EXPLANATORY STATEMENT
STATUTORY RULES 1990 No. 28
Issued by the Authority of the Minister of State for Resources
WHEAT MARKETING ACT 1989
WHEAT INDUSTRY FUND REGULATIONS
The purpose of the Wheat Industry Fund Regulations is to enable the Australian Wheat Board (AWB) to manage and use money in the Wheat Industry Fund established under Section 80 of the Wheat Marketing Act 1989 (the Act), The Fund has been activated by a decision of the Grains Council of Australia (GCA), which is the industry body representing wheat growers, that all wheat sold or processed by or on behalf of growers will be subject to a levy of 2% of the sales value, at least for the 1989/90 season. Amounts equivalent to this levy are credited to the Fund under Section 81 of the Act.
The purpose of the Fund is to provide an asset base for the AWB to finance a range of commercial activities including cash trading in grains and associated activities and providing insurance on credit sales. This will enable the AWB to meet one of its objectives under the Act, namely providing growers with a choice of marketing options by its commercial participation in the grain market.
The GCA has been given a major role in determining how the Fund should be used and managed since Regulations governing these matters can only be made, under the provisions of subsections 82(3) and 83(3) of the Act, after the Minister for Primary Industries and Energy has considered a report from the GCA, prepared in consultation with the AWB. Such a report has been received and considered by the Minister and was the basis on which the Regulations were drafted.
The Wheat Industry Fund Regulations provide for the AWB to develop an Annual Business Plan in consultation with the GCA. The AWB is to have regard to the Plan in its management of the Fund during the year to which the Plan relates. It is envisaged that each Plan will be a strategic document to cover areas such as proposed uses of the Fund, types of financial support arrangements, payments to holders of certificates in the Fund, and other funding policy issues. In addition the uses for which the AWB can use monies of the Fund as set out in the Act will be subject to the approval of the GCA.
The Regulations also provide that the realised value of all assets of the Fund including monies derived through use of the Fund as a security will be attributable to equity holders in the Fund on a seasonal (1 July - 30 June) basis. This will be achieved through an obligation on the AWB to annually revalue assets of the Fund and issue a statement to all persons recorded on its register at the time, stating the amount of levy paid during the season, if any, and the registered person’s equity in the Fund for that season as determined by the AWB. All or part of a person’s equity will be transferable through the issue of a certificate on request.
The holder of equity in the Fund does not automatically have a right to any payment from the Fund. Payments out of the Fund would be at the discretion of the AWB based on its commercial judgement and after consultation with the Grains Council.
The Government’s commitment to provide a loan guarantee of up to $100 million over five years to assist in the establishment of the Fund is reflected in the Regulations.
Overview
The Wheat Marketing Act 1989 was enacted to address the need for a structured and regulated approach to wheat marketing in Australia. It established the Wheat Marketing Act to govern the operations of the Australian Wheat Board (AWB) and ensure the efficient marketing of wheat on behalf of growers. The Wheat Industry Fund Regulations, issued under the authority of the Minister of State for Resources, were designed to facilitate the management and utilisation of funds collected through a levy on wheat sales. The policy objective of these regulations is to provide the AWB with a financial resource base to engage in commercial activities such as cash trading in grains, offering credit sales insurance, and providing growers with diverse marketing options. The Grains Council of Australia plays a pivotal role in determining the use and management of these funds, ensuring that the regulations align with the industry's strategic needs and the interests of wheat growers.
Scope and Application
The Wheat Industry Fund Regulations, made under the Wheat Marketing Act 1989, pertain to the Australian Wheat Board (AWB) and its management of the Wheat Industry Fund. This Fund was established to provide a financial base for the AWB to engage in commercial activities such as cash trading in grains and providing insurance on credit sales, thereby fulfilling one of its objectives of offering growers various marketing options through its participation in the grain market. The Regulations apply to all wheat sold or processed by or on behalf of growers in Australia, with a levy of 2% on the sales value being credited to the Fund. The Grains Council of Australia plays a pivotal role in determining the Fund's use and management, in consultation with the AWB, as mandated by the Act. The AWB is required to develop an Annual Business Plan, outlining strategic areas such as the proposed uses of the Fund and financial support arrangements, subject to the Grains Council's approval. The Regulations also dictate that the Fund's assets' realised value will be attributed to equity holders on a seasonal basis, with the AWB responsible for annual revaluation and issuing statements to registered persons detailing their equity. The Government's support is reflected in the Regulations through a commitment to provide a loan guarantee of up to $100 million over five years.
Key Provisions
The Wheat Industry Fund Regulations, which come under the Wheat Marketing Act 1989, primarily serve to govern the Australian Wheat Board's (AWB) management and utilisation of the Wheat Industry Fund (Sections 80 and 81). A key provision is the requirement for a 2% levy on the sales value of all wheat sold or processed by or on behalf of growers, which is credited to the Fund (Section 81). This levy aims to provide an asset base for the AWB to engage in various commercial activities, such as cash trading in grains and providing insurance on credit sales, thereby offering growers a choice of marketing options (Section 80). The Wheat Industry Fund Regulations also mandate the development of an Annual Business Plan by the AWB, in consultation with the Grains Council of Australia (GCA), to outline the strategic use of the Fund, including financial support arrangements and payments to equity holders (Section 82). These plans must be approved by the GCA and adhered to by the AWB throughout the relevant year.
The Regulations impose several obligations on the AWB and other entities involved. Firstly, the AWB is required to develop and implement an Annual Business Plan that details the strategic use of the Fund, including the types of financial support and payments to equity holders (Section 82). This plan must be approved by the GCA. Secondly, the AWB must annually revalue the assets of the Fund and issue a statement to all persons recorded on its register, detailing the amount of levy paid during the season and the equity of each registered person for that season (Section 83). Furthermore, the Regulations require the AWB to consult with the GCA before making any payments from the Fund, ensuring that any disbursements are made in accordance with the approved Business Plan and at the commercial discretion of the AWB (Section 82).
The Wheat Industry Fund Regulations establish specific consequences for non-compliance with the outlined provisions. While the Regulations do not explicitly state civil or criminal penalties for breaches, the importance of adhering to the approved Annual Business Plan and the consultation process with the GCA suggests that failure to comply could result in significant consequences. Such non-compliance might lead to the invalidation of transactions or the need for corrective actions, potentially impacting the AWB's ability to use the Fund effectively. Additionally, any misuse of Fund assets could lead to financial losses, necessitating the AWB to rectify any mismanagement and possibly restore the Fund's integrity. The overarching aim of these regulations is to ensure that the Wheat Industry Fund is used responsibly and in line with its intended purpose, thereby safeguarding the interests of wheat growers and the broader grain market.