Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017-2018-2019
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
FUTURE DROUGHT FUND BILL 2019
REVISED EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Finance and the Public
Service,
Senator the Hon Mathias Cormann)
THIS EXPLANATORY MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE
OF REPRESENTATIVES TO THE BILL AS INTRODUCED
Table of abbreviations and common terms
|Abbreviation or |Description |
|common term | |
|Acts Interpretation Act|means the Acts Interpretation Act 1901 |
|Agency |means the Future Fund Management Agency |
| |established by section 74 of the Future Fund |
| |Act 2006 |
|Agriculture Department |means the Department administered by the |
| |Agriculture Minister |
|Agriculture Future |means the Agriculture Future Drought Resilience|
|Drought Resilience |Special Account established by clause 33 |
|Special Account | |
|Agriculture Minister |means the Minister administering the Primary |
| |Industries Research and Development Act 1989 |
|BAF |means the Building Australia Fund established |
| |by section 12 of the NBF Act |
|BAF Special Account |means the Building Australia Fund Special |
| |Account established by section 13 of the NBF |
| |Act |
|Biodiversity Convention|means the Convention on Biological Diversity, |
| |done at Rio de Janeiro on 5 June 1992, as |
| |amended and in force for Australia from time to|
| |time |
|Climate Change |means the United Nations Framework Convention |
|Convention |on Climate Change, done at New York on 9 May |
| |1992, as amended and in force for Australia |
| |from time to time |
|Commonwealth official |means an official of a Commonwealth entity, as |
| |defined in section 13 of the PGPA Act |
|Constitution |means the Commonwealth of Australia |
| |Constitution Act |
|Consultative Committee |means the Future Drought Fund Consultative |
| |Committee established by clause 36B of this |
| |Bill |
|Corporations Act |means the Corporations Act 2001 |
|CRF |means the Consolidated Revenue Fund |
| DCAF |means the DisabilityCare Australia Fund |
| |established by |
| |section 10 of the DCAF Act |
| DCAF Act |means the DisabilityCare Australia Fund Act |
| |2013 |
|Desertification |means the United Nations Convention to Combat |
|Convention |Desertification in those Countries Experiencing|
| |Serious Drought and/or Desertification, |
| |Particularly in Africa, done at Paris on 17 |
| |June 1994, as amended and in force for |
| |Australia from time to time. |
|EIF |means the Education Investment Fund established|
| |by |
| |section 131 of the NBF Act |
|Finance Minister |has the same meaning as defined in section 8 of|
| |the PGPA Act |
|Future Drought Fund |means the Future Drought Fund established by |
| |clause 10 of this Bill |
|Future Drought Fund |means the Future Drought Fund Special Account |
|Special Account |established by clause 13 of this Bill |
|Future Fund |means the Future Fund established by section 11|
| |of the Future Fund Act |
|Future Fund Act |means the Future Fund Act 2006 |
|Future Fund Board |means the Future Fund Board of Guardians |
| |established by section 34 of the Future Fund |
| |Act |
|Future Fund Special |means the Future Fund Special Account |
|Account |established by section 12 of the Future Fund |
| |Act |
|ITAA |means the Income Tax Assessment Act 1997 |
|Legislation Act |means the Legislation Act 2003 |
|MRFF |means the Medical Research Future Fund |
| |established by section 11 of the MRFF Act |
|MRFF Act |means the Medical Research Future Fund Act 2015|
|NBF Act |means the Nation-building Funds Act 2008 |
|PGPA Act |means the Public Governance, Performance and |
| |Accountability Act 2013 |
|PGPA Rule |means the Public Governance, Performance and |
| |Accountability Rule 2014 |
|Productivity Commission|means the Productivity Commission established |
| |by section 5 of the Productivity Commission Act|
| |1998 |
|Productivity Minister |means the Minister administering the |
| |Productivity Commission Act 1998 |
|Ramsar Convention |means the Convention on Wetlands of |
| |International Importance especially as |
| |Waterfowl Habitat, done at Ramsar, Iran, on 2 |
| |February 1971, as amended and in force for |
| |Australia from time to time. |
|Remuneration Tribunal |means the Remuneration Tribunal established by |
| |section 4 of the Remuneration Tribunal Act 1973|
|RIC Act |means the Regional Investment Corporation Act |
| |2018 |
|RIC Board |means the Board of the Regional Investment |
| |Corporation established under the RIC Act |
|Responsible Ministers |means the following: |
| |(a) the Treasurer; and |
| |(b) the Finance Minister |
FUTURE DROUGHT FUND BILL 2019
OUTLINE
The Future Drought Fund Bill 2019 (the Bill) gives effect to the
Government's decision to establish the Future Drought Fund (the Fund) to
fund initiatives that enhance future drought resilience, preparedness and
response across Australia.
The Fund consists of the Future Drought Fund Special Account and the
investments of the Future Drought Fund. It is a dedicated investment
vehicle to provide a secure revenue stream to be used for drought
resilience, preparedness and response.
Uncommitted funds currently in the Building Australia Fund, approximately
$3.9 billion, would be transferred to the Fund on establishment. The
Government had intended to use the uncommitted funds from Building
Australia Fund to fund the National Disability Insurance Scheme. However,
the Government has secured the future of the National Disability Insurance
Scheme and ensured it is fully funded, through better economic and fiscal
management, which has delivered a strong and improving budget position.
This means the Government is able to fully fund the National Disability
Insurance Scheme without persisting with the Medicare levy increase and the
uncommitted funds currently in the Building Australia Fund can be used to
fund initiatives that enhance future drought resilience, preparedness and
response across Australia. By 2028-29, the Government expects that the Fund
would grow to approximately $5.0 billion through reinvestment of net
earnings (less disbursements). The Fund will provide disbursements from 1
July 2020.
The Bill also establishes the Agriculture Future Drought Resilience Special
Account. Each financial year the Finance Minister must direct in writing
that $100 million be debited from the Fund and credited to the Agriculture
Future Drought Resilience Special Account for the purpose of making grants
or payments under an arrangement relating to drought resilience.
The Agriculture Minister must have regard to advice from the Regional
Investment Corporation (RIC) Board prior to making arrangements or grants
and debiting amounts from the Agriculture Future Drought Resilience Special
Account. In providing such advice, the RIC Board must comply with the
Drought Resilience Funding Plan-which is a high-level plan to assist
coherence and consistency in making arrangements or grants. The rolling
four-year Plan will be a legislative instrument and can be updated to
reflect changing priorities.
The Bill also establishes the Future Drought Fund Consultative Committee
and requires the Agriculture Minister to seek and have regard to advice
from the Committee about the draft Plan referred to in subclause 32(1) of
the Bill before determining a Drought Resilience Funding Plan. Before
making an arrangement or grant under clause 21 of the Bill, the Agriculture
Minister must request advice from the Committee about whether the proposed
design of the program of arrangements or grants is consistent with the
Drought Resilience Funding Plan. The Consultative Committee will comprise
of a Chair and 4 other members, all of whom will be appointed on a part-
time basis.
The Future Fund Board will be responsible for deciding how to invest the
Fund to enhance the Commonwealth's ability to make arrangements with, and
grants to, persons or bodies in relation to drought resilience. The Future
Fund Board is an experienced, specialised and trusted sovereign investor
currently responsible for investing over $180 billion across five sovereign
wealth funds with different purposes and investment mandates (the funds are
the EIF, the Future Fund, the DCAF, the MRFF and the BAF).
Investment mandate
The Bill requires the responsible Ministers to issue an investment mandate
to the Future Fund Board regarding the investment of the Fund. The purpose
of the investment mandate is to provide a mechanism for the Government to
provide strategic guidance to the Board on its expectations for the
investment of the Fund.
As with other sovereign wealth funds managed by the Future Fund Board, the
Future Drought Fund will benefit from sovereign immunity from taxation in
Australia and foreign jurisdictions on the bulk of investments.
Expenses
Expenses associated with investment and administration of the Fund incurred
by the Future Fund Board will be met from the Fund.
Reporting
The Bill requires the Future Fund Board to keep the responsible Ministers
informed of the operations of the Board under this Bill. The Finance
Minister may provide reports, documents and other information to Ministers.
The Bill provides the Finance Minister with the power to require the Board
to provide additional information about one or more specified matters
relating to the performance of the Board's functions under this Bill.
The Finance Minister has the power to publish information received from the
Future Fund, as the Finance Minister deems appropriate and in the public
interest.
The Agriculture Minister will be required to publish up-to-date information
about grants and arrangements on the Agriculture Department's website.
Financial Impact Statement
The initial credit of the balance of the funds from the Building Australia
Fund to the Future Drought Fund will not have a direct impact on underlying
cash and fiscal balances, as these represent the transfer of financial
assets between funds.
Positive interest earnings of the Future Drought Fund will have a positive
impact on the underlying cash and fiscal balances. Costs incurred by the
Future Fund Board have a negative impact on the underlying cash and fiscal
balances. Payments for initiatives to enhance future drought resilience
will have a negative impact on the underlying cash and fiscal balance.
Statement of Compatibility with Human Rights
The Bill is 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 (Cth).
The Bill engages the following right:
. Article 11(1) of the International Covenant on Economic Social and
Cultural Rights (ICESCR) - right to an adequate standard of living,
including food, water and housing
Right to an adequate standard of living, including food, water and housing
Article 11(1) of the ICESCR recognises the right to an adequate standard of
living, including food, water and housing. States have an obligation to
ensure the availability and accessibility of the resources necessary for
the progressive realisation of this right.
The United Nations Committee on Economic Social and Cultural Rights (the
Committee) has stated that the core content of the right to adequate food
implies both the availability and (economic and physical) accessibility of
food.[1] The Bill seeks to promote this right by providing funding for
drought resilience projects, including water infrastructure. These
activities are intended to ensure that the impact of drought on the
livelihoods of farmers and people in drought-affected communities is
lessened, as well as reducing the impact of drought on the ability of
Australian farms to produce food, thereby improving food security.
This right also includes the right to water.[2] The Committee has also
noted the importance of ensuring sustainable access to water resources for
agriculture to realise the right to adequate food.[3] The programs and
projects funded under this Bill will help to ensure that farmers have
sustainable access to water and water management systems, including through
investment in emerging technologies. The drought resilience measures funded
under this Bill will increase the availability of sufficient water for
present and future generations.
Conclusion
This Bill is compatible with human rights because it promotes the right to
an adequate standard of living, enshrined in Article 11(1) of the ICESCR.
FUTURE DROUGHT FUND BILL 2019
NOTES ON CLAUSES
Part 1 - Preliminary
Clause 1 - Short title
1. Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2 - Commencement
2. This clause would provide for the commencement of the Bill, as set out
in the table. Item 1 in the table provides that Parts 1 and 2 of this
Bill would commence on a single day to be fixed by Proclamation.
However, if the Bill does not commence before 6 months from the day
after it receives the Royal Assent, those Parts will commence on the day
after the end of that 6-month period.
3. Item 2 in the table provides that Divisions 1 to 5 of Part 3 of the Bill
would commence at the same time as Parts 1 and 2. Similarly, item 4 in
the table provides that Parts 4 to 6 of the Bill would commence at the
same time.
4. Item 3 of the table provides that Division 6 of Part 3 of the Bill would
commence immediately after the commencement of Parts 1 and 2 of the Bill
or on the day that an appropriation occurs from the Consolidated Revenue
Fund for the purposes of the Consultative Committee, whichever occurs
later. Division 6 of Part 3 of the Bill will not commence unless the
Consolidated Revenue Fund is appropriated for the purposes of the
Consultative Committee.
5. The Government intends to make this proclamation within two to three
months of the passage of the Bill. However, should there be no
proclamation, the Bill would nevertheless commence not later than 6
months after it receives the Royal Assent.
6. Subclause 2(2) would provide that any information in column 3 of the
table is not part of this Bill. Information may be inserted in this
column, or information in it may be edited, in any published version of
the Act.
Clause 3 - Object
7. This clause would set out the object of the Bill, which is to enhance
the public good by building drought resilience. This would include
building the drought resilience of farms and communities. Drought
resilience would be defined in clause 5.
8. An example of where the public good may be enhanced by building drought
resilience would be funding provided to a farmer to undertake activities
that reduce soil erosion and sediment run-off from the property. This
would conserve soils, increase soil moisture and mitigate the effects of
flooding, which in turn would increase drought resilience and enhance
farm productivity. It would also contribute to the public good by
arresting and reversing land degradation, improving animal welfare and
improving biodiversity outcomes.
9. The public good may also be enhanced by investing in research and
development that relates to drought resilience. For example, research
into improved availability of data and information on drought-related
risks to agriculture may enable the insurance sector to target more
affordable and relevant insurance products to meet specific needs within
the farming sector.
10. Furthermore, effective communication of research findings to the
farming sector will accelerate the adoption of new knowledge and
technologies that build drought resilience through more efficient and
effective farming practices and more sustainable management of natural
resources.
11. The public good would not be enhanced by measures that solely benefit
individual farm entities.
Clause 4 - Simplified outline of this Act
12. This clause would provide a high-level introduction to the provisions
in the Bill, to aid readability. The outline is not intended to be
comprehensive and should not be relied on in place of the substantive
provisions in the Bill.
Clause 5 - Definitions
13. This clause would provide definitions to support the operation of
provisions of the Bill. These definitions are discussed throughout the
Explanatory Memorandum where they are relevant to the operation of a
particular clause.
14. 'Drought' would not be defined in this Bill, so would be given its
ordinary meaning.
Clause 6 - Crown to be bound
15. Clause 6 would provide that the Bill binds the Crown in each of its
capacities but does not make the Crown liable to be prosecuted for an
offence.
Clause 7 - Extension to external Territories
16. Clause 7 would provide that the Bill extends to every external
Territory.
Clause 8 - Extra-territorial operation
17. Clause 8 would provide for the geographical reach of this Bill to apply
outside of Australia, to allow for recipients of grants or payments from
the Future Drought Fund to collaborate with international partners.
18. The definition of 'drought' in clause 5 would confine that definition
to 'drought in Australia'. This has the effect that even though the Bill
would have extra-territorial operation, grants or payments could only be
made in relation to drought resilience in Australia.
Part 2 - Future Drought Fund
Division 1 - Introduction
Clause 9 - Simplified outline of this Part
19. This clause would provide a high-level introduction to the provisions
in this Part, to aid readability. The outline is not intended to be
comprehensive and should not be relied on in place of the substantive
provisions of this Part.
Division 2
Clause 10 - Establishment of the Future Drought Fund
20. Clause 10 would establish a financial asset fund - the Future Drought
Fund - consisting of amounts credited to the Future Drought Fund Special
Account and investments of the Future Drought Fund.
Clause 11 - Transfer of balance of the Building Australia Fund Special
Account
21. The Future Drought Fund (Consequential Amendments) Bill 2018 would
operate to close the Building Australia Fund Special Account from the
date of commencement of this Bill. Clause 11 of the Future Drought Fund
Bill 2019 would provide that, as soon as practicable after that date, an
amount equal to the balance of the Building Australia Fund Special
Account immediately before commencement of this Bill (that is,
immediately before that special account is closed), is to be credited to
the Future Drought Fund Special Account.
22. In effect, this would transfer the balance of the Building Australia
Fund Special Account immediately prior to its closure, to the Future
Drought Fund Special Account.
23. The note at the end of this clause would alert readers to the fact that
the balance of the Building Australia Fund Special Account does not
include the value of an investment of the Building Australia Fund (which
are to be transferred under Clause 12).
Clause 12 - Transfer of investments of the Building Australia Fund
24. Clause 12 would deal with the transfer of investments of the Building
Australia Fund to the Future Drought Fund.
25. Subclause 12(1) would apply to financial assets, which immediately
prior to the commencement of this Bill, were investments of the Building
Australia Fund. Subclause 12(2) would provide that those assets would
become investments of the Future Drought Fund immediately after this
Bill commences.
Clause 13 - Establishment of the Future Drought Fund Special Account
26. Clause 13 would establish the Future Drought Fund Special Account,
which would be a special account for the purposes of the PGPA Act.
27. A special account is an appropriation mechanism that sets aside an
amount within the CRF to be expended for specific purposes. Any amounts
credited to the Future Drought Fund Special Account would be quarantined
from the rest of the CRF and could only be debited from the Future
Drought Fund for the purposes set out in the Bill.
28. The note immediately following this clause would assist the reader by
clarifying that amounts could be credited to the Future Drought Fund
Special Account by an Appropriation Act.
Division 3 - Credits of amounts to the Future Drought Fund Special Account
Clause 14 - Credits of amounts
29. This clause would establish a mechanism for specified amounts - other
than the initial balance from the Building Australia Fund Special
Account - to be credited to the Future Drought Fund Special Account. A
specified amount would also be able to be credited in specified
instalments.
30. Amounts would be credited by a written determination of the responsible
Ministers or their delegates (refer to clauses 61 and 62 for delegation
powers of the Finance Minister and the Treasurer).
31. Note 1 immediately following subclause 14(1) would assist readers by
directing them to the subsection 33(3) of the Acts Interpretation Act,
which provides that a power to make a legislative instrument includes
the power to vary or revoke that instrument.
32. Note 2 would assist readers by directing them to other clauses of this
Bill that would also require amounts to be credited to the Future
Drought Fund Special Account.
33. Subclause 14(2) would provide that a determination to credit a
specified amount to the Future Drought Fund Special Account is a
legislative instrument but is not subject to disallowance. Such
determinations could be regarded as administrative, rather than
legislative, in character. However, having the determination as a
legislative instrument ensures transparency of amounts credited as a
matter of public interest.
34. A determination under subclause 14(1) is expected to be made only in
exceptional circumstances following the initial credit under clause 11.
Amounts credited under clause 14 are expected to be provided from other
Appropriation Acts. In this respect, the determination would be a tool
for the Government to manage its financial arrangements. Disallowance
could also undermine commercial certainty, given that once an amount is
credited to the Future Drought Fund Special Account, the Future Fund
Board would be able to invest the amount in any financial assets under
clause 39 of the Bill.
35. Providing for a determination under subclause 14(1) to be a legislative
instrument that is not disallowable would be consistent with
arrangements for other Funds invested by the Future Fund Board (see Item
3 of Schedule 1 of the Future Fund Act, and section 15 of the MRFF Act).
Division 4 - Debits of amounts from the Future Drought Fund
Clause 15 - Purpose of the Future Drought Fund Special Account - main
purpose
36. Clause 15 would provide that the main purpose of the Future Drought
Fund Special Account would be to transfer amounts to the Agriculture
Future Drought Resilience Special Account (in accordance with the
mechanism for these transfers set out in clause 34) for the purposes of
paying amounts payable by the Commonwealth under an arrangement made
under clause 21, and making grants under clause 21.
37. Clause 21 would provide the matters in relation to which a grant may
be made or an arrangement entered into under this Bill.
Clause 16 - Purposes of the Future Drought Fund Special Account - purposes
related exclusively to the investments etc. of the Future Drought Fund
38. Clause 16 would relate to the payment of various expenses that may be
incurred by the Future Fund Board, which relate exclusively to the
investments of the Future Drought Fund, and which do not relate to the
main purpose of the Fund. It sets out the additional purposes for which
the Future Drought Fund may be debited.
39. The note at the end of this clause would direct readers to consider
section 80 of the PGPA Act, which relates to the establishment of,
crediting to and debiting against a special account established by an
Act.
Clause 17 - Purposes of the Future Drought Fund Special Account - purposes
not related exclusively to the Future Drought Fund
40. Clause 17 would relate to the payment of various expenses that may be
incurred by the Future Fund Board in respect of its broader functions
under this Bill, as well as the Future Fund Act, the MRFF Act, the NBF
Act, or the DCAF Act.
41. Clause 17 would set out the range of additional purposes for which the
Future Drought Fund Special Account may be debited in respect of costs
that are common to the funds for which the Future Fund Board has
responsibility.
42. The note at the end of this clause would direct readers to consider
section 80 of the PGPA Act, which relates to the establishment of,
crediting to and debiting against a special account established by an
Act.
Clause 18 - Future Fund Board must ensure that the balance of the Future
Drought Fund Special Account is sufficient to cover authorised debits etc.
43. Clause 18 would require the Future Fund Board to take all reasonable
steps to ensure that the balance of the Future Drought Fund Special
Account is sufficient to cover amounts to be debited from the Future
Drought Fund Special Account.
44. The note immediately below this clause would assist readers to
understand the obligations of the Future Fund Board in respect of this
requirement.
Clause 19 - Transfers from the Future Drought Fund to the Future Fund
45. Clause 19 would allow for transfers from the Future Drought Fund
Special Account to the Future Fund Special Account.
46. This clause would allow for amounts to be transferred between the
Future Drought Fund and the Future Fund. The purpose of this is to
enable reimbursement to the Future Fund Special Account of expenses
incurred in relation to the Future Drought Fund that have been debited
from the Future Fund Special Account.
47. The clause would allow the Finance Minister to direct, in writing, that
one Fund is to be debited and the other Fund credited by a specified
amount.
48. Subclause 19(3) would be included to assist readers, as a direction
under subclause 19(1) would not be a legislative instrument within the
meaning of subsection 8(1) of the Legislation Act. Directions of this
type are administrative in character because they are merely the
application of a legal power in a particular case (i.e. they do not
determine or alter the content of the law itself).
Part 3 - Arrangements and grants relating to drought resilience
Division 1 - Introduction
Clause 20 - Simplified outline of the Part
49. This clause would provide a high-level introduction to the provisions
in this Part, to aid readability. The outline is not intended to be
comprehensive and should not be relied on in place of the substantive
provisions of this Part.
Division 2 - Arrangements and grants
Clause 21 - Arrangements and grants
50. This clause would provide a broad legislative spending power that is to
be read subject to the constitutional limits in clause 26.
51. Subclause 21(1) would allow the Agriculture Minister to make
arrangements with or grants of financial assistance to a person or body
for certain matters.
52. 'Agriculture Minister' would be defined in clause 5 as the Minister
administering the Primary Industries Research and Development Act 1989.
53. '[A]rrangement' would be defined in clause 5 to include a contract,
agreement or deed. It would exclude a securities lending arrangement or
securities lending arrangements (refer to clause 51).
54. Subclause 21(5) would expressly exclude the acquisition of shares in a
company or the making of a loan from the arrangements that could be made
under this clause. These types of arrangements would be excluded because
this Bill is not intended to provide these types of arrangements and
because there are existing mechanisms through which the Government can
enter into these types of arrangements, for example, the Regional
Investment Corporation offers loans to farm business owners affected by
drought, or who want to prepare for drought.
55. '[P]erson' would be defined in clause 5 to include a partnership.
Subsection 2C(1) of the Acts Interpretation Act further provides that
'person' includes a body politic or body corporate, as well as an
individual.
56. Under this clause arrangements could therefore be made with, and grants
provided to, individuals, incorporated or unincorporated bodies, not-for-
profit organisations, educational institutions (such as a university),
State and Territory governments, and local government bodies. This list
should not be considered exhaustive.
57. The matters for which the Agriculture Minister may make arrangements or
grants would be:
. carrying out a project directed towards achieving drought
resilience;
. carrying out research directed towards achieving drought
resilience;
. provision of advice directed towards achieving drought resilience;
. provision of a service directed towards achieving drought
resilience; or
. adoption of technology directed towards achieving drought
resilience.
58. The Agriculture Minister would also be able to make arrangements or
grants for a matter that is incidental or ancillary to any of the above
matters.
59. '[D]rought resilience' would be defined in clause 5 to mean:
. resilience to drought;
. preparedness for drought;
. responsiveness to drought;
. management of exposure to drought;
. adaptation to the impact of drought;
. recovery from drought; or
. long-term drought-related sustainability of farms and communities
that have been, are being, or are at significant risk of being,
affected by drought.
60. The words 'at significant risk' in the definition of drought resilience
would require a higher threshold test than a farm or community that
merely might be or could be affected by drought at some point in the
future. The risk of being affected by drought would need to be
'significant' to attract this element of the definition of drought
resilience.
61. The types of things that could be funded under subclause 21(1) may
include:
. the creation or development of water infrastructure,
. financial and business planning for primary producers to improve
ability to manage through lower income periods caused by drought,
. restoring native vegetation for soil or water regeneration,
. pest control,
. fire mitigation,
. training and information for primary producers on sustainable stock
management during drought,
. training and information on local climate variability and advice on
climate risk applied to specific locations,
. blue-sky research in drought resilience, or
. improving data on fodder and impacts from drought, including market
trends.
62. The above list should not be considered to be exhaustive or conclusive
regarding the types of projects that could receive funding. It would be
a matter for the Agriculture Minister to decide whether or not to make a
particular arrangement or grant in relation to drought resilience, this
list merely provides examples of possible projects.
63. Subclauses 21(2)-(4) would clarify that, without limiting anything in
subclause 21(1), in making an arrangement or grant under this clause,
the Commonwealth may reimburse, or partly reimburse, costs or expenses
that the other party has incurred or expended prior to the making of the
arrangement or grant.
64. The note at the end of subclause 21(1) would assist readers by
directing them to clause 25 (which relates to compliance with the
Drought Resilience Funding Plan), clause 26 (which places constitutional
limits on the exercise of the spending powers provided in this clause),
and clause 28 (which requires the Agriculture Minister to request and
take into account advice from the RIC Board in relation to making
arrangements or grants under this clause).
Clause 22 - Terms and conditions of grants
65. This clause would require the terms and conditions for a grant of
financial assistance under clause 21 to be set out in a written
agreement between the Commonwealth and the grant recipient, and that the
Agriculture Minister would enter such an agreement on behalf of the
Commonwealth. That agreement would be required to provide the
circumstances in which the grant recipient must repay amounts to the
Commonwealth - this would not limit the terms and conditions that can be
provided in an agreement, but would set out a minimum requirement.
66. Subclause 22(3) would require a recipient of a grant under clause 21 to
comply with the terms and conditions set out in the agreement made under
this clause.
67. The note at the end of subclause 22(2) would assist readers by
directing them to clause 25 (which relates to compliance with the
Drought Resilience Funding Plan), clause 26 (which places constitutional
limits on the exercise of the spending powers provided in this clause),
and clause 28 (which requires the Agriculture Minister to request and
take into account advice from the RIC Board in relation to making
arrangements or grants under this clause).
68. The note at the end of subclause 22(4) would assist readers by alerting
them to the fact that an amount repayable to the Commonwealth would be a
debt to the Commonwealth.
Clause 23 - Agriculture Minister has powers etc. of the Commonwealth
69. This clause would specify that the Agriculture Minister would hold and
exercise all the rights, responsibilities, duties and powers of the
Commonwealth as a party to an arrangements or the grantor of a grant
under clause 21. This would include, but is not limited to:
. paying amounts payable by the Commonwealth under a clause 21
arrangement;
. receiving amounts payable to the Commonwealth under a clause 21
arrangement;
. paying clause 21 grants to grant recipients;
. receiving amounts payable to the Commonwealth by way of the
repayment of the whole or a part of a section 21 grant; and
. instituting actions or proceedings on behalf of the Commonwealth in
relation to a matter that concerns either an arrangement or a grant
made under clause 21.
Clause 24 - Conferral of powers on the Agriculture Minister
70. This clause would provide a legislative basis for the Agriculture
Minister to exercise a power conferred on him or her by an arrangement
under clause 21 or an agreement under clause 22 in relation to a grant.
Clause 25 - Compliance with Drought Resilience Funding Plan
71. In order to ensure a coherent and consistent approach in making
arrangements or grants under clause 21 or agreements under clause 22,
this cause would require the Agriculture Minister to comply with a
Drought Resilience Funding Plan in force under clause 31 when exercising
a power under either of those clauses.
Clause 26 - Constitutional limits
72. This clause would set out the Constitutional powers under which this
Bill would operate. It would provide that the Agriculture Minister may
only exercise a power under clauses 21 and 22 where one of the
enumerated Constitutional powers is enlivened. It would act as a
limitation on the broad spending power provided under clauses 21 and 22.
73. Clause 26 would inform a court how the Bill is capable of operating
within the Commonwealth's legislative powers. It would not apply to
every provision of the Bill; instead, it confines only the principal
spending powers in clauses 21 and 22.
74. The other clauses of this Bill (other than clauses 21 and 22) would be
incidental in character. That is, they would be incidental to purpose of
providing funding in relation to drought resilience, in that they
establish the mechanism for investment of funds in order to ensure there
is sufficient amounts available to make relevant payments under the
powers in clause 21.
75. Nothing in this clause is intended to narrow the scope of the
enumerated Constitutional powers, but rather to clarify the powers
relied upon to support the Parliament enacting this legislation.
76. Some examples of potential measures could include, but are not limited
to:
. activities implementing Australia's international obligations under
the Desertification Convention, which may include assisting
communities at risk of drought by funding measures to assist in
drought preparedness;
. activities implementing Australia's international obligations under
the Climate Change Convention, which may include undertaking
climate-change mitigation projects;
. activities implementing Australia's obligations under the Ramsar
Convention, which may include funding activities that improve the
resilience of Ramsar-listed and other wetlands to drought;
. activities implementing Australia's obligations under the
Biodiversity Convention, which may include funding the recovery of
threatened species or ecological communities, or the restoration of
degraded ecosystems;
. activities directed towards matters of international concern such
as, for example, drought resilience;
. grants of financial assistance to a state or territory to
incentivise natural resource management activities;
. grants of financial assistance to a constitutional corporation for
the purposes of carrying out the corporation's activities including
for example, financial planning for primary producers to improve
ability to manage through lower income periods caused by drought;
. activities within a territory to restore native vegetation for
soil/water regeneration;
. activities at Commonwealth places to restore native vegetation for
soil/water regeneration;
. funding for primary producers engaged in trade and commerce between
Australia and other countries, among the states or within a
territory, between a state and a territory or between two
territories, to undertake drought mitigation activities;
. funding for grants to use the postal, telegraphic telephonic or
like services to improve access to information on drought
resilience and mitigation measures to provide better information to
primary producers;
. funding for the research and development of new patentable
invention which would improve drought resilience;
. grants of financial assistance for meteorological observations to
enhance climate observation and forecasting data to provide better
information to primary producers;
. grants of financial assistance to assist insurers and insurance
customers to fund activities that improve weather data and
assessments to advance the development and adoption of better
targeted and lower the cost of insurance products;
. funding for activities that are responsive to national emergencies
or crises and that can only be carried out by the Commonwealth
including, for example, measures to address drought emergency and
crises; and
. grants of financial assistance that are for purposes incidental to
the execution of any of the legislative powers of the Parliament or
the executive power of the Commonwealth.
Clause 27 - Executive power of the Commonwealth
77. This clause would clarify that this Division does not impliedly limit
the executive power of the Commonwealth contained in section 61 of the
Constitution.
Clause 27A - Publication of information relating to arrangements and grants
78. This clause would require the Agriculture Minister to publish detailed
and up-to-date information about grants and arrangements on the
Agriculture Department's website. The information to be published would
include, but is not limited to, amounts paid and payable under grants
and arrangements as well as the names of recipients of grants and
arrangements.
79. The information required to be published under this clause would be
additional to the information that must be published in accordance with
the Commonwealth Grants Rules and Guidelines and the Commonwealth
Procurement Rules.
80. Subclauses 27A(2) and (3) would require the information to be published
as soon as practicable.
Division 3 - Advice
81. This Division would relate to advice to the Agriculture Minister about
the exercise of powers under clauses 21 and 22, that is, in relation to
making arrangements or grants of financial assistance in relation to
drought resilience.
Clause 28 - Agriculture Minister must request advice from the Regional
Investment Corporation Board
82. Subclause 29(1) would require the Agriculture Minister to request
advice from the RIC Board regarding whether to make an arrangement or
grant under clause 21, or whether to enter into an agreement under
clause 22, prior to making the arrangement or grant or entering the
agreement. Subclause 28(2) would require the RIC Board to provide the
requested advice.
83. Subclause 28(3) would require the Agriculture Minister, in making a
decision about making an arrangement or grant under clause 21, or
entering an agreement under clause 22, to have regard to any advice
given to him or her by the RIC Board under this clause. This clause does
not preclude the Agriculture Minister from seeking advice from other
sources in addition to the RIC Board. Subclause 28(4) would clarify that
that the Agriculture Minister may have regard to matters other than the
advice of the RIC Board.
Clause 29 - Compliance with Drought Resilience Funding Plan
84. In order to ensure a coherent and consistent approach in making
arrangements or grants under clause 21 or agreements under clause 22,
this cause would require the RIC Board to comply with a Drought
Resilience Funding Plan in force under clause 31 when giving advice to
the Agriculture Minister under clause 28.
Clause 30 - Disclosure of interests
85. This clause sets out the disclosure requirements where a member of the
RIC Board has a material personal interest that relates to the advisory
affairs of the RIC Board. '[A]dvisory affairs' of the RIC Board would be
defined in clause 5 to mean the affairs of the Regional Investment
Corporation Board that relate to its function of giving advice to the
Agriculture Minister under section 28.
86. The scope set out in subclause 30(1) would mirror the disclosure
threshold for Commonwealth officials under section 29 of the PGPA Act,
that is, 'material personal interest that relates to the affairs of' the
body. 'Material personal interest' is also the threshold that applies to
members of the EIF and MRFF Advisory Boards.
87. As members of the RIC Board would be advising on the disbursement of
public resources, it would be vital for material personal interests to
be raised as soon as practicable and dealt with effectively. Failure to
do so could undermine confidence and trust in the advisory role of the
RIC Board under this Bill. The public and the Government rightfully
expects that decisions about how public resources are used will be made
in the public interest, and not for other reasons, such as personal
gain.
88. The duty would not be absolute - it would only apply to material
personal interests. What constitutes a material personal interest
relating to the advisory affairs of the RIC Board will depend on the
particular facts, but would not be confined to financial or similar
interests. For example, a material personal interest may involve a
direct or indirect advantage or benefit to the extent that it has the
capacity to influence how the member would assess a particular proposal.
89. The phrase 'relating to the advisory affairs of the Regional Investment
Corporation Board' should be read broadly.
90. Subclause 30(2) would require a member with such an interest to, as
soon as practicable after becoming aware of the interest, disclose it:
. at a meeting of the RIC Board - this would ensure that the other
members of the RIC Board are aware of the relevant interest when
preparing advice for the Agriculture Minister; and
. to the Agriculture Minister - this would ensure that when making a
decision in regard to a matter on which the RIC Board has provided
the advice, the Minister would be aware of the relevant interest.
91. Subclause 30(3) would require certain details of the interest to be
included in a disclosure under subclause 30(2).
92. Subclause 30(4) would require a disclosure at a meeting of the RIC
Board to be recorded in the minutes of the meeting.
93. Subclause 30(5) would require a member who has disclosed a material
personal interest under subclause 30(2) to not be present when the
matter to which the interest relates is being discussed and to not vote
in that matter. This would prevent that member's interest from unduly
influencing the discussions, decisions or advice of the RIC Board.
94. Subclause 30(6) would allow the Agriculture Minister to terminate the
appointment of a member of the RIC Board if that member, without
reasonable excuse, fails to comply with the disclosure requirements in
subclause 30(2) or the requirements in relation to a meeting at which
the relevant matter is considered in subclause 30(5). This would not
limit the termination provisions contained in section 26 of the RIC Act.
95. Subclause 30(8) would provide that the disclosure requirements and the
consequences of disclosure in this clause override subsection 29(1) of
the PGPA Act, or any rules made under subsection 29(2) of that Act. The
effect of this override would be that the Minister could not allow
members with a conflict to participate in a meeting where a matter in
which they have a material personal interest is being considered,
despite that interest (refer section 15 of the PGPA Rule).
Division 4 - Drought Resilience Funding Plan
Clause 31 - Drought Resilience Funding Plan
96. Clause 31 would require the Agriculture Minister to determine a plan,
to be known as the Drought Resilience Funding Plan, that sets out a
coherent and consistent approach for making arrangements or grants in
relation to drought resilience or entering agreements in relation to
such grants. The plan would be high level and could not require
arrangements to be made with, or grants provided to, a particular person
or project.
97. The Minister would be required to take all reasonable steps to ensure
that the first Drought Resilience Funding Plan comes into force before 1
July 2020. This would provide time for extensive consultation with
stakeholders, whilst still ensuring the plan is in place before payments
from the Future Drought Fund commence.
98. The plan would be in place for four years to provide a longer-term
focus for drought resilience funding. At the end of four years, the plan
would be repealed by subclause 31(4). Future plans would be required to
be in force as soon as the preceding plan is repealed to ensure there is
always a plan in force.
99. In developing the plan, the Agriculture Minister would have regard to
the National Drought Agreement and any successive agreements, as well as
any related Australian Government drought policies and strategies.
100. The plan would be a legislative instrument for the purposes of the
Legislation Act. The instrument would be disallowable under section 42
of that Act.
101. In addition to the registration and publication requirements contained
in the Legislation Act, the plan would be required to be published on
the Agriculture Department's website, making it more easily accessible
to the public.
102. Subclause 31(9) would provide that the power to make an instrument in
this clause does not include the power to repeal, rescind, revoke,
amend, or vary any such instrument as provided by subsection 33(3) of
the Acts Interpretation Act. However, subclause 31(5) would enable a new
Drought Resilience Funding Plan to revoke an existing plan at the time
it comes into force, which would allow the amendment or revocation of
the plan by replacing it with a new plan with any desired amendments.
This would allow the Agriculture Minister to provide an updated plan
outside of the four-year cycle, for example, where there have been
changes to the policy context.
Clause 32 - Consultation before determining a Drought Resilience Funding
Plan
103. This clause would provide the consultation requirements for the
Drought Resilience Funding Plan. It would require the Agriculture
Minister, before determining the plan, to publish a draft plan and the
final report of the Productivity Commission review of the previous plan
(if any) on the Agriculture Department's website and invite submissions
on the draft plan for at least 42 days. The Minister would be required
to consider any submissions received before determining the plan.
104. This clause would not limit the consultation provisions in relation to
legislative instruments contained in section 17 of the Legislation Act.
Clause 32A - Productivity Commission review of effectiveness of Drought
Resilience Funding Plan
105. This clause would require the Productivity Minister to initiate an
inquiry, to be conducted by the Productivity Commission, into the
effectiveness of the Drought Resilience Funding Plan. The inquiry, which
must be initiated within 3 years of a Drought Resilience Funding Plan
coming into force, would have regard to economic, social and
environmental outcomes.
106. Subclause 32A(2) would require the report of the inquiry to be
submitted by the Productivity Commission at least 5 months before the
Drought Resilience Funding Plan expires. The Productivity Commission
would be required to make recommendations on the matter considered by
the inquiry.
107. The note immediately below subclause 32A(2) would bring the reader's
attention to a requirement, under the Productivity Commission Act 1998,
that the report be tabled in each House of the Parliament.
108. Subclause 32A(3) would state that inquiries under this clause would be
matters relating to industry, industry development and productivity for
the purposes of the Productivity Commission's functions under its
enabling Act (the Productivity Commission Act 1998).
Division 5 - Agriculture Future Drought Resilience Special Account
Clause 33 - Agriculture Future Drought Resilience Special Account
109. Clause 33 would establish the Agriculture Future Drought Resilience
Special Account, which would be a special account for the purposes of
the PGPA Act. The Secretary of the Agriculture Department would be
responsible for the special account. 'Agriculture Department' would be
defined in clause 5 to mean the Department administered by the
Agriculture Minister.
110. The note immediately following subclause 33(2) would assist the reader
by clarifying that amounts could be credited to the Agriculture Future
Drought Resilience Special Account by an Appropriation Act.
111. A special account is an appropriation mechanism that sets aside an
amount within the CRF to be expended for specific purposes. Any amounts
credited to the Agriculture Future Drought Resilience Special Account
would be quarantined from the rest of the CRF and could only be debited
from the Agriculture Future Drought Resilience Special Account for the
purposes set out in the Bill.
Clause 34 - Transfers to the Agriculture Future Drought Resilience Special
Account
112. This clause would provide the mechanism by which amounts can be
transferred from the Future Drought Fund Special Account to the
Agriculture Future Drought Resilience Special Account, where it can then
be used to make grants or payments under arrangements under clause 21.
This clause would enable transfers from 1 July 2020.
113. Subclause 34(2) would require the Finance Minister to direct that $100
million be debited from the Future Drought Fund Special Account and
credited to the Agriculture Future Drought Resilience Special Account on
a specified day. A direction could also provide that the $100 million is
to be transferred in specified instalments on specified days in the
financial year. This would enable the Finance Minister to balance the
objective of growing the Future Drought Fund to around $5 billion by
2028-2029, with the requirement to ensure the Agriculture Future Drought
Resilience Special Account has enough funds to meeting funding
obligations under the arrangements, grants or agreements entered or made
under clauses 21 and 22.
114. It is expected that the Finance Minister would consult with the
Agriculture Minister before making a determination under subclause
34(2). This would ensure that, in making a determination, the Finance
Minister could accommodate any agreed payment schedules under clause 21
arrangements or clause 22 agreements.
115. Such a direction must be in writing. The effect of subclause 34(1)
would be to require at least one direction to be made each financial
year from the financial year beginning 1 July 2020.
116. Subclause 34(3) would be included to assist readers, as a direction
under subclause 34(2) would not be a legislative instrument within the
meaning of subsection 8(1) of the Legislation Act. Directions of this
type are administrative in character because they are merely the
application of a legal power in a particular case (i.e. they do not
determine or alter the content of the law itself).
117. Subclause 34(4) would require the Finance Minister to provide a copy
of a direction made under this clause to the Treasurer and the
Agriculture Minister.
Clause 35 - Other credits to the Agriculture Future Drought Resilience
Special Account
118. This clause would require amounts to be credited to the Agriculture
Future Drought Resilience Special Account that are equal to amounts paid
to the Commonwealth:
. under an arrangement made under clause 21;
. by way of damages or compensation for breach of an arrangement
under clause 21; and
. by way of the repayment of the whole or part of a grant made under
clause 21.
119. This would ensure that any amounts payable to the Commonwealth arising
out of an arrangement or grant made under clause 21 would be credited to
the Agriculture Future Drought Resilience Special Account to be used to
for the purposes of that special account and would not return to the
Future Drought Fund Special Account.
Clause 36 - Purposes of the Agriculture Future Drought Resilience Special
Account
120. This clause would set out the purposes of the Agriculture Future
Drought Resilience Special Account, which would be to pay amounts
payable by the Commonwealth under an arrangement made under clause 21
and to make grants under clause 21.
121. The note at the end of this clause would direct readers to consider
section 80 of the PGPA Act, which relates to the establishment of,
crediting to and debiting against a special account established by an
Act.
Division 6 - Future Drought Fund Consultative Committee
Clause 36A - Definitions
122. This clause would provide definitions to support the operation of
provisions in Division 6 of Part 3 of this Bill.
Clause 36B - Future Drought Fund Consultative Committee
123. This clause would establish the Consultative Committee.
Clause 36C - Functions of the Committee
124. This clause provides that the Consultative Committee would have the
functions given to it by Subdivision C of Division 6 of Part 3 of the
Bill.
Clause 36D - Agriculture Minister must request advice from Committee about
draft Drought Resilience Funding Plan
125. Subclause 36D(1) would require the Agriculture Minister to request
advice from the Consultative Committee about a draft Drought Resilience
Funding Plan before determining a Drought Resilience Funding Plan. The
subclause would also require the Agriculture Minister to have regard to
any advice received from the Consultative Committee about the draft plan
before determining a Drought Resilience Funding Plan.
126. The requirements under subclause 36D(1) are in addition to the
Agriculture Minister's consultation obligations under subclause 32(1) of
the Bill.
127. Subclause 36D(2) would require the Consultative Committee to comply
with any request from the Agriculture Minister for advice about the
draft Drought Resilience Funding Plan.
128. Subclause 36D(3) would provide that the section does not limit section
17 of the Legislation Act, which requires rule-makers to be satisfied
that appropriate consultation has taken place before making a
legislative instrument.
Clause 36E - Agriculture Minister must request advice from the Committee on
design relating to arrangements and grants
129. This clause would require the Agriculture Minister to request advice
from the Consultative Committee before first making an arrangement or
grant under clause 21 of the Bill.
130. The advice would relate specifically to whether the proposed design of
the program of arrangements or grants is consistent with the Drought
Resilience Funding Plan.
131. Subclause 36E(2) would require the Consultative Committee to comply
with any requests made by the Agriculture Minister under subclause
36E(1).
Clause 36F - Powers of the Committee
132. This clause would provide the Consultative Committee with the power to
do all things necessary or convenient to be done for, or in connection
with, the performance of its functions.
Clause 36G - Membership of the Committee
133. This clause would provide that the Consultative Committee would
consist of a Chair and 4 other members. For clarity, the Chair would be
considered a member of the Consultative Committee.
Clause 36H - Appointment of members of the Committee
134. Subclause 36H(1) would require members of the Consultative Committee
to be appointed by the Agriculture Minister, by way of written
instrument. The note immediately following subclause 36H(1) would assist
readers by specifying that members may be reappointed, subject to
subclause 36J(2).
135. Members would hold their position on a part-time basis and must not be
appointed unless they have expertise or experience in at least 2 of the
areas listed in subclause 36H(3), including drought resilience measures,
the agriculture industry, rural and regional development and/or
economics.
136. Subclause 36H(4) would require the Agriculture Minister to ensure (as
far as practicable) a balance of gender, knowledge and skills among
members of the Consultative Committee.
Clause 36J - Period of appointment for members of the Committee
137. Subclause 36J(1) would limit the period of appointment of any member
to a maximum of 4 years. The period would be specified in the written
instrument of appointment.
138. Subclause 36J(2) would impose an 8-year limit on the period when a
person could hold office as a member of the Consultative Committee.
Clause 36K - Acting Appointments
139. Clause 36K deals with the appointment of acting Consultative Committee
members.
140. Subclause 36K(1) would enable the Agriculture Minister to appoint a
member of the Consultative Committee to act as the Chair during a
vacancy in the office of the Chair, as well as any periods when the
Chair is absent (from their duty or Australia), or otherwise unable to
perform their duties.
141. Subclause 36K(2) would enable the Agriculture Minister to appoint a
person to act as a member of the Consultative Committee (other than the
Chair) during a vacancy in the office of a member (other than the
Chair), as well as any periods when the appointed member is absent (from
their duty or Australia) or unable to perform their duties.
142. Subclause 36K(3) would provide that a person must be eligible for
appointment as a member of the Consultative Committee in order to be
eligible to be appointed to act as a member of the Committee.
Clause 36M - Remuneration
143. Under subclause 36M(1), members of the Consultative Committee would be
paid by the Commonwealth the remuneration determined by the Remuneration
Tribunal. However, if there is no determination in operation, members
would be paid the remuneration prescribed by the rules.
144. Subclause 36M(2) provides that members would be paid the allowances
prescribed by the rules.
145. Subclause 36M(3) and the note immediately following that subclause
provide that members of the Consultative Committee will be paid
remuneration and allowances out of money appropriated by an Act of the
Parliament (other than the Remuneration Tribunal Act 1973).
146. Subclause 36M(4) clarifies that clause 36M of the Bill has effect
subject to the Remuneration Tribunal Act 1973, except as provided by
subclause 36M(3).
Clause 36N - Disclosure of interests to the Agriculture Minister
147. This clause would require members of the Consultative Committee to
notify the Agriculture Minister in writing of all of their interests
that conflict or could conflict with the proper performance of their
functions as a member.
Clause 36P - Outside work
148. This clause would prohibit members from engaging in any paid work that
conflicts with, or may conflict with, the proper performance of their
duties as a member of the Consultative Committee.
Clause 36Q - Leave of absence
149. Subclause 36Q(1) would enable the Agriculture Minister to grant a
leave of absence to the Chair of the Consultative Committee on the terms
and conditions determined by the Minister.
150. Subclause 36Q(2) would allow the Chair of the Consultative Committee
to grant a leave of absence to a member (other than the Chair) on the
terms and conditions determined by the Chair.
Clause 36R - Resignation
151. Under subclause 36R(1), a member of the Committee would be permitted
to resign their appointment by writing to the Agriculture Minister.
152. Subclause 36R(2) would provide that a resignation under subclause
36R(1) would take effect on the day specified in written resignation. If
no day is specified, the resignation would take effect on the day the
written resignation is received by the Agriculture Minister.
Clause 36S - Termination of appointment
153. Subclause 36S(1) would enable the Agriculture Minister to terminate
the appointment of a member of the Consultative Committee if that member
is unable to perform their duties due to physical or mental incapacity.
154. Under subclause 36S(2), the Agriculture Minister would be empowered to
terminate the appointment of a Committee member for other reasons listed
in this subclause, including for reasons related to financial hardship,
failure to comply with disclosure obligations and absence from Committee
meetings.
Clause 36T - Other terms and conditions
155. This clause provides that, with respect to matters not covered by the
Bill, members of the Consultative Committee hold office on the terms and
conditions (if any) determined by the Agriculture Minister.
Part 4 - Investment of the Future Drought Fund
Clause 37 - Simplified outline of this Part
156. This clause would provide a high-level introduction to the provisions
in this Part, to aid readability. The outline is not intended to be
comprehensive and should not be relied on in place of the substantive
provisions of this Part.
Clause 38 - Objects of investment of the Future Drought Fund
157. Subclause 38(1) would reinforce that amounts would be invested by the
Future Fund Board for the main object of enhancing the Commonwealth's
ability to provide grants for or enter arrangements in relation to
drought resilience.
158. Subclause 38(2) would provide that the ancillary objects of the
investment of the Future Drought Fund are for enhancing the ability of
the Commonwealth and the Future Fund Board to discharge costs, expenses,
obligations and liabilities set out in clauses 16 and 17.
Clause 39 - Investment of the Future Drought Fund
159. Clause 39 would take account of the investment powers provided for
under section 58 of the PGPA Act. However, subclause 39(1) expands on
those powers to provide for the investment of the Future Drought Fund in
a broad range of financial assets. Specific conditions on the
acquisition of derivatives are separately covered in clause 49. This
approach to the investment of the Future Drought Fund is consistent with
investment arrangements for the Future Fund.
160. Investments of the Future Drought Fund would be made in the name of
the Future Fund Board (rather than the Commonwealth) to make clear that
the Future Fund Board would manage the Future Drought Fund at arm's
length from the Government. However beneficial ownership of the Future
Drought Fund assets would remain with the Commonwealth at all times.
Clause 40 - Management of investments of the Future Drought Fund
161. Subclauses 40(1) and (2) would provide that income derived from an
investment of the Future Drought Fund, including a return of capital or
another form of financial distribution, must be credited to the Future
Drought Fund Special Account. This is consistent with the requirements
under sections 81 and 83 of the Constitution (which, in effect, provide
that public money forms part of the CRF and can only be spent if
authorised by an appropriation made by law). In practice, any amount
that has not been invested must be held in the Future Drought Fund
Special Account.
162. Subclauses 40(3)-(5) would relate to the arrangements that would apply
in relation to the realisation of assets, and allow the Future Fund
Board to authorise, prior to an investment maturing, that the proceeds
of this investment be automatically reinvested with the same entity.
This would avoid the need for the proceeds of realisation of the
investment to be treated as public money and credited to the CRF, only
to be then reappropriated and reinvested. Any reinvestment would be an
investment of the Future Drought Fund.
163. Subclause 40(6) would provide that section 58 of the PGPA Act does not
apply to an investment of the Future Drought Fund. Section 58 of the
PGPA Act authorises the Finance Minister or the Treasurer to invest
public money in only a limited range of investments, such as government
bonds and bank deposits. However, clause 39(1) would provide for the
investment of the Future Drought Fund in a broader range of financial
assets.
Clause 41 - Future Drought Fund Investment Mandate
164. This clause would provide the Government, as owner of the Future
Drought Fund, with a mechanism for articulating its expectations for how
the Future Drought Fund will be invested and managed by the Future Fund
Board. Clause 41 establishes a framework that enables the Government to
give strategic guidance to the Future Fund Board while preserving the
Board's role in managing the investments of the Future Drought Fund at
arm's length from the Government. This approach is consistent with the
arrangements in place for the other Funds invested by the Future Fund
Board.
165. Subclause 41(1) would provide the responsible Ministers with the power
to give the Future Fund Board written directions in relation to the
performance of its investment functions and the exercise of its powers.
This clause would be subject to the limitations in clause 43. The
responsible Ministers must issue at least one such direction, and these
directions will be collectively known as the Future Drought Fund
Investment Mandate (subclause 41(3) refers). Note that the Future
Drought Fund investment function would be defined in clause 5.
Directions comprising the Future Drought Fund Investment Mandate would
be informed by expert advice, including advice on setting an appropriate
benchmark rate of return and appropriate risk tolerances to meet the
Government's policy objectives.
166. While the responsible Ministers can issue new directions at any time,
the intention is that the Investment Mandate will reflect the
Government's policy intent with regard to the investments of the Future
Drought Fund. Any new directions would therefore be expected to take
account of significant policy changes or material changes in the
investment environment faced by the Future Drought Fund.
167. These requirements will give the Future Fund Board and Parliament
assurance that the responsible Ministers must make appropriately
considered directions in regard to investment targets, while providing
flexibility to take account of broader policy issues and national
interest considerations.
168. Subclause 41(2) would provide that in setting an Investment Mandate
the responsible Ministers must have regard to maximising the return on
the Future Drought Fund over the long term consistent with international
best practice for institutional investment, and of the need to enhance
the Commonwealth's ability to provide grants for or pay amounts under
arrangements in relation to drought resilience, and any other matters
the responsible Ministers consider to be relevant.
169. Subclause 41(4) would provide that the Investment Mandate may include,
but is not limited to, statements about policies the Future Fund Board
must pursue in relation to risk and return and the allocation of the
Future Drought Fund to particular financial assets. This may include
restrictions or thresholds for investing the Future Drought Fund in
certain jurisdictions or asset classes and statements of the
Government's appetite for risk.
170. Subclause 41(5) would make it clear that a Ministerial direction under
subclause 41(1) prevails over clause 42 to the extent of any
inconsistency, and places limitations on responsible Ministers in
issuing the Investment Mandate. This means that the Investment Mandate
could not have the effect of requiring the Future Fund Board to do
anything inconsistent with this Bill, including the aim of enhancing the
Commonwealth's ability to provide grants for or pay amounts under
arrangements in relation to drought resilience.
171. Subclause 41(6) would provide that the Investment Mandate would not
formally commence until at least 15 calendar days after it is issued.
This would allow the Future Fund Board time to adjust to any revised
directions issued by the responsible Ministers. Importantly, this would
allow the Future Fund Board to know with certainty when the new
direction would come into force.
172. Subclause 41(7) would provide that a direction under subclause 41(1)
is a legislative instrument, and as such must be tabled in Parliament
and registered on the Federal Register of Legislation. Note 1 would
alert the reader that a direction is not subject to disallowance, in
accordance with regulations made for the purposes of paragraph 44(2)(b)
of the Legislation Act. Note 2 alerts the reader that a direction is not
subject to sunsetting, in accordance with regulations made for the
purposes of paragraph 54(2)(b) of the Legislation Act.
173. The Government considers it is appropriate that a direction under
subclause 41(1) of the Bill is not subject to disallowance. The Bill
would provide adequate scrutiny of directions comprising the Future
Drought Fund Investment Mandate through mandated consultation with the
Future Fund Board (clause 44). Exemption from disallowance together with
consultation would give the Future Fund Board necessary certainty when
investing through the Future Drought Fund. While it would be possible to
provide that a direction under subclause 41(1) does not come into effect
until disallowance periods have expired, this approach would
significantly impede the ability of Government to make urgent changes to
the Future Drought Fund Investment Mandate in the national interest.
174. The Government also considers it is appropriate that a direction under
subclause 41(1) of the Bill is not subject to sunsetting. The process
for setting the Future Drought Fund Investment Mandate has been designed
to ensure the mandate remains relevant over the long term, subject to
appropriate revisions to take into account changing circumstances. This
process means the Future Drought Fund Investment Mandate may comprise of
multiple directions issued at different times. Not being subject to
sunsetting would ensure that directions comprising the Future Drought
Fund Investment Mandate remain coherent, regardless of when specific
directions were issued.
175. This approach enables the public and the Parliament to hold the
Government accountable for the directions it issues to the Future Fund
Board without impeding the Government's ability to manage its finances.
The approach is consistent with other investment mandates in respect of
the other investment funds managed by the Future Fund Board.
Clause 42 - Obligation on Future Fund Board in performing investment
functions
176. This clause would require the Future Fund Board, in exercising its
Future Drought Fund investment function, to seek to maximise the return
on the Future Drought Fund over the long term, consistent with
international best practice for institutional investment. It is expected
that international best practice will be reflected in the investment
policies of the Future Drought Fund.
Clause 43 - Limitation on Future Drought Fund Investment Mandate
177. Clause 43 would provide that the responsible Ministers must not direct
the Future Fund Board to use the assets of the Future Drought Fund to
invest in a particular financial asset, for example shares in a
particular company. It would also prevent the responsible Ministers from
issuing a direction that has the effect of requiring the Future Fund
Board to use the assets of the Future Drought Fund to support a
particular business entity, activity or business.
Clause 44 - Future Fund Board to be consulted on Future Drought Fund
Investment Mandate
178. Consistent with arrangements for the other Funds invested by the
Future Fund Board, the responsible Ministers would be required to
consult the Future Fund Board before issuing a Future Drought Fund
Investment Mandate direction under subclause 41(1).
179. Subclause 44(1) would require the responsible Ministers to send a
draft of a direction under subclause 41(1) of the Bill to the Future
Fund Board and invite the Board to make a submission within a specified
time limit. The specified time limit would be determined on a case by
case basis with regard to relevant circumstances and priorities at the
time. It may be the case that urgent changes are required in the
national interest. In this situation it would be reasonable for the
Future Fund Board to be asked to consider a draft direction quickly.
However, where there is less urgency, or the change in the Future
Drought Fund Investment Mandate is substantial, it would be reasonable
to provide the Future Fund Board with a longer period of time to
consider a draft direction. The responsible Ministers would be required
to consider any submission received from the Future Fund Board within
the specified time limit.
180. Subclause 44(2) would require any submission received from the Future
Fund Board on a draft direction to be tabled in the Parliament along
with the direction. This would ensure that the Parliament is kept
informed of any concerns raised by the Future Fund Board about the
impact of the direction on the Future Drought Fund.
Clause 45 - Compliance with Future Drought Fund Investment Mandate
181. This clause would deal with compliance of the Future Fund Board with
the Future Drought Fund Investment Mandate.
182. Subclause 45(1) would require the Future Fund Board to take all
reasonable steps to ensure that all policies and decisions regarding the
operation and investment of the Future Drought Fund are in accordance
with the Future Drought Fund Investment Mandate issued by the
responsible Ministers. Since the Future Drought Fund Investment Mandate
is intended to provide broad guidance to the Future Fund Board, it may
contain directions that require the Board to apply its judgment on
whether or not Future Drought Fund investments comply with the Future
Drought Fund Investment Mandate.
183. Subclause 45(2) would provide that if the Future Fund Board becomes
aware of a breach of the Future Drought Fund Investment Mandate, the
Board must inform the responsible Ministers in writing as soon as is
practicable, and set out a proposed strategy to bring the operations of
the Future Drought Fund into compliance with the Future Drought Fund
Investment Mandate.
184. Similarly, subclauses 45(3) and 45(4) would provide that if the
Government identifies areas where the Future Fund Board is not complying
with the Future Drought Fund Investment Mandate, the responsible
Ministers can issue written directions to the Future Fund Board to
provide an explanation and to take action to remedy the situation. The
Future Fund Board would be required to comply with any such directions,
noting that the responsible Ministers would be the final arbiters on
what is intended by the Future Drought Fund Investment Mandate.
185. Subclause 45(5) would provide that any transactions undertaken by the
Future Fund Board and subsequently deemed not to have complied with the
Future Drought Fund Investment Mandate remain valid, and the Future Fund
Board is required to honour any commitments made. This would protect
third parties who enter into transactions with the Future Fund Board or
its agents in good faith.
186. Subclause 45(6) is included to assist readers, as a direction under
subclause 45(3) is not a legislative instrument within the meaning of
subsection 8(1) of the Legislation Act. Directions of this type are
administrative in character because they are merely the application of a
legal power in a particular case (i.e. they do not determine or alter
the content of the law itself).
Clause 46 - Future Fund Board must not trigger the takeover provisions of
the Corporations Act 2001
187. Clause 46 aims to minimise market distortion and eliminate the
potential for conflicts of interest for the Government as a market
regulator. It would provide that the Future Fund Board is prohibited
from triggering the takeover provisions under section 606 of the
Corporations Act.
188. Section 606 of the Corporations Act essentially prohibits acquisitions
of relevant interests in the voting shares of a listed company, or
unlisted company with more than 50 shareholders, if a person's voting
power increases from a figure at or below 20 per cent to a figure above
20 per cent (or from a figure above 20 per cent but below 90 per cent to
a higher figure) - unless the shares are acquired in one of the
circumstances set out at section 611 of that Act.
189. It is the Government's intention that the takeover threshold be
adhered to quite strictly in relation to listed companies and unlisted
companies with more than 50 shareholders. Therefore, subclause 46(1)
would provide that the exceptions under section 611 of the Corporations
Act (that is, exceptions to the prohibition in section 606) do not apply
in relation to acquisitions by the Future Fund Board if the acquisition
is the result of the performance by the Future Fund Board of its Future
Drought Fund investment functions.
190. Subclause 46(2) would provide that if for some reason the Future Fund
Board has not complied with section 606 of the Corporations Act (as it
is applied to the Future Fund Board under subclause 46(1)) the relevant
transactions would still be valid. The aim of this provision is to
ensure third parties are not affected adversely by any non-compliance of
the Future Fund Board.
191. The note at the end of this clause would assist the reader by
referring to section 39 of the Future Fund Act, which sets out the
application of the Corporations Act to the Future Fund Board.
Clause 47 - Borrowing
192. Clause 47 would prohibit the Future Fund Board from borrowing money,
except for short-term borrowing associated with the settlement of
transactions, or in other circumstances prescribed in the rules.
193. The overall aim of this provision is to ensure that the Future Fund
Board is able to operate efficiently without exposing the Budget to
undue risk.
194. Subclause 47(3) would provide that the rules may specify circumstances
in which it is appropriate for the Future Fund Board to be able to
borrow. The rules could also be used to clarify any uncertainty on
whether a particular activity constitutes borrowing. While it is not
anticipated that the Future Fund Board will have a need to borrow, this
provision allows for unforeseen events or changes in the investment
environment without the need to amend the primary legislation. The power
to make rules would be provided for in clause 66 of the Bill.
Clause 48 - Future Drought Fund investment policies
195. Clause 48 would require the Future Fund Board to formulate, publish
and comply with a number of policies on its investment activities. The
aim of this provision is to ensure rigour and transparency around how
the Future Fund Board performs its investment function in relation to
the Future Drought Fund, including risk management, performance
assessment and benchmarks.
196. Subclauses 48(1) and 48(7) require the Future Fund Board to formulate
and comply with policies and any additional matters specified in the
rules. A note at the end of subclause 48(1) would remind the reader
that, under subsection 33(3) of the Acts Interpretation Act, the Future
Fund Board is able to repeal, rescind, revoke, amend, or vary any such
policies.
197. Subclause 48(2) would provide that the policies that the Future Fund
Board develops must be consistent with the Future Drought Fund
Investment Mandate.
198. Subclauses 48(3) and 48(4) would require the Future Fund Board to
publish such policies on the internet.
199. Subclauses 48(5) and 48(6) would require the Future Fund Board to
conduct reviews of these policies periodically, and when the responsible
Ministers change the Future Drought Fund Investment Mandate. It is not
expected that the results of the reviews would be published. However, if
a review resulted in any changes to policies, it is intended that the
updated policies would be published on the internet.
200. Subclause 48(8) would provide that if the Future Fund Board enters
into a transaction which is not consistent with a policy that it has
published under this section, the transaction would still be valid. This
would ensure that third parties would not be affected by a failure of
the Future Fund Board to comply with policies formulated under
subclause 48(1). However, subclause 48(7) would require the Future Fund
Board to take all reasonable steps to comply with the policies it
develops under subclause 48(1).
201. Subclause 48(9) would be included to assist readers, as a policy
formulated under subclause 48(1) would not be a legislative instrument
within the meaning of subsection 8(1) of the Legislation Act. Such
policies would be administrative in character, and would not determine
or alter the content of the law. Rather they would be administrative
policies that the Future Fund Board would be required to formulate and
comply with, to ensure rigour and transparency around how the Board
performs its investment function.
Clause 49 - Derivatives
202. Derivatives are widely used by financial market participants as a tool
for risk management.
203. Clause 49 would provide for the Future Fund Board to make use of
derivatives for certain purposes. This includes as a risk management
tool and to achieve indirect exposure to assets that it could not
otherwise achieve. The Future Fund Board could also use derivatives to
reduce the transaction cost of achieving required exposures.
204. Subclause 49(1) would enable the Future Fund Board to acquire a
derivative for specified purposes, but would make it clear that the
Board cannot acquire or use derivatives for the purposes of speculation
or leverage.
205. Subclause 49(2) would provide that the acquisition of derivatives
under this clause cannot be inconsistent with the requirement under
section 48 of the Bill for the Future Fund Board to formulate a policy
on its investment strategy and take all reasonable steps to comply with
that policy.
206. Subclauses 49(3) and 49(4) would provide that derivatives would be
held in the name of the Future Fund Board and be taken to be an
investment of the Future Drought Fund.
207. Similar to other investments, derivatives could be realised by the
Future Fund Board under subclause 40(3) of the Bill.
Clause 50 - Additional financial assets
208. Clause 50 would provide that if the Future Fund Board becomes a holder
of another financial asset (for example through a capital distribution)
that asset would become an investment of the Future Drought Fund and
would therefore be subject to all the restrictions and requirements for
investments of the Future Drought Fund.
Clause 51 - Securities lending arrangements
209. Clause 51 would provide that the Future Fund Board is able to enter
into securities lending arrangements. Lending of securities is
commonplace among institutional investors. It could also take collateral
as part of a securities lending arrangement. Any collateral it takes
would either be credited to the Future Drought Fund Special Account or
become an investment of the Future Drought Fund.
Clause 52 - Investment managers
210. Clause 52 would deal with the use of investment managers by the Future
Fund Board for purposes in connection with the Future Drought Fund.
211. Subclause 52(1) would enable the Future Fund Board to hire one or more
investment managers. An 'investment manager' would be defined broadly in
clause 5 of the Bill to include custodians, transition managers and
other investment managers. However, the Agency would be excluded from
this definition as it is generally expected that investment activities,
such as acquiring derivatives or investing money, will be outsourced.
212. Unless otherwise approved by the responsible Ministers, the Future
Fund Board would be required to use investment managers to invest money
in financial assets, acquire derivatives, and enter into securities
lending arrangements or to realise financial assets.
213. Subclause 52(2) would provide that the responsible Ministers may
provide approval in writing for certain methods of investment, other
than through investment managers, should it be prudent and cost
effective to do so.
214. Subclauses 52(3) and 52(4) would require the Future Fund Board to
ensure that investment managers operate within this Bill and report on
the state of investments of the Future Drought Fund to the Future Fund
Board and the Agency. It would be expected that such obligations would
be set out in the contractual arrangements between the Future Fund Board
and the investment manager.
Clause 53 - Refund of franking credits
215. Under subsection 84B(1) of the Future Fund Act, the Future Fund Board
is deemed to be an exempt institution that is eligible for a refund of
franking credits under the ITAA. As the Future Fund Board is exempt from
income tax, it may have an investment bias towards assets whose return
had not previously been subject to income tax (such as debt instruments
or unfranked dividends). Refunding franking credits removes any
potential bias against franked dividends.
216. Clause 53 would deal with the refund of franking credits and provide
that if the Future Fund Board receives a refund of a tax offset under
the ITAA and the tax offset is attributable to the investment of the
Future Drought Fund, any refund received is credited to the Future
Drought Fund Special Account. Note 1 would refer the reader to section
84B of the Future Fund Act. Note 2 would refer the reader to Division 63
of the ITAA, which deals with refunds of tax offsets.
Clause 54 - Realisation of non-financial assets
217. Clause 54 would require the Future Fund Board to realise an asset that
ceases to be a financial asset or any asset acquired by the Board (as an
investment of the Future Drought Fund) that is not a financial asset.
This could include circumstances where the Future Fund Board holds an
asset which was mistakenly acquired by the Board, or given to the Board,
or which ceases to be a financial asset.
218. The clause would require a non-financial asset to be treated as a
financial asset up to the time it is realised. Subclause 54(1) would
ensure that the asset is considered an investment of the Future Drought
Fund and that relevant provisions relating to investments of the Future
Drought Fund apply to that asset for the time it is held by the Future
Fund Board.
Clause 55 - Additional function of the Future Fund Board
219. Clause 55 would provide that the functions of the Future Fund Board
include the function of investing amounts in accordance with this Bill.
Part 5 - Reporting obligations etc.
Clause 56 - Simplified outline of this Part
220. This clause would provide a high-level introduction to the provisions
in this Part, to aid readability. The outline is not intended to be
comprehensive and should not be relied on in place of the substantive
provisions of this Part.
Clause 57 - Finance Minister may require Future Fund Board to prepare
reports or give information
221. This clause would provide that the Finance Minister may require, in
writing, that the Future Fund Board prepare a report or a document on
one or more specified matters relating to the performance of the Future
Fund Board's functions under this Bill. This report or information would
be required to be provided as outlined in the Finance Minister's
request. Such a report could be requested, for example, in order to
satisfy the Government that the Future Fund Board's management of the
Future Drought Fund complies with legislation and the Fund's investment
mandate.
222. Subclause 57(4) would be included to assist readers, as a report
prepared under subclause 57(1) would not be a legislative instrument
within the meaning of subsection 8(1) of the Legislation Act. Such
reports would be administrative in character, and would not determine or
alter the content of the law.
Clause 58 - Keeping the responsible Ministers informed etc.
223. Clause 58 would require the Future Fund Board to notify the
responsible Ministers of any information that the responsible Ministers
should know, including by providing any written information to the
Finance Minister. This could include significant investment results,
concerns regarding fraud and any non-compliance with the Future Fund
Board's policy on conflicts of interest.
Clause 59 - Finance Minister may give reports to other Ministers etc.
224. Clause 59 would allow the Finance Minister to give reports, documents
and other information to another Minister. This includes reports and
documents under subclauses 57(1) or 57(2) and any other information
obtained by the Finance Minister under the Bill. It is intended that the
Finance Minister will use this provision to inform the Agriculture
Minister about matters relating to the Future Drought Fund, given the
responsibility of the Agriculture Minister for making payments from the
Agriculture Future Drought Resilience Special Account on behalf of the
Commonwealth.
225. It is envisaged that the Agriculture Minister would also cause
information about a payment or grant under clause 21 to be published in
the Annual Report for the Agriculture Department. This could include
information such as the amount of the payment or grant, and the person
or body to whom the payment was made or grant paid, and any other
relevant information.
Part 6 - Miscellaneous
Clause 60 - Simplified outline of this Part
226. This clause would provide a high-level introduction to the provisions
in this Part, to aid readability. The outline is not intended to be
comprehensive and should not be relied on in place of the substantive
provisions of this Part.
Clause 61 - Delegation by the Finance Minister
227. This clause would enable the Finance Minister to delegate certain of
the Finance Minister's functions and powers under this Bill.
228. Under subclause 61(1), the Finance Minister would be empowered to, in
writing, delegate his or her functions or powers under clauses 14 and 34
of the Bill to the Secretary of the Finance Department or to an SES
employee (or acting SES employee) in that Department. The Minister would
not be required to do so.
229. The Finance Minister's powers under clauses 14 and 34 would relate to
the determination of a specified amount to be credited to the Future
Drought Fund Special Account (in the case of clause 14) or a direction
that a specified amount is to be transferred from the Future Drought
Fund Special Account to the Agriculture Future Drought Resilience
Special Account (in the case of clause 34). Delegation of these
functions to the Secretary of, or SES official in, the Finance
Department would facilitate the efficient administration of these
matters.
230. Subclause 61(2) would allow the Finance Minister to delegate, in
writing, any or all of the Finance Minister's powers under clause 19 of
the Bill to the Secretary of the Finance Department; or to an SES
employee (or acting SES employee) in that Department; or to the Chair of
the Future Fund; or an SES employee (or an acting SES employee) of the
Agency. Clause 19 would relate to the transfer of funds from the Future
Drought Fund Special Account to the Future Fund Special Account.
231. The notes would assist the reader by referring to the relevant section
of the Acts Interpretation Act in relation to the expressions 'SES
employee' and 'acting SES employee'.
232. It is envisaged that the delegate would be accountable to the Finance
Minister for his or her actions under any delegation. Subclause 61(3)
would reinforce this intention by requiring the delegate to comply with
any direction of the Finance Minister in exercising powers under a
delegation.
Clause 62 - Delegation by the Treasurer
233. Under subclause 62(1), the Treasurer would be empowered to, in
writing, delegate his or her powers under clause 14 of the Bill to the
Secretary of the Treasury Department or an SES employee (or acting SES
employee) in that Department. The Treasurer would not be required to do
so.
234. Clause 14 of the Bill would relate to the determination of a specified
amount to be credited to the Future Drought Fund Special Account.
Delegation of this power to the Secretary of, or SES official in, the
Treasury would enable the efficient administration of these matters.
235. The note would assist the reader by referring to the relevant section
of the Acts Interpretation Act in relation to the expressions 'SES
employee' and 'acting SES employee'.
236. It is envisaged that the delegate would be accountable to the
Treasurer for his or her actions under any delegation. Subclause 62(2)
would reinforce this intention by requiring the delegate to comply with
any direction of the Treasurer in exercising powers under a delegation.
Clause 63 - Delegation by the Agriculture Minister
237. Under subclause 63(1) the Agriculture Minister would be empowered to,
in writing, delegate his or her powers under Division 2 of Part 3 to the
Secretary of the Agriculture Department, an SES employee (or acting SES
employee) in that Department (so long as that employee possesses
expertise appropriate to the delegated power), or another official of a
Commonwealth entity. This broad delegation power is required to enable
grants made under clause 21 to be administered by Commonwealth officials
employed in the Australian Government Community Grants Hub, managed by
the Commonwealth Department of Social Services.
238. The note would assist the reader by referring to the relevant section
of the Acts Interpretation Act in relation to the expressions 'SES
employee' and 'acting SES employee'.
239. Division 2 of Part 3 of the Bill deals with making arrangements or
grants of financial assistance in relation to drought resilience.
Delegation of these functions to the Secretary of, or SES official in,
the Agriculture Department, or a Commonwealth official employed in the
Australian Government Community Grants Hub, would enable the efficient
administration of these matters.
240. It is envisaged that the delegate would be accountable to the
Agriculture Minister for his or her actions under any delegation.
Subclause 63(2) would reinforce this intention by requiring the delegate
to comply with any direction of the Agriculture Minister in exercising
powers under a delegation.
Clause 64 - Transitional - receipts relating to the Building Australia Fund
241. This transitional clause would provide that any amount received by the
Future Fund Board that relates to the BAF would be credited to the
Future Drought Fund Special Account. This clause would operate after the
closure of the BAF, which takes effect with the commencement of this
Bill. The amounts that may still be received by the Future Fund Board
that relate to the BAF could include accrued interest, fee refunds, or
withholding tax refunds.
Clause 65 - Review of operation of Act
242. Subclause 65(1) would require the responsible Ministers to cause a
review of the operation of this Bill to be undertaken before the tenth
anniversary of the commencement of this clause. This review mechanism is
intended to provide the opportunity to consider whether the Bill is
providing the outcomes envisaged. It is envisaged that this 10-year
review would be used to consider the appropriateness of continuing to
provide annual transfers of $100 million from the Future Drought Fund to
the Agriculture Future Drought Resilience Special Account. Over 10
years, the balance of the Fund is projected to grow to $5 billion, which
would, potentially, support a higher annual disbursement.
243. Subclause 65(2) would require the responsible Ministers to table, in
both Houses of the Parliament, a copy of the terms of reference for the
review as well as a report of the review. This must occur within 15
sitting days (for each House of the Parliament) of the tenth anniversary
of the commencement of clause 65.
244. Under subclause 65(3), the responsible Ministers must publish on the
internet both the terms of reference for the review as well as a report
of the review. This must occur as soon as practicable after the tenth
anniversary of the commencement of clause 65.
Clause 66 - Rules
245. Clause 66 would provide that the Finance Minister may, by legislative
instrument, make rules covering matters required to be prescribed in
this Bill, or matters that it would be necessary or convenient to
prescribe for the purposes of this Bill.
246. Enabling the making of rules rather than regulations would accord with
the Office of Parliamentary Counsel's Drafting Direction No. 3.8 -
Subordinate Legislation. Paragraph 2 of that Drafting Direction states
that "OPC's starting point is that subordinate instruments should be
made in the form of legislative instruments (as distinct from
regulations) unless there is good reason not to do so".
247. Paragraph 3 of the Drafting Direction states that matters such as
compliance and enforcement, the imposition of taxes, setting amounts to
be appropriated, and amendments to the text of an Act, should be
included in regulations unless there is a strong justification
otherwise. The Bill does not intend to enable the rules to provide for
any of the types of matters listed.
248. In addition, clause 66 of the Bill would clarify that the rules made
under the Bill would be a legislative instrument for the purposes of the
Legislation Act. Pursuant to sections 38 and 39 of that Act, all
legislative instruments and their explanatory statements must be tabled
in both Houses of the Parliament within 6 sitting days of the date of
registration of the instrument on the Federal Register of Legislation.
Once tabled, the rules would be subject to the same level of
Parliamentary scrutiny as regulations (including consideration by the
Senate Standing Committee on Regulations and Ordinances), and a motion
to disallow the rules may be moved in either House of the Parliament
within 15 sitting days of the date the rules are tabled (see section 42
of the Legislation Act).
249. Subclause 66(2) would be a declaratory clause, included for the
avoidance of doubt.
-----------------------
[1] UN Committee on Economic Social and Cultural Rights, General Comment No
12 (1999), paragraphs 8 and 13
[2] UN Committee on Economic Social and Cultural Rights, General Comment No
15, paragraph 3
[3] Ibid, paragraph 7
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