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senate vote 2017-10-18#1
Edited by
mackay staff
on
2018-01-20 17:51:10
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Title
Bills — Regional Investment Corporation Bill 2017; in Committee- Regional Investment Corporation Bill 2017 - in Committee - Ministerial discretions & rules
Description
<p class="speaker">Carol Brown</p><p>I was thinking that the minister might stand to answer the question that I asked when we finished up yesterday, which was about consultations in relation to the location of the RIC in Orange.</p> <p class="speaker">Anne Ruston</p>- The same number of senators voted for and against the [amendments](http://www.openaustralia.org.au/senate/?gid=2017-10-18.117.1) moved by Senator [Carol Brown](https://theyvoteforyou.org.au/people/senate/tasmania/carol_brown), which means the amendments failed.
- Read more about the amendments in [Senator Brown's explanation](http://www.openaustralia.org.au/senate/?gid=2017-10-18.117.1).
- ### What does this bill do?
- The [bill](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5906) was introduced to create a Regional Investment Corporation to administer farm business loans and financial assistance granted to states and territories. Read more about it in the [bills digest](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1718a/18bd013).
<p>The decision about the location of the Regional Investment Corporation was a decision made by government.</p> <p class="speaker">Carol Brown</p><p>You are saying that there were no consultations outside government?</p> <p class="speaker">Anne Ruston</p><p>Without going through the answer that I gave to a previous question, the decision about the specifics of the office accommodation are obviously a matter for the RIC board; the decision to locate the RIC in Orange was a decision of government. The decision of government was based on a number of criteria, which I talked about in the answer to a question yesterday: the importance of Orange as an agricultural hub which is well serviced by transport links, particularly from Canberra and Sydney; the opportunities for growth in that area; and the fact that it also meets the existing strong commitment by this government to establish hubs in rural and regional areas of Australia.</p><p>In addition to that, obviously we had discussions with other operations in Orange to assure ourselves that this was a suitable place for this corporation to go. Departmental officers, I understand, have met with stakeholders in Orange to discuss the establishment of the RIC in that city, that regional location. The meetings were held with a number of organisations, including the New South Wales Department of Primary Industries, the New South Wales Rural Assistance Authority, the Regional Development Australia Central West division, Paraway Pastoral Company, the Rural Financial Counselling Service New South Wales Central Region, Orange City Council, Orange Business Chamber and the New South Wales Farmers Orange branch.</p> <p class="speaker">Carol Brown</p><p>Yesterday, Minister, you stated that you were not aware of any discussions the minister or his department is having about outsourcing functions of the RIC. At the public hearing of the Select Committee on Regional Development and Decentralisation in Bendigo on 9 October 2017, Ms Gartmann, the managing director and CEO of the Bendigo Rural Bank, gave evidence in response to the following questions:</p><p class="italic">… can you let us know if there's been any consultation with rural finance about the Regional Investment Corporation? Has anyone reached out to you about what's worked and what hasn't worked? Going forward, are you concerned at all about this federal organisation coming in and taking core business?</p><p>Ms Gartmann replied:</p><p class="italic">There certainly has been a large amount and a continuing number of engagements between the Commonwealth agencies and Rural Finance Corporation/Bendigo Bank representatives to discuss what is currently being executed in Victoria in partnership with the Victorian government and to explore areas to strengthen and improve the delivery of the government concessional lending and drought-and-disaster support. That continues to take place. Certainly we're always open to supporting a national approach and collaborating and partnering in whatever model is finalised going forward as of July next year.</p><p class="italic">As was outlined by Marnie, the balancing act is having some efficiency by coordination from a central, national point as opposed to the current delivery by the states and territories. It is the efficiency gained by having one system as opposed to multiple and balancing that out with an entity that is then further removed from the customer base that it is there to support and serve by having a national entity as opposed to those based in states and across the regions. That balance is yet to be worked out. We've still got a number of months to go before that is supposed to be up and running on 1 July, and we will certainly continue to share the experiences of Rural Finance Corporation with the relevant individuals and agencies to try to create a model that will serve and support all the farmers.</p><p>Ms Gartmann went on to say:</p><p class="italic">The offset accounts. They have traditionally not been available to agricultural businesses. But it is a common practice in residential lending. Legislative changes last year at a federal level were passed and that allowed the farm management deposit offset account to be created, which allows farmers to offset funds held in a farm management deposit account against eligible variable rate term lending, thereby reducing their farm lending costs. Rural Bank is the only bank in market offering that at the moment. But those sorts of legislative changes can demonstrate that it leads to positive business and funding changes for an industry, when done and supported by the private sector.</p><p>During a break, Ms Gartmann said that Bendigo Bank/Rural Finance was hoping to be able to tender for RIC work, which would be a front, but Bendigo Bank would continue to do the work. Ms Gartmann said they were in discussions with the department about a tender process.</p><p>Now that we know there have been discussions about outsourcing functions of the RIC, can the minister provide detail to the Senate about any other discussions? Is the minister aware that the department is having discussions with agencies that are currently delivering concessional loans? Has any work been undertaken regarding the cost these possible arrangements may incur? Will the RIC be regulated in a similar fashion to other financial banking institutions with regard to receivers, evaluators, lenders and who can provide advice to farm businesses seeking a loan?</p> <p class="speaker">Anne Ruston</p><p>Thank you, Senator Brown. I will do my very best to answer the myriad of questions that you asked in that one long question. As I said to you yesterday, I wasn't aware of the consultations, but overnight I took it upon myself to avail myself of information relating to the consultation process that has been undertaken to date, particularly in relation to the areas that you were talking about: outsourcing and rural financial counselling services.</p><p>I can advise you that, in the period from 9 July to 10 August this year, the department engaged with a number of representatives of the banking sector and current concessional loan delivery agencies to gain a greater understanding of the market as well as the risks and opportunities in the service delivery area. As part of this process, they also met with a number of agencies that relate to the delivery of these financial assets to the community. They included the ANZ, Rural Bank, Rural Finance, Rabobank, Efic, the Commonwealth Bank, the National Bank, the Australian Bankers' Association, the New South Wales Rural Assistance Authority, the Department of State Growth in Tasmania, the Queensland Rural and Industry Development Authority, the Department of Primary Industries and Regions in South Australia and the Department of Primary Industries and Regional Development in Western Australia.</p><p>In relation to the determination about the specifics of the operation, you asked about outsourcing and the opportunity for existing providers to be able to work as service providers and service delivery providers for the Regional Investment Corporation. Whilst some preliminary discussions have occurred around the broader issues of the delivery of the services of the RIC, the government believes it is appropriate that the details of that are a matter for the RIC board, once it is established, and so the detailed answers to the questions that you have asked are not available at this stage. However, I think it is reasonable to say that the RIC board will be given a level of scope to be able to make sure that they are delivering the services to the farming community of Australia in the most efficient and effective way. If they determine that that is using service providers that are currently in the marketplace, and I am sure they will, then that is obviously a matter of which they are able to avail themselves.</p> <p class="speaker">Carol Brown</p><p>Thank you, Minister, and thank you also for coming in and clearing up your response to my question about outsourcing yesterday. In that response, are you saying that any outsourcing is a matter for the RIC board?</p> <p class="speaker">Anne Ruston</p><p>Yes, I am.</p> <p class="speaker">Carol Brown</p><p>So it is solely a matter for the board. Can I ask then: why have these discussions, to which Ms Scartland in particular has referred been occurring, and why have they been undertaken by the department?</p> <p class="speaker">Anne Ruston</p><p>At the moment, the department is doing a level of preparatory work so that when the board is appointed they have as much information available as possible on which to base their decisions. Of course, the board is entirely entitled to go and seek its own information, or additional information, so I suppose you could just refer to it as somewhat of an incoming brief—so that they have information before them. Obviously, anything that the board may choose to do has to be within the terms of the operating mandate.</p> <p class="speaker">Carol Brown</p><p>Thank you. So—as I asked yesterday—we will possibly see, as Ms Scartland has indicated, that their wish would be that the RIC would be a front and that the Bendigo Bank—if they were successful in any tender—would be running the work of the RIC. She has indicated—just because you look confused, Minister—that they were hoping to be able to tender for RIC work and the RIC would be a front but the Bendigo Bank would continue to do to the work.</p> <p class="speaker">Anne Ruston</p><p>No, I'm not confused. First of all, referring to the RIC as a front, I think, is probably a very misleading way to be describing it. Certainly, the opportunity exists for service providers to be able to provide services to the RIC, like any other outsourcing of service delivery that were to occur within a statutory organisation.</p><p>However, as I stated before, the decisions about the operation, particularly about outsourcing and the operation and delivery of the assets of the RIC, are a matter for the incoming RIC board. So, apart from being able to say to you, Senator Brown, that the opportunity exists for outsourcing to occur, it would be entirely inappropriate for me to be giving direction to the RIC board about what they should or should not be outsourcing. Suffice to say, powers and opportunities exist for the RIC to do that under the terms of its operating mandate. I'm not sure I can give you any more information than that.</p> <p class="speaker">Carol Brown</p><p>You just mentioned the operating mandate. Is that available?</p> <p class="speaker">Anne Ruston</p><p>The operating mandate is currently being developed. It will be an instrument that will require tabling post the establishment of the organisation. Obviously, the passage of the bill needs to proceed for the finalisation of the mandate, and at that time it will be tabled.</p> <p class="speaker">Janet Rice</p><p>On the issue of the operating mandate, we have grave concerns with this bill because of the power that it gives the minister without parliamentary oversight and, in fact, without cabinet oversight. You have just stated that the operating mandate is in preparation, but is it correct that that operating mandate isn't a disallowable instrument?</p> <p class="speaker">Anne Ruston</p><p>Yes, that is correct.</p> <p class="speaker">Janet Rice</p><p>So, essentially, you are setting up the Regional Investment Corporation with an operating mandate that has got no parliamentary oversight. It is giving a huge amount of power to the minister to determine exactly what the responsibilities of the RIC will be and the parliament won't be able to actually have any input into that—is that correct?</p> <p class="speaker">Anne Ruston</p><p>Obviously, the operating mandate is the key vehicle where the government will set out its expectations for the corporation. Whilst the express exemption exists for directions from ministers to corporate Commonwealth entities, the bill provides that the operating mandate is a legislative instrument and must be tabled in the parliament. This gives the parliament a level of oversight. Given the nature and the significance of the potential directions, that is fair and reasonable. It is not proposed for it to be a disallowable instrument. We believe that this is appropriate as it deals with matters over which the executive should retain control. As I said to Senator Brown yesterday when we were discussing the structure of this proposed organisation, the set-up of the RIC is almost a direct replica of the way the Clean Energy Finance Corporation was set up and currently operates in this space. Quite clearly, the mandate of the CEFC is required to be tabled in the parliament, but it is not a disallowable instrument.</p> <p class="speaker">Carol Brown</p><p>I'm not sure, Minister, whether you actually did answer my question about whether the RIC will be regulated in a similar fashion as other financial banking institutes with regard to receivers, evaluators and lenders, and who can provide advice to farm businesses seeking a loan.</p> <p class="speaker">Anne Ruston</p><p>First of all, the RIC is not a bank. The RIC doesn't take deposits, so the regulation of the RIC will be appropriate for its structure.</p> <p class="speaker">Carol Brown</p><p>Can I ask the minister to give us some more information as to what she believes is appropriate?</p><p>We've been asked to pass this legislation—legislation that Labor, the opposition, believes does not have sufficient transparency or parliamentary oversight. So we're here in this committee stage to try to get some answers to allow some of that transparency, not only for the senators and the parliament but for those in the community who are very interested in this piece of legislation. So far we haven't really been able to get any answers to be able to alleviate any concerns that the opposition may have. So I ask the minister whether she can elaborate on her answer.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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