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2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Asset Recycling Fund (Consequential Amendments) Bill 2014
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Hon Mathias Cormann)
Table of abbreviations and common terms
Abbreviation or Full term or description
common term
ARF Asset Recycling Fund
ARF Act Asset Recycling Fund Act 2014
ARF Special Account means the Asset Recycling Fund Special Account established
under section 11 of Asset Recycling Fund Bill 2014
BAF Building Australia Fund
BAF Special Account means the Building Australia Fund Special Account
established under section 13 of the Nation Building Fund
Act 2008
COAG Reform Fund means the Fund to be established under the COAG Reform
Fund Act 2008 for the purpose of making grants of financial
assistance to the States and Territories
DCAF DisabilityCare Australia Fund
DCAF Act DisabilityCare Australia Fund Act 2013
DCAF Special Account means the DisabilityCare Australia Fund Special Account
established under section 11 of the DisabilityCare Australia
Fund Act 2013
EIF Education Investment Fund
EIF Special Account means the Education Investment Fund Special Account
established under the section 132 of the Nation Building Fund
Act 2008
Finance Minister The Minister who administers the Financial Management and
Accountability Act 1997
Future Fund Board Future Fund Board of Guardians as established by section 34
of the Future Fund Act 2006
Future Fund Special Account means the Future Fund Special Account established by
section 12 of the Future Fund Act 2006
HHF Health and Hospitals Fund
NBF Act Nation-building Funds Act 2008
Responsible Ministers means the following:
(a) the Treasurer; and
(b) the Finance Minister
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Outline
The Asset Recycling Fund (Consequential Amendments) Bill 2014 (the Bill) makes a
number of consequential amendments to other pieces of legislation required to enable
the effective operation of Asset Recycling Fund (ARF) from 1 July 2014.
The ARF Act established the Asset Recycling Fund on 1 July 2014 as a dedicated
investment vehicle, with a focus on providing financial assistance and incentives to the
States and Territories, to create new infrastructure that supports economic growth. The
ARF consists of the ARF Special Account and the investments of the ARF.
These consequential amendments support the establishment of the ARF in that they:
· enable grants to the States and Territories through the COAG Reform Fund;
· extend the Future Fund Board's duties to manage the ARF;
· allow for amounts to be transferred between the ARF and Future Fund to
allow for proper apportioning of common expenses incurred by the Future
Fund Board in managing the funds.
The Bill amends the COAG Reform Fund Act 2008, the Future Fund Act 2006,
Nation-building Funds Act 2008 and the DisabilityCare Australia Fund Act 2013.
Providing for a separate Bill for the consequential amendments conforms to
Commonwealth practice to reduce the complexity of principal Acts.
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Financial Impact Statement
The Bill has no financial impact.
Statement of Compatibility with Human Rights
The proposed amendments do not engage any of the applicable rights or freedoms
outlined in the Human Rights (Parliamentary Scrutiny) Act 2011, such as
encompassed in the International Covenant on Civil and Political Rights.
The proposed amendments do not limit any human rights, nor propose any offences or
penalties.
This Bill is therefore compatible with the human rights and freedoms recognised or
declared in the international instruments listed in subsection 3(1) of the Human Rights
(Parliamentary Scrutiny) Act 2011.
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Asset Recycling Fund
(Consequential Amendments) Bill 2014
NOTES ON SECTIONS
1 - Short Title
Section 1 provides for the Act to be cited as the Asset Recycling Fund (Consequential
Amendments) Act 2014.
Note: The sections in the Bill will become sections of the Act on Royal Assent.
2 - Commencement
Section 2 is the commencement provision for the Bill. The commencement dates for the
specific provisions are provided in the table in subsection 2(1).
Provision 1 of the table provides that sections 1 to 3 and anything not covered by this table
commences on the day the Act receives Royal Assent.
Provision 2 of the table provides that Schedule 1 will commence immediately after the
commencement of the Asset Recycling Fund Act 2014.
3 - Schedule
Section 3 provides that each Act specified in a Schedule to this Act is amended or repealed as
set out in the Schedule concerned.
SCHEDULE 1 - AMENDMENTS
Schedule 1 contains consequential amendments to a range of legislation to:
· enable grants to the States and Territories through the COAG Reform Fund;
· extend the Future Fund Board's duties to manage the ARF; and
· allow for amounts to be transferred between the ARF and Future Fund to allow for
proper apportioning of common expenses incurred by the Future Fund Board in
managing the funds.
COAG Reform Fund Act 2008
Item 1 inserts a Note 3A at subsection 5(2) to reflect that an amount originating in the ARF
may be transferred to the COAG Reform Fund to mirror Note 2 establishing the ability to
transfer amounts originating in the BAF, EIF or Health and Hospital Fund (HHF) to the
COAG Reform Fund.
Item 2 updates references to recognise that grants from the ARF to States and Territories will
be channelled through the COAG Reform Fund.
Item 3 inserts a note at subsection 7(3) to reflect that the channelling of grants to States and
Territories from the ARF through the COAG Reform Fund is subject to the provisions of the
ARF Act.
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DisabilityCare Australia Fund Act 2013
Item 4 adds a reference to the ARF at paragraph 16(a), which confirms that expenses incurred
by the Future Fund Board in establishing and operating bank accounts related to the DCAF
can be met from DCAF Special Account to the extent that such expenses do not relate to any
other fund including the ARF.
Item 5 adds a reference to the ARF at paragraph 16(b), which confirms that cost of insurance
incurred by the Future Fund Board in relation to the DCAF can be met from DCAF Special
Account to the extent that such insurance premiums do not relate to any other fund including
the ARF.
Item 6 adds a reference to the ARF at paragraph 16(c), which confirms that general
management expenses incurred by the Future Fund Board in relation to managing the DCAF
can be met from DCAF Special Account to the extent that such expenses do not relate to any
other fund including the ARF.
Future Fund Act 2006
Item 7 inserts a reference within the Note at section 4 to confirm that the Future Fund Board
has additional functions under the ARF Act.
Item 8 inserts a definition of the ARF by reference to section 11 in the ARF Act.
Item 9 inserts a definition of ARF Special Account by reference to section 12 of the
ARF Act.
Item 10 update note 2A to Section 13 to make reference to the transfer of amounts from the
Future Fund to the ARF.
Items 11 and 12 amends section 28(5) to allow investment managers engaged in connection
with the management of the ARF to also be engaged for the purposes of managing the Future
Fund, DCAF, BAF, EIF or HHF.
Item 13 inserts a reference within the Note at section 33 to confirm that the Future Fund
Board has additional functions under the ARF Act.
Item 14 amends section 35 to extend the functions of the Future Fund Board to its functions
specified under the ARF Act.
Item 15 amends section 55 to confirm that the Future Fund Board's reporting obligation in
relation to the Future Fund do not include its separate reporting obligation to the Responsible
Ministers under the ARF Act.
Items 16 and 17 amends section 63 to confirm that the Chair or a member of the Future Fund
Board cannot breach its civil and criminal obligations under the Future Fund Act by doing an
act that they are required to do under the ARF Act.
Item18 amends section 81 to require that the Annual Report prepared by the Chair of the
Future Fund Board include a report on the performance of investments of the ARF and the
amounts debited from the ARF for purposes allowed under the ARF Act.
Item 19 amends section 81 to require that the Annual Report prepared by the Chair of the
Future Fund Board include benchmarks in relation to the performance of the investments of
the ARF and debits from the ARF.
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Item 20 amends section 83 to allow the Future Fund Board to delegate its power to engage
investment managers in relation to the ARF to the Chair of the Future Fund Board or a Senior
Executive Employee of the Future Fund Management Agency.
Item 21 and 22 amends subsection 84(1) to confirm that any amount of money received by
the Board must be credited to the Future Fund Special Account if it is not covered by a
relevant provision under the Future Fund, DCAF, NBF or ARF Acts.
Item 23 amends section 84 to allow the nominated Minister under section 83 to provide a
written direction to the Future Fund Board requiring an amount credited to the Future Fund
Special under subsection 84(1) to be subsequently debited from this account and credited to
the ARC Special Account.
Item 24 amends subsection 84(5) to provide further guidance on how amounts transferred to
the ARF under section 84 are to be determined.
Item 25 amends subsection 84(6) to make it clear that a written direction made under section
84 does not have the status of a legislative instrument.
Items 26, 27 and 28 amends section 2 of Schedule 2 to confirm that bank account expenses,
insurance premiums and general management costs relating to the management of the ARF
by the Future Fund Board are to be considered purposes of the Future Fund Special Account.
Item 29 adds a reference to clause 1 of Schedule 2A to indicate that inter-fund transfers may
include transfers from the Future Fund to the ARF.
Item 30 adds a clause to schedule 2A to allow the nominated Minister under the Future Fund
Act to provide a written direction requiring the reversal of a debit from the ARF to meet bank
account, insurance premium or other general management costs relating to the ARF. This
reversal is to be effected by debiting the Future Fund Special Account and crediting the ARF
Special Account. The reversal amount cannot exceed the amount originally debited from the
ARF special Account. The nominated Minister's written direction is not to be regarded as a
legislative instrument.
Nation-building Funds Act 2008
Item 31 adds a reference to the ARF, which confirms that expenses incurred by the Future
Fund Board in establishing and operating bank accounts related to the BAF can be met from
BAF Special Account to the extent that such expenses do not relate to any other fund
including the ARF.
Item 32 adds a reference to the ARF, which confirms that cost of insurance incurred by the
Future Fund Board in relation to the BAF can be met from the BAF Special Account to the
extent that such insurance premiums do not relate to any other fund including the ARF.
Item 33 adds a reference to the ARF, which confirms that general management expenses
incurred by the Future Fund Board in relation to the managing the BAF can be met from the
BAF Special Account to the extent that such expenses do not relate to any other fund
including the ARF.
Item 34 adds a reference to the ARF, which confirms that expenses incurred by the Future
Fund Board in establishing and operating bank accounts related to the EIF can be met from
the EIF Special Account to the extent that such expenses do not relate to any other fund
including the ARF.
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Item 35 adds a reference to the ARF, which confirms that cost of insurance incurred by the
Future Fund Board in relation to the EIF can be met from the EIF Special Account to the
extent that such insurance premiums do not relate to any other fund including the ARF.
Item 36 adds a reference to the ARF, which confirms that general management expenses
incurred by the Future Fund Board in relation to the managing the EIF can be met from the
EIF Special Account to the extent that such expenses do not relate to any other fund including
the ARF.
Item 37 adds a reference to the ARF, which confirms that expenses incurred by the Future
Fund Board in establishing and operating bank accounts related to the HHF can be met from
the HHF Special Account to the extent that such expenses do not relate to any other fund
including the ARF.
Item 38 adds a reference to the ARF, which confirms that cost of insurance incurred by the
Future Fund Board in relation to the HHF can be met from the HHF Special Account to the
extent that such insurance premiums do not relate to any other fund including the ARF.
Item 39 adds a reference to the ARF, which confirms that general management expenses
incurred by the Future Fund Board in relation to the managing the HHF can be met from the
HHF Special Account to the extent that such expenses do not relate to any other fund
including the ARF.
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