EXPLANATORY STATEMENT
STATUTORY RULES 1984 NO 108
ISSUED BY THE AUTHORITY OF THE TREASURER
PRIMARY INDUSTRY BANK ACT 1977
PRIMARY INDUSTRY BANK REGULATIONS (AMENDMENT)
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 $58.7 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 1983 to 30 June 1984, 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 1984.
A retrospective reduction in the interest rate would not be in contravention of the Acts Interpretation Act. 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 Commmonwealth) 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 1983 and by prescribing 9.5 per cent per annum as the rate of interest payable with effect from 1 July 1984.
Overview
The Primary Industry Bank Regulations (Amendment) Statutory Rules 1984 No 108, issued under the authority of the Treasurer, were enacted to amend the Primary Industry Bank Regulations of 1977. These regulations were introduced to address the need for adjusting the interest rates on loans made by the Commonwealth to the Primary Industry Bank of Australia, as stipulated in the Primary Industry Bank Act 1977. The objective of this amendment is to reduce the interest rate from 9.5 per cent per annum to 7.5 per cent per annum for the financial year from 1 July 1983 to 30 June 1984, thereby providing additional financial assistance to the Bank. This amendment ensures that the changes do not contravene the Acts Interpretation Act 1901, as the reduction in interest rate would only affect the rights of the Commonwealth, which is permitted under the legislation.
Scope and Application
The Primary Industry Bank Regulations (Amendment) Statutory Rules 1984 No 108 made under the Primary Industry Bank Act 1977 amend the interest rates payable on loans made to the Primary Industry Bank of Australia by the Commonwealth. The Act applies to the Primary Industry Bank of Australia and the Commonwealth, facilitating financial assistance to the Bank to support loans to primary industry borrowers. The geographic reach of the Act is national, as it involves federal legislation and funding. The proposed regulations do not exclude any entities or conduct but specifically address the interest rates on Commonwealth loans to the Bank. The Act allows for amendments through subordinate instruments, such as these regulations, to adjust the terms and conditions of loans made to the Bank. The amendments aim to lower the interest rate from 9.5 per cent to 7.5 per cent for a specific period, thereby providing more favourable terms for the Bank and its borrowers. The changes are designed to be effective from 1 July 1983 to 30 June 1984, after which the interest rate will revert to 9.5 per cent.
Key Provisions
The proposed amendment to the Primary Industry Bank Regulations, under section 8(3) of the Primary Industry Bank Act 1977 (the Act), primarily concerns the interest rates applicable to loans made to the Primary Industry Bank of Australia (the Bank) by the Commonwealth. Regulation 3 of the Primary Industry Bank Regulations, as amended, sets forth the interest rates that the Bank must pay on loans received from the Commonwealth. Specifically, it reduces the interest rate from 9.5 per cent per annum to 7.5 per cent per annum for the financial year starting on 1 July 1983 and ending on 30 June 1984. After this period, the interest rate reverts back to 9.5 per cent per annum.
The obligations under these regulations are primarily directed at the Bank, which must adhere to the prescribed interest rates on loans received from the Commonwealth. The Bank must ensure that its financial records and loan agreements reflect these amended interest rates as of the specified dates. Additionally, the regulations stipulate that these interest rates apply to all loans made under the authority of the Act, thereby formalising the terms on which the Bank can borrow from the Commonwealth.
Failure to comply with these regulations could result in legal consequences. While the explanatory statement does not explicitly list specific offences or penalties for non-compliance, it is reasonable to infer that any breach of the prescribed interest rates could lead to financial discrepancies and potential legal challenges. The Bank might face civil actions for non-compliance, and the Commonwealth could enforce penalties or seek to recover any financial losses incurred due to the non-adherence to the prescribed interest rates. The exact nature and extent of penalties or consequences would need to be assessed in light of the specific circumstances of any breach.