States Grants (Rural Reconstruction) Act 1971 (Cth)
An Act relating to an Agreement between the Commonwealth and one or more of the States in respect of a Scheme to provide Assistance to Persons engaged in Rural Industries.
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BE it enacted by the Queen’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—
THE SCHEDULE Section 3.
An Agreement made the day of One thousand nine hundred and seventy between—
The Commonwealth of Australia (in this agreement called “the Commonwealth”) of the first part,
The State of New South Wales of the second part,
The State of Victoria of the third part,
The State of Queensland of the fourth part,
The State of South Australia of the fifth part,
The State of Western Australia of the sixth part, and
The State of Tasmania of the seventh part.
Whereas—
(a) the Commonwealth and the States recognize that there is need to provide assistance to persons engaged in rural industries throughout Australia in the interest of those industries and of Australia generally;
(b) Ministers of the Commonwealth and of the States have agreed upon the Outline of Proposals for Rural Reconstruction set out in the Schedule to this agreement as constituting a Scheme under which assistance of various kinds could be provided;
(c) the carrying out of the said Scheme is dependent upon financial assistance being granted by the Parliament of the Commonwealth to the States for that purpose;
(d) the Parliament of the Commonwealth has authorized the execution of this agreement by and on behalf of the Commonwealth and the provision of financial assistance to the States as provided in this agreement;
Now it is hereby agreed as follows:
I.—Introductory
(2.) Notwithstanding that all the States of New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania are named as parties to this agreement, this agreement shall operate as an agreement between the Commonwealth and each State in respect of which it has come into force as fully and effectually as if the State or States in respect of which it has come into force were the only State or States named as a party or as parties to the agreement.
(3.) In this agreement, each State in respect of which the agreement has come into force is referred to as a “State”, and the expression “the States” means, except where the context otherwise requires, all of the States in respect of which for the time being the agreement is in force.
“financial year” means a period of twelve months ending on the thirtieth day of June;
“the Authority” means, in relation to a State, the authority or authorities of the State that has or have the administration of the Scheme on behalf of the State and, in a case where there are more than one authority, refers, where the context requires reference to one authority, to the relevant authority of the State;
“the Scheme” means the Scheme to be established and operated by a State in accordance with clause 4 of this agreement;
“the Treasurer” means the Treasurer of the Commonwealth.
(2.) References in this agreement to a Minister of the Commonwealth or of a State shall include a reference to a Minister for the time being acting for or on behalf of the Minister referred to.
The Schedule—
II.—Administration of Scheme
(2.) The Scheme shall consist of the forms of assistance described in, and shall be established and operated in conformity and in accordance with the general principles and the provisions set out in, the Outline of Proposals for Rural Reconstruction contained in the Schedule to this agreement, as amended at any time in pursuance of clause 10 of this agreement.
(a) the assistance provided for in Part 2 of the Schedule—as debt reconstruction;
(b) the assistance provided for in Part 3 of the Schedule—as farm build-up; and
(c) the assistance provided for in Part 4 of the Schedule—as rehabilitation.
(a) for loans for debt reconstruction—at such rates as will average not less than four per centum per annum over all loans made; and
(b) for loans for farm build-up—at not less than six and one-quarter per centum per annum.
(2.) Where so agreed between the Commonwealth Minister and the Minister or Ministers of the relevant State or States, the amendments to the provisions of the Schedule to this agreement may be made and take effect as between the Commonwealth and one or more of the States without affecting the operation of this agreement as between the Commonwealth and a State the Minister of which has not so agreed.
III.—Financial Assistance
New South Wales..................................................... | $32,000,000 |
Victoria.................................................................... | $22,070,000 |
Queensland............................................................... | $16,000,000 |
South Australia......................................................... | $12,000,000 |
Western Australia..................................................... | $14,630,000 |
Tasmania.................................................................. | 3,300,000 |
The Schedule—
(2.) The allocation of financial assistance provided for by sub-clause (1.) of this clause shall be varied from time to time in accordance with any agreement in respect of allocation of funds reached by the Commonwealth and the States upon a review under clause 24 of this agreement.
(3.) In the event that this agreement does not come into force or ceases to be in force in relation to one or more than one of all States, the amount of financial assistance that is allocated to that State or those States under the preceding sub-clauses of this clause may be allocated to the States in relation to which the agreement is in force to the extent and according to such allocation as is determined by the Commonwealth after consultation with the States.
(2.) An amount or part of an amount advanced by the Treasurer under this clause may be deducted by the Commonwealth from an amount that subsequently becomes payable under clause 15 of this agreement or, if no further amounts will become payable under that clause, shall be refunded by the State to the Commonwealth at the request of the Treasurer.
(2.) Any statement of expenditure by a State furnished to the Treasurer in connexion with a request by the State for a payment under clause 15 of this agreement shall be certified by the Auditor-General of the State as to its correctness in accordance with the books and documents of the Authority.
(2.) Interest accrued under this clause prior to the date upon which interest becomes included in the payments provided for by the next succeeding clause, shall be payable on the fifteenth day of January and the fifteenth day of July in each year.
(2.) The interest to be included in payments referred to in sub-clause (1.) of this clause shall be interest that will, in accordance with sub-clause (1.) of the last preceding clause, accrue in respect of the relevant advance or payment on and from the commencement of the fourth financial year that wholly occurs after the advance or payment was made by the Commonwealth.
The Schedule—
(2.) Interest at the rate of six per centum per annum shall accrue on amounts paid by a State in accordance with sub-clause (1.) of this clause, calculated from the date of payment and compounded with half-yearly rests on each fifteenth day of January and fifteenth day of July.
(3.) When on any fifteenth day of January or fifteenth day of July the payment by the State under the last preceding clause exceeds the amount by which the unrepaid balance of the total amount repayable under that clause together with interest accrued on that total amount up to and including that date exceeds the total of the amounts paid by the State to the Commonwealth in accordance with sub-clause (1.) of this clause together with interest accrued on those amounts up to and including that date under sub-clause (2.) of this clause, the State shall pay to the Commonwealth the amount of the second-mentioned excess in lieu of the amount due under the last preceding clause and no further payments shall be required to be made by the State to the Commonwealth under that clause.
(2.) Should a State certify that, without taking into account its administrative costs, it has incurred losses under the Scheme from circumstances beyond its control arising after the date of this agreement and disadvantageous compared with past experience and normal expectations as to factors that affect farmers’ incomes referred to in sub-clause (1.) of this clause, the Commonwealth agrees to review the position with the State with a view to adjusting amounts payable to the Commonwealth by the State under this agreement to the extent of such losses.
(3.) The provisions of this agreement in relation to the times at which payments are to be made by the State to the Commonwealth and the amounts of the payments that are to be made may be varied in such manner as is agreed between the Commonwealth and the State upon a review carried out in accordance with sub-clause (2.) of this clause.
(2.) Until such time as the total amount of the financial assistance to a State has been provided by the Commonwealth and applied by the State in accordance with this agreement and supporting evidence to the satisfaction of the Treasurer in relation to all amounts advanced or paid by the Commonwealth has been furnished by the State, a report on the audits in respect of each financial year shall be furnished by the Auditor-General of the State to the Treasurer as soon as possible after the completion of the financial year.
The Schedule—
IV
(2.) A review under sub-clause (1.) of this clause shall be carried out not later than the time necessary to enable to be brought into operation by the first day of July, 1972 any adjustments or amendments which it may be agreed should be made to the Scheme in respect of—
(a) the funds to be provided for the Scheme;
(b) the allocation of funds between the States;
(c) the provisions for losses (other than unforeseen losses) and write-offs available tothe States under the Scheme;
(d) the interest rates to be charged to borrowers; and
(e) the proportion of the financial assistance applied to farm build-up.
THE SCHEDULE
Rural Reconstruction—Outline of Proposals
Part I—General Principles
(a) No agricultural industry is excluded from the scheme (except for farm build-up cases eligible under the Marginal Dairy Farms Reconstruction Scheme). It has, however, been framed with the circumstances of the sheep and sheep/wheat industries primarily in mind. Where the particular circumstances of an agriculturalist in another industry are such that the scheme applies to his circumstances, it is open to him to apply It is recognised that in respect of farm build-up the particular circumstances of some industries (e.g. apples, pears, dried vine fruits) may need additional special consideration.
(b) The general principle to be applied is to distribute the available resources as widely as practicable, but the over-riding objective is to help restore to economic viability those farms and farmers with the capacity to maintain viability once achieved.
(c) It is expected that each administering Authority will avail itself of the best available advice on agricultural technology and market prospects.
(d) Companies will not be eligible for assistance unless the Authority, having considered the shareholdings and being satisfied that the shareholders are bona fide primary producers relying primarily on the income from the company for their livelihood, considers it appropriate to provide assistance.
(e) In cases of assistance under the heading of debt reconstruction or by way of advances for carry-on expenses, plant, livestock and property development in farm build-up cases, it is an essential part of the scheme that adequate supervision of property management and the financial affairs of the assisted farmer is maintained. If the Authority deems it necessary it may require that moneys receivable on account of the property will be received by the Authority or its agent or a body nominated by the Authority, payments within the approved budgets being made through normal channels.
(f) Repayment of advances made by the Authority and interest due thereon will be secured by the best and most appropriate security available, recognising that this may involve ranking after existing securities.
(g) A transfer of the property before advances made by the Authority are repaid will be permitted only with the consent of the Authority, which will upon transfer, or upon succession on the death of the borrower, have the right to review its arrangements in respect of the property.
(h) The arrangements with the assisted farmer are subject to regular review by the Authority from time to time and are liable to termination in the event of the farmer ceasing to be personally in working occupation of the property, failing to observe his obligations and undertakings under the arrangements or in the event of the Authority arriving at the conclusion that for any reason he lacks prospects of successful occupation. Otherwise the arrangements shall be terminable when the Authority arrives at the conclusion that his prospects of successful occupation are no longer dependent on the extension of concessional finance. Upon termination of the arrangements, all debts will then become due and payable.
The
Schedule—
Part II—Debt Reconstruction
(1) Purpose
To assist a farmer who although having sound prospects of long term commercial viability, has used all his cash and credit resources and cannot meet his financial commitments.
(2) Tests of Eligibility
(a) The applicant is unable to obtain finance to carry on from any other normal source and is thus in danger of losing property or other assets if not assisted under the scheme.
(b) There is a reasonable prospect of successful operation with the assistance possible under the scheme, the prime requirement being ability to service commitments, and to reach the stage of commercial viability within a reasonable time.
(c) Assistance is merited and the applicant’s difficulties are not substantially due to circumstances within his control.
(3) Nature of Assistance
The assistance to be provided may encompass where necessary:—
(a) A re-arrangement and/or a composition of debts to allow more time for payment.
(b) The negotiation of a concessional rate of interest for existing rates.
(c) Advances of additional funds for carry-on expenses, livestock and further property development, at reasonable interest rates.
(d) Where the State Legislation so provides, a protection order against any creditor who has threatened action for debt, to apply while the application is under consideration and subject to such extensions as the administering Authority may from time to time determine.
(4) Method of Operation
(a) A re-arrangement and/or composition may take the form of the Authority advancing money to pay off in whole or in part the creditors, (whether or not the debts have been written down by the creditors under (b) below), excluding the Crown. There may be an arrangement by the secured or unsecured creditors to postpone repayments of principal and to refrain from taking action against the debtor for a specified time. Composition arrangements require the agreement in writing of creditors.
(b) The possibility of creditors including the Crown, local authorities and public utilities being asked to defer or write-off part of their debts—possibly at a uniform rate but with due regard to priority of security—should be considered. Creditors should not be pressed to the extent that the availability of credit to rural industries is damaged.
(c) Additional funds advanced for carry-on expenses, livestock and further property development will be strictly limited to the minimum which the Authority considers is required to enable the farmer to carry on and free himself from dependence on the Authority’s assistance within the term of the advances made to him by the Authority.
(d) In exceptional cases, advances for carry-on expenses and livestock may be made to a farmer who is not yet in immediate danger of losing property or other assets but who in the opinion of the Authority is likely to reach that position without such assistance, such cases being tested strictly against the remaining eligibility criteria.
(e) The rate of interest payable on advances made by the Authority to pay off creditors and also advances made for carry-on expenses, livestock, plant and property development, will be decided by the Authority on the circumstances of the particular case. The Authority will have the right to review the interest rates on individual accounts at any time and should review the interest rates at regular intervals. The Authority will ensure that the average interest rate over all loans made will be not less than 4 per centum per annum.
(f) Where protection orders apply it is desirable to establish a relationship with creditors such that the Authority is acting in combined interests of applicant and creditors, secured and unsecured.
The Schedule—
(5) Limits
The Authority shall have discretion to determine:—
(a) The terms and conditions of any loan it may make up to a maximum repayment term of 20 years. In a number of cases an initial period of freedom from repayments of principal would be justifiable depending on the circumstances of the case and the interest rate to be charged.
(b) The proportion of debts paid off by advances in any one case.
(c) The total of advances which may be made by the Authority in any one case.
Part III—Farm Build-Up
(1) Purpose
To supplement, without discouraging, the normal processes under which properties which are too small to be economic are amalgamated with an adjoining holding or are subdivided and the subdivided portions are added to adjoining holdings, or to assist a farmer with a property too small to be economic to purchase additional land to build up his property to at least economic size.
(2) Tests of Eligibility
(a) The owner of the property to be purchased wishes to sell or accepts that he is obliged to sell.
(b) The purchaser is unable to obtain the finance applied for from any other source.
(c) The Authority is satisfied that the built-up property will be of sufficient size to offer sound prospects of long term commercial viability.
(d) Where an application is made by an adjoining owner for assistance under the scheme to purchase an uneconomic property, but there is a possibility of sale of the property to another adjoining owner who does not require assistance under the scheme, assistance will be provided only if the applicant’s property would be built-up from an uneconomic to an economic size.
(e) The term “adjoining holding” includes a holding which is within a reasonable working distance of the holding under consideration where there is no impediment to the two holdings being worked as a single unit.
(3) Nature of Assistance
(a) The provision to the purchaser of finance at an interest rate not less than 6¼ per centum per annum to assist the purchase of an adjoining holding or part of an adjoining holding.
(b) Grants at the discretion of the Authority to cover, in whole or in part, losses sustained in the disposal of assets included in the purchase price of the property, which are not useful for the build-up property.
(c) Advances, at an interest rate not less than 6¼ per centum per annum, for carry-on expenses, plant, livestock, and property development in respect of the additional land where not available from other sources.
(4) Method of Operation
(a) A property will not be purchased by the Authority at random, simply because it is uneconomic and the farmer intends to leave the industry; normally a property will be purchased only where arrangements have been made for an adjoining owner to take over the property or for the property to be subdivided and the subdivided parts added to adjoining properties.
(b) It would however be appropriate for the Authority to take the initiative to encourage an adjoining owner to purchase an uneconomic farm where the Authority is aware that the owner of the uneconomic farm wishes to leave the industry or accepts that he is obliged to leave the industry; this particularly applies where it is unlikely that the appropriate purchaser or purchasers will be able to purchase the additional land unless the Authority provides assistance for the purchase.
(c) None of the foregoing would prevent the Authority from purchasing an uneconomic property in advance of arrangements having been made for the property to be added to an adjoining property or properties, where the programme of farm adjustment could not otherwise be achieved.
The Schedule—
(d) Since it is required that there must be reasonable prospects of successful operation of the built-up property, the Authority in considering the transfer price of land will have regard to its productivity value.
(e) If the farmer is able to satisfy the conditions of eligibility under both schemes, a farmer assisted under the debt reconstruction scheme may also be assisted to acquire land to build up his farm to economic size.
(f) Grants to cover losses on the write-off of redundant assets will be kept to a minimum.
(g) Where advances are made for carry-on expenses, plant, livestock and property development, the advances will be strictly limited to the minimum which the Authority considers is required to enable the farmer to carry on and free himself from dependence on the Authority’s assistance within the term of the advances made to him by the Authority.
(h) The rate of interest payable on advances made by the Authority under the farm build-up proposal will be set by the Authority, but will not be less than 6¼ per centum per annum.
(i) While any advances by the Authority in respect of a built-up property remain unpaid, the transfer of part of the built-up property will not be permitted if this would result in a property of a size too small to be economic.
(5) Limits
(a) The term of a loan by the Authority and conditions of repayment of principal will be at the discretion of the Authority up to a maximum repayment term of 20 years. In a number of cases an initial period of freedom from repayments of principal would be justifiable, depending on the circumstances of the case and the interest rate to be charged.
(b) The total of advances which may be made up by the Authority in any one case shall also be at its discretion.
Part IV—Rehabilitation
(1) Purpose
To provide limited assistance to those obliged to leave the industry where in the opinion of the Authority administering the scheme this is necessary to alleviate conditions of personal hardship.
(2) Conditions of Eligibility
(a) The applicant’s property must have been purchased by an adjoining owner who has been assisted under the farm build-up provisions to make the purchase or the applicant must have been unable to secure assistance under the debt reconstruction provisions because his property is assessed not to have sound prospects of long term commercial viability; and
(b) Taking into account the financial position of the applicant after his property has been sold, he will suffer financial hardship which will be alleviated by assistance under these provisions.
(3) Nature of Assistance
A loan on such conditions as to interest rate, if any, and repayment as are determined by the Authority up to a maximum of $1,000 in any one case.
(4) Method of Operation
The loans will be available at the discretion of the Authority administering the scheme.
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