Michaelia Cash (WA, Liberal Party, Minister for Women) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the bill and I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

REGIONAL INVESTMENT CORPORATION BILL 2017

During the 2016 election campaign, the government announced it would establish a Regional Investment Corporation to be the single delivery agency for the Commonwealth's farm business concessional loans program, the National Water Infrastructure Loan Facility, as well as any future programs.

This bill delivers on that commitment, establishing the corporation.

We are establishing the corporation because we recognise the enormous contribution that rural and regional communities make to the nation.

We are committed to helping those communities reach their full potential.

Agriculture has always been a key pillar of our economy and has to deal with so many things, such as the vagary of the weather, as it contributes to our national economy. But, while agriculture is a strong part of the economy, it is a volatile industry.

Our farmers deal with a highly variable climate that impacts on their productivity. Farmers face severe droughts that can undermine the best farm-business planning.

Farmers can also experience dramatic fluctuations in commodity prices that impact on revenue and profitability. Farmers live and work with this uncertainty.

Since 2013-14, the Commonwealth has been offering concessional loans to farm businesses to help them through these times of difficulty.

Our efforts have largely focused on managing drought. Concessional loans are an important element of the Commonwealth's drought policy framework introduced by this government to implement our commitments to the intergovernmental agreement on national drought reform.

This drought policy framework encourages on-farm risk management and farm business resilience and provides targeted support when needed to enable businesses to improve their long-term financial position.

The government's drought policy is underpinned by long-term policy commitments around which farmers and associated financial and support industries can plan:

- A 10-year commitment to farm business concessional loans.

- Access to time limited Farm Household Allowance during periods of financial hardship.

- A strengthened Farm Management Deposits Scheme with increased deposit cap of $800,000, restored drought trigger to access funds and the ability to offset farm debt against farm management deposits. We would dearly love all banks to allow this offset, which has been legislated, to be applied to those facilities. Accelerated depreciation for water reticulation, fencing and fodder storage—100 per cent write-off water reticulation, 100 per cent write-off of fencing and a write-off over three years for fodder storage.

- Longer term funding security for the Rural Financial Counselling Service—a vital service for so many farmers who are doing it hard in times of drought.

While building industry resilience to drought has been a key focus for use of concessional loans, more recently loans have been offered to dairy farmers affected by the severe industry disruption of retrospective price cuts made by some major dairy processors.

Concessional loans are also available in 2017-18 to support eligible farmers who have exhausted their 1,095 day eligibility for the farm household allowance.

These concessional loan programs have been delivered through the states.

There is no doubt these loans are successfully providing practical support to the farm businesses that have received them, with over $724 million in loans approved nationally to 1,342 farm businesses as of 30 June 2017.

But the fact is that delivering through the states is unwieldy and there is a lack of consistency in delivery across the country.

Currently, the Commonwealth has to negotiate separately with each state government to change an existing arrangement or roll out a new program to farmers.

Even with the best endeavours, this can involve protracted negotiations over delivery, loan terms and administration costs—delaying the rollout of and farmers' ability to apply for this important government support.

We have also found that loan decisions are not being made consistently across the country.

For example, some states apply a very restrictive approach to assessing loan applications and have a very low rate of loan approvals.

This is unacceptable. The Commonwealth should have more direct control over the delivery of its loans programs. We did not go to so much work to provide access to this facility to see it not rolled out by certain states.

Establishing the corporation will remove the middle man, allowing us to be more responsive in providing loans to farm businesses.

We also will be able to deliver a nationally consistent program focused on the needs of Australian farmers.

Establishing the corporation will be a significant change in the way the Commonwealth works with farmers during times of need.

It is the logical next step in meeting the government's commitment to agriculture, as set out in our landmark Agricultural Competitiveness White Paper, in excess of $4 billion.

The Regional Investment Corporation will have a client focused culture that is receptive to and understands the unique nature of farming.

The farm business loans offered by the corporation will help viable farm businesses return to normal operating conditions.

They will help those businesses take advantage of emerging opportunities at a time when the agriculture sector is performing so well.

They will also boost farm productivity and cash-flow, and provide positive economic and social flow-on effects for regional Australia.

The loans will not be the same as those currently offered through the states. The program will be broader, with loans drawing on constitutional authority that includes the Commonwealth's trade and commerce and external affairs powers.

Existing loans which have been delivered by the state and Northern Territory governments will continue to be managed by those state delivery agencies for the life of the loan.

As well as administering farm business loans, the corporation will administer the government's National Water Infrastructure Loan Facility.

Water and water infrastructure is critical to our future prosperity, particularly for agricultural industries and regional areas of Australia, especially areas such as Central Queensland, Northern New South Wales and Western Australia. We are already seeing the rollout of dam infrastructure in Tasmania. This government is committed to working with the states and territories to identify and build the water infrastructure of the 21st century to secure Australia's water resources.

Through the facility, announced in May 2016, the government has put $2 billion worth of concessional loans on the table for states and territories to draw on to deliver the water infrastructure needed to help our agricultural sector reach its full potential.

The corporation's administration of the loan facility will provide further incentive for states and territories to fast-track the construction of dams and priority water infrastructure projects.

These projects will stimulate investment, economic growth and increased agricultural productivity in rural and regional economies, helping take the people in those areas ahead and giving them a better economic future.

As outlined in our election commitment, the corporation may also deliver other programs in the future. This bill provides for this by allowing for rules to prescribe additional programs to be administered by the corporation. These rules will be subject to legislative oversight and disallowance.

A key consideration in the design of the corporation was ensuring it had the right governance framework, with appropriate independence from government.

The bill establishes the corporation as a corporate Commonwealth entity. It will have an independent board of three to five members to oversee the performance of the corporation.

This will ensure the government can appoint a board with the breadth of skills and experience needed to oversee the Corporation's functions.

The board's skills will cover fields such as agribusiness, banking and finance, financial accounting or auditing, economics, water infrastructure planning and financing, the law and government funding programs or bodies. We are also seeking board members with experience in issues affecting rural industries and communities.

Such expertise will be vital for the corporation's management of financial risk.

It will also allow for the corporation to provide expert advice to the government on water infrastructure projects and issues affecting farm businesses.

There will be two responsible ministers for the entity—the Minister for Agriculture and Water Resources and the Minister for Finance.

The responsible ministers will appoint the board of the corporation and will issue the corporation with an operating mandate.

The operating mandate will be the key vehicle for the government to set out its expectations for the corporation. The board will then be responsible for implementing the mandate.

The bill sets out what can be included in the mandate, such as:

- the objectives to pursue in administering farm business loans and the National Water Infrastructure Loan Facility,

- the government's expectations in relation to the strategies and policies to be followed by the corporation,

- the eligibility criteria for loans, and

- the management of funding and other matters.

The initial mandate will be ready by the time the corporation commences its operations. It will be tabled in parliament, but, as a direction to a corporate Commonwealth entity, it will not be disallowable.

The responsible ministers can also direct on the location of the corporation. This will enable the government to give effect to its decision to locate the corporation in Orange, New South Wales.

Importantly, while responsible ministers can direct on matters listed in the bill, they cannot stray into decisions on individual farm business loans. These are matters for the corporation alone.

The arrangements for the National Water Infrastructure Loan Facility are somewhat different.

In that case, decisions on whether to provide loans to states and territories will continue to be made by the government.

The role of the corporation will be to provide independent expert advice to the government on water infrastructure projects being considered for financial assistance.

Then, on direction from the responsible ministers, the corporation will enter into and administer loan agreements with states and territories.

Bringing this stream of work together with farm business loan administration consolidates loans expertise in one entity in the agriculture portfolio.

It also incorporates the functions into an entity with a governance structure that balances independent, commercial decision-making with appropriate responsiveness to government.

Establishing this corporation reflects the government's priorities for rural and regional communities in Australia. We want to see these communities reach their productive and economic potential.

The corporation will make a significant contribution to building a stronger and more prosperous rural and regional Australia.

It will strengthen farm businesses. The corporation's loans will help farm businesses build and maintain diversity in the markets they supply, and take advantage of new and emerging opportunities across Australia.

It will also help fast-track the construction of priority water infrastructure needed to stimulate investment, economic growth and increased agricultural productivity in rural and regional Australia.

The establishment of the Regional Investment Corporation is one of the key priorities for this government. It shows a real vision for where we are taking regional Australia.

Debate adjourned.