Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer, the Hon Stuart Robert MP)Chapter 3 Loan scheme for eligible primary producers affected by floods in Northern Queensland
Outline of chapter
3.1 Schedule 3 to the Bill provides a special appropriation of $1.75 billion for urgent assistance for eligible primary producers affected by floods in Northern Queensland. The program will consist of a scheme to provide lower interest rate loans to eligible primary producers and will be administered by the Agency.
3.2 The scheme allows for low interest loans to eligible financial institutions for up to three years to reduce their rate of borrowing. This will enable the ADIs to reduce the cost of interest on new and existing loans to eligible primary producers who were affected by floods in Northern Queensland in 2019.
Context of amendments
3.3 Following flooding in Northern Queensland in January 2019 the Government has determined that assistance is required for primary producers who have been affected.
3.4 Urgent assistance following the floods in Northern Queensland will be provided by facilitating lower interest business loans to eligible primary producers. The loan scheme will provide ADIs with lower cost loans to enable them to lower the interest charged on new and existing loans to eligible primary producers.
3.5 All Commonwealth spending must meet the requirements set out in the Constitution. The Constitution requires that an appropriation exist in law before money can be drawn from the Consolidated Revenue Fund.
3.6 A special appropriation provides authority for the appropriation of Commonwealth money for a particular purpose. Once a Bill with a special appropriation provision has been passed by Parliament and commences, ongoing authority exists for the continued expenditure of those funds for the specified purpose.
3.7 Commonwealth spending must also have legislation authorising the spending. Legislative authority for the program to provide urgent assistance to eligible primary producers affected by floods in Northern Queensland is provided through an item in Part 4 of Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997.
Detailed explanation of new law
3.8 Schedule 3 to the Bill appropriates an amount of $1.75 billion from the Consolidated Revenue Fund. The appropriation is a special appropriation to allow the Commonwealth to implement a loan scheme to provide urgent assistance to eligible primary producers affected by the 2019 floods in Northern Queensland. [Schedule 3, item 1]
3.9 The 2019-20 Budget includes funding of up to $1.75 billion for the loan scheme, and as such the special appropriation is limited to that amount.
Application and transitional provisions
3.10 Schedule 3 to the Bill commences the day after the bill receives the Royal Assent. [Clause 2 of the Bill]