State Debt Recovery Act 2018: What You Need to Know

On 21 March 2018, a new State Debt Recovery Act 2018 (NSW) commenced. The Act gives Revenue NSW the power to bypass the court debt recovery process, dramatically changing the way state debts, such as council rates, are collected in NSW. 

Under the new law, any state agency – including local councils – can enter into an agreement with the Chief Commissioner of State Revenue (Revenue NSW formally known as the State Debt Recovery Office or SDRO) for the recovery of that agency's debts.

RLC’s Credit and Debit solicitor Laura Bianchi warns that the new arrangement has the potential to significantly affect low income households.  

‘We are particularly concerned with the wide scope of “referable debt”, specifically because it appears to extend to social housing debts, which will affect many of our most vulnerable clients,” Laura Bianchi said.

Ms Bianchi explained that state agencies were previously required to obtain judgment from a court before they could take this type of action to enforce a debt. Now Revenue NSW can simply send a notice to a person’s last known address, and if the debt remains unpaid after the due date, debt recovery action will commence. Recovery action can include taking money from a person’s bank account, seizing property and placing a charge on land.  

Redfern Legal Centre is currently involved a consultation to finalise the debt recovery guidelines, which will influence the way Revenue NSW will use this power against people experiencing homelessness, mental illness, financial hardship, and substance addiction. 

When the Bill was debated in parliament earlier this year, RLC joined forces with Community Legal Centres NSW to successfully advocate for the removal of provisions that we feared would have the most detrimental impact on vulnerable people in our community.   

The most critical amendment was the removal of the power to suspend certain occupational licences such as tow truck licences, real estate licences and mechanic licences without notice. Ms Bianchi said that the list of licences that could be suspended appeared to have been chosen at random, which would have severely disadvantaged certain groups.

‘The suspension of any occupational licence is counterintuitive to the goal of encouraging payment of debt so we were glad the government saw sense in our position and agreed to remove that power,’ Laura Bianchi said.  

As state debts begin to be referred and collected by Revenue NSW, RLC will continue to advise and advocate for people through our credit, debt and consumer law practice.  

Further info  

State Debt Recovery Bill 2017 (Harsard)

State Debt Recovery Act 2018 

RLC in the Media: New debt recovery laws welcomed: CLCNSW  (Lawyers Weekly)

Media Release: Proposed NSW debt recovery laws improved by amendments (CLCNSW/RLC Joint Media Release)