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Reserve Bank Amendment (Australian Reconstruction and Development Board) Bill 2019

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2016-2017-2018-2019

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

RESERVE BANK AMENDMENT

(AUSTRALIAN RECONSTRUCTION AND DEVELOPMENT BOARD) BILL 2019

 

EXPLANATORY MEMORANDUM

 

 

Circulated by the authority of Hon Bob Katter MP

 

 

 

 

 

 

 

 

RESERVE BANK AMENDMENT

(AUSTRALIAN RECONSTRUCTION AND DEVELOPMENT BOARD) BILL 2019

 

OUTLINE

This Bill establishes an "Australian Reconstruction and Development Board" (ARDB), with the capacity to reconstruct debilitating financial arrangements, and to provide suitably tailored funds and capital arrangements that enable the sustainability and development of at-risk Australian agriculture and its associated industries and infrastructures.

The Reserve Bank of Australia already has the necessary regulatory framework, powers and relevant duties legislatively assigned to be able to constitute The Australian Reconstruction and Development Board (ARDB) as a third Board within the Reserve Bank of Australia.

Australia has developed a highly-regarded capability to provide it’s own foods and to trade surplus produce for the sustenance of others and the prosperity of the Australian nation. This important national capability has been diminished by recent events including, inter alia, a combination of adverse conditions originating beyond the farm gate which have reduced farm incomes and imposed great strain upon production systems.

Rural Australia is struggling under an insurmountable debt burden, characterised by low farm income and lending practices of financial institutions in deregulated financial markets. In 1980, debt in Gross Value Farm Production was at 32% and this has escalated to historically high levels of debt, reaching 135.4% in 2012. With escalating debts, many farmers and producers are facing foreclosures, and with forced sales widening loan-to-value ratios, there is a risk of ‘fire sales’, that could precipitate a raging financial bushfire that may not be contained to rural and regional Australia.

In such circumstances of uncertainty and risk to nationally-important agricultural and associated industries, reconstruction is critical to re-establish a sound financial basis, and development funds to maintain and sustainably develop capabilities.

The Australian Reconstruction and Development Board (ARDB) responsibilities include the ability to facilitate, and when necessary manage, rural adjustment and financial reconstruction activities. The Australian Reconstruction and Development Board (ARDB) is also able to tailor funding and financial arrangements to meet identified needs of nationally-important industries operating in particularly uncertain or risky environments.

The Australian Reconstruction and Development Board (ARDB) will also play a vital role in researching and monitoring industries to provide advance warning of emerging problems and to initiate reconstruction, development or other activities as deemed necessary.

The Australian Reconstruction and Development Board (ARDB) will provide a means of identifying and resolving serious financial imbalances, sectoral stresses and development shortfalls that, if left unaddressed, might impair the prosperity and welfare of the people of Australia, the maintenance of full employment or the stability of the currency of Australia.

Such direct activities complement the existing monetary and general policy activities of the Board and the regulatory activities of the Payments System Board through Australian Prudential Regulation Authority (APRA).

Specifically, Australian Reconstruction and Development Board (ARDB) activities related to agriculture and associated industries and infrastructures will help develop:

·          the resilience, capabilities and ongoing financial viability of Australia’s food and natural fibre systems;  

·          a profitable farming sector exercising good stewardship of the resources associated with production;  

·          effective ways to mitigate the impacts of adverse events, particularly those associated with natural disasters, market failures and inadequate commercial financial arrangements; and  

·          the capability of agriculture to contribute more fully, responsibly and reliably to the economic prosperity and welfare of the people of Australia and the peoples of other nations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL IMPACT STATEMENT

There is no financial impact associated with the Bill.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT ON COMPATIBILITY WITH HUMAN RIGHTS

The Statement of Compatibility with Human Rights appears at the end of this Explanatory Memorandum.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES ON CLAUSES

 

Part 1 - Preliminary

Clause 1 - Short Title

This is a formal provision specifying the short title.

Clause 2 - Commencement

(a) 28th day after this Act receives the Royal Assent; and

(b) the day the Consolidated Revenue Fund is appropriated under another Act for the purposes of the Australian Reconstruction and Development Board.

This is to ensure time to appoint members of the Australian Reconstruction and Development Board and take any other necessary steps to implement the Australian Reconstruction and Development Board.

Clause 3 - Schedule(s)

This Bill provides that each Act, and each set of regulations, that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has the effect according to its terms.

 

Schedule 1 -

Amendments to Reserve Bank Act 1959

Item 1

This item adds a new section 5 (1) of the Reserve Bank Act 1959 , providing a definition and interpretation of a development task. This specifies that a development task means the task of developing and offering funding arrangements to contribute to the development of Australian agriculture, associated industries and infrastructure.

Item 2

This item adds a new section 5 (1) of the Reserve Bank Act 1959 , providing a definition and interpretation of a facilitating task. This specifies that a facilitating task means the task of researching, reporting on and helping to develop, in a timely way, the resilience, capabilities and ongoing financial viability of;

·          Australia’s food and natural fibre systems; and

·          any industries or sectors in need of reconstruction or development including industries or sectors in systems relating to Australia’s food and fibre systems that the Australian Reconstruction and Development Board has identified as being at risk.

Item 3

This item adds a new section 5 (1) of the Reserve Bank Act 1959 , providing a definition and interpretation of a reconstruction task. This specifies that a reconstruction task means addressing the market, organisational or other failures or events that have now resulted in debilitating financial arrangements in Australian agriculture or associated industries.

Item 4

This item adds a new section 5 (1) of the Reserve Bank Act 1959 , providing a definition and interpretation of a rural reconstruction and development policy. This specifies that a rural reconstruction and development policy means policy in relation to;

·          the reconstruction task; and

·          the development task; and

·          the facilitative task.

Item 5

This item adds a new section to section 7A (2) of the Reserve Bank Act 1959, which is concerned with special provisions relating to how the Commonwealth Authorities and Companies Act 1997 applies to the Bank. The purpose of this amendment is to ensure that members of the Australian Reconstruction and Development Board are treated similarly to the Payments System Board, and adapts the Reserve Bank Act 1959 to establish 3 Boards.

This will also ensure that members of the Australian Reconstruction and Development Board meet certain obligations under the Commonwealth Authorities and Companies Act 1997.

Item 6

This item adds a new section to section 7A (2) of the Reserve Bank Act 1959, which is concerned with special provisions relating to how the Commonwealth Authorities and Companies Act 1997 applies to the Bank. The purpose of this amendment is to ensure that members of the Australian Reconstruction and Development Board are treated similarly to the Payments System Board, and adapts the Reserve Bank Act 1959 to establish 3 Boards.

This will also ensure that members of the Australian Reconstruction and Development Board meet certain obligations under the Commonwealth Authorities and Companies Act 1997.

Item 7

This item adds a new section to section 8 of the Reserve Bank Act 1959, which is concerned with special provisions relating to the Bank’s general powers. The amendment will extend the general powers to also acquire, hold, deal with and dispose of property.

Item 8

In section 8A(i) of the Reserve Bank Act 1959 is concerned with the Boards of the Bank. This item omits that the Reserve Bank has “2 Boards” and inserts “3 Boards”. The purpose of this amendment is to include the objective of the Bill to establish a third Board, the Australian Reconstruction and Development Board.

Item 9

Section 8A(1) of the Reserve Bank Act 1959 is concerned with the Boards of the Bank. This item inserts a new section to include the establishment of a third Board, the Australian Reconstruction and Development Board.

Item 10

Section 8A(2) of the Reserve Bank Act 1959 is concerned with the Boards of the Bank. This item currently specifies that the Reserve Bank Board is responsible for the Bank’s monetary and banking policy and the Bank’s policy on all other matters except for its payments system policy. The purpose of this amendment is to ensure that the Reserve Bank Board is not responsible for the rural and reconstruction policy.

Item 11

Section 8A(2) of the Reserve Bank Act 1959 is concerned with the Boards of the Bank. This amendment adds a new section 8A(3) to include that the Australian Reconstruction and Development Board is responsible for the Bank’s rural reconstruction and development policy. The amendment refers to a later amendment (Section 10BB) which provides further details on the functions of the Australian Reconstruction and Development Board.

Item 12

Section 8A(5) of the Reserve Bank Act 1959 is concerned with the Boards of the Bank. This item omits that the Reserve Bank has “2 Boards” and inserts “3 Boards”. The purpose of this amendment is to ensure that the objective of the Bill is achieved; to establish a third Board, the Australian Reconstruction and Development Board.

Item 13

Section 8A(5) of the Reserve Bank Act 1959 is concerned with the functions of the Reserve Bank Board. This item currently specifies that the Reserve Bank Board has the power to determine the policy of the Bank in relation to any matter, other than its payments system policy. The purpose of this amendment to ensure that the Reserve Bank Board is not responsible for the rural and reconstruction policy.  

Item 14

Section 10B of the Reserve Bank Act 1959 is concerned with the functions of the Payments System Board. This item adds new section 10BA and 10BB in Division 2 of Part II of the Bill.

This new section 10BA provides for the establishment for the Australian Reconstruction and Development Board of the Reserve Bank.

This new section 10BB provides for the functions of the Australian Reconstruction and Development Board. This includes that the Australian Reconstruction and Development Board has the power to determine the Bank’s rural reconstruction and development policy. The Australian Reconstruction and Development Board has the power to take whatever necessary action including applying capital of the Bank (referred to in section 28 of the Reserve Bank Act 1959) as appropriate, to guarantee that the Bank gives effect to the policy it determines. Additionally it is the Australian Reconstruction and Development Board duty to ensure, within its powers that;

·          the Bank’s rural and reconstruction and development policy is directed to the greatest advantage of the people and industries of Australia; and

·          the powers of the Bank are exercised in a way that, in the Board’s opinion, will best;

o    fulfil the reconstruction task, the development task and the facilitative task which together comprise the Bank’s rural reconstruction and development policy; and

o    in relation to the reconstruction task—ensure that debilitating financial arrangements that arise because of adverse circumstances, poor design, inadequate initial evaluation or other conditions that render loan arrangements no longer tenable are dealt with effectively, reasonably and fairly; and

o    in relation to the development task—ensure that investment and financial arrangements reasonably and realistically recognise the nature of likely yields, revenues, costs, uncertainties and risks over time and circumstances and the impact of such things on the ability of an obligated party to meet offered conditions; and

o    in relation to the facilitative task—ensure that appropriate means are used to assist sound investment and prudent financial decisions; and

o    ensure that due regard is paid to various interests and that persons being assisted by the reconstruction task assume responsibilities that are fair and reasonable having regard to past efforts but not so burdensome as to threaten the person’s ongoing enterprise in a reconstructed form or industry exit on reasonable and accepted terms.

Item 15

Section 10C of the Reserve Bank Act 1959 is concerned with resolving the differences between the Boards. This item adds a new section at the end of section 10C.

This new section is to address the possibility of inconsistencies of a policy determined by the  Reserve Bank Board and a policy determined by the Australian Reconstruction and Development Board. If this difference arises, the Reserve Bank Policy prevails and the Australian Reconstruction and Development Board policy has effect as if it were modified to remove the inconsistency.

The section includes that it is the Governor’s responsibility to determine and resolve if there is a disagreement between the Reserve Bank Board and the Australian Reconstruction and Development Board as to whether;

·          there are inconsistencies of policies (as outlined above) ; or

·          the extent of the inconsistencies; or

·          the effect of a policy of the Australian Reconstruction and Development Board due to the Australian Reconstruction and Development Board modifying a policy to remove an inconsistency.

The section also includes that if there is a disagreement between the Reserve Bank Board and the Australian Reconstruction and Development Board as to which of the Boards is responsible for determining the Bank’s policy on a matter, the disagreement is to be resolved as determined by the Treasurer.

Item 16

Section 11(1) of the Reserve Bank Act 1959 is concerned with the differences of opinion with Government on questions of policy, including that the Government is to be informed of the Bank’s policy. This item adds a new section at the end of section 11(1) to include that it is the responsibility of the Australian Reconstruction and Development Board to inform the Government, of the Bank’s rural reconstruction and development policy.

Item 17

Section 11(2) of the Reserve Bank Act 1959 is concerned with the differences of opinion with Government on questions of policy. Section 11(2) includes that in the event of a difference of opinion of policy between the Government and the relevant Boards about whether a policy determined by the relevant Board is directed to the greatest advantage of the people of Australia, the Treasurer and the relevant Board shall endeavour to reach an agreement. This item adds a new section which provides that if the policy affects the rural reconstruction and development policies then the industries of Australia, are also to be considered.

Item 18

Section 12(1) of the Reserve Bank Act 1959 is concerned with the Management of the Bank. This technical amendment omits “and 10B” and substitutes “and 10B and 10BB” to be included. This amendment will ensure that the purpose of the Bill to establish the Australian Reconstruction and Development Board and its related functions, are managed by the Governor.

Item 19

At the end of Part IIIA, this item adds new section Part IIIB - The Australian Reconstruction and Development Board.

Division 1 - The members of the Australian Reconstruction and Development Board

Section 25NA - Membership of the Australian Reconstruction and Development Board

New section 25NA (1) provides that the members of the Australian Reconstruction and Development Board consist of the following members;

·          the Governor;

·          one representative of the Bank;

·          7 other members with relevant rural or agricultural experience.

New section 25NA (2) provides that among the 7 members with relevant rural and agricultural experience the following must be included;

·          an economist;

·          an accountant;

·          a banker;

·          a representative of the States and Territories;

·          a farmer.

Section 25NB - Appointment of Members

New section 25NB provides for the appointment of members. It specifies that the representative of the Bank referred to in 25NA is to be appointed by the Governor. The person appointed must be a member of the Reserve Bank Board or a staff member of the Reserve Bank Service. This appointment is not for a specified time; however their appointment can be terminated at any time.

Each other member referred to in 25NA(2) is to be appointed by the Treasurer for a period specified in the instrument of appointment, this period cannot exceed 5 years. All other appointments are to be in writing. All appointments under this section are to be on a part-time basis.

It is also noted that the Governor is an ex-officio member of the Australian Reconstruction and Development Board, and therefore is not separately appointed to the Board.

Section 25NC - Chair of the Australian Reconstruction and Development Board

New section 25NC provides that the Chair is to be appointed by the members of the Australian Reconstruction and Development Board.

Section 25ND - Deputy Chair of the Australian Reconstruction and Development Board

New section 25ND provides that the Deputy Chair of the Australian Reconstruction and Development Board is chosen by the members of the Australian Reconstruction and Development Board; the Deputy Chair must be either the Governor or the representative of the Bank as per section 25NA.

The Deputy Chair is to act as the Chair during any period where the Chair is vacant or the Chair is absent from Australia or is for any reason unable to perform the duties of the Chair of the Australian Reconstruction and Development Board.

The Deputy Chair has, when acting as the Chair, all the powers, rights, duties and entitlements of the Chair of the Australian Reconstruction and Development Board.

Section 25NE - Declaration by Members

New section 25NE provides provisions for each member of the Australian Reconstruction and Development Board before first starting to act as a member of the Board. This includes making an oath or affirmation of allegiance and making a declaration of secrecy. The member does not have to do this if he or she is a member of the Reserve Bank Board and has previously made an oath or affirmation of allegiance and declaration of secrecy.

The section specifies that the oath or affirmation of allegiance is to be in accordance with the form set out in the Schedule to the Constitution and is to be made before a Justice of the Peace or a Commissioner for taking Affidavits.

It also specifies that the declaration of secrecy is to be in the prescribed form and is to be made before a Justice of the Peace or a Commissioner for taking Affidavits.

Division 2 - Meeting

25NF Meetings

New Section 25NF is in relation to meetings.

The Australian Reconstruction and Development Board are to meet at times and places as determined by the Australian Reconstruction and Development Board or as directed by the Chair. The Chair is to preside over all meetings of the Australian Reconstruction and Development Board. In the case of the Chair’s absence, the Deputy Chair is to preside.

Five members of the Australian Reconstruction and Development Board form a quorum at a meeting of the Australian Reconstruction and Development Board. The section also provides that questions arising from a meeting by the Australian Reconstruction and Development Board are to be decided by a majority of votes of the members present and voting. The member presiding at a meeting of the Australian Reconstruction and Development Board has a deliberative vote and if necessary, a casting vote.

25NG Conduct of Meetings

New Section 25NG is in relation to the conduct of meeting.

The Australian Reconstruction and Development Board may regulate proceedings at its meetings, if it considers it appropriate. However proceedings cannot be inconsistent with the Bill. It is noted that section 33B of the Acts Interpretations Act provides further information about the way in which members may participate in meetings.

25NH Resolutions without meetings

New Section 25NH is in relation to resolutions without meetings.

This section provides that a resolution is taken to have been passed at a meeting of the Australian Reconstruction and Development Board if the Australian Reconstruction and Development Board have determined that resolutions may be passed in accordance with the section and the method of indicating agreement with a resolution passed this section. A resolution is to be passed if;

·          without meeting, a majority of the members indicate agreement with the resolution in accordance agreed to by the Australian Reconstruction and Development Board; and

·          the majority would have to constitute a quorum at the meeting of the Australian Reconstruction and Development Board; and

·          all members were well informed of the proposed resolution, or reasonable efforts were made to inform all members of the proposed resolution.

Division 3 - Other Administrative provisions

25NI Remuneration

New section 25NI relates to remuneration.

The section provides the Remuneration Tribunal determines payment remunerations of members of the Australian Reconstruction and Development Board. If there is no determination of that remuneration, the member is to be paid the remuneration that is prescribed.

It also provides that a member of the Australian Reconstruction and Development Board is to be paid the allowances prescribed. This section is subject to the Remuneration Tribunal Act 1973.

Subsection 7(13) of the Remuneration Tribunal Act 1973 does not apply in relation to the office of member of the Australian Reconstruction and Development Board.

Note:   The effect of this subsection is to require remuneration of a member of the Australian Reconstruction and Development Board that is determined by the Remuneration Tribunal to be paid out of money appropriated by the Parliament by an Act other than the Remuneration Tribunal Act 1973.

Subject to subsection (3), this section has effect subject to the Remuneration Tribunal Act 1973.

25NJ Leave of absence

New section 25NJ relates to leave of absence of members of the Australian Reconstruction and Development Board.

The Australian Reconstruction and Development Board has the ability to grant leave of absence to a member of the Australian Reconstruction and Development Board, on the terms and conditions that it determines.

25NK Resignation

New section 25NK relates to the resignation of the members of Australian Reconstruction and Development Board.

The section provides that if the member and representative of the bank on the Australian Reconstruction and Development Board (paragraph 25NA(b), the member may resign his or her appointment by giving written resignation to the Governor. The section also provides that if the member is one of the 7 members selected for their relevant rural and agriculture experience on the Australian Reconstruction and Development Board (paragraph 25NA(c)), the member may resign his or her appointment by giving written resignation to the Treasurer.

25NL Termination of appointment

New section 25NL provides for the termination of appointment of members of the Australian Reconstruction and Development Board.

The Governor may at any time terminate the member and representative of the bank on the Australian Reconstruction and Development Board (paragraph 25NA(b)). It is also noted that the (ADD) appointment of a member representative of the Bank on the Australian Reconstruction and Development Board (paragraph 25NA(b)) is terminated immediately if he or she ceases to be a member of the Reserve Bank Board or a staff member of the Reserve Bank Service.

The Treasurer may at any time terminate a member who is one of the 7 members selected for their relevant rural and agriculture experience on the Australian Reconstruction and Development Board (paragraph 25NA(C)) for misbehaviour or if the member is unable to perform their duties of office due to mental or physical incapacity.

The Treasurer must at any time terminate a member who is one of the 7 members selected for their relevant rural and agriculture experience on the Australian Reconstruction and Development Board (paragraph 25NA(C)) if;

·          the member becomes permanently incapable of performing his or her duties; or

·          the member;

o    becomes bankrupt; or

o    applies to take the benefit of any law for relief of bankruptcy or insolvent debtors; or

o    compounds with his or her creditors; or

o    makes an assignment of his or her remuneration for the benefit of his or her creditors; or

·          the member is absent (except on leave of absence granted by the Australian Reconstruction and Development Board) from;

o    2 or more consecutive meetings of the Australian Reconstruction and Development Board; or

o    3 or more meetings of the Australian Reconstruction and Development Board in any period of 12 months; or

o    fails to comply with the members obligations under section 25F or 25J of the Commonwealth Authorities and Companies Act 1997.

25NM Australian Reconstruction and Development Board’s report to Treasurer

New section 25NM relates to the Australian Reconstruction and Development Board report to the Treasurer.

It is provided that the Australian Reconstruction and Development Board is to provide as the Treasurer with a report that;

·           describes the actions that Bank has taken during the financial year on 30 June, which give effect to the Bank’s rural and reconstruction and development policy; and

·          Describes the impact of those actions; and

·          Identifies and explains any changes made to the Bank’s rural and reconstruction and development policy in the financial year ending June 30.

This report is to be provided as soon as practicable after June 30 in each year. Section 34C of the Acts Interpretation Act 1901 does not apply to this report.

Item 20

Section 28 of the Reserve Bank Act 1959 is concerned with central banking and capital for the Bank. This amendment also includes that the capital for the Bank should also be for the purposes of the Bank’s rural and reconstruction and development policy.

Item 21

Section 79A(1) of the Reserve Bank Act 1959 relates to secrecy provisions. The section is amended to ensure that the secrecy provisions apply to a member of the Australian Reconstruction and Development Board (now included as a definition of an officer).

Item 22

Section 79A(6) of the Reserve Bank Act 1959 also relates to secrecy provisions. This section is amended to ensure that the secrecy provisions apply to a member of the Australian Reconstruction and Development Board and does not prohibit a person from disclosing protected information or producing protected documents.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Compatibility with Human Rights

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

 

RESERVE BANK AMENDMENT

(AUSTRALIAN RECONSTRUCTION AND DEVELOPMENT BOARD) BILL 2019

 

This Bill 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 Bill

This Bill establishes an "Australian Reconstruction and Development Board" (ARDB), with the capacity to reconstruct debilitating financial arrangements, and to provide suitably tailored funds and capital arrangements that enable the sustainability and development of at-risk Australian agriculture and its associated industries and infrastructures.

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

Conclusion

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

 

Hon Bob Katter MP