Last week, 20 February 2018, the Regional Investment Corporation Act 2018 (Cth) was assented. This Act sets out to establish the Regional Investment Corporation (RIC) from July 2018, with the proposed objective of delivering up to $2 billion in Commonwealth farm business concessional loans to rural and regional farmers.
The Act also transfers responsibility of the National Water Infrastructure Loan Facility (NWILF) to the RIC. The NWILF was established to provide concessional loans to state and territory governments, available through the Department of Agriculture and Water Resources, for the purpose of co-funding the construction of water infrastructure.
As part of the 2016 election campaign, the Coalition promised the establishment of a Regional Investment Corporation with the purpose of delivering financial assistance to farmers in rural and regional communities. Senator Michaelia Cash outlined the need of this legislative development in her second reading speech to the Senate:
“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.”
The overall purpose of the act is the establishment of the RIC. The functions of the RIC are outlined in section 8 of the Act. Key parts of these functions include (section 8(1)):
In addition to the above, the RIC is required to perform its functions in a proper, efficient and effective manner (section 8(2)).
The impact of the Act on the NWILF, which currently operates through the Department of Agriculture and Water Resources, was also outlined in the second reading speech to the Senate:
“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.”
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Regional Investment Corporation Act 2018, Bill and explanatory materials available from TimeBase's LawOne service.
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