WHEAT INDUSTRY FUND REGULATIONS (AMENDMENT) 1993 NO. 245

WHEAT INDUSTRY FUND REGULATIONS (AMENDMENT) 1993 NO. 245

STATUTORY RULES 1993 No. 245

Issued by Authority of the Minister for Primary Industries and Energy

Wheat Marketing Act 1989

Wheat Industry Fund Regulations (Amendment)

The Wheat Industry Fund (the Fund), established under the neat Marketing Act 1989 (the Act), is made up of levies paid on all wheat sold or processed plus earnings on Fund monies. The Fund is used by the Australian Wheat Board (AWB) as an asset base to finance a range of commercial activities such as trading in grains and investment in grain related value adding activities.

The use and management of Fund monies is determined by the provisions of the Act and the associated Wheat Industry Fund Regulations (Statutory Rules 1990 No 28 as amended), which require the AWB to manage the Fund in accordance with an Annual Business Plan approved by the Grains Council of Australia (GCA). Business Plans may cover the proposed uses of the Fund including any revolvement or repayment of monies. The Regulations provide that levy payers hold equity in the Fund and for that equity to be determined annually.

Changes to the Act, which were passed by Parliament in December 1992, expanded the objectives and functions of the AWB to include participation in grain related value adding activities and extended the Government's borrowing guarantee to fund advance payments for pool return wheat until 1999. The continued operation and build up of the Fund was not varied. This asset base will allow for increased participation by the AWB in value adding activities and enable the AWB to be able to fund advance payments when underwriting support for this purpose ends.

While there is already provision in the Regulations for equity to be transferred, at present there is no recognised financial market for equity certificates and the scope for actual transfer is small. As a result of this and of some growers' concerns over the payment of the Fund levy, the GCA has sought amendments to the Regulations that would allow for repayment of equity in the case of death or bankruptcy. The GCA considered that persons in these circumstances had definitively ceased to be wheatgrowers and were therefore entitled to have access to their equity in the Fund.

The proposed Regulations provide for the repayment of equity to a representative of the equity holder within the constraints of the Fund's Annual Business Plan, the methods by which repayments are to be made and the time limitations on such payments.

The GCA is pursuing other options to allow equity holders generally to realise at least part of their equity in the Fund and for repayment in special or necessitous circumstances or on leaving the industry. These latter matters have not been addressed in the current amendments to the Regulations.

The opportunity has been taken to correct anomalies identified in the Regulations regarding references to the Fund's financial year, which is defined as commencing on 1 October.

In accordance with the requirements of the Act, a report from the GCA requesting amendment of the Regulations along the above lines has been considered by the Minister and formed the basis of the Regulations.

Details of the proposed Regulations are set out in the Attachment.

ATTACHMENT

Details of the proposed Regulations are as follows:

Regulation 1 - Provides for amendment of the Wheat Industry Fund Regulations.

Regulation 2 - Subregulation 2.1 inserts definitions related to the procedures to be followed by the AWB in making repayments of equity in the case of death or bankruptcy. It also defines

-       the financial year for the Fund as the year commencing on 1 October

-       and extends the meaning of equity holder to include persons entitled to be on the register whether or not registration has actually occurred. This is to protect the entitlement to equity repayment of persons in this situation.

Subregulation 2.2 clarifies for the purposes of the Regulations that a person is not deemed to have paid levy until amounts equivalent to the Fund portion of that levy have been passed to the AWB. In this way the AWB is not liable to repay levy which may have been paid by a grower to the collector (ie the first purchaser of wheat) or the Commonwealth, but which had not been passed to the AWB at the time of an application for repayment of equity. Any such levy subsequently received by the AWB is required to be repaid under the proposed new regulation 18.

Regulation 3 - Amends all references in Regulation 8 relating to the Fund's financial year commencing on 1 October, in order to reflect the definition "WIF financial year" which has now been included in Regulation 2 (Interpretation). These changes will overcome the previous inconsistency between the intended meaning of "financial year" under the Regulations and the meaning as set out in the Acts Interpretation Act 1901. This will assist the AWB in the allocation of equity to equity holders in the Fund.

Regulation 4 - Provides that Regulation 9 will be consistent with the definition of "WIF financial year" which is now included in Regulation 2 (Interpretation). This change will assist the AWB to efficiently issue statements of equity to equity holders in the Fund.

Regulation 5 - Amends references relating to the financial year in Regulation 10 to maintain consistency with the definition of "WIF financial year" in Regulation 2.

Regulation 6 - Requires the Wheat Industry Fund number to be included on the Register of equity holders and substitutes the reference to "season" in paragraph 13(2)(b), with "WIF financial year". This provides that the information in the Register of equity holders will be consistent with the requirements under Regulations 8 and 9 to allocate equity on the basis of levy received and credited in a particular WIF financial year, irrespective of which season's wheat the levy relates to,

Regulation 7 - Adds new regulations to provide for the repayment of equity in the event of death or personal bankruptcy of an equity holder, subject certain conditions.

The proposed new regulation 14 provides for an application to be made to the AWB for repayment of equity where an equity holder has died or is declared bankrupt. In the latter case the equity holder must be a natural person. The proposed new subregulation 14(3) provides for certain information to be tendered by the applicant so that the AWB can verify any claim and correctly determine payment in accordance with the option which has been chosen.

The proposed new regulation 15 sets a time limit of 3 years after death or bankruptcy during which a claim for repayment can be made. Where death or bankruptcy occurred prior to the commencement of these regulations, the three year period commences from that date. A claim cannot be made if a person ceases to be bankrupt before such action is taken.

The proposed new regulation 16 requires the AWB to make a repayment of equity in respect of a valid claim unless in doing so the AWB could not comply with the relevant Annual Business Plan. Under Section 83 of the Act and Regulation 5 the AWB is required to manage the Fund in accordance with the Annual Business Plan approved by the GCA. While it is unlikely that any single application would cause the Business Plan to fail, the proposed new subregulation 16(3) allows for review by the Administrative Appeals Tribunal of any decision by the AWB to not make a repayment under this regulation.

The two options for repayment of equity are set out in the proposed new regulation 17, Under the first option, repayment is based on the equity held at the date of application with no allowance for distribution of Fund earnings which may have occurred since the end of the last WIF financial year. In this case payment is available within 30 days of the claim being received by the AWB (new regulation 19). Under the second option the equity repayment is delayed until after the end of the WIF financial year so that the equity holder participates in the distribution of earnings etc by the Fund for that year, in accordance with Regulation 8. Payment is to be made as soon as practicable after that determination (new regulation 19).

The proposed new regulation 18 provides that any levy received by the AWB on behalf of an equity holder whose equity has already been repaid because of death or bankruptcy, must be paid to the applicant within 30 days (new regulation 19).

The proposed new regulation 19 sets out the time periods for repayments of equity by the AWB in the case of claims arising from death or bankruptcy.

The proposed regulations would commence on the date of Gazettal.