Details of the Financial Management and Accountability Amendment (2014 Measures No. 4) Regulation 2014

 

Section 1 - Name of Regulation

 

This section provides that the title of the Regulation is the Financial Management and Accountability Amendment (2014 Measures No. 4) Regulation 2014.

 

Section 2 - Commencement

 

This section provides that the Regulation commences on the day after it is registered on the Federal Register of Legislative Instruments. 

 

Section 3 - Authority

 

This section provides that the Regulation is made under the Financial Management and Accountability Act 1997 (FMA Act).

 

Section 4 - Schedule(s)

 

This section provides that the Financial Management and Accountability Regulations 1997 is amended as set out in Schedule 1 to the Regulation.

 

Schedule 1 - Amendments

 

Item 1 - Part 2 of Schedule 1AB (note)

 

This item repeals the note to Part 2 of Schedule 1AB and adds two items to this Part to establish legislative authority for the Government to provide grants of financial assistance to the states or territories for matters administered by the Department of Agriculture, respectively.

 

New table item 1 establishes legislative authority for the Government to provide grants of financial assistance to the states and territories for the purposes of establishing and funding a scheme by which loans are provided to eligible farm businesses that are experiencing financial pressures as a result of severe drought conditions.

 

The Commonwealth has allocated $280 million to the Drought Concessional Loans Scheme from 2013-14 to 2014-15 for grants of financial assistance to the states and territories.  These grants will be made on conditions imposed under section 32C of the Financial Management and Accountability Act 1997 (terms and conditions for grants).  The conditions imposed on the grants will establish the framework under which the states and territories (or their delivery agencies) will be able to provide loans to eligible farm businesses.

 

The Drought Concessional Loans Scheme will help farm businesses recover from, and prepare for, future droughts and return to commercial viability in the long term. 

 

The key features of the scheme provide that:

*         drought concessional loans will be available to drought-affected farm businesses for debt restructuring, operating expenses and/or drought recovery and preparedness activities;

*         drought concessional loan will have a loan term of five years, with a concessional interest rate period of five years;

*         drought concessional loans will have a variable interest rate of 4 per cent set at the commencement of the scheme.  The interest rate will be revised in accordance with changes to the Farm Finance Concessional Loans Scheme, remaining 0.5 per cent below the Farm Finance rate;

*         interest only payments will be available for the loan term;

*         at the end of the loan term, the farm business must repay or refinance the remaining loan balance; and

*         farm businesses must be able to demonstrate that they have sound prospects for a return to commercial viability to be eligible for a loan.

 

Under this framework, scheme guidelines will be publicly available.  Prospective loan applicants will be able to use these guidelines to apply for a loan.  Individual loan details will not be publicly available; however actual expenditure for the purposes of the grants of financial assistance will be publicly available.

 

It will be the responsibility of the delivery agencies in each jurisdiction to assess and make decisions about individual loan applications in accordance with the scheme guidelines, on a case-by-case basis.  The scheme guidelines outline applicants' rights of appeal, which include an internal review of the decision within the state or territory delivery agency and the option to engage the State or Territory Ombudsman.  

 

The Drought Concessional Loans Scheme was announced by the Prime Minister, the Hon Tony Abbott MP, and the Minister for Agriculture, the Hon Barnaby Joyce MP, on 26 February 2014.

 

 

 

 

Statement of Compatibility with Human Rights

Prepared in accordance with part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Management and Accountability Amendment (2014 Measures No. 4) Regulation 2014

 

This Regulation is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Legislative Instrument

 

The Financial Management and Accountability Act 1997 (the FMA Act) provides a framework of rules for the proper management of public money and public property by Chief Executives and officials of FMA Act agencies.  The FMA Act applies to Commonwealth Departments of State and their staff, parliamentary departments and their staff, and prescribed agencies. 

 

Section 32B of the FMA Act establishes legislative authority for the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Management and Accountability Regulations 1997 (FMA Regulations) and to make, vary and administer arrangements and grants for the purposes of programmes specified in the FMA Regulations.  This is in response to the High Court's decision in Williams v Commonwealth (2012) 288 ALR 410.  Schedule 1AA and Schedule 1AB to the FMA Regulations specify the arrangements, grants and programmes. 

 

The Regulation amends the FMA Regulations to establish legislative authority in Schedule 1AB for the Government to provide grants of financial assistance to the states and territories for the Drought Concessional Loans Scheme which was announced by the Prime Minister and the Minister for Agriculture on 26 February 2014.  Under the Scheme, concessional loans will be provided to eligible farm businesses that are experiencing financial pressures as a result of severe drought conditions.  The Scheme will help farm businesses recover from, and prepare for, droughts and return to commercial viability in the long term.  Drought concessional loans will be available to drought-affected farm businesses for debt restructuring, operating expenses and/or drought recovery and preparedness activities.  The Department of Agriculture will administer this scheme.

 

The item specified in Schedule 1AB is the responsibility of the relevant Minister who have portfolio responsibility for the matter.

 

Human rights implications

 

The Regulation does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This regulation is compatible with human rights as it does not raise any human rights issues.

 

 

Senator the Hon Mathias Cormann

Minister for Finance