Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Jim Chalmers MP)Chapter 3: Amendments relating to Indigenous Business Australia
Outline of chapter
3.1 Schedule 3 to the Bill supports the Government's Future Made in Australia agenda by amending the ATSI Act to enable IBA to leverage their capital to invest in First Nations individuals, communities and businesses. The amendments reform IBA's borrowing powers to enable greater investment in First Nations individuals, communities and businesses, and to drive First Nations economic self-determination.
3.2 Schedule 3 of the Bill gives IBA the power to borrow for a purpose in connection with their functions in accordance with the PGPA Act or where the Minister for Finance has agreed to rules prescribing the borrowing.
3.3 Schedule 3 of the Bill removes the restriction on IBA's ability to borrow in s 183 of the ATSI Act. The Bill inserts a new section 183 into the ATSI Act to enable IBA to borrow and raise money in connection with the performance of its functions.
Context of amendments
3.4 The Government's Future Made in Australia agenda in the 2024-25 Budget Papers includes initiatives to boost IBA's investment, borrowing and lending power to enable IBA to deliver on Government priorities by investing in First Nations communities and businesses and driving First Nations economic self-determination.
3.5 IBA promotes First Nations economic self-determination through lending, investment and ancillary support across its 3 activity streams - home ownership, business support, and assets and investments. These activities support First Nations people to start, grow and sustain businesses, purchase homes and invest in commercial ventures. IBA's objective is to foster self-sufficiency and long-term economic empowerment for First Nations communities across Australia.
3.6 Access to capital continues to be a significant barrier to First Nations economic development and empowerment. Without amendments to the ATSI Act, IBA is constrained in its ability to pursue opportunities to finance activities that align with Government priorities.
3.7 Enabling IBA to directly borrow, for the purposes of investing in First Nations ventures, will allow increased investment to support First Nations economic empowerment, enabling IBA to further contribute to the CTG and supporting the delivery of government priorities.
Summary of new law
3.8 Schedule 3 to the Bill amends the ATSI Act to give IBA a power to borrow money in connection with the performance of its functions where it is authorised by the PGPA Act or where the Minister for Finance has agreed to rules prescribing the circumstances and limits of the borrowing.
Detailed explanation of new law
Powers of Indigenous Business Australia
3.9 Schedule 3 to the Bill inserts a new provision into the ATSI Act to include a specific power for IBA to borrow money for a purpose in connection with IBA's functions. This is a supporting provision to provide scope to the new borrowing power under section 183 of the ATSI Act.
[Schedule 3, item 1, and section 152 of the ATSI Act]
Borrowing by Indigenous Business Australia
3.10 Schedule 3 to Bill 2024 repeals and substitutes a new section 183 of the ATSI Act. These amendments set out the conditions and circumstances under which the IBA can borrow money.
3.11 These amendments will modernise the ATSI Act by allowing IBA to borrow for a purpose connected to its functions, where the borrowing is authorised by rules agreed to by the Minister for Finance or under section 57 of the PGPA Act. These amendments provide a mechanism for IBA's borrowing powers to be tailored, whilst maintaining appropriate controls to limit financial risks.
3.12 These amendments provide a rule-making power, under which the Minister can make rules with the written agreement of the Minister for Finance, setting out the circumstances in which IBA may borrow and imposing limits or conditions on borrowing.
3.13 These amendments provide that the IBA rules prevail over written authorisations or rules made under the PGPA Act, to the extent of any inconsistency.
3.14 These amendments define 'borrow' for the purposes of this Part of the ATSI Act.
[Schedule 3, item 2, and section 183 of the ATSI Act]
3.15 Schedule 3 to the Bill repeals subsection 184(2) of the ATSI Act. This is a consequential amendment to the insertion of a new section 183 and definition of 'borrow'.
[Schedule 3, items 3 and 4, and section 184 of the ATSI Act]
3.16 Schedule 3 to the Bill enables the minister to make rules, in the form of a legislative instrument for the purposes of the Legislation Act, prescribing matters required or permitted to be prescribed, or necessary or convenient for giving effect to the borrowing power. These rules are called the Indigenous Business Australia rules. The rules will be subject to the same level of parliamentary scrutiny as regulations (including consideration by the Senate Standing Committee for the Scrutiny of Delegated Legislation), and a motion to disallow the rules may be moved in either House of the Parliament within 15 sitting days of the date the rules are tabled.
3.17 The amendments provide that the rules cannot create offences or penalties, provide arrest, entry, search or seizure powers, impose taxes, or provide for amounts to be appropriated from the Consolidated Revenue Fund. The rules can also not directly amend the text of the ATSI Act.
3.18 The amendments clarify that rules that are inconsistent with regulations made under the ATSI Act have no effect to the extent of the inconsistency, but the rules are taken to be consistent with the regulations to the extent that the rules are capable of operating concurrently with the regulations.
[Schedule 3, item 5]
Commencement, application, and transitional provisions
3.19 Schedule 3 to the Bill 2024 commences the day after Royal Assent.
[Schedule 3]