The Future Drought Fund Bill 2019 (CTH) (‘the Bill’) and the Future Drought Fund (Consequential Amendments) Bill 2019 (CTH) (‘the Amendment Bill’) were introduced to the Commonwealth House of Representatives on 22 July 2019 by the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management, David Littleproud. The bills passed both houses of Parliament on 24 July 2019 and are currently awaiting assent.
Earlier versions of the Bill and the Amendment Bill, the Future Drought Fund Bill 2018 (CTH) (later renamed the Future Drought Fund Bill 2019 (CTH)) and the Future Drought Fund (Consequential Amendments) Bill 2018 (CTH) were introduced in the previous session of Parliament.
The Bill was introduced in order to establish the Future Drought Fund (‘the Fund’). The aim of this Fund is to enable the Government to make arrangements and grants to individuals or organisations in relation to drought resilience.
The Minister noted in his second reading speech on the Bill:
“Drought is a constant factor in Australian agriculture and the establishment of the Future Drought Fund will provide a new, secure, predictable funding stream for drought resilience into the future to ensure the potential of this vibrant industry is realised through drought resilience planning … Helping our farming communities face the challenges of drought is a key focus of this government and, because we have fully funded the NDIS [National Disability Insurance Scheme] and made substantial infrastructure commitments, we are in a position to build a sustainable source of funding for drought resilience, preparedness and recovery across Australia.”
The Fund would consist of the Future Drought Fund Special Account and its investments, in order to provide for secure revenue to be used in the future for drought resilience, preparedness and response. At the establishment of the Fund, uncommitted moneys in the Building Australia Fund will be transferred into the Fund. This starting balance amounts to approximately $3.9 billion. The Fund is predicted to grow to $5 billion over the next decade and is scheduled to start providing for disbursements from 1 July 2020. The Minister of Finance, Senator Mathias Cormann, said in a joint media release on 24 July 2019 that the Fund will facilitate a $100 million a year additional investment into drought resilience projects every year from 1 July 2020.
The investments of the Fund will be the responsibility of the Future Fund Board of Guardians (‘the Board’), which is required to follow the investment mandate. The Board is a specialized sovereign investor, established under the Future Fund Act 2006 (CTH) and will report to the responsible Ministers of the operation of the Fund. Additionally, the Bill requires that the investment mandate be issued by the responsible Ministers. Its purpose is to enable the Government to provide strategic guidance to the Board on its expectations regarding investment of the Fund.
As part of the changes, the Government will also develop and publish a Drought Resilience Funding Plan (‘the Plan’). The Plan will be a high-level framework which will be used to ensure a coherent and consistent approach in considering and providing funding for projects. In drafting the Plan, the Drought Minister will be informed by independent expert advice from the Future Drought Fund Consultative Committee ('the Committee'). The Committee will be established under the Bill and will consist of a range of experts in relevant fields such as climate risk, agriculture, drought resilience, economics and rural development.
Furthermore, the Plan will go through public consultation prior to publication and will be reviewed every four years in order to ensure that changing priorities are included and the Fund remains up to date. The Productivity Commission will lead these reviews and will make recommendations to the Parliament of potential changes.
The Amendment Bill makes a number of consequential amendments to other legislation in order to enable the effective operation of the Fund.
The Amendment Bill:
The Amendment Bill also provides for the transitional arrangements and closure of the Building Australia Fund.
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Future Drought Fund Bill 2019 (CTH), second reading speech and explanatory material - available from TimeBase’s LawOne Service
Future Drought Fund (Consequential Amendments) Bill 2019 (CTH) and explanatory material - available from TimeBase’s LawOne Service
Future Fund Act 2006 (CTH) and explanatory material - available from TimeBase’s LawOne Service
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