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.
Overview
The Primary Industry Bank Act 1977 was enacted to address the need for a financial institution specifically tailored to the primary industry sector in Australia. This Act allows the Commonwealth to provide financial assistance to the Primary Industry Bank of Australia, enabling it to offer more favourable loan terms to borrowers within the primary industry sector. The Act empowers the Treasurer to make grants or loans to the Bank on agreed terms and conditions, facilitating the Bank's role in supporting primary industries. The accompanying Primary Industry Bank Regulations, amended in 1985, include provisions for interest rates on Commonwealth deposits, which were reduced temporarily to assist the Bank in providing additional financial support. The amendments were made under the authority of Section 11 of the Act, ensuring the regulations do not adversely affect existing rights or impose new liabilities on non-Commonwealth entities, thereby complying with the Acts Interpretation Act 1901.
Scope and Application
The Primary Industry Bank Regulations (Amendment) Statutory Rules 1985 No. 109 amends the Primary Industry Bank Regulations to adjust the interest rates applicable to loans made by the Commonwealth to the Primary Industry Bank of Australia. The Act applies to the Primary Industry Bank of Australia and the Commonwealth of Australia, specifically concerning the financial transactions between the two entities. The regulations are made under the authority of the Primary Industry Bank Act 1977, which is a Commonwealth Act, thus extending the jurisdiction of the Act across the national territory of Australia. The regulations do not exclude any specific persons or entities but focus on the interest rates for loans made under the Act. Notably, the regulations do not contravene the Acts Interpretation Act 1901, as any retrospective reduction in interest rates would only affect the Commonwealth, which is permitted under the Act. The amendment reduces the interest rate from 9.5 per cent per annum to 7.5 per cent per annum for the period from 1 July 1984 to 30 June 1985, with the rate reverting to 9.5 per cent per annum from 1 July 1985.
Key Provisions
The Primary Industry Bank Regulations (Amendment) Statutory Rules 1985 No. 109 make significant modifications to the existing regulations concerning the interest rates that the Primary Industry Bank of Australia (the Bank) must pay on loans from the Commonwealth. Section 11 of the Primary Industry Bank Act 1977 (the Act) empowers the Governor-General to make regulations that are necessary for the effective implementation of the Act. In line with this authority, the regulations amend Regulation 3 to lower the interest rate on Commonwealth deposits from 9.5 per cent to 7.5 per cent per annum, effective from 1 July 1984 until 30 June 1985, after which it will revert to 9.5 per cent per annum. These amendments are aimed at making additional financial assistance available to the Bank during the specified period.
Under the amended regulations, the Bank now has a modified financial obligation towards the Commonwealth for the specified period. Specifically, the Bank must pay a reduced interest rate of 7.5 per cent per annum on all loans made by the Commonwealth, as opposed to the previously applicable rate of 9.5 per cent per annum. This reduction is intended to ease the financial burden on the Bank and potentially facilitate more favourable loan terms for primary industry borrowers. The reduced interest rate is applicable to all existing loans from the Commonwealth, and no new loans are being introduced under these regulations. The obligation remains in place until 30 June 1985, after which the interest rate will revert to the original 9.5 per cent per annum.
Breach of these amended regulations would not typically result in criminal or civil penalties, as the regulations primarily pertain to financial terms and conditions rather than mandatory compliance requirements with explicit punitive measures. However, failure to adhere to the stipulated interest rates could potentially lead to disputes or renegotiations between the Commonwealth and the Bank. It is essential for all parties involved to comply with the terms of the amended regulations to avoid any financial discrepancies or legal challenges. The regulations are clear in their application and do not introduce new obligations beyond the specified interest rate adjustments.