outward engagement, encouraging:

The policy recommendations come under the following broad headings and are summarised below:

The Report recommends maintaining the high standard of, and focus on, regulatory protection of investors and consumers existing within the Australian financial sector. However, periodic reviews of the regulatory framework are necessary to remove unnecessary regulation and promote efficiency. The Report is concerned there may be over-regulation introduced to Australia's detriment in the wake of the global financial crisis.

In addition to the Asian funds passport, the Report recommends increased 'reaching-out' by ministers and agencies to increase foreign awareness of the attractions and benefits of the Australian financial sector. Increased resources should be placed into tailored financial trade missions to deepen regional understanding.

The authors of the Johnston Report recognise that many of their recommendations embody long-term structural aspirations that will take time to develop and implement. The level of implementation will not be clarified until later in 2010. The recommendations will be reviewed by the Federal Government in the context of the 'Australia's future tax system review' (Henry Review), which was released on 2 May 2010 and we will report on significant financial sector policy implementations as they arise.

Based on current requirements, Australian federal, state and local governments alone cannot finance the entirety of their immediate and planned infrastructure programme. To alleviate this shortfall, as is the case for the northern hemisphere, it is recognised in Australia that private sector funding must remain a viable option for the delivery of much-needed infrastructure.

The global financial crisis has provided significant challenges to the traditional PPP model. In the first half of 2009, the availability of finance for infrastructure in Australia and globally had all but evaporated.

First, the disappearance of the monoline insurers significantly restricted the ability of the bond market to provide a competitive funding solution. Secondly, international bank debt providers operating in Australia retreated to home markets to tackle their own challenges. Lastly, the amount of financing available from each bank to a project decreased significantly and the tenor of such funding reduced from covering the life of the project (but for a small tail) to three to seven year funding, meaning refinancing risk posed an enormous problem for projects. The greater equity requirement significantly impacts project economics.

Some governments have met this challenge directly by recognising that the strength of the PPP model lies in its flexibility to reallocate certain finance risks on a value for money basis.

In its 2009 report 'Financing Infrastructure in the Global Financial Crisis', Infrastructure Partnerships Australia (IPA) outlined three funding methods governments could use to address PPP financing issues.

Under this proposal, a government would offer a guarantee to underpin various risks in the infrastructure project. The guarantee may be provided at either the project level to cover operating risks or at the finance level for financing risks. Placed in context, this idea is not new or novel, indeed government guaranteed infrastructure underpinned the development of the limited recourse project finance market in Asia in the late 1980s and 1990s.

The effectiveness of this approach was demonstrated most recently in the Victorian desalination plant which reached financial close in late 2009. The difficult financial market conditions at the time, particularly for European banks, manifested in limitations on securing sufficient funding for the project. The use of the guarantee model mitigated this issue.

The other alternative financing models proposed by IPA involve governments acting as either a direct financier or as an equity provider. Again, these proposals are neither new nor novel.

A government development bank, multilateral credit agency or export credit agency are examples of governments acting as financiers. Examples of governments acting as equity provider include state-owned enterprises, government entities which have been partially privatised or commercialised and, in the UK, entities in which the Crown holds a golden share to vote on limited issues.

Another model is the supported debt model used on the South East Queensland schools projects (winner of Asia Pacific PFI Deal of the Year 2009), where the State's Treasury provided term debt for completed schools (see Australia: Innovative funding models - breaking the mould).

The advantage of these models is that they enable governments to recycle their limited capital and encourage infrastructure delivery. However, each model presents challenges due to inherent conflicts faced by government acting as both procurer and project participant in a project structure.

Tax incentives. To attract private operators, contractors and investors developing infrastructure, an appropriate fiscal environment needs to be provided. Presently in Australia, there are some unintended taxation barriers which continue to inhibit infrastructure investment.

Available funding – remaining flexible. To secure private sector funding, the government needs to be flexible in its approach. Leverage levels remain high. While the worst of the financial crisis may be over, the Australian market, similar to the situation in the northern hemisphere, is currently in a period of significant deleveraging to reflect lower asset values and more conservative assumptions. This deleveraging will place significant pressure on project economics and the availability of funding for larger projects.

Bid costs. Bid costs are a barrier to a strong and competitive bid market. Understandably, obtaining the right balance between absolute certainty in bid proposal and bid costs is complex. Governments need to be mindful of the types and detail of information requested in the bid phase. For example, governments routinely require bidders to submit complex and detailed design documents to provide comfort to the public sector regarding the asset which is to be constructed. Arguably, a government is sufficiently protected by passing design risk to the private sector and retaining a right to approve designs rather than requesting greater levels of detailed design from the private sector.

Consistency and simplification. To achieve national consistency throughout Australia (and make infrastructure more attractive to bidders and lenders), there is also a strong argument in favour of streamlining the tendering, bid management, documentation and probity processes. National Australian PPP guidelines and commercial principles, for example, have been drafted to help achieve these outcomes and improve overall cost and efficiency. This is a positive step but further work is required.

Building sustainable and liveable cities for the 21st century is one of the greatest challenges facing Australia over the next decade. It is recognised that the Australian Federal, State and Local Governments must take an innovative approach to addressing specific infrastructure shortfalls and impediments across key sectors by being flexible in their funding methods in PPP projects.