Bills Digest no. 160 2006–07
Australian Centre for International Agricultural
Research Amendment Bill 2007
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
for International Agricultural Research Amendment Bill
10 May 2007
House: House of Representatives
Portfolio: Foreign Affairs
1 July 2007
The purpose of
the Bill is to amend the Australian Centre for International
Agricultural Research Act 1982 (the ACIAR Act) which
establishes the Australian Centre for International Agricultural
Research (ACIAR) and is the legislative basis for regulating its
administration. The key amendments contained in the Bill are:
- the abolition of a Board of Management of the Centre along with
the office of Director.
- the establishment of a seven-member expert Commission for
International Agricultural Research (the Commission).
- amendment of the ACIAR Act so as to avoid duplication in the
membership of the proposed Commission and the current Policy
- creation of a new position of Chief Executive Officer (in place
of the current Director) who will be directly accountable to the
Minister for administrative and financial purposes under the
Financial Management and Accountability Act 1997.
- removal of body-corporate status from ACIAR.(1)
The amendments in the Bill respond to the
relevant findings of the Review of the Corporate Governance of
Statutory Authorities and Office Holders (the Uhrig Review)
conducted by Mr John Uhrig AC in 2003. They also follow an internal
review by the Australian Centre for International Agricultural
As part of its 2001 election platform, the
Coalition Government signalled its intention to examine the
efficacy of the governance arrangements of statutory authorities
In November 2002, the Government announced a
review of the governance practices of statutory authorities and
office-holders, with special focus on those agencies which impact
on the business community. The Prime Minister, the Hon. John
Howard, appointed Mr John Uhrig, AC, to head the review. The
objective of the review was to examine and evaluate governance
arrangements and practices and provide options for the Government
to improve the performance and get the best from statutory
authorities, their office holders and their accountability
frameworks .(2) In doing so, the Government noted the
impact that the performance of statutory authorities and
office-holders has on business and the overall health of the
Australian economy. In particular, the review was to focus on the
areas where businesses have the right to expect the highest levels
of efficiency, fairness and transparency in their dealings with
A key task was to develop a broad template of
governance principles that, subject to consideration by government,
might be extended to all statutory authorities and office
As part of the
process of developing a broad template, the review was asked to
consider the governance structures of a number of statutory
authorities and office holders with critical relationships with
business and to consider best practice corporate governance
structures in both the public and private
The report recommended that two templates
should apply to ensure good governance of statutory authorities:
agencies should either be managed by a Chief Executive Officer
(CEO) or by a board structure. Both templates detail measures for
ensuring the boundaries of responsibilities are better understood
and the relationship between Australian government authorities,
Ministers and portfolio departments is made clear.(4)
However, as Uhrig explained, the purpose of the template is to
serve as a reference point for the development of governance
arrangements and so it is expressed as an ideal .(5)
Uhrig recommended that the selection of the
management template and financial frameworks to be applied should
be based on the governance characteristics of a statutory
For a summary of the responses and debate that
followed the release of the review, please refer to Dr. Richard
Uhrig Review and the future of statutory authorities ,
Research Note, no. 50, Parliamentary Library, 2004 05.
Nearly all government bodies fall under the
Financial Management and Accountability Act 1997 (the FMA
Act) or the Commonwealth Authorities and Companies Act
1997 (the CAC Act).
The FMA Act focuses primarily on the
obligations and responsibilities of Chief Executives and the way
officials handle public money, public property and other resources
of the Commonwealth. The FMA Act applies to budget-funded
authorities managed by a CEO, and establishes various management
and reporting responsibilities for the CEO (sections 44 46, 49
and 51), as well as allowing the Minister to give guidelines to the
CEO (section 64). Furthermore, the FMA Act provides an
accountability framework for CEOs to manage agency resources.
The CAC Act, on the other hand, requires
directors and officers to exercise their powers and duties in the
best interests of the body and for a proper purpose. Directors
duties apply to help ensure that prudent decisions are made on the
resources that, as a matter of law, the body holds in its own
right. The CAC Act applies to authorities that are corporate
entities managed by a board. It requires the head of the board to
report to the responsible Minister (sections 15 16), and to ensure
that the authority s activities comply with government policies
(section 28). A board structure is favoured if there is a strong
commercial focus to the organisation, or if the agency is
As at 15 May 2007, there were 94 FMA Act
agencies and 99 CAC Act agencies.(7) The Department of
Finance and Administration publication Governance
Arrangements for Australian Government Bodies (August
2005) provides further explanation on the FMA Act and CAC Act and a
comparison between the two pieces of legislation.
On the basis of the findings of the Uhrig
Review, Ministers and their Departments have been undertaking an
assessment of their portfolio agencies against the governance
templates.(8) The Minister for Finance and
Administration has assumed a coordinating role in these
reviews.(9) Thus, a number of similar Acts have been
passed by Parliament incorporating Uhrig Review
ACIAR was established to play a special role
as part of the Australian Government s development cooperation
programs. ACIAR s mandate is to encourage, commission and support
research for the purpose of identifying or finding solutions to
agricultural problems facing developing countries. The research
projects funded by ACIAR are formulated within a framework
reflecting the priorities of Australia s aid program and national
research strengths, together with the agricultural research and
development priorities of partner countries .(10)
The Explanatory Memorandum states that there
is no financial impact.
It is proposed that the Board of Management of
the Centre along with the office of Director be abolished and
replaced by a Commission for International Agricultural Research
and a new position of CEO. Items 2 8 repeal some
definitions and insert others so as to reflect these revised
governance arrangements incorporating an executive management
The governance review of ACIAR concluded that,
as a budget-funded prescribed agency under the FMA Act, which does
not need to own assets in its own right, ACIAR no longer needed
body corporate status. Item 9 repeals the
subsections establishing the status of ACIAR as a body corporate
and replaces them with a proposed subsection 2 which states that
the Centre will be composed of a CEO and the staff of the Centre
referred to in section 30 of the Act.
Item 10 inserts a new
section 4A which establishes the statutory office of CEO.
Items 11 14 and 16 are consequential amendments
designed to reflect the fact that the functions currently performed
by the Centre will be vested in the CEO as part of the new
Item 15 proposes a
new section 5A which permits the Minister to give
the CEO written directions with respect to the performance of the
CEO s functions under this Act (including in relation to the
appropriate strategic direction the CEO should take in performing
his or her functions) .
The Explanatory Memorandum states that this
amendment is similar to the terms upon which the Minister is able
to give directions to the Board under the current Act. However, it
is noteworthy that under the existing Act,
such direction by the Minister to the Board
contains a couple of checks which seem to be
absent in the amendment proposed by item 15.
Under section 16 of the
current Act, in giving a direction such as that
proposed by item 15, the Minister is required to have regard to any
relevant advice that he may have received from the Policy Advisory
Council under section 18.(11) Furthermore, the annual
report of the Centre shall set out all directions given by the
Minister under this section. These checks on ministerial
power have not been added to the proposed section
Item 17 repeals Part III of
the current Act which established the Board of Management of the
Centre and replaces it with new provisions for the
establishment of a Commission for International
Agricultural Research. The Explanatory Memorandum states
that these amendments are designed to give effect to the executive
management model proposed by the Uhrig Review. However, the
Commission is to retain a capacity for collective decision-making
and the provision of expert advice to the Minister on particular
aspects of the Centre s operations.
Division 1, proposed section
8: the Commission will consist of a Chair and six other
Division 1, proposed section
9: specifies the functions of the Commission. These
functions are: the provision of expert advice in relation to the
formulation and funding of specific programs, the setting of
priorities, and any other matter relating to the Act as requested
by the Minister. The explicit articulation and separation of roles
between the Commission and the CEO is deliberately designed to
reflect the new governance and accountability arrangements.
Division 2, proposed section
10: the Commissioner is to be appointed by the
Governor-General and enjoy a period of office of not more than
three years. A person cannot be appointed as both a Commissioner
and a member of the Policy Advisory Council.
Division 2, proposed section
11: Commissioners will hold office on a part-time
Division 2, proposed section
14: Acting Commissioners may be appointed by the Minister
in certain circumstances.
Division 2, proposed section
16: A Commissioner may resign his or her appointment by
giving the Governor-General notice in writing.
Division 2, proposed section
16A: A Commissioner s appointment may be
terminated by the Governor-General for misbehaviour or physical or
A Commissioner s appointment must be
terminated by the Governor-General if:
- the Commissioner becomes bankrupt; or
- the Commissioner applies to take the benefit of any law for the
relief of bankrupt or insolvent debtors; or
- the Commissioner compounds with his or her creditors; or
- the Commissioner makes an assignment of his or her remuneration
for the benefit of his or her creditors; or
- the Commissioner is absent, except on leave of absence, from
three consecutive meetings of the Commission; or
- the Commissioner fails, without reasonable excuse to comply
with the requirement that he or she disclose personal interests
(see proposed section 16B).
Division 2, proposed section 16B:
Proposed subsection (1) mandates that a Commissioner must
give written notice to the Minister of any direct
or indirect pecuniary interest that the Commissioner has or
acquires and that conflicts or could conflict with the proper
performance of the Commissioner s functions .
Proposed subsection (2)
mandates that a Commissioner who has a direct or indirect pecuniary
interest in a matter being considered or about to be considered by
the Commission must disclose the nature of the
interest to a meeting of the Commission . This
disclosure must be made as soon as possible after the relevant
facts have come to the Commissioner s knowledge and must be
recorded in the minutes of the meeting. The Commissioner must not
be present or take part in any deliberation by the Commission on
any such matter.
The proposed provisions under Division
3 establish the arrangements regarding meetings of the
Commission. These requirements are similar to those currently in
force for meetings of the Board.
Proposed Part III, Division 4, section
16J allows the Commission, by resolution, to delegate all
or any of its functions or powers under the Act to a Commissioner.
Explicit checks and balances are provided in relation to this
Proposed Part III, Division 5, section
16K enables the Minister to give written directions to the
Commission in regards to the performance of the Commission s
functions under the Act. In doing so, the Minister is required to
have regard to any relevant advice that he or she may have received
from the Policy Advisory Council under section 18.
The minister is obliged to give a copy of the written direction to
the CEO. The Explanatory Memorandum states that this arrangement is
designed to enable the Minister to direct the Commission to perform
its functions under the Act in a particular way. No further
clarification of this point is provided.
Item 25 repeals Part
V of the ACIAR Act which established the office of
Director and substitutes it with a new Part
V, which establishes the statutory office of
CEO, in keeping with an executive management
Proposed section 24 deals
with the appointment of the CEO. The CEO is to be appointed by the
Governor-General and holds office for a specified period which must
not exceed seven years. The Explanatory Memorandum makes it clear
that the operation of this section is not meant to limit the
operation of the Acts Interpretation Act 1901, which
provides that the power to appoint includes the power to
Proposed subsection 24(3)
provides that a CEO may be appointed as both the CEO and a
Commissioner (including the Chair). The Explanatory
Memorandum states that it is intended that the CEO will be a member
of the Commission, thereby ensuring consistency in advice to the
Minister .(13) It is even envisaged that the Chair of
the Commission may also be appointed as the CEO.
Proposed section 25 provides
that the CEO will hold office on a full-time basis. Where the CEO
is also a Commissioner, the position of Commissioner will be held
on a part-time basis.
The appointment of the CEO may be terminated
on almost the same conditions as the appointment of a Commissioner
(proposed section 29C). Possible additional
reasons for termination are that the CEO:
- is absent, except on leave of absence, for 14 consecutive days
or 28 days in 12 months; or
- engages, except with the Minister s approval, in paid
employment outside the duties of his or her office; or
- fails, without reasonable excuse, to comply with the
requirement that he or she disclose personal interests (see
proposed section 29D).
Proposed section 29D mandates
that the CEO must give written notice to the
Minister of any direct or indirect pecuniary interest that
the CEO has or acquires and that conflicts or could conflict with
the proper performance of the CEO s functions .
Proposed section 29E is
designed to clarify that the CEO is not subject to direction by the
Commission in regard to the CEO s performance of functions or
exercise of powers under the FMA Act or the Public Service Act
1999, in relation to ACIAR.
Item 41 provides that the
Minister may, by writing, delegate to any person all or any of the
Minister s functions or powers under this Act.
As already noted,
this Bill is one of series introduced by the government designed to
make relevant and appropriate reforms in response to observations
and conclusions made by the Uhrig Report. It also responds to a
recent assessment of the ACIAR. The specific amendments are
designed to improve and strengthen the governance arrangements of
- Hon. Greg Hunt, MP,
Parliamentary Secretary to the Minister for Foreign Affairs, Second
reading speech: Australian Centre for International Agricultural
Research Amendment Bill 2007 , House of Representatives,
Debates, 10 May 2007, p. 6.
- Senator the Hon. N.
Government Response to Uhrig Report, media release, 12
- J. A. Uhrig, AC,
Review of the Corporate Governance of Statutory
Authorities and Office Holders, Canberra, June 2003, p.
- Senator the Hon. N.
Minchin, op. cit.
- Uhrig, op. cit., p.
- ibid., p. 12, point
- Department of
Finance and Administration, Chart of 94 Agencies under the
Financial Management and Accountability Act 1997 (FMA Act), Chart
of 99 bodies under the Commonwealth Authorities and Companies Act
1997 (CAC Act) , http://www.finance.gov.au/Publications/docs/FMA_CACFlipchart.pdf,
accessed on 22 May 2007.
- More than 160
Australian Government Agencies are being assessed against the Uhrig
Report principles and templates . Sussan Ley, MP, Parliamentary
Secretary to the Minister for Agriculture, Fisheries and Forestry,
Second reading speech: Primary Industries and Energy Research and
Development Amendment Bill 2007 , House of Representatives,
Debates, 1 March 2007, p. 10.
- Australian Centre
for International Agricultural Research, About us , http://www.aciar.gov.au/web.nsf/doc/acia-5kj3ex,
accessed on 18 May 2007.
- Section 18 defines
the functions of the Policy Advisory Council.
Memorandum, p. 9.
23 May 2007
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