Bills Digest no. 13, 2017–18
Date introduced: 14 June 2017
House: House of Representatives
Portfolio: Agriculture and Water Resources
Commencement: Sections 1 and 2 on Royal Assent; all other provisions on the earlier of a day to be fixed by Proclamation or six months after Royal Assent.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.
All hyperlinks in this Bills Digest are correct as at August 2017.
Purpose of
the Bill
The purpose of the Regional Investment Corporation Bill
2017 (the Bill) is to establish the Regional Investment Corporation. The
establishment of the Regional Investment Corporation delivers on a 2016
election commitment.[1]
Structure
of the Bill
The Bill comprises five parts:
- Part
1 sets out introductory matters
- Part
2 establishes the Regional Investment Corporation and sets out its functions
- Part
3 provides for the establishment and functions of the Board of the Corporation
- Part
4 sets out the role of the Chief Executive Officer and provides for the
engagement of staff and consultants
- Part
5 relates to miscellaneous matters.
Background
Demise of
dedicated rural banking
Role of the
Reserve Bank
Between 1925 and 1988 the Rural Credits Department (RCD)
of the Reserve Bank of Australia (Reserve Bank) provided seasonal credit for
periods of up to one year to statutory marketing authorities and rural
cooperative associations to facilitate the marketing, processing and
manufacture of primary produce.[2]
It also extended research grants and fellowships for projects associated with
the promotion of primary production.[3]
The RCD was created when the size of the rural sector
meant that its demand for seasonal finance was very large relative to the
capacity of private financial markets. By the 1980s, however, the commercial
banking system had become the primary source of rural credit.[4]
Role of the
Commonwealth Development Bank
Between 1960 and 1974, the Commonwealth Development Bank
(CDB) provided finance related to primary production and industry undertakings
(particularly small undertakings). Lending would occur in cases where the
provision of finance was desirable and the finance was not otherwise available,
either in full or in part, on reasonable and suitable terms and conditions.[5] The
legislation also provided that the CDB should have regard ‘primarily to the
prospects of the operations of that person becoming, or continuing to be,
successful’ and not necessarily ‘the value of the security available in respect
of that finance’.[6]
Move to
commercial banks
The 1981 Committee of Inquiry into the Australian
Financial System (the Campbell Committee) opined that private markets had
matured sufficiently to ‘cope comfortably with rural marketing financing
needs’.[7]
Accordingly, it recommended that ‘the Rural Credits Department of the Reserve
Bank should be phased out, with appropriate transition arrangements to enable
existing customers to make alternative arrangements’.[8]
Along with the Commonwealth Bank of Australia (CBA), the CDB
was converted from a statutory authority into a public company in 1990.
Problems
with banking in the rural sector
Campbell Committee
Despite the confidence of the Campbell Committee that
commercial banks could meet the needs of rural customers, problems were
apparent from as early as 1991. At that time the House Standing
Committee on Finance and Public Administration conducted an inquiry into
banking and the effect of deregulation. The Committee’s ‘interest was prompted
by public perceptions about ‘excessive’ profits made by banks, the apparent imposition
of wider margins on ordinary consumers to recover losses on loans to failed
entrepreneurs and concern about the general practices of banks.[9]
According to the Committee:
A number of problems in the relationship between banks and
farm borrowers arose during the course of the inquiry. Submissions received
dealing with the bank-farmer relationship consisted of complaints by rural
borrowers about their treatment by the banks which ranged from allegations of
failure to notify changes to interest rates to forced exiting from farm
properties.[10]
Productivity
Commission inquiry
In 2009 the Productivity Commission was asked to
undertake a public inquiry into the government drought support arrangements in
Australia—in particular to identify the most appropriate way for governments to
assist farmers, farm businesses and farm dependent rural small businesses
improve their self-reliance and preparedness for drought events.[11]
The Productivity Commission considered that the provision
of concessional loans to:
... maintain viable farm businesses during drought can only
be justified if there is some failure in capital markets that restrict these
businesses from borrowing. Given the availability of rural credit for viable farm
businesses ... and high average equity levels, it is likely that such support
measures cannot be justified on market failure grounds.[12]
[emphasis added]
Accordingly, none of the Productivity Commission’s
recommendations were directed towards the establishment of a corporation whose
activities would be directed towards the granting of concessional loans to farm
businesses.
Economics Committee
inquiry
In 2011, the Senate Standing Committee on Economics
conducted an inquiry into competition in banking following the global financial
crisis (GFC).[13]
In that case, the Economics Committee considered the feasibility of resurrecting
‘an organisation like the Commonwealth Development Bank or the Primary Industry
Bank’.[14]
The rationale for such a move was said to be:
... that competition from the development bank might lead the
commercial banks to compete more aggressively in the small business market.
Others noted that a development bank could also fill the gap during recessions
through keeping credit flowing to businesses, farmers and for mortgages, should
the commercial banks be forced to restrict lending.[15]
However, the Economics Committee rejected the notion.[16]
Private
Senators’ Bill
The apparent disconnect between the practices of
commercial banks and the financial needs of farmers culminated in the
introduction of a Private Senators’ Bill, the Reserve Bank Amendment
(Australian Reconstruction and Development Board) Bill 2013, by Senators
Xenophon and Madigan in December 2013.[17]
Speaking in relation to the Bill, Senator Xenophon stated:
Rural and regional Australia is
struggling. We have heard over and over again the challenges communities are
facing, and how they are trying to survive. In recent years, they have borne
the brunt
of extreme
weather events, a high Australian dollar, and a lack of support from
State, Territory and
Federal Governments.
This Bill ... seeks to establish a
specific board under the umbrella of the Reserve Bank, with the aim of
promoting reconstruction and development in rural and regional areas.
In a sense, the proposed board is
similar to the Commonwealth Development Bank, which was established in 1960.
Its aim was to provide loans to individuals and businesses in the primary and
secondary industry sectors, where that support would lead to an increase in
productivity and wasn’t otherwise available to the applicants.[18]
The Bill lapsed when Parliament was
dissolved on 9 May 2016.
2014—Financial
system inquiry
The issues around rural banking and access to finance for
the rural sector were aired again during the Financial System Inquiry (FSI) which
was undertaken in 2014.
According to the FSI one of the main concerns that it
heard was that ‘particular sectors of the economy, such as small and
medium-sized enterprises (SMEs) or rural businesses, do not have sufficient
access to funding’.[19]
According to the final report of the FSI:
Some submissions also called on Government to influence the
allocation of resources towards particular sectors of the economy perceived to
have insufficient access to funding. For example, several submissions call on
Government to encourage the investment of superannuation assets in
infrastructure or to establish a Government-owned bank to direct funding to
particular causes, such as rural businesses.[20]
The FSI did not support such an approach on the grounds
that ‘to maximise the efficiency of the financial system policy makers should
not set out to favour one particular funding destination over another’.[21]
2016—Inquiry
into the impairment of customer loans
In 2016, the Parliamentary Joint Committee on Corporations
and Financial Services tabled the report of its inquiry into the impairment of
customer loans.[22]
The final report notes that the evidence to the Parliamentary
Joint Committee from the Department of Agriculture was that a notable portion
of the correspondence received by the Minister for Agriculture regarding debt
matters raised issues including:
- banks
refusing to provide property valuation documents to farmers
- use
of unreasonable charges or fees for compulsory property valuations
- re-evaluating
properties to ‘engineer’ defaults, despite farmers not missing required principal
and/or interest payments and
- use
of single organisations for valuation and receivership processes, including allegations
of using organisations that are known to undervalue property.[23]
The report did not make any recommendations which were
specific to rural banking but rather made a range of recommendations which
sought to improve communication between banks and all their customers.
Stakeholder
comment
What seems unclear then is whether there is, in fact, some
failure in capital markets that restrict farm businesses from borrowing. There
is no doubt that farm businesses and farming communities feel aggrieved at the
manner in which they have been treated by the banks. However, neither the
Productivity Commission nor the FSI identified an economic need for a
Commonwealth entity such as that proposed by the Bill to be created based on market
failure grounds.
The Pastoralists and Graziers Association of Western
Australia (PGA), noting the comments of the Productivity Commission, has
expressed its concern that the ‘Corporation will effectively be a state-owned
bank that will compete directly with a wide range of private sector financial
entities that currently provide financial services and products to farm
businesses’.[24]
The PGA is concerned, first that concessional loans
granted by the Regional Investment Corporation may encourage less effective
producers to remain in the industry when exit may be of greater personal and
economy-wide benefit. ‘Unless the criteria used by the RIC ensure that
concessional loans are only made to otherwise viable producers there is a real
risk that the recipient farm business will fail and the loan subsequently
written off.’[25]
Secondly, the PGA is concerned that because the Regional
Investment Corporation ‘will be insulated from full market forces there is a
very real danger that organisational performance, at all levels of governance
and operations will be lower than in private financial entities’.[26]
On the other hand, the National Farmers’ Federation is
supportive of the Bill stating:
... there is hope in the farming community that the lag between
political announcements about farm business loan programs and the actual
delivery will be significantly shortened. Thus during tough seasons, a
streamlined and is centrally administered farm business loan program could
prove vital to farmers across the nation.[27]
Election
commitment
In the context of decades of complaints that the rural
sector and small business were strongly disadvantaged in their dealings with
banks, it is no surprise that the Nationals made a commitment in the lead up to
the 2016 Federal election to address some of those issues.
In particular, the Minister for Agriculture and Water
Resources, Barnaby Joyce stated:
A re-elected Coalition Government will establish a Regional
Investment Corporation to fast- track the delivery of $4.5 billion in
Commonwealth drought and water infrastructure loans.
The Coalition is committed to streamlining Commonwealth
financing and concessional loan processing to enable new dams to be financed
quickly and ensure drought loans are speedily approved to help farmers in need.
The Regional Investment Corporation will be established as
the single administrator for the $4.5 billion in Agriculture and Water
Resources portfolio financing and concessional loans initiatives.
No longer will the Commonwealth have to barter with state
governments to process drought and dairy concessional loans to help farmers. Under
a re-elected Coalition Government we will be able to deliver this support
direct to farmers in need. [28]
This Bill implements this election commitment.
Value to the
economy
There is no question that rural exports are of great value
to the economy. According to the Australian Bankers’ Association:
- Rural exports, including
agriculture, forestry and fishing, account for just under 15 per cent of all
goods and services exported from Australia. Australia is a major global
exporter of some key rural commodities, being one of the top three exporters
for wheat, cattle, sheep and dairy.
- Rural businesses have a relatively
high demand for finance, and banks have a long history of providing this
financial support. About two-thirds of small businesses in agriculture,
forestry and fishing have a credit facility other than a credit card. This is a
higher recourse to debt funding than in most other small business sectors.
-
Lending by banks to the
agriculture, forestry and fishing industry increased by 4 per cent over the
year to June 2015 to a record high of $65 billion.
- Around 93 per cent of agriculture,
forestry and fishing businesses which seek debt finance are successful in
obtaining the required funding. This is a higher success rate than any other
business sector, other than health.[29]
The Australian Bureau of Agricultural and Resource
Economics and Sciences (ABARES) consider the nature and extent of farm debt to
be as follows:
- broadacre
debt is estimated to have increased by 7 per cent during 2015–16 to average
$560,500 per farm at 30 June 2016
- dairy
industry debt also increased by around 7 per cent to average $937,600 per farm
- most
new borrowing during 2015–16 for broadacre and dairy farms funded new on-farm
investment and
- farm
business equity on average is strong for broadacre farms. The average equity
ratio for broadacre farms at 30 June 2016 is estimated at 88 per cent, an
increase from 87 per cent at 30 June 2015.[30]
Figures 1 and 2 below show the ratio of farm
business debts to total farm cash receipts.
Figure 1: farm
business debt and total farm cash receipts, broadacre farms, Australia, 1996–97
to 2016–17: average per farm
For the broadacre industries, the proportion of net farm income
(total farm cash receipts less total cash
Figure 2: farm business debt and
total farm cash receipts, dairy farms, Australia, 1996–97 to 2016–17: average
per farm
Comment
Figure 1 shows that broadacre farms have endured a ten-year
period during which farm business debt exceeded farm cash receipts and that
only in 2016–17 has this unevenness started to improve. However, figure 2
indicates that the unevenness between farm business debt and farm cash receipts
for dairy farms is worsening.
Nevertheless, it is not apparent that statistics such as
these translate into a specific need for a Commonwealth entity such as that proposed
by the Bill to be created based on market failure grounds. Rather, it is more
likely than not that there are a range of interacting reasons for the figures
including but not limited to, supply chain arrangements and climatic
conditions.
Committee
consideration
Senate
Standing Committee for Rural and Regional Affairs and Transport
The Bill has been referred to the Senate Standing
Committee for Rural and Regional Affairs and Transport (Rural and Regional
Affairs Committee) for inquiry and report by 14 August 2017.[31]
Select
Committee on lending to primary production customers
Of note, is the inquiry by the Select Committee on lending
to primary production customers (Select Committee) which was established in
February 2017.[32]
The Select Committee is due to report on 18 October 2017. At the time of
writing this Bills Digest, 59 submissions had been received.[33]
Senate
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills (Scrutiny
of Bills Committee) published its comments in relation to the Bill on 21 June
2017.[34]
The various matters raised by the Scrutiny of Bills Committee are canvassed
under the heading ‘Key issues and provisions’ below.
Policy
position of non-government parties/independents
At the time of writing this Bills Digest there had not
been any comment by the non-government parties or the independents in relation
to the Bill
Position of
major interest groups
At the time of writing this Bills Digest only five submissions
had been received by the Rural and Regional Affairs Committee in relation to
the Bill and its provisions.[35]
One of those was provided by the Department of Agriculture and Water Resources.
The comments made by submitters relate largely to matters of governance and are
canvassed under the heading ‘Key issues and provisions’ below.
Financial
implications
According to the Explanatory Memorandum:
The farm business concessional loans program and National
Water Infrastructure Loan Facility are intended to be budget neutral over their
life, with the establishment and operating costs of the Corporation to be
recovered through the interest charged on loans to farm businesses and state
and territory governments.[36]
The election commitment from Minster
Joyce was to the effect that the Regional Investment Corporation would deliver
$4.5 billion in Commonwealth drought and water infrastructure loans.[37]
Statement
of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[38]
Parliamentary
Joint Committee on Human Rights
At its meeting of 20 June 2017, the Parliamentary Joint
Committee on Human Rights determined that the Bill did not raise any human
rights concerns.[39]
Key issues
and provisions
Regional
Investment Corporation
Part 2 of the Bill establishes the Regional Investment
Corporation as a body corporate which has its own seal and which may sue and be
sued.[40]
First
function—farm business loans
A primary function of the Regional Investment Corporation
is to administer farm business loans. This function includes:
- the
provision of loans subject to relevant lending criteria being satisfied
- consulting
with commercial lenders and other industry bodies representing persons likely
to seek a loan
- determining
the terms and conditions on which approved loans are provided
- taking
security for approved loans
- charging
for transaction costs incurred in relation to an approved loan
- managing
approved loans, and if required, enforcing the security taken for an approved
loan and
- periodically
reviewing loans provided, and the terms and conditions on which approved loans
are provided.[41]
Background
to concessional loans
Since 2013, the Coalition Government has provided
concessional loans to assist farm businesses to improve their debt servicing
capacity or recover from the effects of drought via a number of programs.[42]
Under each concessional loans program, funds were loaned to the states and the
Northern Territory to establish schemes to provide loans to eligible farming
businesses.[43]
The scheme delivery arrangements were negotiated bilaterally with each
jurisdiction and were underpinned by a loan agreement and a service level
agreement that outline roles and responsibilities, reporting and performance
requirements and the terms and conditions of the Commonwealth's loan.[44]
However, a report by the Australian National Audit Office
(ANAO) published in 2016 was critical of some aspects of the two concessional
loan programs established by the Department of Agriculture and Water Resources
which it examined.
ANAO noted that the ‘establishment of decentralised delivery
arrangements is complex and can, due to the number of different arrangements to
be agreed, affect the ability of the department to open schemes
simultaneously’.[45]
In addition an earlier review conducted by the Department of
Agriculture and Water Resources of three jurisdictions’ systems and processes
for managing their farm finance concessional loans schemes:
... identified that the jurisdictions’ approaches to applying
the criteria and assessing each application were not consistent. For example,
the jurisdictions applied different ratio thresholds to calculate the suitability
of security and different focus areas to determine the applicant’s capacity to
repay the loan.[46]
Legal basis
for the programs to date
Part of the reason for the uneven nature of delivery of the
concessional loans programs lies in their constitutional underpinning. Loans to
the states were made under section 96 of the Constitution
which deals with the provision of financial assistance, otherwise known as
‘grants’ from the Commonwealth to the states, whereas the loans to the Northern
Territory were based on section 122 of the Constitution.
The Department of Agriculture and Water Resources advised
the ANAO that it had obtained advice that ‘the Constitution did not
provide a heads [sic] of legislative power which would alone, or in
combination, provide broad support for a Commonwealth program of direct
assistance to farming businesses through the provision of concessional loans’.[47]
Legal basis
for the Bill
Nevertheless, the Bill establishes a body corporate to
administer farm business loans. It is in the definition of that
term that the constitutional powers on which the Bill is based are enunciated.
Accordingly a farm business loan means a loan made, or proposed
to be made, to a farm business (a term which has not been defined in the Bill):
- engaged
solely or mainly in producing commodities for constitutional trade or commerce[48]
- for
the purpose of encouraging or promoting constitutional trade or commerce
- that
is a constitutional corporation[49]
- to
allow the business to satisfy the requirements of a contract with a
constitutional corporation which relates to the corporation’s trading
activities
- in
an affected area, within the meaning of the Desertification Convention,[50]
for the purpose of implementing Australia’s international obligations under
that Convention[51]
or
- in
a Territory.[52]
Essentially then the powers relied on either individually,
or in combination, are the power to make laws with respect to trade and
commerce with other countries, and among the states; the power to make laws
with respect to foreign corporations, and trading and financial corporations
formed within the limits of the Commonwealth; the power to make laws with
respect to external affairs and the power to make laws for the government of a territory.
Setting aside the reference to the Desertification
Convention, the suite of constitutional powers drawn on for the Bill is the
same as that which the Department of Agriculture and Water Resources previously
advised the ANAO would not provide broad support for a Commonwealth program of
direct assistance to farming businesses through the provision of concessional
loans.[53]
Key
issue—use of the corporations power
Section 51(xx) of the Constitution refers to foreign
corporations and trading or financial corporations, formed within Australia.
Essentially, to be considered a trading or financial corporation, an entity
must be first, incorporated and second, engaged in ‘substantial’[54]
trading[55]
or financial[56]
activities. Under the Bill, the Regional Investment Corporation will be a
corporation formed within Australia which will be engaged in financial
activities.
Since the High Court handed down its decision in the WorkChoices
Case in November 2006,[57]
the corporations power has been interpreted broadly. In that case Gleeson CJ,
Gummow, Hayne, Heydon and Crennan JJ referred back to the earlier statement by
Gaudron J in Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry,
Mining and Energy Union:
I have no doubt that the power conferred by section 51(xx) of
the Constitution extends to the regulation of the activities, functions,
relationships and the business of a corporation described in that sub-section,
the creation of rights, and privileges belonging to such a corporation, the
imposition of obligations on it and, in respect of those matters, to the
regulation of the conduct of those through whom it acts, its employees and
shareholders and, also, the regulation of those whose conduct is or is capable
of affecting its activities, functions, relationships or business.[58]
The above statement bears some resemblance to McHugh J’s observation in Re Dingjan, where His Honour noted:
If a law regulates the activities, functions, relationships
or business of a section 51(xx) corporation, no more is needed to bring the law
within section 51(xx). That is because the law, by regulating the activities
etc., is regulating the conduct of the corporation or those who deal with it.
Further, if, by reference to the activities or functions of section 51(xx)
corporations, a law regulates the conduct of those who control, work for, or
hold shares or office in those corporations, it is unlikely that any further
fact will be needed to bring the law within the reach of section 51(xx).[59]
This is a very broad interpretation of the corporations
power. It holds that, as long as a law is addressed to a ‘constitutional
corporation’, the Commonwealth can regulate any aspect of what that corporation
does, including any relationship the corporation may have with a third party or
its employees.[60]
Key
issue—use of the external affairs power
In addition to the corporations power, the Bill relies on
section 51(xxix) of the Constitution—known as the external affairs
power.
Australia became a party to the 1994 Desertification
Convention in 2000, which by 2012 had secured 195 state parties, making it
one of the most widely adopted international environmental instruments.[61] The Convention's objective is to ‘combat
desertification and mitigate the effects of drought in countries experiencing
serious drought and/or desertification’ with a particular focus on Africa.[62]
Desertification is defined as ‘land degradation in arid,
semi-arid and dry sub-humid areas resulting from various factors, including
climatic variations and human activities’.[63] Activities
directed towards combating desertification include ‘the prevention or reduction
of land degradation, the rehabilitation of partly degraded land, and the
reclamation of desertified land’.[64]
It has been stated that ‘the Convention does not create
precise obligations for single continental states like Australia, other than as
a country affected by desertification to take measures to combat those effects
and to mitigate the effects of drought’.[65]
This is relevant to the first function of the Regional
Investment Corporation in administering farm business loans. It is also
relevant to its second function of administering financial assistance for water
infrastructure projects as set out below.
Second
function—water infrastructure loans
A second function of the Regional Investment Corporation
is to administer, on behalf of the Commonwealth, financial assistance for water
infrastructure projects which are granted to the states and territories prior
to the enactment of the Regional Investment Corporation Act.[66]
Currently the National Water Infrastructure Loan Facility is a $2 billion facility which is available
through the Department of Agriculture and Water Resources to provide state and
territory governments with concessional loans to co-fund the construction of
water infrastructure.[67]
Once the Bill
is enacted, the Regional Investment Corporation will have a role to play in
future water infrastructure projects by:
- liaising,
negotiating and cooperating with the states and territories and other parties
on possible future water infrastructure projects[68]
- providing
advice to responsible Ministers on a water infrastructure project[69]
and
- implementing
directions of the responsible Ministers to enter into agreements, on behalf of
the Commonwealth, for the grant of financial assistance to states or territories
in relation to water infrastructure projects.[70]
The Regional Investment Corporation is to periodically review
financial assistance granted, and the terms and conditions on which it was
granted.[71]
Scrutiny of
Bills Committee comments
The Scrutiny of Bills Committee noted that one of the functions
of the Regional Investment Corporation will be ‘to administer, on behalf of the
Commonwealth, financial assistance to states and territories in relation to
water infrastructure projects’ and that, as part of this role it will, amongst
other things, on direction from the relevant ministers, enter into
agreements to grant financial assistance to states and territories in
relation to water infrastructure projects.[72]
The Scrutiny of Bills Committee noted that although the Regional
Investment Corporation would be the administrator of the National Water
Infrastructure Loan Facility, the legislation’s reference to the broader
concept of ‘water infrastructure projects’ would empower it to administer other
programs of financial assistance to the states and territories in relation to
water infrastructure. The Explanatory Memorandum states that the Regional
Investment Corporation will undertake the administration of these financial
assistance programs on behalf of the Commonwealth because ‘the
decision on whether to provide the financial assistance remains with the
government, not the Corporation’.[73]
However, as the Scrutiny of Bills Committee points out, the
power to make grants to the states and to determine terms and conditions
attaching to them is conferred on the Parliament by
section 96 of the Constitution. The Committee stated:
Where the Parliament delegates this power to the executive,
the Committee considers that it is appropriate that the exercise of this power
be subject to at least some level of parliamentary scrutiny,
particularly noting the terms of section 96 of the Constitution and the role of
Senators in representing the people of their State or Territory.[74]
[emphasis added]
That being the case, the Scrutiny of Bills Committee
recommended amendments to the Bill ‘to include at least some high-level
guidance as to the types of terms and conditions that States and Territories
will be required to comply with in order to receive payments of financial
assistance for water infrastructure projects’.[75]
Commencement
Although the provisions of the Bill will commence on the
earlier of the day to be fixed by proclamation or six months after the Royal
Assent, subclause 8(3) of the Bill provides that the Regional Investment
Corporation is to perform the first function of administering farm business
loans and the water infrastructure loans function as described above from 1
July 2018. In addition subclause 8(4) of the Bill empowers the
responsible Ministers to specify a date earlier than 1 July 2018 from which the
Regional Investment Corporation is to perform those functions.
Miscellaneous
functions
The Regional Investment Corporation will also be required
to set, and adjust the interest rates applicable to loans and financial
assistance,[76]
to provide advice and assistance to borrowers (both before and after approval)[77]
and to administer programs prescribed by the rules.[78]
However, any such programs must address the constitutional basis for each
program.[79]
Importantly the Regional Investment Corporation may on its
own initiative or at the request of a responsible Minister provide advice to
the Minister about the activities that it is undertaking or that it could
undertake.[80]
Stakeholder
comment
The National Farmers’ Federation supports the
last-mentioned function. It has stated that it would also be:
... beneficial to provide the Regional Investment Corporation
with a specific function to advise the responsible Ministers on issues
affecting the financial circumstances of the agricultural industry ... This could
include coordination with the national farm debt survey and responding to any
financing or debt reconstruction needs. This would give the ability for the
Regional Investment Corporation to provide strategic forecasting information to
Ministers about potential future issues and opportunities.[81]
Whilst stakeholders may wish to see the Regional
Investment Corporation with such additional functions, much will depend on
whether the relevant function is consistent with the constitutional basis for
the Bill.
Operating
mandate
The responsible Ministers must give an Operating
Mandate to the Regional Investment Corporation about the performance of
its functions. Although the operating mandate will be provided by legislative
instrument and will be tabled in the Parliament, the Bill makes clear that it
will not be disallowable under the Legislation Act
2003.[82]
It will be tabled in the Parliament. The operating mandate may include
directions about:
- the
objectives that the Regional Investment Corporation is to pursue in administering
farm business loans, financial assistance in relation to water infrastructure
projects or any programs prescribed by the rules
- expectations
in relation to the strategies and policies to be followed for the effective
performance of the Corporation’s functions
- eligibility
criteria for loans or financial assistance
- financial
arrangements in relation to the Corporation, including how amounts received by
the Corporation are to be dealt with and the circumstances in which they are to
be remitted to the Commonwealth and
- any
other appropriate matters.[83]
Other directions
Clause 12 of the Bill
authorises the responsible Ministers to give other directions to the Regional
Investment Corporation.
First, upon advice from the Board, the responsible
Ministers may give a written direction about a class of farm business loans,
but may not give a direction in relation to a particular farm business loan.[84]
Second, upon advice from the Board, they may give a
written direction to enter into an agreement, on behalf of the Commonwealth,
for the grant of financial assistance to a particular state or territory in
relation to a particular water infrastructure project. The direction may
specify terms and conditions to be included in the agreement.[85]
Third, the responsible Ministers may give a written
direction to the Regional Investment Corporation about where it is to be
located. Mr Joyce has already announced that the Regional Investment
Corporation is to be located in Orange.[86]
However, it will not be possible to give a formal written direction to that
effect until the Bill is enacted.
The Regional Investment Corporation must take all
reasonable steps to comply with any direction set out in the operating mandate
or any other direction given by the responsible Ministers.[87]
Where there has been a failure to do so, the Board must advise the responsible
Ministers of that fact and explain the circumstances in which the failure
occurred.[88]
Importantly, the Bill does not specify that any of the
above directions will be a legislative instrument. That being the case there
will be no requirement that they be tabled in the Parliament.
Scrutiny of
Bills Committee comments
The Scrutiny of Bills Committee expressed its concern that
the Explanatory Memorandum does not explain why it is necessary for the
directions made under clauses 11 and 12 to be exempt from disallowance and
sunsetting stating that ‘significant concepts relating to a legislative scheme
should be defined in primary legislation (or at least in legislative
instruments subject to Parliamentary disallowance, sunsetting and tabling)
unless a sound justification for using non-disallowable delegated legislation
is provided’.[89]
The Minister was requested to provide advice in relation to these matters. That
advice has been included in the Scrutiny of Bills Committee scrutiny digest of
9 August 2017.[90]
In addition, the Scrutiny of Bills Committee recommended
amendments to the Bill to include a legislative requirement that any directions
made by the responsible Ministers in any agreements with the states and territories
about these grants of financial assistance are tabled in the Parliament within
15 sitting days after being made, and published on the internet within 30 days
after being made.[91]
Having received the Minister’s reply to its inquiries the
Scrutiny of Bills Committee had this to say:
The Committee notes the Minister's advice that the Regional
Investment Corporation's Operating Mandate will be the key vehicle for the
government to set out its expectations for the Corporation and that it is
expected to include high-level programme requirements associated with financial
assistance under the National Water Infrastructure Loan Facility, including
eligibility criteria and key loan specifications. The Minister advised that
Parliament will have visibility of these matters as the Operating Mandate will
be tabled in the Parliament. The Committee also notes the Minister's advice
that any directions to enter into an agreement for the grant of financial
assistance to a State or Territory made under subclause 12(3) of the Bill may
specify terms and conditions to be included in the agreement and the directions
will be required to be published in the Corporation's annual report as a result
of the provisions of paragraph 17BE(d) of the Public Governance, Performance
and Accountability Rule 2014 (the PGPA Rule).
The Committee reiterates that the power to make grants to the
States and to determine terms and conditions attaching to them is conferred on
the Parliament by section 96 of the Constitution. Where the Parliament
delegates this power to the executive, the Committee considers that it is
appropriate that the exercise of this power be subject to at least some level
of parliamentary scrutiny, particularly noting the terms of section 96 of the
Constitution and the role of Senators in representing the people of their State
or Territory.
The Committee thanks the Minister for advising it of the
requirements in the PGPA Rule which mean that the Corporation's annual report
will include details about any ministerial directions given to the Corporation,
including directions to enter into an agreement for the grant of financial
assistance to a State or Territory. However, it is not clear that the annual
reports will include details about all of the relevant terms and conditions
imposed on States and Territories, nor is there any legislative requirement to
publish on the internet or table in the Parliament the relevant agreements in
their entirety. In addition, the Committee notes that the response does not
directly provide any detail as to why it would not be appropriate to include at
least some high-level guidance as to the types of terms and conditions that
States and Territories will be required to comply with on the face of the Bill.
[92]
Stakeholder
comment
The Australia Institute has expressed its concern about
the ‘explicit power the Bill provides to the responsible Ministers over the
recipients and terms of the loans’.
... very substantial aspects of the Corporation’s lending
activities will be at ministerial discretion. This creates serious risks of
politically directed spending without rigorous oversight or analysis.
...
Many of the functions of this Corporation will be heavily
controlled by the Operating Mandate, which will be set by the Ministers. As
this is not included in the legislation, key elements of the Corporation’s
operation are as yet undetermined. As the mandate is not disallowable, the
Ministers will be able to change the Corporation’s direction substantially
without Parliamentary agreement.[93]
Part 3—Board of the Corporation
The Public Governance,
Performance and Accountability Act 2013 (PGPA Act) will apply to
the Regional Investment Corporation. In particular, one of the objects of the PGPA
Act is to require Commonwealth companies to meet high standards of
governance, performance, and accountability.[94]
Establishing
the Board
Part 3 of the Bill establishes the Board of the Regional
Investment Corporation.[95]
The Board is responsible for:
- deciding
the strategies and policies to be followed by the Corporation—subject to the Operating
Mandate
- ensuring
the proper, efficient and effective performance of the Regional Investment
Corporation’s functions
- signing
agreements, on behalf of the Commonwealth, with a state or territory for the
grant of financial assistance to the state or territory in relation to a water
infrastructure project[96]
- appointing
the Chief Executive Officer and
- any
other functions conferred on the Board by the Act or the rules.[97]
The Board is the accountable authority in
accordance with section 12 of the PGPA Act.
Membership
of the Board
The board consists of the Chair and two other members.[98]
The members and the Chair are to be appointed by the responsible Ministers by
written instrument, on a part-time basis.[99]
Importantly, the responsible Ministers must be satisfied
that a person has appropriate qualifications, skills or experience in one or
more of certain specified areas in order for the person to be eligible for
appointment as a Board member. Those areas are:
- agribusiness
and the financial viability of businesses within the agricultural sector
- banking
and finance
- water
infrastructure planning and financing
- issues
concerning rural industries and communities
- economics
- financial
accounting or auditing
- government
funding programs or bodies and
- law.[100]
Alternatively, a person will be eligible for appointment
to the Board if the responsible Ministers are satisfied that he, or she, has
expertise in an area that is relevant to a program prescribed by the relevant
rules.[101]
Mr Joyce has already sought expressions of interest in these roles.[102]
The period of appointment must not exceed five years—is
although it is possible for a Board member to be reappointed.[103]
A Board member may resign his, or her, appointment by advising the responsible
Ministers in writing.[104]
The responsible Ministers may terminate the appointment of
a Board member for a range of conduct including, but not limited to:
for
misbehaviour[105]
if
the Board member is unable to perform the duties of his or her office because
of physical or mental incapacity[106]
or is absent, except on leave of absence, from three consecutive meetings of
the Board[107]
if
the responsible Ministers do not have confidence in the Board member[108]
or are satisfied that the performance of the Board member has been
unsatisfactory for a significant period.[109]
Meetings of
the Board
The Chair may convene a meeting of the Board at any
time. Importantly the Chair must convene at least four meetings each
calendar year.[110]
The Bill provides that a quorum is constituted by a majority of Board members.[111]
However, as there are only three members of the Board, this means that
decisions may be made by only two members.
Key issue—size
of the Board
The PGPA Act does not specify a minimum number of
members to be appointed to a Board. According to the Australian Securities and
Investments Commission (ASIC) a proprietary company must have at least one
director whereas a public company must have at least three directors.[112]
That being the case, the number of members of the
proposed Board of the Regional Investment Corporation complies with the minimum
requirements.
The term ‘governance’ when used in relation to an
organisation or business:
... encompasses the system by which an organisation is
controlled and operates, and the mechanisms by which it, and its people, are
held to account. Ethics, risk management, compliance and administration are all
elements of governance.[113]
According to the Australian Securities Exchange (ASX):
Fundamental to any corporate governance structure is
establishing the roles of the board and senior executives ... with a balance of
skills, experience and independence on the board appropriate to the nature and
extent of company operations ... There is a basic need for integrity among those
who can influence a company’s strategy and financial performance, together with
responsible and ethical decision-making which takes into account not only legal
obligations but also the interests of stakeholders.[114]
Of some concern is the size of the Board, given that the
Regional Investment Corporation will be responsible for the administration of
loans of more than $4 billion.[115]
Whilst the Bill does require Board members to have appropriate qualifications,
skills or experience in specified areas, the appointment of a three-member
Board may not provide a sufficient spread of skills. In addition, the Board operates
so that the strategies and policies to be followed by the Regional Investment
Corporation and the oversight of the proper, efficient and effective
performance of the Corporation’s functions may ultimately be done by only two
persons. Section 16 of the PGPA Act requires an accountable
authority (such as the Board of the proposed Regional Investment Corporation)
to establish and maintain:
- an
appropriate system of risk oversight and management for the entity and
- an
appropriate system of internal control for the entity
including by
implementing measures directed at ensuring officials of the entity comply with
the finance law.[116]
Given that the Board needs to only
meet four times in each calendar year and that decisions may be made without
meetings,[117]
it may be that there is insufficient oversight of the activities of the
Regional Investment Corporation—at least in its early stages.
It might be preferable to draft this clause more broadly
to allow for a minimum and maximum number of members.[118]
This would give the responsible Ministers some flexibility in the event that it
was deemed necessary to appoint further Board members due to unforeseen
circumstances. A review of the operation of the Act is to be arranged by the
Agriculture Minister and finalised on or before 1 July 2024.[119]
One of the matters to be considered in the review is the appropriate governance
arrangements for the Regional Investment Corporation after 30 June 2026. However,
given the high risk nature of the activities of the Regional Investment
Corporation, it may be prudent to impose tighter governance arrangements at the
outset.
Stakeholder
comments
In its submission to the Rural and Regional Affairs
Committee inquiry into the Bill the Department of Primary Industries and
Regional Development of Western Australia noted that the Regional Investment
Corporation is ‘to manage a loan portfolio of $4 billion and up to 1,000
clients, and operate across all jurisdictions’. That being the case, and ‘taking
into account variations in climatic and production zones in Australia, it would
appear that three members would provide insufficient spread of skills and
experience for effective governance’.[120]
The Australia Institute also
expressed its concern that three Board members may be insufficient to
effectively govern the agency. While the Bill requires the Board members to
have expertise in at least one of the listed fields, there is no requirement
for the Board to exhibit a range of experience. In addition, the list of
required expertise does not include environmental, biological or climate
science—so the Board may make recommendations and administer programs with
limited knowledge of the impacts on the environment, and on other farmers.[121]
The Pastoralists and Graziers
Association of WA stated that the governance arrangements established by the
Bill:
... enshrine political influence into
what should be a purely commercial operation.
...
Political interference in the
operations of the RIC will always have the potential to disrupt the commercial
driven processes of RIC and thereby reduce the performance of RIC below private
sector norms.[122]
Chief
Executive Officer
Part 4 of the Bill establishes the
Chief Executive Officer (CEO).[123]
The CEO:
- may
sign, on behalf of the Corporation, a loan agreement to be administered by the Regional
Investment Corporation[124]
and
- is
otherwise responsible for the day‑to‑day administration of the Regional
Investment Corporation.
The CEO is appointed by the Board on a full-time basis for
a period not exceeding five years—although subsequent reappointments may be
made.[125]
The CEO may be terminated by the Board on a number of grounds including misbehaviour,
or if he, or she, is unable to perform the duties of the office because of
physical or mental incapacity.[126]
The CEO is an official for the purposes of
the PGPA Act which imposes general duties, for instance, a duty of care
and diligence,[127]
a duty to act honestly, in good faith and for a proper purpose[128]
as well as duties in relation to use of position and use of information.[129]
Staff and
consultants
The Regional Investment Corporation may employ
such persons as it considers necessary for the performance of its functions and
the exercise of its powers.[130]
In addition, the Regional Investment Corporation may engage consultants to
assist in the performance of its functions.[131]
Rules
The Bill authorises the responsible Ministers to make
rules, by legislative instrument prescribing matters that are required or
permitted by the Act to be so prescribed or that are necessary or convenient to
be prescribed for carrying out or giving effect to the Act.[132]
Delegation
The Bill operates so that there is a cascading power to
delegate the powers or functions authorised by the Act as follows:
- by
the Regional Investment Corporation in writing under its seal, delegate all or
any of its powers or functions under the Act or the rules to a Board member or the
CEO[133]
- by
the Board, in writing, to a Board member or the CEO[134]
and
- by
the CEO, in writing to a member of staff employed by the Regional Investment
Corporation.[135]
Scrutiny of
Bills Committee comments
The Scrutiny of Bills Committee generally ‘prefers to see
a limit set either on the scope of powers that might be delegated, or on the
categories of people to whom those powers might be delegated’.[136]
The Scrutiny of Bills Committee noted that the Explanatory Memorandum stated
that these provisions were intended ‘to provide flexibility to the operation of
the Regional Investment Corporation’.[137]
However, the Committee was not persuaded that this was a
sufficient reason for the delegation of such significant powers and functions.[138]
The Bill of itself does not specify the relevant skills or experience that
would be required to undertake delegated functions. Given the nature of the
risk related to the activities of the Corporation—such as the making of loans
which are subject to default—it may be that the extent of the possible
delegation of functions and powers by the CEO to a staff member should be
qualified.
Comments
The delegation of functions and powers is of particular
concern in the light of the ANAO report which identified deficiencies in some
aspects of the two concessional loan programs established by the Department of
Agriculture and Water Resources which it examined.[139]
Of concern to stakeholders is that the Regional Investment
Corporation will have staff who have been appropriately trained to ensure that
they have an understanding of the industries, businesses and regions that will
be supported by the operation of the Corporation.[140]
Concluding comments
On its face, the Bill establishes a Corporation to deliver
more than $4 billion in concessional loans under the government’s farm business
concessional loans program and the National Water Infrastructure Loan Facility.
The PGPA Act applies to the Regional Investment Corporation (as a
Commonwealth entity) and will govern its reporting requirements.
Nevertheless matters relating to the powers of the
responsible Ministers, the governance arrangements of the Board and a broad
power to delegate the powers and functions of the Regional Investment
Corporation may benefit from further consideration.
[1]. B
Joyce (Deputy Prime Minister and Minister for Agriculture and Water Resources),
Coalition
to establish $4.5 billion Regional Investment Corporation, media
release, 22 June 2016.
[2]. Typically
the major part of rural credit advances was used to finance the wheat crop at
the summer harvest time. Source: J Campbell, (Chairman, Committee of
Inquiry), Australian financial
system: final report of the Committee of Inquiry, Australian Government
Publishing Service (AGPS), Canberra, 1981, p. 111.
[3]. Reserve
Bank of Australia, Submission
to the Senate Standing Committee on Economics, Inquiry into the Reserve Bank
Amendment (Australian Reconstruction and Development Board) Bill 2013,
February 2014, pp. 4–5.
[4]. Ibid.
[5]. Commonwealth Banks
Act 1959, paragraph 72(a).
[6]. Ibid.,
subsection 73(1).
[7]. Campbell,
Australian financial system: final report of the Committee of Inquiry, op.
cit., p. 33.
[8]. Ibid.,
paragraph 2.106. The legislation to wind up the RCD (Banking
Legislation Amendment Act 1986) was passed by
Parliament in 1986. The phasing-out process was completed in January 1988, when
the last customer advance was repaid.
[9]. The
House of Representatives Standing Committee on Finance and Public
Administration, A pocket full of
change: banking and deregulation, House of Representatives, Canberra,
November 1991, p. 3.
[10]. Ibid.,
p. 267.
[11]. Productivity
Commission (PC), ‘Government
drought support: public inquiry’, PC website.
[12]. PC, Government drought
support, Inquiry report, 46, Commonwealth of Australia, 2009, p. 412.
[13]. The
terms of reference, submissions to the Standing Committee on Economics and the
final report are available on the inquiry
homepage.
[14]. Senate
Standing Committee on Economics, Competition
within the Australian banking sector, Senate, Canberra, May 2011, p.
191.
[15]. Ibid.,
p. 191.
[16]. Ibid.,
p. xx.
[17]. Parliament
of Australia, ‘Reserve
Bank Amendment (Australian Reconstruction and Development Board) Bill 2013
homepage’, Australian Parliament website.
[18]. N
Xenophon, ‘Second
reading speech: Reserve Bank Amendment (Australian Reconstruction and
Development Board) Bill 2013’, Senate, Debates, 5 December 2013, p.
952.
[19]. Financial
System Inquiry, Final report,
Treasury, Canberra, November 2014, p. 14.
[20]. Ibid.
[21]. Ibid.,
p. 15.
[22]. The
terms of reference, submissions to the Parliamentary Joint Committee and the
final report are available on the inquiry
homepage.
[23]. Parliamentary
Joint Committee on Corporations and Financial Services, Impairment of customer loans,
Canberra, May 2016, p. 89.
[24]. Pastoralists
and Graziers Association of WA (PGA), Submission
to the Rural and Regional Affairs and Transport Legislation Committee, Inquiry
into the Regional Investment Corporation Bill 2017, 12 July 2017, p. 3.
[25]. Ibid.,
p. 4.
[26]. Ibid.
[27]. National
Farmers’ Federation, Submission
to the Rural and Regional Affairs and Transport Legislation Committee, Inquiry
into the Regional Investment Corporation Bill 2017, 20 July 2017, p. 2.
[28]. Joyce,
Coalition to establish $4.5 billion Regional Investment Corporation, op.
cit.
[29]. Australian
Bankers’ Association, Submission
to the Select Committee on Lending to Primary Production Customers, 9 May
2017, p. 1.
[30]. P
Martin, W Shafron and P Phillips, ‘Farm
debt: broadacre and dairy farms 2014–15 to 2016–17’, ABARES website, 29 May
2017.
[31]. The
terms of reference for the inquiry, the submissions to the Rural and Regional
Affairs and Transport Committee and the final report (when published) are
available on the inquiry
homepage.
[32]. The
terms of reference, submissions to the Select Committee on lending to primary
production customers and the final report (when published) are available on the
inquiry
homepage.
[33]. Senate
Select Committee on Lending to Primary Production Customers, ‘Submissions’,
The Senate, Canberra, 2017.
[34]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 7, 2017, 21 June 2017, pp. 35–40.
[35]. Senate
Standing Committee for Rural and Regional Affairs and Transport, ‘Submissions’,
The Senate, Canberra, 2017.
[36]. Explanatory
Memorandum, Regional Investment Corporation Bill 2017, p. 2.
[37]. Joyce,
Coalition
to establish $4.5 billion Regional Investment Corporation, op. cit.
[38]. The
Statement of Compatibility with Human Rights can be found at page 3 of the Explanatory
Memorandum to the Bill.
[39]. Parliamentary
Joint Committee on Human Rights, Report,
6, 2017, 20 June 2017, p. 26.
[40]. Regional
Investment Corporation Bill 2017, subclauses 7(1) and (3).
[41]. Ibid.,
paragraph 8(1)(a).
[42]. Australian
National Audit Office (ANAO), Administration
of concessional loans programs: Department of Agriculture and Water Resources,
Report, 28, 2015–16, 2016, p. 7.
[43]. Ibid.,
p. 17.
[44]. Ibid.
[45]. Ibid.,
p. 37.
[46]. Ibid.,
p. 38.
[47]. ANAO,
Administration of concessional loans programs: Department of Agriculture and
Water Resources, op. cit., p. 17.
[48]. Constitution,
section 51(i).
[49]. Ibid.,
section 51(xx).
[50]. Regional
Investment Corporation Bill 2017, clause 4 defines the Desertification
Convention as the United Nations Convention to Combat Desertification
in Those Countries Experiencing Serious Drought and/or Desertification, Particularly
in Africa, done at Paris on 17 June 1994, [2000]
ATS 18 (entered into force for Australia 13 August 2000).
[51]. Constitution,
section 51(xxix).
[52]. Ibid.,
section 122.
[53]. ANAO,
Administration of concessional loans programs: Department of Agriculture and
Water Resources, op. cit., p. 17.
[54]. See R v Federal
Court of Australia: Ex parte WA National Football League (1979) 143 CLR
190, [1979]
HCA 6.
[55]. Trading refers to the
business of buying, selling, exchanging or bartering goods or services, or
being engaged in the business of commerce.
[56]. Financial
dealings are acts such as borrowing, lending, banking or insurance and the
provision of management and advisory services in relation to financial matters.
[57]. NSW
v Commonwealth (2006) 231 ALR 1, [2006] HCA 52.
[58]. Ibid., paragraph 178; Re
Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union
(2000) 203 CLR 346, [2000] HCA 34,
paragraph 83.
[59]. Re Dingjan; ex
parte Wagner (1995) 183 CLR 323; [1995] HCA 16.
[60]. L Roth and G Griffith,
The
Workplace Relations case: implications for the states, NSW
Parliamentary Library Research Service Briefing Paper, 18/06, November 2006, p.
9.
[61]. DR
Rothwell, ‘International
law and the Murray-Darling Basin Plan’, Environmental and Planning Law
Journal, 29(268), 2012, pp. 268–280, at p. 276; United Nations
Convention to Combat Desertification in those Countries Experiencing
Serious Drought and/or Desertification, particularly in Africa, done in
Paris 17 June 1994, [2000]
ATS 18, op. cit.
[62]. Ibid.,
Article 2.
[63]. Ibid.,
Article 1, paragraph (a).
[64]. Ibid.,
Article 1, paragraph (b).
[65]. Rothwell,
‘International
law and the Murray-Darling Basin Plan’, op. cit., p. 276.
[66]. Regional
Investment Corporation Bill 2017, paragraph 8(1)(b).
[67]. Department
of Agriculture and Water Resources, National Water
Infrastructure Loan Facility website.
[68]. Regional
Investment Corporation Bill 2017, subparagraph 8(1)(c)(i).
[69]. Ibid.,
subparagraph 8(1)(c)(ii).
[70]. Ibid.,
subparagraph 8(1)(c)(iii). In this case, the responsible ministers are the
Agriculture Minister and Minister who administers the Public Governance,
Performance and Accountability Act 2013 (PGPA Act) (currently
the Minister for Finance)—see the definition of ‘responsible Ministers’ at
clause 4 of the Regional Investment Corporation Bill 2017.
[71]. Regional
Investment Corporation Bill 2017, subparagraph 8(1)(c)(iv).
[72]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017,
op. cit., p. 35.
[73]. Explanatory
Memorandum, Regional Investment Corporation Bill 2017, p. 6.
[74]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017,
op. cit., p. 36.
[75]. Ibid.
[76]. Regional
Investment Corporation Bill 2017, paragraph 8(1)(d).
[77]. Ibid.,
paragraph 8(1)(f).
[78]. Ibid.,
paragraph 8(1)(g). Clause 54 provides for the responsible Ministers to
make rules by way of legislative instruments.
[79]. Ibid.,
paragraph 8(5)(a) of the Bill.
[80]. Ibid.,
paragraph 8(1)(e) of the Bill.
[81]. National
Farmers’ Federation, Submission to the Rural and Regional Affairs and Transport
Legislation Committee, Inquiry into the Regional Investment Corporation Bill
2017, op. cit., p. 4.
[82]. Regional
Investment Corporation Bill 2017, subclause 11(1). The Operating Mandate is
made up of directions given by a Minister to a corporate Commonwealth entity.
The provisions of item 2 of the table in section 9 of the Legislation
(Exemptions and Other Matters) Regulation 2015 therefore apply.
[83]. Regional
Investment Corporation Bill 2017, subclause 11(2).
[84]. Ibid.,
subclause 12(1).
[85]. Ibid.,
subclause 12(3).
[86]. Ibid.,
subclause 12(5); B Joyce (Minister for Agriculture and Water Resources) and A
Gee, Budget
2017: Regional Investment Corporation gets green light in Orange, joint
media release, 16 May 2017.
[87]. Regional
Investment Corporation Bill 2017, subclause 13(1).
[88]. Ibid.,
subclause 13(2).
[89]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017,
op. cit. p. 38.
[90]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 8, 2017, Senate, Canberra, 9 August 2017.
[91]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017,
op. cit., p. 36.
[92]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 8, 2017, p. 141
[93]. The
Australia Institute, Submission
to the Rural and Regional Affairs and Transport Legislation Committee, Inquiry
into the Regional Investment Corporation Bill 2017, n.d., pp. 2–3.
[94]. PGPA
Act, paragraph 5(d).
[95]. Regional
Investment Corporation Bill 2017, clause 14.
[96]. Note
that whilst only the Board can sign an agreement about the grant of financial
assistance in relation to a water infrastructure project, the Chief Executive
Officer may sign, on behalf of the Regional Investment Corporation, a loan
agreement to be administered by the Corporation, see Regional Investment
Corporation Bill 2017, paragraph 35(1)(a).
[97]. Ibid.,
clause 15.
[98]. Ibid.,
clause 16.
[99]. Ibid.,
subclause 17(1) and clause 18.
[100]. Ibid.,
paragraph 17(2)(a).
[101]. Ibid.,
paragraph 17(2)(b).
[102]. B
Joyce (Minister for Agriculture and Water Resources), Seeking
talent to lead new Regional Investment Corporation, media release,
26 May 2017.
[103]. Regional
Investment Corporation Bill 2017, clause 19. Section 33AA of the Acts Interpretation
Act 1901 provides that if an Act confers on a person or body power to
make an appointment, the power is taken to include a power of reappointment.
[104]. Ibid.,
subclause 25(1).
[105]. Ibid.,
paragraph 26(1)(a).
[106]. Ibid.,
paragraph 26(1)(b).
[107]. Ibid.,
paragraph 26(2)(b).
[108]. Ibid.,
paragraph 26(1)(c).
[109]. Ibid.,
paragraph 26(2)(d). The note to clause 26 provides that the appointment of a
Board member may also be terminated under section 30 of the PGPA Act which
deals with terminating the appointment of an accountable authority, or a member
of an accountable authority, for contravening the general duties of officials.
[110]. Ibid.,
subclause 27(2).
[111]. Ibid.,
clause 29.
[112]. Australian
Securities and Investments Commission (ASIC), ‘Minimum officeholders’,
ASIC website.
[113]. Governance
Institute of Australia (GIA), ‘Governance
foundations’, GIA website.
[114]. Australian
Securities Exchange (ASX) Corporate Governance Council, Corporate
governance principles and recommendations with 2010 amendments, 2nd edn,
2007, p. 3.
[115]. Joyce,
Coalition
to establish $4.5 billion Regional Investment Corporation, op. cit.
[116]. Section
8 of the PGPA Act provides that finance law means the PGPA
Act; or the rules; or any instrument made under the PGPA Act; or an
Appropriation Act.
[117]. Regional
Investment Corporation Bill 2017, clause 33.
[118]. See
for example, Australian
Charities and Not-for-profits Commission Act 2012, section 135-10.
[119]. Regional
Investment Corporation Bill 2017, clause 53.
[120]. Department of Primary Industries and Regional Development
(WA), Submission
to the Rural and Regional Affairs and Transport Legislation Committee, Inquiry
into the Regional Investment Corporation Bill 2017, 14 July 2017, p. 1.
[121]. The
Australia Institute, Submission to the Rural and Regional Affairs and Transport
Legislation Committee, Inquiry into the Regional Investment Corporation Bill
2017, op. cit., pp. 3–4.
[122]. Pastoralists
and Graziers Association of WA, Submission to the Rural and Regional Affairs
and Transport Legislation Committee, Inquiry into the Regional Investment
Corporation Bill 2017, op. cit., p. 5.
[123]. Regional
Investment Corporation Bill 2017, clause 34.
[124]. Note
that only the Board may sign an agreement, on behalf of the Commonwealth, with
a state or territory for the grant financial assistance to that state or
territory in relation to a water infrastructure project, see Regional
Investment Corporation Bill 2017, paragraph 15(1)(c).
[125]. Regional
Investment Corporation Bill 2017, clause 36. Section 33AA of the Acts Interpretation
Act 1901 provides that if an Act confers on a person or body power to
make an appointment, the power is taken to include a power of reappointment.
[126]. Regional
Investment Corporation Bill 2017, clause 43.
[127]. PGPA
Act, section 25.
[128]. Ibid.,
section 26.
[129]. Ibid.,
sections 27 and 28.
[130]. Regional
Investment Corporation Bill 2017, clause 44.
[131]. Ibid.,
clause 45.
[132]. Ibid.,
clause 54.
[133]. Ibid.,
clause 49.
[134]. Ibid.,
clause 50.
[135]. Ibid.,
clause 51.
[136]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017,
op. cit., p. 39.
[137]. Explanatory
Memorandum, Regional Investment Corporation Bill 2017, p. 20.
[138]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017, op.
cit., pp. 39–40.
[139]. ANAO,
Administration of concessional loans programs: Department of Agriculture and
Water Resources, op. cit.
[140]. National
Farmers’ Federation, Submission to the Rural and Regional Affairs and Transport
Legislation Committee, Inquiry into the Regional Investment Corporation Bill
2017, op. cit. p. 2.
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