Australian Business Securitisation Fund Bill 2019 [2019] AUSStaCSBSD 22 (28 March 2019)

• Australian Business Securitisation Fund Bill 2019
• Significant matters in delegated legislation20

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Australian Business Securitisation Fund Bill 2019

Purpose	This bill seeks to establish the Australian Business Securitisation Fund
Portfolio	Treasury
Introduced	House of Representatives on 13 February 2019

Significant matters in delegated legislation^[20]

1.23 The bill seeks to establish the Australian Business Securitisation Fund (the fund) which is intended to provide access to debt finance for small to medium businesses. Clause 12 provides that the minister may, on behalf of the Commonwealth, invest amounts standing to the credit of the fund in any authorised debt security and clause 13 provides that the minister may, by legislative instrument, give directions about the exercise of those powers. The explanatory memorandum states that the fund will be credited with $2 billion between 1 July 2019 and 1 July 2023. ^[21]

1.24 The bill sets out the type of debt securities^[22] that the minister can invest in, however, it also allows the rules to prescribe other requirements or restrictions that the debt security must comply with and allows the rules to modify the amount of credit to which the debt security relates. In particular, while the bill provides that authorised debt securities are limited to securities where the underlying credit provided to each business is less than $5 million, the rules may prescribe an amount that is greater or lesser than that amount. The explanatory memorandum does not explain why it is necessary to allow the rules to modify this limit in any way. Instead, the explanatory memorandum simply states that the bill 'sets the outer limits on the types of debt securities the Minister can invest in' but the rules 'have the flexibility to prescribe other limitations as required depending on how the market develops'.^[23]

1.25 In addition, the minister may make directions under clause 13 as to how the powers under clause 12 are to be exercised. The bill does not otherwise provide any rules or guidance as to how the powers under clause 12 are to be exercised and there is no requirement for the minister to give such directions. Directions given by the minister will be legislative instruments but will not be subject to disallowance or sunsetting.^[24] This is because the directions will be covered by an exemption under the Legislation (Exemptions and Other Matters) Regulation 2015.^[25] The explanatory memorandum acknowledges that the directions made under clause 13 would not be subject to disallowance.^[26] However, it does not explain why this is considered appropriate.

1.26 The committee's consistent view is that significant matters, such as the rules or guidance relating to the exercise of a power to invest significant amounts of Commonwealth money, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. Where significant matters are left to non-disallowable legislative instruments, the committee would also expect a sound justification for this approach to be included in the explanatory materials.

1.27 The committee notes its scrutiny concerns regarding the inclusion of significant matters in delegated legislation (including in a non-disallowable legislative instrument). The committee considers that the explanatory materials do not adequately address these concerns and draws this matter to the attention of the Senate.

1.28 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.

1.1

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[20] Clauses 12 and 13. The committee draws senators' attention to these provisions pursuant to Senate Standing Orders 24(1)(a)(iv) and (v).

[21] The explanatory memorandum states that the fund will be credited with $2 billion between 1 July 2019 and 1 July 2023, p. 5.

[22] See the definition of 'authorised debt security' in subclause 12(4).

[23] Explanatory memorandum, pp. 9-10.

[24] Subclause 13(1).

[25] See section 9, item 2, and section 11, item 3 of the Legislation (Exemptions and Other Matters) Regulation 2015.

[26] Explanatory memorandum, p. 11.