Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)Chapter 1 - Preliminary
Outline of chapter
1.1 Part 1 of the Bill sets out the objects of the Act, arrangements for commencement, application to the Crown, and definitions. This Part also contains a simplified outline of the Act.
1.2 Transitional provisions are included in the NHFIC Consequential Amendments and Transitional Provisions Bill.
Detailed explanation of new law
Short title
1.3 This section provides that the Bill, when enacted, may be cited as the National Housing Finance and Investment Corporation Act 2018. [Clause 1]
Commencement, application and transitional provisions
1.4 The Bill will apply from commencement, that is, on the day after Royal Assent, to enable the initial establishment of the NHFIC including appointment of board members and establishment of governance structures. [Clause 2]
1.5 Transitional provisions are included in the NHFIC Consequential Amendments and Transitional Provisions Bill. Under the transitional provisions the NHFIC may not, before the later of 1 July 2018 or such later date as the Minister determines, commence making decisions regarding:
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- the making of loans, investments or grants, or to grant financial assistance to a State or Territory; or
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- the provision of business advisory services or other capacity building assistance to CHPs.
[Schedule 2, item 1, National Housing Finance and Investment Corporation (Consequential Amendments and Transitional Provisions) Bill 2018]
1.6 The Minister may determine the time at which that NHFIC commences making decisions according to its functions. However, such a determination cannot be a day earlier than 1 July 2018, and must be made by legislative instrument. If no such determination is made, and the Act has not commenced by 1 July 2018, the NHFIC will be able to commence making these decisions from 3 months after the Act commences. [Schedule 2, item 1, clause (2),National Housing Finance and Investment Corporation (Consequential Amendments and Transitional Provisions) Bill 2018]
1.7 It is intended that NHFIC's activities (the Bond Aggregator and the NHIF) will commence on 1 July 2018.
Objects
1.8 The object of the Bill is to establish the NHFIC to contribute to efforts to improve housing outcomes for Australians by:
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- strengthening efforts to increase the supply of housing;
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- encouraging investment in housing, particularly in the social or affordable housing sector;
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- providing finance, [2] grants or investments that complement, leverage or support Commonwealth, State or Territory activities relating to housing; and
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- contributing to the development of the scale, efficiency and effectiveness of the community housing sector in Australia.
[Clause 3]
1.9 These objectives will be implemented through the NHFIC's initial activities of administering the Bond Aggregator and NHIF. The bond aggregator seeks to catalyse institutional investment into the community housing sector and improve the financial and management capabilities of this sector (capacity building) - thereby allowing the sector to better leverage the potential large-scale institutional investment enabled by the bond aggregator.
1.10 Under the NHIF, financial assistance will be made available to enable critical infrastructure to increase the stock of housing, particularly affordable housing, and to bring forward the supply of such housing. It does this by addressing impediments in building the infrastructure that is critical to unlocking new housing supply. These can take the form of financial constraints - such as mismatches between future revenue streams and the upfront costs of infrastructure - and coordination issues relating to the different stakeholders and different layers of government regulation and responsibilities.
1.11 It is intended that the Bond Aggregator and NHIF operate in conjunction with commercial lenders and State and Territory governments in order to ensure that its financing is additional to that otherwise available, rather than replacing finance available from other sources.
Simplified outline of the Act
1.12 The Bill contains a simplified outline that summarises its operation. The simplified outline is intended to assist users of the Bill to understand the substantive provisions but is not otherwise comprehensive. For a detailed understanding users of the Bill need to refer to the substantive provisions and explanation in this Explanatory Memorandum. [Clause 4]
Definitions
1.13 The Bill defines a number of terms. The terms that are defined for the purposes of the structure of the NHFIC include NHFIC, Board, Board member, CEO and Chair. The Finance Minister is defined as the Minister administering the PGPA Act. Paid work is defined as work for financial gain or reward irrespective of the status of the person undertaking the work (for example an employee or otherwise). [Clause 5]
Crown to be bound
1.14 This Act binds the Crown in each of its capacities but does not make the Crown liable to prosecution for an offence. [Clause 6]