Regional Investment Corporation (Drought Hardship Loans) Rules 2026

EXPLANATORY STATEMENT

Issued by Authority of the Minister for Agriculture, Fisheries and Forestry and the Minister for Finance

Regional Investment Corporation Act 2018

Regional Investment Corporation (Drought Hardship Loans) Rules 2026

Legislative Authority

The Regional Investment Corporation Act 2018 (the Act) establishes the Regional Investment Corporation (the Corporation).

Section 54 of the Act provides that the responsible Ministers may, by legislative instrument, make Rules prescribing matters required by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. The responsible Ministers are the Agriculture Minister and the Minister who administers the Public Governance, Performance and Accountability Act 2013 (the Finance Minister).

The Corporation’s functions are set out in section 8 of the Act. The functions of the Corporation include: to administer programs prescribed by the rules (paragraph 8(1)(g), any functions conferred on the Corporation by the Act, the rules or any other Commonwealth law (paragraph 8(1)(h)), and to do anything incidental to, or conducive to, the performance of its functions (paragraph 8(1)(i)).

Subsection 8(5) of the Act provides that, for the purposes of paragraph 8(1)(g) of the Act, the rules may prescribe one or more programs to be administered by the Corporation. Paragraph 8(5)(a) of the Act provides that any rules that prescribe a program must address the constitutional basis for the program. Paragraph 8(5)(b) also provides that the rules may allow for the charging of transaction costs incurred by the Corporation in relation to a program or allow for the responsible Ministers to give written directions to the Corporation in relation to the program.

Purpose

The purpose of the Regional Investment Corporation (Drought Hardship Loans) Rules 2026 (the Rules) is to establish the Drought Hardship Loans Program (the program) to enable the Corporation to make concessional loans to farm businesses that are in financial need of those loans and experiencing a financial impact as a result of prolonged drought, to assist those businesses to manage or recover from the impact of drought.

The program is intended to help businesses who have experienced a material reduction in the turnover of the business from farm activities because of the business being impacted by drought. A condition of the loan is that it is used to assist the business to manage or recover from the impact of drought by meeting operating expenses of the business. This does not include the loan being used for funding capital expenses or refinancing existing debt.

By maintaining business continuity, the program will provide cash-flow relief and help affected farm businesses endure financial hardship resulting from drought over a number of years.

Background

The Australian Government has recognised the need to provide further assistance to farmers in areas that are impacted by drought through shorter term, lower value loans on a more concessional basis. On 11 December 2025, the Minister for Agriculture, Fisheries and Forestry announced a new concessional Drought Hardship Loan designed to help farmers facing long terms droughts with operating costs.

These Rules give effect to this announcement by providing for a Commonwealth funded concessional loan program, administered by the Corporation, that is intended to provide practical support to affected businesses to assist them in managing or recovering from the impact of drought.

Impact and Effect

The program prescribed by the Rules will provide relief to businesses that experience a financial impact as a result of prolonged drought, which have experienced a material reduction in business turnover from farm activities as a result of the impact of drought, and are in financial need. The Program will assist eligible businesses to manage or recover from the impact of drought by meeting the operating expenses of the business. The Drought Hardship Loans Program will operate in a similar manner to existing drought loan programs offered by the Corporation.

Consultation

This program was developed following consultation with industry stakeholders at the 2025 National Drought Forum. Consultation identified the need for further access to concessional loans to address the impact of drought. The Department of Agriculture consulted with the Attorney-General’s Department, the Department of Finance, the Department of Foreign Affairs and Trade, the Department of the Prime Minister and Cabinet, the Treasury and the Regional Investment Corporation in the development of the Rules.

Details

Details of the Rules are set out in Attachment A.

The Rules are compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A statement of compatibility is set out in Attachment B.

The Rules commence as follows:

• sections 1 to 4, section 22 and section 25 of the Rules commence the day after the Rules are registered;
• sections 5 to 21 and sections 23 and 24 of the Rules commence on 30 March 2026.

The Rules are a legislative instrument for the purposes of the Legislation Act 2003.

Attachment A

Details of the Regional Investment Corporation (Drought Hardship Loans) Rules 2026

Part 1 - Preliminary

Section 1 – Name

This section provides that the name of the instrument is the Regional Investment Corporation (Drought Hardship Loans) Rules 2026 (the Rules).

Section 2 – Commencement

This section provides that: 

• sections 1 to 4 and anything not in this instrument not elsewhere covered by the table commence the day after the Rules are registered; 

• sections 5 to 21 commence on 30 March 2026; 

• section 22 commences the day after the Rules are registered; 

• sections 23 and 24 commence on 30 March 2026; and 

• section 25 commences the day after the Rules are registered. 

Section 3 – Authority

This section provides that the instrument is made under the Regional Investment Corporation Act 2018 (the Act).

Section 4 – Definitions

This section provides definitions of terms used in the Rules.

A note explains that a number of expressions used in the instrument are defined in the Act, including the following: Board; Corporation; Desertification Convention; and responsible Ministers.

The following table sets out the terms used in the Rules that are defined in section 4.

Part 2—Drought Hardship Loans

Division 1—Prescribing Drought Hardship Loans Program

Section 5 – Drought Hardship Loans Program prescribed

This section prescribes and sets out the purpose and scope of the Drought Hardship Loans Program (the program).

Subsection 5(1) provides that the program is prescribed for the purposes of paragraph 8(1)(g) of the Act. Subsection 8(5) of the Act provides that for the purposes of paragraph (1)(g), the rules may prescribe one or more programs to be administered by the Corporation. Paragraph 8(1)(g) of the Act provides that the Corporation has the function of administering programs prescribed by the rules.

Purpose of program

The heading to subsection 5(2) is “Purpose of program”.

Subsection 5(2) provides that the purpose of the program is for the Corporation to make concessional loans to farm businesses that are in financial need of those loans, and are experiencing a financial impact as a result of prolonged drought, to assist those businesses to manage or recover from the impact of drought.

Scope of program

The heading to subsection 5(3) is “Scope of program”.

Subsection 5(3) provides for the scope of the program. It provides that the program consists of the following:

• making loans under the Rules in accordance with Division 2;
• determining under Division 3 the terms and conditions on which those loans are made;
• taking security for those loans;
• charging applicants for those loans, and recipients of those loans, transaction costs incurred by the Corporation in relation to the program;
• collecting and dealing with payments of interest on, and repayments of principal of, those loans;
• managing those loans, and if required, enforcing security taken for those loans or taking foreclosure action in relation to those loans;
• reviewing periodically those loans and the terms and conditions on which they are made;
• dealing with debts relating to those loans;
• reporting to the responsible Ministers on those loans in accordance with Division 6;
• other matters incidental to a matter set out above.

A note directs the reader to Division 5 about the funding of the loans.

The purpose of this section is to establish the program, to be administered by the Corporation, which includes to make concessional loans to farm businesses that have experienced a financial impact as a result of prolonged drought.

The concessional loans to be made available under the program are intended to assist farm businesses experiencing financial impact as a result of prolonged drought to assist those businesses to meet operating expenses.

Section 6 – Constitutional basis for program

This section, together with section 7, specifies the constitutional basis for the program. 

Paragraph 8(5)(a) of the Act provides that if the rules prescribe one or more programs to be administered by the Corporation, they must address the constitutional basis for each program. 

Section 6 of the Rules provides, for the purposes of paragraph 8(5)(a) of the Act, that the program relies on the Commonwealth’s legislative powers under paragraph 51(xxix) (external affairs) of the Constitution as it relates to giving effect to Australia’s obligations under the Desertification Convention. The Desertification Convention is defined in the Act and means the United Nations Convention to Combat Desertification in those Countries Experiencing Serious Drought and/or Desertification, particularly in Africa, done at Paris on 17 June 1994. 

Paragraph 51(xxix) of the Constitution empowers the Parliament to make laws with respect to “external affairs”. The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party. Australia has international obligations under the Desertification Convention. For example:

• Article 2(1) provides that the objective of the Convention “is to combat desertification and mitigate the effects of drought…through effective action at all levels”;
• Article 4(2)(a) provides that Parties, in implementing the objective of the Desertification Convention, shall adopt an integrated approach to address the physical, biological and socio-economic aspects of the processes of desertification and drought;
• Article 5(a) of the Desertification Convention provides, that affected country Parties undertake to give due priority to combating desertification and mitigating the effects of drought, and allocate adequate resources in accordance with their circumstances and capabilities. 

Additionally, Article 5(b) of the Desertification Convention further provides, among other things, that affected country Parties, in addition to their general obligations pursuant to Article 4, undertake to establish strategies and priorities, within the framework of sustainable development plans and/or policies, to combat desertification and mitigate the effects of drought; and Article 5(e) requires Parties to undertake to provide an enabling environment by strengthening, as appropriate, relevant existing legislation and, where they do not exist, enacting new laws and establishing long-term policies and action programs.

The program enables the Corporation to provide drought hardship loans to certain eligible  farm businesses that are affected by drought, including in an affected area (within the meaning of the Desertification Convention). Eligible farm businesses must undertake all primary production activities within Australia and there must be a material reduction in the turnover of the business from farm activities because of the business being impacted by drought. The business must also be in financial need. These loans will support eligible businesses mitigate the effects of drought and manage or recover from the impact of drought, and in turn help manage the broader socio-economic impacts of desertification and drought. Assisting farm businesses to manage and recover from drought may also improve their resilience and adaptation to droughts and desertification in the future.

Section 7 Additional operation of program 

Section 7 of the Rules provides, for the purposes of paragraph 8(5)(a) of the Act, and in addition to section 6 above, the program also has effect as provided in the section.  

Subsection 7(2) provides that the program also has the effect it would have if a reference to primary production activities in paragraph 9(2)(c) were expressly confined to primary production activities undertaken in the course of: (a) trade or commerce between Australia and places outside Australia, or (b) trade and commerce among the states, or (c) trade or commerce within a Territory, between a State and a Territory or between 2 Territories. Paragraphs (a) and (b) refer to the trade and commerce power (paragraph 51(i) of the Constitution) and paragraph (c) refers to the territories power (section 122 of the Constitution).

Paragraph 51(i) of the Constitution empowers the Parliament to make laws with respect to “trade and commerce with other countries, and among the states”. Section 122 of the Constitution empowers the Parliament to “make laws for the government of any territory”.

Under the program, the Corporation may make drought hardship loans to eligible businesses undertaking primary production activities within Australia in the course of trade and commerce with other countries, or among the States, between a State and a Territory, or between two Territories.

Subsection 7(3) provides that the program also has the effect it would have if a reference to primary production activities in paragraph 9(2)(c) were expressly confined to primary production activities undertaken by a corporation to which paragraph 51(xx) of the Constitution applies. Paragraph 51(xx) of the Constitution empowers the Parliament to make laws with respect to “foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth” (constitutional corporations).

Under the program, the Corporation may make drought hardship loans to eligible businesses undertaking primary production activities within Australia that are constitutional corporations.

Subsection 7(4) provides that the program also has the effect it would have if a reference to primary production activities in paragraph 9(2)(c) were expressly confined to primary production activities undertaken in a Territory. As noted above, section 122 of the Constitution empowers the Parliament to “make laws for the government of any Territory”.

Under the program, the Corporation may make drought hardship loans to eligible businesses undertaking primary production activities in a Territory within Australia.

Division 2—Making drought hardship loans

Section 8 – Making loans

Section 8 of the Rules provides that the Corporation may make a drought hardship loan if the business is eligible for the loan; and the business makes an application in accordance with section 10.

Section 9 provides for when a business is eligible for a loan under the Rules. Section 10 sets out the requirements for an application for a loan under the Rules, which include the form in which an application must be made, the manner (if any) in which it must be made, and any information or documents that must be included in, or accompany, the application.

The purpose of this section is to provide that the Corporation may only exercise its discretion to make a drought hardship loan to a business if the business satisfies the eligibility requirements in section 9 and makes an application in accordance with section 10.

Section 9 – Eligibility for loan

Section 9 of the Rules prescribes the eligibility requirements for a loan made under the Rules.

Subsection 9(1) provides that a business is eligible for a loan under the Rules if the requirements of section 9 are satisfied in relation to the business.

The effect of this subsection is that a business must satisfy all the requirements prescribed by section 9 to be eligible to be granted a drought hardship loan by the Corporation.

Nature of the business

The heading to subsection 9(2) is “Nature of business”.

Subsection 9(2) prescribes a requirement in relation to the nature of a business that is eligible for a loan.

Subsection 9(2) provides that it is a requirement that:

• the business is a farm business (paragraph 9(2)(a)); and
• either:
  • the business is located in an affected area; or
  • the business is not located in an affected area and the Corporation is satisfied that the area the business is located in is affected by drought (paragraph 9(2)(b)); and
  • all primary production activities of the business are undertaken wholly within Australia (paragraph 9(3)(c)).

The effect of paragraph 9(2)(a) is that to be eligible for a loan, the business must be a farm business. “Farm business” has its ordinary meaning.

The effect of paragraph 9(2)(b) is that to be eligible for a loan the business must either:

• be located in an affected area (within the meaning of the Desertification Convention); or
• the Corporation is satisfied that the business is undertaking farm activities and is impacted by drought.

The term “affected area” is defined in section 4 of the Rules to have the same meaning as in the Desertification Convention. “Affected area” in the Desertification Convention means arid, semi-arid, and/or dry sub-humid areas affected or threatened by desertification.

The effect of paragraph 9(2)(c) is that all primary production activities of the business are undertaken wholly in Australia.

Effect of drought on business

The heading to subsections 9(3) and 9(4) is “Effect of drought on business”.

Subsections 9(3) and 9(4) prescribe requirements that the Corporation must be satisfied of in relation to the effect of drought on the business.

Subsection 9(3) provides that it is a requirement that the Corporation is satisfied that there has been a material reduction in the turnover of the business from farm activities because of the business being impacted by drought.

Subsection 9(4) provides that it is a requirement that the Corporation is satisfied that:

• for a period of at least 24 months before the business makes the application in accordance with section 10, the business was affected by drought but had continued to operate; and
• the business is expected to be financially impacted by drought for at least the next 12 months.

Subsections 9(3) and 9(4) together impose key eligibility requirements for the program for the Corporation to make concessional loans to farm businesses financially impacted by drought.

The purpose of subsection 9(3) is to impose a requirement in relation to the impact of the drought on the farm activities of the business. It requires that the Corporation is satisfied that there has been a material reduction in the turnover of the business from farm activities because of the business being impacted by drought.

The purpose of subsection 9(4) is to impose a requirement in relation to the impact of the prolonged drought on the business. It requires that the Corporation is satisfied that for a period of at least 24 months before the business makes the application in accordance with section 10, the business was impacted by drought but had continued to operate; and the business is expected to be financially impacted by drought for at least the next 12 months.

Business requirement

The heading to subsection 9(5) is “Business requirement”.

Subsection 9(5) provides that it is a requirement that:

• the business is carried on by an entity that is:
  • a sole trader; or
  • a partnership; or
  • a trust; or
  • a corporation (within the meaning of the Corporations Act 2001), other than a public company (within the meaning of that Act) (paragraph 9(5)(a)); and
• the entity carrying on the business is registered for tax purposes in Australia with an Australian Business Number (ABN) and registered under the A New Tax System (Goods and Services Tax) Act 1999 (paragraph 9(5)(b)); and
• the Corporation is satisfied that the sole trader, at least one of the partners in the partnership, at least one beneficiary of, or unit holder in, the trust or at least one member of the corporation:
  • is an Australian citizen or permanent resident; and
  • contributes or plans to contribute at least 75% of their labour to the business; and
  • derives or plans to derive at least 50% of their income from the business (paragraph 9(5)(c)); and
• the entity carrying on the business is not subject to external administration or bankruptcy (paragraph 9(5)(d)); and

• the business has a drought management plan that sets out the business’s drought preparedness, drought management and drought recovery strategies (paragraph 9(5)(e)).

The purpose of the requirement in paragraph 9(5)(c) is to ensure that these loans are available to commercial scale farmers who do, or will, spend the majority of their time and receive, or will receive, the majority of their income from the farming business.

The term “permanent resident” is defined in section 4 of the Rules to have the same meaning as in the Australian Citizenship Act 2007. The term “Australian citizen” is defined in section 2B of the Acts Interpretation Act 1901 to have the same meaning as in the Australian Citizenship Act.

Financial requirements

The heading to subsections 9(6) and 9(7) is “Financial requirements”.

Subsections 9(6) and 9(7) prescribe the financial requirements that the Corporation must be satisfied of in relation to the business.

Subsection 9(6) provides that it is a requirement that the Corporation is satisfied that:

• the business is financially viable or has sound prospects of a return to financial viability within 5 years; and
• the business has the capacity to repay the loan; and
• the business has provided sufficient security for the loan.

The purpose of subsection 9(6) is to ensure that the business has the means to meet the terms and conditions of the loan set out in section 13 of the Rules.

Subsection 9(7) provides that it is a requirement that the Corporation is satisfied that the business is in financial need of a concessional loan.

The purpose of subsection 9(7) is to ensure that the drought hardship loan program is only available to businesses in financial need.

Debt requirement

The heading to subsection 9(8) is “Debt requirement”.

Subsection 9(8) prescribes the debt requirement, that at the time the application is made, the business:

• owes commercial debt; and
• has the support of each commercial lender to the proposed loan under the Rules.

The term “commercial debt” is defined by section 4 to mean debt established on commercial terms, at commercial interest rates.

The purpose of subsection 9(8) is to require that at the time a business makes an application for a drought hardship loan that it owes commercial debt and has the support of each commercial lender to whom it owes that debt to being granted a drought hardship loan.

Section 10 – Application for loan 

Section 10 of the Rules provides for the requirements that apply to make a valid application for a loan under the Rules. The Corporation may make a loan under the Rules if a business makes an application in accordance with section 10 (see paragraph 8(b)).

Subsection 10(1) provides that a business may make an application for a loan under the Rules.

Subsection 10(2) provides that an application for a loan under the Rules must:

• be in a form approved under subsection 10(3) (paragraph 10(2)(a)); and
• include the information (if any) required by the Corporation (paragraph 10(2)(b)); and 
• be accompanied by the documents (if any) required by the Corporation (paragraph 10(2)(c)); and
• be made in the manner (if any) approved under subsection 10(4) (paragraph 10(2)(d)). 

Subsection 10(3) provides that the Corporation must, in writing, approve a form for the purposes of paragraph 10(2)(a). It provides that the Corporation must publish the form on its website.

The purpose of subsection 10(3) is to require the Corporation to approve a form in which an application must be made and to make this form available to businesses by publishing the approved form on its website.

Subsection 10(4) provides that the Corporation may, in writing, approve a manner for the purposes of paragraph 10(2)(d). It provides that the Corporation must give details of the manner on its website.

The purpose of subsection 10(4) is to enable the Corporation to approve the manner – that is, the way or method – in which an application for a loan must be made. If the Corporation approves a manner in which an application must be made, it must give details of the manner on its website.

The purpose of this section is to set out how businesses may make a valid application for a loan under the Rules and to enable the Corporation to determine how applications must be made and what they must include. The section provides the Corporation with the power to approve the form and manner in which a business must make a valid application for a loan and to require certain information that must be included and documents that accompany an application.

Section 11 – Informing applicant of outcome of applications for loan 

Section 11 of the Rules prescribes obligations on the Corporation in relation to informing applicants about the outcome of their loan applications and providing reasons for a decision to refuse an applicant a loan.

Subsection 11(1) provides that the Corporation must ensure that an applicant for a loan under the Rules is informed in writing of the outcome of the application as soon as practicable after a decision on the application is made. 

Subsection 11(2) provides when the Corporation has made a decision to refuse an applicant a loan, the Corporation must give the applicant written reasons for the refusal. 

The purpose of this section is to ensure that a business that has applied for a loan is informed by the Corporation in writing of the outcome of the application as soon as practicable, and, where an application for a loan is refused, is given written reasons for that decision by the Corporation.

Division 3—Terms and conditions of loans 

Section 12 Maximum amount of loan 

Section 12 of the Rules provides for the maximum amount of a loan that the Corporation may make under the Rules.

Subsection 12(1) provides that the Corporation must not make a loan under the Rules to a business that exceeds the maximum loan amount. 

Subsection 12(2) provides for a definition of the term “maximum loan amount”. It provides that the maximum loan amount for a business is the lesser of the following:

• an amount that would result in the business holding 50% of its total debt in Commonwealth-funded concessional loans; or 
• $250,000. 

A Commonwealth-funded concessional loan is a loan made on more favourable terms than the borrower could obtain in the marketplace that is funded by the Commonwealth. A loan made by the Corporation is an example of a Commonwealth-funded concessional loan.

Subsection 12(3) provides for a definition of the term “total debt”. It provides that the total debt of a business is the sum of:

• the business’s commercial debt and
• the amount owing under each Commonwealth-funded concessional loan provided to the business. 

The purpose of this section is to set a maximum amount of a loan made by the Corporation under the Rules. A business must owe commercial debt to satisfy the debt requirement of the eligibility criteria for a loan (see subsection 9(8)). The term “commercial debt” is defined by section 4 to mean debt established on commercial terms, at commercial interest rates.

The following are examples of how the provision is intended to apply.

Example 1: A business that has applied for a drought hardship loan owes $150,000 in commercial debt and does not have another Commonwealth-funded concessional loan.

As the business currently owes $150,000 in commercial debt, the maximum loan amount the Corporation could offer, that would result in the business holding 50% of its total debt in Commonwealth funded concessional loans, would be $150,000. That is because a loan amount of $150,000 would result in the business owing a total debt of $300,000, which would consist of $150,000 in Commonwealth funded concessional loans and $150,000 in commercial debt.

As a result, the maximum loan amount that could be made by the Corporation under the Rules to the business would be $150,000, as this would be the lesser of the amounts provided for by subsection 12(2).

Example 2: A business that has applied for a drought hardship loan owes $400,000 in commercial debt and $100,000 in an existing Commonwealth-funded concessional loan.

Based on the current debt owed by the business, the amount of a loan that would result in the business holding 50% of its total debt in Commonwealth‑funded concessional loans would be $300,000. That is because a loan of that amount would result in the business holding $400,000 in Commonwealth‑funded concessional loans and $400,000 in commercial debt, and therefore 50% of its total debt in Commonwealth funded concessional loans.

As a result, the maximum loan amount that could be made by the Corporation under the Rules would be $250,000, as this would be the lesser of the amounts provided for by subsection 12(2).

Section 13 – Other terms and conditions of loans 

Section 13 of the Rules provides that a loan agreement in relation to a loan under the Rules to a business must provide for the loan to be made on terms and conditions that include those specified in the section and may provide for other terms and conditions.

Subsection 13(1) provides that a loan agreement in relation to a loan under the Rules to a business must provide for the loan to be made on terms and conditions that include the following: 

• the term of the loan is 5 years (paragraph 13(1)(a)); 
• the loan is to be used to assist the business to manage or recover from the impact of drought by meeting operating expenses of the business (paragraph 13(1)(b));
• the accrual of interest for the term of the loan (paragraph 13(1)(c));
• no principal or interest is payable for the first 2 years of the loan (paragraph 13(1)(d));
• the business must pay interest and repay the principal over the final 3 years of the loan (paragraph 13(1)(e));
• the business being able to make a full or partial early repayment of the principal or interest (or both) at any time during the term of the loan without penalty (paragraph 13(1)(f));

• all outstanding amounts must be repaid at the end of the term of the loan (paragraph 13(1)(g)). 

A note following subsection 13(1) provides that Part 2 of the Regional Investment Corporation Operating Mandate Direction 2018 deals with the interest rates applying to loans under the Rules. The Operating Mandate provides directions to the Corporation in relation to the interest rates on loans made under the Rules. The Operating Mandate is a disallowable legislative instrument made by the responsible Ministers.

The purpose of subsection 13(1) is to require that a loan agreement in relation to a loan under the Rules to a business must provide for the loan to be made on certain terms and conditions.

Subsection 13(2) provides that the Corporation may, by notice in writing given to the business, determine other terms and conditions on which the loan is made (including other terms and conditions relating to amortisation of the loan). 

The purpose of subsection 13(2) is to clarify that the Corporation may determine other terms and conditions on which a loan under the Rules is made. Any other such terms and conditions are to be determined by the Corporation by notice in writing given to the business. Any terms and conditions so determined would be in addition to those required by subsection 13(1) to be included in a loan agreement.

Division 4—Loan management 

Section 14 – Mediation 

Section 14 of the Rules prescribes obligations on the Corporation in respect of offering to undertake mediation in respect of debts relating to loans under the Rules.

It provides that the Corporation must offer to undertake mediation in respect of debts relating to loans under the Rules. It also provides that, if the offer is accepted, the Corporation must undertake the mediation. 

Section 15 – Waiver decisions 

Section 15 of the Rules prescribes obligations on the Corporation in respect of decisions to waive a debt relating to a loan under the Rules.

It provides that a decision to waive a debt relating to a loan under the Rules must be made by the Corporation (not a delegate of the Corporation): 

• with the agreement of the Board (not a delegate of the Board) (paragraph 15(a)); and 

• after the Corporation (not a delegate of the Corporation) has consulted the responsible Ministers and taken their views into account (paragraph 15(b)). 

The requirement that the Corporation must consult with the responsible Ministers and take their views into account before making a decision to waive a debt relating to a loan under the Rules reflects the financial impact that waiving debt may have on the Commonwealth and the usual role of the Finance Minister (a responsible Minister) in waiving debts owed to the Commonwealth, under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

 Section 16 – Loan foreclosure decisions 

Section 16 of the Rules prescribes rules in respect of loan foreclosure.

Section 16 of the Rules provides that a decision on foreclosure on a loan under the Rules must be made by the Corporation (not a delegate of the Corporation) with the agreement of the Board (not a delegate of the Board). 

The requirements of this section reflect the serious nature of foreclosure decisions, and the impact foreclosure decisions may have on the business and the Commonwealth.

Section 17 – Charging of transaction costs 

Section 17 of the Rules provides that for the purposes of subparagraph 8(5)(b)(i) of the Act, the Corporation may charge applicants for loans under the Rules, and recipients of loans under the Rules, transaction costs incurred by the Corporation in relation to the program.

Subparagraph 8(5)(b)(i) of the Act provides that rules that prescribe programs to be administered by the Corporation for the purposes of paragraph 8(1)(g) of the Act may allow for the charging of transaction costs incurred by the Corporation in relation to a program.

The effect of this section is to permit the Corporation to charge loan applicants, and loan recipients for transaction costs it incurs in relation to the program.

Division 5—Funding of loans 

Section 18 – Funding of loans 

Section 18 of the Rules provides for funding for loans under the Rules.

Subsection 18(1) provides that funds for the Corporation, to make loans under the Rules, are to be made out of money appropriated by the Parliament by an Act. 

A note to subsection 18(1) provides that the Act will usually be an Annual Appropriation Act. 

Subsection 18(2) provides that the Commonwealth is to provide funds to the Corporation, upon the Corporation’s request, to enable the Corporation to make loans to businesses under the Rules as required.

Subsection 18(3) provides that the Corporation must:

• only request funds from the Commonwealth as the funds are required to make loans to businesses under the Rules (paragraph 18(3)(a)); and
• only use funds provided for loans under this instrument for that purpose (paragraph 18(3)(b)). 

The purpose of section 18 is to clarify that funds for the Corporation to make loans are to be provided by the Commonwealth, made out of money appropriated by the Parliament by an Act. This reflects the Commonwealth-funded nature of loans made by the Corporation.

Section 19 – Corporation to pay amounts collected to Commonwealth 

Section 19 of the Rules prescribes obligations in respect of payments made by the Corporation to the Commonwealth.

Section 19 provides that the Corporation must pay the Commonwealth, as soon as reasonably practicable, all payments received by the Corporation, from recipients of loans under the Rules, that are payments of interest on, or repayments of principal of, those loans.

A note directs the reader to section 17 about the payment of transaction costs in relation to the program.

The purpose of section 19 is to ensure that the Corporation pays the Commonwealth all loan payments – payments of interest or repayments of principal – it receives from recipients of loans as soon as reasonably practicable. This is consistent with section 18 of the Rules which requires the Corporation to only request funds from the Commonwealth as the funds are required to make loans to businesses under the Rules.

Division 6—Involvement of responsible Ministers 

Section 20 – Quarterly reporting to responsible Ministers 

Section 20 of the Rules provides that the Corporation must provide a report on loans under the Rules to the responsible Ministers as at the end of every March, June, September and December, including information regarding: the uptake of those loans; details of the portfolio of those loans; and financial performance information. 

This reporting requirement is in addition to other reporting obligations the Corporation may have as a corporate Commonwealth entity under the PGPA Act which include requirements to periodically prepare a corporate plan and annual reports.

Section 21 – Directions by responsible Ministers 

Section 21 of the Rules provides that for the purposes of subparagraph 8(5)(b)(iii) of the Act, the responsible Ministers may give written directions to the Corporation in relation to the program. This section clarifies that the responsible Ministers may not give directions that direct, or have the effect of directing, the Corporation in relation to a particular loan under the Rules.

Subparagraph 8(5)(b)(iii) of the Act provides that rules that prescribe programs to be administered by the Corporation for the purposes of paragraph 8(1)(g) of the Act may allow for the responsible Ministers to give written directions to the Corporation in relation to a program.

The purpose of this section is to enable the responsible Ministers to give written directions in relation to the program, but not in relation to a particular loan. This ensures that decisions on individual loans are made independently of the government. This provision is consistent with the approach taken in other provisions that apply to the direction powers of the responsible Ministers under sections 11 and 12 of the Act (see subsection 11(3) and subsection 12(1) of the Act).

Part 3—Other functions relating to program 

Division 1—Corporation functions 

Section 22 – Preparing and publishing guidelines relating to program 

Section 22 of the Rules provides that for the purposes of paragraph 8(1)(h) of the Act, the Corporation has the functions of:

• preparing written guidelines about the program, including guidelines about:
  • the eligibility criteria for loans under this instrument; and
  • the types of security the Corporation may consider and require for loans under this instrument; and
  • the right to request review of decisions to make or refuse loans under the Rules and the process for requesting such reviews; and
  • loans that the Corporation considers to be Commonwealth-funded concessional loans (paragraph 22(a)); and
• publishing the guidelines on the Corporation’s website (paragraph 22(b)).

Paragraph 8(1)(h) of the Act provides that the Corporation has any functions conferred on it by the rules.

The purpose of this section is to provide the Corporation with the function of preparing and publishing written guidelines relating to its administration of the program. The section provides for the matters to be included in written guidelines, although guidelines may be provided about other matters relating to the program.

Section 23 – Provision of information and advice

Section 23 of the Rules provides that for the purposes of paragraph 8(1)(h) of the Act, the Corporation has the functions of: 

• providing information about loans under the Rules to the responsible Ministers on request; and 

• advising the Commonwealth on matters that may improve the operation and policy outcomes of drought hardship loans.

Paragraph 8(1)(h) of the Act provides that the Corporation has any functions conferred on it by the rules.

This section provides the Corporation with the functions of responding to requests from the responsible Ministers for information about loans under the Rules and advising the Commonwealth on matters that may improve the operation and policy outcomes associated with those loans.

Division 2—Board functions 

Section 24– Ensuring internal review of decisions about loans 

Section 24 of the Rules provides that for the purposes of paragraph 15(1)(e) of the Act, the Board has the function of ensuring that: 

• the Corporation develops and applies procedures, for the review, on request, of any decision (the original decision) to make or refuse a loan under the Rules; and
• those procedures:

• are transparent, robust and fair; and 
• provide for the review to be carried out, and a decision to be made on the review, by a person or persons who were not involved in making the original decision; and 
• are consistent with principles of procedural fairness. 

Subparagraph 15(1)(e)(i) of the Act provides that functions of the Board include any functions conferred on the Board by the rules.

The effect of this section is to provide the Board with the function of ensuring that the Corporation develops and applies procedures for the review of any decision to make or refuse a drought hardship loan. This internal review mechanism would afford applicants the opportunity to seek internal review of the original decision made by the Corporation to make or refuse such a loan and enable the review officer to determine the correct or preferable decision in the circumstances.

Section 25 – Developing and applying loan management policies and procedures 

Subsection 25(1) of the Rules provides that for the purposes of paragraph 15(1)(e) of the Act, the Board has the functions of:

• ensuring that the Corporation develops policies and procedures described in subsection 25(2), that take into account the following matters:

• the concessional nature of loans under the Rules; 
• the effect on recipients of those loans of taking action in accordance with those policies and procedures; and

• ensuring that the Corporation applies those policies and procedures taking those matters into account. 

Paragraph 15(1)(e) of the Act provides that functions of the Board include any functions conferred on the Board by the rules.

Subsection 25(2) of the Rules provides that subsection (1) applies to policies and procedures for managing loans under the Rules in a prudential manner to minimise the risk of default, including policies and procedures for: 

• arrears management; and  

• recovery action; and 

• foreclosure arrangements; and 

• waiving debt after consulting with responsible Ministers; and 

• writing off debt; and 

• handling disputes and complaints. 

The Operating Mandate directs the Corporation to undertake all aspects of its loan management in a prudential manner to minimise the risk of default. It further requires the Board to ensure that prudential and arrears management policies and procedures are developed and applied by the Corporation. See subsections 11(1) and (2) of the Operating Mandate.

The purpose of section 25 is to complement those directions by providing the Board with the function of ensuring that the Corporation develops and applies procedures for managing loans under the Rules in a prudential manner to minimise the risk of default. It requires that such policies and procedures cover particular activities, including for foreclosure arrangements and waiving debt after consulting with responsible Ministers, which are matters addressed by sections 15 and 16 of the Rules.

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Regional Investment Corporation (Drought Hardship Loans) Rules 2026

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument 

The purpose of the Regional Investment Corporation (Drought Hardship Loans) Rules 2026 (the Rules) is to establish the Drought Hardship Loans Program (the program) to enable the Regional Investment Corporation (the Corporation) to make concessional loans to farm businesses that are in financial need of those loans and experiencing a financial impact as a result of prolonged drought, to assist those businesses to manage or recover from the impact of drought.

The program is intended to help businesses who have experienced a material reduction in the turnover of the business from farm activities because of the business being impacted by drought. A condition of the loan is that it is used to assist the business to manage or recover from the impact of drought by meeting operating expenses of the business. This does not include the loan being used for funding capital expenses or refinancing existing debt.

By maintaining business continuity, the program will provide cash-flow relief and help affected farm businesses endure financial hardship resulting from drought over a number of years.

Human rights implications

The Rules engage the right to privacy in Article 17 of the International Covenant on Civil and Political Rights (ICCPR).

Protection against unlawful and arbitrary interference with privacy

Article 17 of the ICCPR prohibits arbitrary or unlawful interference with an individual’s privacy, family, home or correspondence, and protects a person’s honour and reputation from unlawful attacks. The right to privacy encompasses respect for private information and private life, particularly the storing, use and sharing of personal information. These Rules engage Article 17 because the Rules enable:

• collection, storage, use and disclosure of personal information, including credit information; and
• the Corporation to take loan recovery and foreclosure action with the agreement of the Board.

For an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. To the extent that the measures in the Rules may limit the right in Article 17 of the ICCPR, they are lawful and non-arbitrary. The proposed measures in the Rules may allow information to be collected, used and disclosed for particular purposes that are necessary, reasonable, and proportionate to enable the effective delivery of the program. This includes those in the following provisions:

• Subsection 10(2) of the Rules requires loan applicants to make an application for a loan in an approved form, include the information required by the Corporation and be accompanied by the documents required by the Corporation. The information sought in this application is expected to include personal and credit-related information. 

• Section 23 of the Rules provides that for the purposes of paragraph 8(1)(h) of the Act, the Corporation may provide information about loans under the program to the responsible Ministers on request.
• Section 16 enables the Corporation to manage loans and if required take foreclosure action in relation to them subject to the agreement of the Corporation’s Board (section 16).

The right to privacy in Australia is, under Commonwealth jurisdiction, governed by the Privacy Act 1988 (the Privacy Act). The Australian Privacy Principles, outlined in section 14 of that Act, relevantly assist Government entities to ensure that the collection, storage, access, use and disclosure of personal information has a lawful basis. The provisions in the Rules that engage with the right to privacy and reputation will be subject to the Privacy Act. 

The Privacy Act protects the use and disclosure of credit information by providing various safeguards including only collecting data necessary for the operation of the credit reporting system, providing protections against misuse and unauthorised access, affording individuals the right to access and correct their credit information and restricting who can access credit reports. Accordingly, to the extent the right to information privacy is engaged, it is not impermissibly limited as any information usage under the Rules is effectively protected under the Privacy Act.

The component of Article 17 which relates to freedom from arbitrary or unlawful interference with a person’s family and home is engaged by the provision in the Rules which enables the Corporation to take loan recovery and foreclosure action following the agreement of the Board to take such action. Any limitation on this freedom in terms of the effects of potential foreclosure action is necessary and proportionate to achieve the legitimate goal of ensuring creditors receive an equitable distribution of the debtors’ assets in the event of default.

Lack of a mechanism to realise a person’s home as a component of business assets for the recovery of a debt where all other recovery options have been exhausted, would undermine the economic stability and endurance of the loan program. 

Foreclosure action requires the agreement of the Corporation’s Board and is a measure of last resort where other loan recovery action has been unsuccessful and financial hardship arrangements have been fully explored. The Board has the function of ensuring that the Corporation develops and applies policies and procedures in relation to loans, under the Rules in a prudential manner to minimise the risk of default, taking into account the concessional nature of the loans and the effect on recipients of any proposed action in relation to the loan in accordance with those policies and procedures (section 25). Under section 14 of the Rules, the Corporation must also offer, and undertake when accepted, mediation in respect of debts relating to loans under the Rules.

Accordingly, to the extent the right to protection from arbitrary or unlawful interference with home and family is engaged by potential foreclosure action, the right is not impermissibly limited as such action is lawfully enacted and a remedy of last resort, is proportionate and reasonable and not arbitrary having regard to the legitimate policy objective of maintaining loan sustainability, program integrity and equitable access by ensuring defaults are properly managed, capital is recovered and can be directed towards other eligible loan applicants.  

Conclusion 

The Rules are compatible with human rights. To the extent that the Rules may limit human rights, these limitations are necessary, reasonable and proportionate. 

The Hon Julie Collins MP

Minister for Agriculture, Fisheries and Forestry

Senator the Hon Katy Gallagher

Minister for Finance