FINANCIAL FRAMEWORK (SUPPLEMENTARY POWERS) AMENDMENT (INFRASTRUCTURE, REGIONAL DEVELOPMENT AND CITIES MEASURES NO. 1) REGULATIONS 2018 (F2018L00609) EXPLANATORY STATEMENT

Commonwealth Numbered Regulations - Explanatory Statements

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FINANCIAL FRAMEWORK (SUPPLEMENTARY POWERS) AMENDMENT (INFRASTRUCTURE, REGIONAL DEVELOPMENT AND CITIES MEASURES NO. 1) REGULATIONS 2018 (F2018L00609)

EXPLANATORY STATEMENT

 

Issued by the Authority of the Minister for Finance

 

Financial Framework (Supplementary Powers) Act 1997

 

Financial Framework (Supplementary Powers) Amendment

(Infrastructure, Regional Development and Cities Measures No. 1) Regulations 2018

 

The Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) confers on the Commonwealth, in certain circumstances, powers to make arrangements under which money can be spent; or to make grants of financial assistance; and to form, or otherwise be involved in, companies.  The arrangements, grants, programs and companies (or classes of arrangements or grants in relation to which the powers are conferred) are specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the Principal Regulations).  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

 

Section 65 of the FF(SP) Act provides that the Governor-General may make regulations prescribing matters required or permitted by that Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to that Act.

 

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

 

The purpose of the Financial Framework (Supplementary Powers) Amendment (Infrastructure, Regional Development and Cities Measures No. 1) Regulations 2018 (the Regulations) is to amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on the Regional Growth Fund which will be administered by the Department of Infrastructure, Regional Development and Cities.

 

The Regional Growth Fund is a $272.2 million investment program designed to provide grants of $10 million or more for major transformational projects which support long-term economic growth and create jobs in regions, including those undergoing structural adjustment.  The program will fund capital infrastructure projects that involve the construction of new infrastructure, or the upgrade or extension of existing infrastructure, across a range of key economic activities including, but not limited to: transport; communications; tourism; manufacturing; and primary industries.

 

Details of the program, including the program guidelines, were released by the Minister for Regional Development, Territories and Local Government, the Hon Dr John McVeigh MP, on 2 March 2018.  Funding for the four-year grant program was included in the 2017-18 Budget.

 

Details of the Regulations are set out at Attachment A.  A Statement of Compatibility with Human Rights is at Attachment B

 

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

 

The Regulations commence on the day after the instrument is registered on the Federal Register of Legislation. 

 

Consultation

 

In accordance with section 17 of the Legislation Act 2003, consultation has taken place with the Department of Infrastructure, Regional Development and Cities.

 

A regulation impact statement is not required as the Regulations only apply to non-corporate Commonwealth entities and do not adversely affect the private sector.

 

 

 


Details of the Financial Framework (Supplementary Powers) Amendment (Infrastructure, Regional Development and Cities Measures No. 1) Regulations 2018

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Infrastructure, Regional Development and Cities Measures No. 1) Regulations 2018.

 

Section 2 - Commencement

 

This section provides that the Regulations commence on the day after the instrument is registered on the Federal Register of Legislation. 

 

Section 3 - Authority

 

This section provides that the Regulations are 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 Schedule to the Regulations.

 

Schedule 1 - Amendments

 

Item 1 - In the appropriate position in 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 on the Regional Growth Fund which will be administered by the Department of Infrastructure, Regional Development and Cities (the department).

 

New table item 275 establishes legislative authority for government spending on the Regional Growth Fund.

 

The Regional Growth Fund is a $272.2 million investment program designed to provide grants of $10 million or more for major transformational projects which support long-term economic growth and create jobs in regions, including those undergoing structural adjustment.  The program will fund capital infrastructure projects that involve the construction of new infrastructure, or the upgrade or extension of existing infrastructure.

 

The projects will support 'common-use’ infrastructure or private use infrastructure that will deliver significant and sustainable benefits to regions by creating jobs and economic growth.  Projects can be undertaken across a range of key economic activities including, but not limited to: transport; communications; tourism; manufacturing; and primary industries. 

Examples of 'common-use' infrastructure projects include freight hubs, roads, ports and terminals, medical hubs, communication infrastructure, and integrated tourism infrastructure that enhance and support Australia's regional tourism experience.

 


 

The program aims to bring together funding from the Australian Government and other sources such as the private sector, not-for-profit organisations and other levels of government to invest in significant capital works projects that will be transformational for regions facing challenges but with potential for growth.  There will be a minimum Commonwealth contribution of $10 million, representing a maximum of 50 per cent of a project's cost.  Co-funding from project proponents and/or other contributors will make up at least 50 per cent of the overall investment, with the total project cost of at least $20 million.  Where appropriate, the department will work with state and territory governments to ensure investments are well targeted and integrated.   

 

The grant program is open to state and territory governments, local governments, the private sector and not-for-profit organisations.  The funding opportunity is for projects located in Australia and in an eligible area or, if the project is located in an excluded area, clearly demonstrates how ongoing economic benefits flow directly into an eligible area.  The excluded areas are cities with a population of over 1 million people (Sydney, Melbourne, Brisbane, Perth and Adelaide) as calculated according to the Urban Centres and Localities criteria defined by the Australian Bureau of Statistics' Australian Statistical Geography Standard.  For the city of Canberra, the excluded area consists only of the part of the Canberra-Queanbeyan Significant Urban Area that is located within the Australian Capital Territory

 

Funding of $272.2 million was included in the 2017-18 Budget under the measure 'Regional Growth Fund'.  Details are contained in Budget 2017-18, Budget Measures, Budget Paper No. 2 2017-18 at page 136.  Grant funding under the program will be provided over four years commencing in 2018-19.

 

Selection of projects will be undertaken in two stages:

 

Stage One requires the submission of an Initial Application for competitive assessment by the department against the eligibility and merit criteria set out in the program guidelines.  The Ministerial Panel, chaired by the Minister for Regional Development, Territories and Local Government (the Minister), will decide which Initial Applications are successful to progress to Stage Two to submit a Full Business Case in consultation with the Investment, Infrastructure and Innovation Committee of Cabinet or the Cabinet. 

 

Should a project that is invited to submit a Full Business Case not be successful at the end of the Stage Two assessment, the Ministerial Panel may reconsider unsuccessful Initial Applications and invite a Full Business Case at a later stage.

 

Stage Two involves the submission of a Full Business Case for assessment by the department.  Only successful applicants from Stage One will be invited to submit a Full Business Case.  To ensure the program objectives relating to long-term sustainability are met, applicants will be required to address project and applicant viability and sustainability as part of the Full Business Case.  These requirements include the ongoing operational and maintenance plans for the project, as well as the applicant's financial status.  Following the assessment, the department will provide recommendations to the Minister.  

 

The Minister will consider whether the proposals will make proper use of Commonwealth resources, as required by the Public Governance, Performance and Accountability Act 2013, and whether any specific requirements will be imposed as a condition of funding, should funding be approved.

 

The Minister's decision will be final in all matters, including:

 

There is no appeal mechanism for decisions to approve or not approve a grant.

 

On 2 March 2018, the Minister released the program guidelines and announced that the program was open for Initial Applications.  The program guidelines are published on the GrantConnect website at www.grants.gov.au and set out the eligibility and merit criteria for the Initial Application stage and criteria for the Full Business Case stage.

 

The grant process is conducted in accordance with the Commonwealth Grants Rules and Guidelines 2017.  Once grant agreements are executed for projects, details of the grants will be published on the GrantConnect website.

 

Grant decisions made under the program are not considered suitable for independent review.  These decisions involve a competitive selection process and the allocation of finite funding resources.  Providing for an independent review would affect the allocation of funding to successful applicants, as an allocation that has already been made to another party would be affected by overturning the original decision, as well as the timely delivery of projects and the achievement of program objectives.

 

Funding for this item will come from Program 3.1: Regional Development, which is part of Outcome 3.  Details are set out in the Portfolio Budget Statements 2017-18, Budget Related Paper No. 1.13, Infrastructure and Regional Development Portfolio at page 47.

 

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

 

Interstate and international trade and commerce power

 

Section 51(i) of the Constitution empowers the Parliament to make laws with respect to 'trade and commerce with other countries, and among the States'.

 

Grants will be made under the program for the construction or redevelopment of local infrastructure which provides for or serves interstate trade and commerce or overseas tourism.  Grants will also foster or improve the engagement of relevant regions in international or interstate trade and commerce.

 

External affairs power

 

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'.  The external affairs power supports legislation implementing treaties to which Australia is a party.

 

Australia has obligations under the International Covenant on Economic, Social and Cultural Rights [1976] (ICESCR).  Article 2(1) of the ICESCR provides that States Parties undertake to take steps to progressively realise the rights recognised in the Covenant 'by all appropriate means, including particularly the adoption of legislative measures'.  Article 6 is concerned with States Parties taking appropriate steps to safeguard the right of everyone to the opportunity to gain his or her living by work (Article 6(1)).  Steps to be taken by States Parties include programs and policies 'to achieve steady economic development' and 'full and productive employment' (Article 6(2)).

 

Australia also has obligations under the International Labour Organization's Convention concerning Employment Policy (ILO Convention 122).  Article 1 requires each Member to declare and pursue an 'active policy designed to promote full, productive and freely chosen employment'.  Under Article 2, Members shall implement measures to achieve the objects in Article 1, including to ensure 'there is work for all those who are available for and seeking work' (Article 1(2)(a)).

 

Grants made under the program will directly create jobs and boost economic activity in the relevant regions and thereby foster employment and reduce unemployment.  The program has a specific merit criterion for job creation.

 

Territories power

 

Section 122 of the Constitution empowers the Parliament to make laws 'for the government of any territory'.

 

Some of the grants made under the program will fund projects in a territory (for example, the Northern Territory).

 

Power to grant financial assistance to States

 

Section 96 of the Constitution empowers the Parliament to 'grant financial assistance to any State'.

 

Some of the grants made under the program may be for projects that involve payments to state governments.

 

Railway construction and extension power

 

Section 51(xxxiv) of the Constitution empowers the Parliament to make laws with respect to 'railway construction and extension in any State with the consent of that State'.

 


 

Grants made under the program may involve the construction or extension of railways, with the consent of relevant states.  For example, the program has a merit criterion that considers projects that will address connectivity constraints faced by regional communities, businesses and services. 

 

Communications power

 

Section 51(v) of the Constitution empowers the Parliament to make laws with respect to 'postal, telegraphic, telephonic and other like services'.

 

Grants may be made under the program to provide or enhance connectivity through new or improved communications infrastructure or services.  The program guidelines specifically identify increased connectivity through the merit criteria.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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 (Infrastructure, Regional Development and Cities Measures No. 1) Regulations 2018

 

These Regulations are 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

 

The Regulations amend Schedule 1AB to the FF(SP) Regulations to establish legislative authority for government spending on the Regional Growth Fund, a 2017-18 Budget initiative, which will be administered by the Department of Infrastructure, Regional Development and Cities.

 

The Regional Growth Fund is a $272.2 million investment program designed to provide grants of $10 million or more for major transformational projects which support long-term economic growth and create jobs in regions, including those undergoing structural adjustment.  The program will fund capital infrastructure projects that involve the construction of new infrastructure, or the upgrade or extension of existing infrastructure, across a range of key economic activities including, but not limited to: transport; communications; tourism; manufacturing; and primary industries.

 

The Minister for Regional Development, Territories and Local Government has responsibility for this matter. 

 

Human rights implications

 

The Regulations do not engage any of the applicable rights or freedoms.

 

Conclusion

 

These Regulations are compatible with human rights as they do not raise any human rights issues.

 

Senator the Hon Mathias Cormann

Minister for Finance


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