29 Sep 2016

Holy Scrap! Parliament passes new scrap metal controls

By Nick Thomas and Katrina Hogan

NSW scrap metal dealers should contact their local police station to organise registration, and familiarise themselves with the new identification protocols and limitations on payment methods.

On 14 September the NSW Parliament passed the Scrap Metal Industry Bill which aims to regulate criminal activity within the scrap metal industry in three major ways:

  • scrap metal dealers can no longer pay cash;
  • new record keeping measures and registration requirements will ensure that the sale of stolen scrap metal can be traced; and
  • police officers now have powers of entry, inspection and seizure.

The Hon Rick Colless, in introducing the Bill into the Upper House in Parliament, estimated that 600 to 700 scrap metal businesses are operating across New South Wales and "[u]p until now this trade has been largely unregulated and undocumented making it extremely attractive to criminals as a way to make some quick cash". 

The Act is designed to address the rapid and anonymous disposal of stolen property such as cars, hot water systems, building materials and parts of critical infrastructure. In the second reading speech Mr Colless stated that police have indicated that the lack of regulation can lead to "the same people dropping off cars they have stolen to scrap metal yards every week, or someone offloading a dozen hot water systems they have illegally ripped out of a new development as a scrap. Or, a bulk load of stolen copper piping or wire, which might until recently have been part of an operating rail line, or the copper plumbing infrastructure of a local school hall".

The Act will respond to criticism that the scrap metal regulatory regime in New South Wales is weaker than other states. For example, Queensland and the Australian Capital Territory require licensing for all second hand scrap metal dealers and South Australia requires licensing if operators receive more than 100 tonnes of scrap metal in a year. In South Australia and Tasmania new scrap metal dealers are also required to notify the police of an intention to open a second-hand scrap metal dealership.

The legislation follows calls in other jurisdictions for stronger regulation of the scrap metal industry. In Victoria, Western Australia and the Northern Territory scrap metal dealers are currently exempt from licensing requirements provided they do not deal in certain metals (such as gold and silver).


Cash no longer accepted

Section 12 of the Act makes it an offence for a scrap metal dealer to pay for any scrap metal in cash (including cash cheque) or in kind with goods and services. The maximum penalty is 100 penalty units (currently $11,000). Dealers will now utilise EFTPOS transfers or cheques. This will also remove the security risk posed by the current need for scrap metal businesses to keep large volumes of cash on hand.

New record keeping measures and registration requirements

The Act requires scrap metal business to be registered with the Commissioner of Police and pay a fee every three years. The registration information must include the name of the business and address of each scrap metal yard used by the scrap metal dealer in carrying on the business.

Unlike other jurisdictions such as Tasmania and South Australia, registration will be automatic and the police will not be able to object to an application for registration, however it will be an offence not to register. The Commissioner of Police will provide registered businesses with a certificate of registration and maintain a publicly-accessible register of scrap metal businesses.

It is likely that this register will be utilised by other bodies such as the Australian Taxation Office and Environmental Protection Authority who have an interest in making contact with scrap metal businesses to ensure the payment of taxes and levies, and the appropriate disposal of waste.

A supporting regulation will be drafted in early 2017 which Mr Colless says will "prescribe penalty notice offences and will outline a schedule of fees…which is likely to be less than $300 for three years' registration".

For each transaction dealers will also be required to record the details of the seller of the material, a description of the scrap metal including its quantity and weight and, in the case of motor vehicles, the unique identification details. This will aid police investigations and enable them to better trace items which are the subject of property theft. Scrap metal businesses must also report suspicious transactions to the police, including any scrap metal that comes into their possession that they suspect has been stolen.

New police powers

Part 3 of the Act will empower police to enter a scrap metal business without a warrant to determine whether there has been a contravention of the Act and to conduct a search; take photographs, films, audio and video recordings; seize anything the police officer believes on reasonable grounds is connected with an offence against the Act or regulations; copy records; require any person to produce documents on the premises; and require any person to answer any questions relating to any document or other relevant matter. This right does not extend to parts of the premises used for residential purposes without permission of the occupier or a warrant.

The volume of property thefts in a given area and the strength of relevant criminal intelligence or reports of suspicious transactions from scrap metal dealers themselves will drive the frequency of visits to certain scrap metal yards.

The Act also provides for interim and long term closure orders in respect of scrap metal premises. Where the Commissioner of Police is satisfies that a scrap metal business is not registered or that a serious criminal offence is being committed on the premises of the business, the Commissioner can make an interim closure order which lasts 72 hours unless repealed or revoked. This is a non-reviewable power of the Commissioner, however the Commissioner cannot make more than one interim order closing the same property within a seven day period.


Police may also apply to the court for a long-term closure order. The court may order the closure of specified premises for such a period or until such time as the court considers appropriate provided certain conditions are met. Notwithstanding the obvious advantages to the police in being able to issue interim development closures, the NSW Parliament Legislation Review Committee prefers the process outlined in section 18 which offers the scrap metal business the opportunity to be heard before a court and the decision is reviewable.


What this means for you

It is expected that the Act will commence operation in the first half of 2017.

Scrap metal dealers should contact their local police station to organise registration. Sellers of scrap metal should familiarise themselves with the new identification protocols and limitations on payment methods. This Act also encourages those who have suffered property theft to immediately report such theft to the Police who will soon have an enhanced ability to track property theft under the new regime. 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.