Details of the Financial Framework (Supplementary Powers) Amendment (Agriculture and Water Resources Measures No. 2) Regulation 2016

 

Section 1 - Name

 

This section provides that the title of the Regulation is the Financial Framework (Supplementary Powers) Amendment (Agriculture and Water Resources Measures No. 2) Regulation 2016.

 

Section 2 - Commencement

 

This section provides that the Regulation commences on the day after it is registered on the Federal Register of Legislation. 

 

Section 3 - Authority

 

This section provides that the Regulation is made under the Financial Framework (Supplementary Powers) Act 1997.

 

Section 4 - Schedules

 

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedules to the Regulation.

 

Schedule 1 - Amendments

 

Item 1 - Part 4 of Schedule 1AB (table)

 

This item adds a new table item to Part 4 of Schedule 1AB to establish legislative authority for government spending for an activity administered by the Department of Agriculture and Water Resources.

 

New table item 156 establishes legislative authority for the Government to fund farm insurance advice and assessments through the Managing Farm Risk Programme.

 

Funding of $20.2 million is available over four years (2015-16 to 2018-19) for the Programme, which was announced in July 2015 by the Minister for Agriculture, the Hon Barnaby Joyce MP, as part of the Agricultural Competitiveness White Paper.

 

As the agricultural insurance market in Australia continues to mature, a greater choice of commercial products is becoming available.  These include the following types of insurance, which can be used to manage drought and climate risk:

*         multi-peril insurance, which typically provides coverage against a reduction in revenue or production, triggered by the occurrence of one of a number of perils, such as excessive heat or pest infestation;

*         single-peril insurance, also known as named peril insurance, which typically provides coverage for a specific type of event, for example, frost, hail or fire damage to crops, resulting in loss of production; and

*         parametric insurance, also known as index-based insurance, which provides coverage against the occurrence of specific climatic events, such as the amount of rainfall in a particular location over a given time period being greater or less than an agreed amount.

 

As the range and complexity of commercial insurance products increases, identifying and selecting suitable insurance products can be challenging.  The Managing Farm Risk Programme will assist farmers with their decision-making, and help them apply for a suitable product.  Under the program, eligible farm businesses can access up to $2,500 as a one-off rebate to reimburse up to 50 per cent of the costs associated with applying for a new insurance policy that assists with the management of drought and other production and market risks.  Along with other general eligibility requirements, the program is limited to farm businesses with total annual cash receipts of less than $2 million.

 

The program does not involve a competitive, merit-based application and assessment process.  The program is demand driven with funding capped.  Eligibility is binary, based on applicants either meeting or not meeting the requirements of the program as specified in the program guidelines.  Therefore, a merits review mechanism is not appropriate for this type of program.  The department's decision is final and applications will not be reviewed.  However, if an applicant is dissatisfied by the department's handling of an application, they can lodge a complaint via the process detailed in the program guidelines.  Further information is available in the program guidelines, located on the department's website (www.agriculture.gov.au).

 

Spending decisions are made by authorised departmental officers in accordance with ministerially approved program guidelines.  Expenditure for this program is made in accordance with the Public Governance, Performance and Accountability Act 2013, the Commonwealth Grants Rules and Guidelines (CGRGs) and through program guidelines.  Spending decisions are made public on the department's website (www.agriculture.gov.au) as required by the CGRGs.

 

Information on this program is set out in the Mid-Year Economic and Fiscal Outlook 2015-16, Appendix A: Policy decisions taken since the 2015-16 Budget at page 144, under the measure 'Stronger Farmers, Stronger Economy - new drought management framework measure'.  The program comes under Program 1.10: Agricultural Resources, which is part of Outcome 1: More sustainable, productive, internationally competitive and profitable Australian agricultural, food and fibre industries through policies and initiatives that promote better resource management practices, innovation, self-reliance and improved access to international markets.  Funding details are set out in the 2016-17 Portfolio Budget Statements (PBS), Agriculture and Water Resources Portfolio.

 

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the insurance power (section 51(xiv)) of the Constitution.

 

 

 

Statement of Compatibility with Human Rights

 

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

 

Financial Framework (Supplementary Powers) Amendment (Agriculture and Water Resources Measures No. 2) Regulation 2016

 

This Regulation 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

 

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations.  Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs. 

 

The FF(SP) Act applies to Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013. 

 

Schedule 1 to the Regulation amends the Principal Regulations to establish legislative authority in Schedule 1AB for spending by the Government to fund the Managing Farm Risk Programme to provide farm insurance advice and assessments to assist farmers with their decision-making and help them apply for a suitable product.  The program was included in the Agricultural Competitiveness White Paper, which was released by the former Prime Minister, the Hon Tony Abbott MP, and the Minister for Agriculture, the Hon Barnaby Joyce MP, on 4 July 2015.  The program is administered by the Department of Agriculture and Water Resources.

 

The Minister for Agriculture and Water Resources has portfolio responsibility for these programs.

 

Human rights implications

 

The Regulation does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This Regulation is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

Senator the Hon Mathias Cormann

Minister for Finance