BILLS DIGEST NO. 13, 2017–18              14 August 2017

Regional Investment Corporation Bill 2017

Paula Pyburne
Law and Bills Digest Section 

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.

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[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.