EXPLANATORY STATEMENT
STATUTORY RULES 1990 No. 417
Issued by the Authority of the Minister of State for Primary Industries and Energy
WHEAT MARKETING ACT 1989
WHEAT INDUSTRY FUND REGULATIONS (AMENDMENT)
Money in the Wheat Industry Fund (the Fund) is used by the Australian Wheat Board (AWB) as an asset base to finance a range of commercial activities such as cash trading in grains and associated activities. The use and management of Wheat Industry Fund monies is determined by the provisions of the Wheat Industry Fund Regulations which give the Grains Council of Australia a controlling role over the use of the Fund and ensure that levy payers hold equity in the Fund and its assets.
A report from the Grains Council of Australia requesting amendments to the guarantee provisions of the Wheat Industry Fund Regulations, and to correct other anomalies in the operation of those regulations, has been considered by the Minister and formed the basis for the proposed Regulations.
The purpose of the Wheat Industry Fund Regulations (Amendment) is to allow for a global type guarantee of borrowings by the Board for purposes involving use of the Wheat Industry Fund and to correct anomalies in the operation of the regulations.
The Wheat Industry Fund Regulations, which became operative in February this year, put into effect the Government’s policy to give a five year $100 million guarantee for borrowings by the AWB for the purpose of the Fund as provided under subsection 83(2) of the Wheat Marketing Act 1989. However, the wording of the relevant provision (regulation 7) requires a temporal connection between a borrowing and a guarantee, which constrains the AWBs ability to arrange suitable funding facilities based on prospective borrowings.
These amendments thus provide for the Treasurer to give a global type guarantee of borrowings by the AWB for the purposes of the use of the Fund. The $100 million limit on the principal guaranteed and the time limit (30 June 1994) have both been retained. Furthermore, the amendments provide that the delegation power for these guarantees may now only be given to senior Treasury officers.
To provide for better management of the Fund, the amendments also provide for only profits from activities involving use of Fund monies, rather than gross receipts, to be credited to the Fund. The amendments also extend the insurance provision of section 82(1)(c) of the Act to allow for the Fund to provide insurance cover in respect of any activity by the AWB, and provide for the AWB to determine equity in the Fund based on levy received in the relevant financial year.
Details of the proposed Wheat Industry Fund Regulations (Amendment) are attached.
ATTACHMENT
Regulation 1 provides for the amendment of the Wheat Industry Fund Regulations.
Regulation 2 allows for profits only, rather than gross receipts, from Fund related activities to be credited to the Fund, and also allows for payment of money received under a Commonwealth guarantee to be paid into the Fund. This corrects an anomaly in regulation 3 of the Wheat Industry Fund Regulations.
Regulation 3 clarifies that the Fund may be used for providing, as well as obtaining, insurance cover in respect of any property of or activity by the Board as provided for by section 82(1)(c) of the Act.
Regulation 4 alters regulation 7 of the Wheat Industry Fund Regulations to allow the Treasurer to give specific or global guarantees of borrowings by the Board for the purposes of activities involving the use of the money of the Fund, providing the principal guaranteed at any time does not exceed $100 million, and is within the five year time limit. Regulation 4 also limits the powers of delegation to senior Treasury officers only. This latter action is in response to a request by the Senate Standing Committee on Regulations and Ordinances.
Regulation 5 allows the Board to determine a contributor’s equity in the Fund based on levy payments actually received by the Board from that person in respect of the relevant financial year.
Regulation 6 provides that equity statements issued by the Board will reflect the amount of levy actually received by the Board from each person in the relevant financial year.
Overview
The Wheat Industry Fund Regulations (Amendment) Statutory Rules 1990 No. 417, enacted by the authority of the Minister of State for Primary Industries and Energy, amends the Wheat Industry Fund Regulations under the Wheat Marketing Act 1989. The amendments address operational anomalies and improve the management of the Wheat Industry Fund, which is used by the Australian Wheat Board (AWB) to finance commercial activities. The key objectives are to enable a global type guarantee for borrowings by the AWB, to correct inconsistencies in the operation of the regulations, and to enhance the financial management of the Fund by focusing on profit-based credits and clarifying the delegation of guarantee powers. The changes are intended to provide more flexibility and ensure the Fund is managed more effectively, while maintaining the $100 million guarantee limit and a five-year time frame as originally stipulated.
Scope and Application
The Wheat Industry Fund Regulations (Amendment) applies to the Wheat Industry Fund, which is a financial resource managed by the Australian Wheat Board (AWB) to finance commercial activities such as grain trading. These regulations amend the Wheat Industry Fund Regulations to improve the management and operation of the Fund. The Wheat Marketing Act 1989, under which these regulations are made, applies to the AWB and its operations as a statutory corporation. The amendments are designed to allow for a global type guarantee of borrowings by the AWB for the purposes of the Wheat Industry Fund and to correct operational anomalies in the existing regulations. The scope of these amendments is limited to the financial arrangements and operational practices of the AWB concerning the Wheat Industry Fund, and they do not extend to other entities or industries. The changes are applicable nationally, as the Wheat Marketing Act 1989 is a Commonwealth Act. The amendments do not introduce new exclusions or exemptions but refine the existing framework to enhance the management and operational efficiency of the Wheat Industry Fund. Subordinate instruments may further extend or specify the application of these amendments as necessary.
Key Provisions
The Wheat Industry Fund Regulations (Amendment) provide a comprehensive framework for the management and use of the Wheat Industry Fund, with several key provisions. Regulation 1 amends the Wheat Industry Fund Regulations to implement the changes proposed by the Grains Council of Australia. Regulation 2 modifies the way profits from activities involving the Fund are credited, ensuring that only net profits, rather than gross receipts, are added to the Fund, thereby correcting an anomaly in the existing regulations. Regulation 3 expands the scope of insurance cover that the Fund can provide, allowing it to insure any property or activity of the Australian Wheat Board (AWB) as permitted under section 82(1)(c) of the Wheat Marketing Act 1989. Regulation 4 introduces a global guarantee mechanism for borrowings by the AWB, allowing the Treasurer to provide guarantees up to $100 million within a five-year period, provided that the principal guaranteed at any time does not exceed this amount. Furthermore, it restricts the delegation of this power to senior Treasury officers only. Regulation 5 allows the AWB to determine a contributor’s equity in the Fund based on the levy payments received in the relevant financial year. Lastly, Regulation 6 ensures that equity statements issued by the AWB reflect the actual levies received from each person in the relevant financial year.
The Wheat Industry Fund Regulations (Amendment) impose specific obligations on the AWB and other entities governed by the Wheat Marketing Act 1989. The AWB must now credit only net profits, rather than gross receipts, from activities involving the Fund. This change aims to provide a more accurate reflection of the Fund’s financial health. The AWB is also mandated to ensure that any insurance cover provided by the Fund complies with the expanded scope allowed under the amended regulations. The Treasurer, on the other hand, must adhere to the conditions set for the global guarantee mechanism, ensuring that any guarantees provided do not exceed the $100 million limit and are within the five-year timeframe. Additionally, the AWB is required to determine contributors’ equity in the Fund based on the actual levy payments received in the relevant financial year and issue equity statements that accurately reflect these amounts.
Breach of the Wheat Industry Fund Regulations (Amendment) may lead to various civil and criminal consequences. The specific offences, penalties, and consequences are not detailed in the explanatory statement but are generally subject to the provisions of the Wheat Marketing Act 1989. Any failure to comply with the amended regulations, such as incorrectly crediting profits to the Fund or providing inaccurate equity statements, could result in legal action being taken against the AWB or relevant officers. The precise penalties would depend on the nature and severity of the breach, but could potentially include fines or other sanctions as prescribed under the Act. Additionally, the Treasurer’s failure to adhere to the conditions for the global guarantee mechanism might also lead to civil or administrative consequences.