EXPLANATORY STATEMENT
MINUTE NO OF 1985 - TREASURER
PRIMARY INDUSTRY BANK ACT 1977
PRIMARY INDUSTRY BANK REGULATIONS (AMENDMENT)
STATUTORY RULES 1985 NO. 109
Section 11 of the Primary Industry Bank Act 1977 (the Act) provides, inter alia, that the Governor-General may make regulations, not inconsistent with Part II of the Act, prescribing all matters that are required or permitted by that Part to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Part.
Sub-section 7(1) of the Act provides that the Treasurer may, from time to time, on behalf of the Commonwealth, make grants or loans to the Primary Industry Bank of Australia on such terms and conditions as are determined by the Treasurer and agreed to by the Bank.
Since the Bank’s establishment in July 1978, funds of $101 million have been deposited with it by the Commonwealth in terms of sub-section 7(1) to enable loans made by banks and other lenders and refinanced by the Bank to be on terms more favourable to the borrowers than would otherwise be practicable. The source of these funds was the Income Equalisation Deposits Trust Account. Authority for making loans to the Bank from the Trust Account is provided by sub-section 8(2) of the Act. After scheduled repayments, the amount currently outstanding with the Bank from the Trust’ Account is $44.85 million.
Sub-section 8(3) of the Act provides that a loan to the Bank from the Income Equalisation Deposits Trust Account in accordance with sub-section 8(2) shall not be made except in accordance with regulations that:
(a) prescribe maximum limits with respect to the amounts that may from time to time be lent to the Bank; and
(b) prescribe rates of interest to be payable by the Bank in respect of such loans.
Consistent with that, the regulations currently prescribe 9.5 per cent per annum as the interest rate payable by the Bank in respect of all loans made by the Commonwealth. The Government has proposed, and the Bank has agreed, that the
interest rate on the three deposits currently outstanding should be lowered to 7.5 per cent per annum, for the period 1 July 1984 to 30 June 1985, to make additional financial assistance available to the Bank. The rate of interest is to revert to 9.5 per cent per annum from 1 July 1985.
A retrospective reduction in the interest rate would not be in contravention of the Acts Interpretation Act 1901. Sub-section 48(2) of the Acts Interpretation Act 1901 provides that:
‘(2) Regulations shall not be expressed to take effect before the date of notification in any case where, if the regulations so took effect-
(a) the rights of a person (other than the Commonwealth or an authority of the Commonwealth) existing at the date of notification, would be affected in a manner prejudicial to that person; or
(b) liabilities would be imposed on any person (other than the Commonwealth or an authority of the Commonwealth) in respect of anything done or omitted to be done before the date of notification.
and where, in any regulations, any provision is made in contravention of this sub-section, that provision shall be void and of no effect.’
Amending the Primary Industry Bank Regulations to reduce the interest rate payable by the Bank on moneys deposited by the Commonwealth would prejudicially affect only the rights of the Commonwealth and for that reason would not contravene sub-section 48(2) of the Acts Interpretation Act.
The proposed Regulations amend Regulation 3 of the Primary Industry Bank Regulations by prescribing 7.5 per cent per annum as the rate of interest payable in respect of all Commonwealth deposits, with effect from 1 July 1984, and by prescribing 9.5 per cent per annum as the rate of interest payable with effect from 1 July 1985.
Authority: Section 11 of the Primary Industry Bank Act 1977.