Federal Register of Legislation - Australian Government

Primary content

A Bill for an Act to amend the National Housing Finance and Investment Corporation Act 2018, and for related purposes
Administered by: Treasury
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Registered 18 Oct 2018
Introduced HR 18 Oct 2018
Table of contents.

2016-2017-2018

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

NATIONAL HOUSING FINANCE AND INVESTMENT CORPORATION AMENDMENT BILL 2018

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

(Circulated by authority of the

Assistant Treasurer, the Hon. Stuart Robert MP)

 

 

 


Table of contents

13TGlossary...................................................................................................... 1

13TGeneral outline and financial impact..................................................... 3

Chapter 1........... National Housing Finance and Investment Corporation special account           5

Chapter 2........... Other amendments............................................................. 9

Chapter 3........... 13TStatement of Compatibility with Human Rights.... 13

 

 


The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

AHBA

Affordable Housing Bond Aggregator

Bill

National Housing Finance and Investment Corporation Amendment Bill 2018

Investment Mandate

National Housing Finance and Investment Corporation Investment Mandate Direction 2018

NHFIC

National Housing Finance and Investment Corporation

NHFIC Act

National Housing Finance and Investment Corporation Act 2018

 

 


National Housing Finance and Investment Corporation amendments

The National Housing Finance and Investment Corporation Amendment Bill 2018 (the Bill) amends the National Housing Finance and Investment Corporation Act 2018 (the NHFIC Act) to:

       establish a $1 billion special account to support the National Housing Finance and Investment Corporation (NHFIC) bond aggregation function;

       ensure the members of the Board of the NHFIC collectively have an appropriate balance of relevant qualifications, skills or experience, including at least one Board member with a background in social or affordable housing; and

       require a review of the NHFIC Act to commence as soon as possible after 30 June 2020.

12TDate of effect1T12T1TThe amendments apply from the day after Royal Assent.

12TProposal announced1T12T:  The creation of the NHFIC special account has not been previously announced. 1TThe other amendments fully implement the commitment the Government made to the Opposition on 28 June 2018.

12TFinancial impact1T12T1TThe amendments will not have a material impact on the fiscal or underlying cash balance over the forward estimates period.

12THuman rights implications12T:  This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 3, paragraphs 3.1 to 3.4.

12TCompliance cost impact1T12T1TNil

 


Outline of chapter

1.1                  Schedule 1 to the Bill establishes a $1 billion special account to support the NHFIC bond aggregation function.

Context of amendments

The NHFIC

1.2                  The NHFIC is a new corporate Commonwealth entity dedicated to improving housing outcomes. It was established on 30 June 2018 following the commencement of the NHFIC Act.

1.3                  The establishment of the NHFIC was a key element of the Government’s Reducing Pressure on Housing Affordability plan announced in the 2017-18 Budget.

1.4                  The NHFIC has broad functions to enable it to administer:

       a $1 billion National Housing Infrastructure Facility, which will help to finance critical infrastructure to increase the stock of housing, particularly affordable housing, and to bring forward the supply of such housing; and

       the Affordable Housing Bond Aggregator (AHBA), which will improve the efficiency of financing for registered community housing providers, enabling them to improve housing outcomes for their clients. These providers are non-government organisations, generally not-for-profit organisations, which provide subsidised housing for people on a very low, low or moderate income, or for people with additional needs.

1.5                  The NHFIC’s functions are described further in the National Housing Finance and Investment Corporation Investment Mandate Direction 2018 (the Investment Mandate).

1.6                  In the 2018-19 Budget, $150 million was appropriated for the purposes of the AHBA. The provision of funding is subject to agreement between the Commonwealth and the NHFIC. This agreement will be complemented by section 11 of the Investment Mandate.

1.7                  Section 11 of the Investment Mandate requires the NHFIC to allocate up to $1 billion in funds borrowed from the Commonwealth to an AHBA reserve. Allocations generally relate to loans that NHFIC makes to registered community housing providers.

1.8                  Amounts allocated to the reserve must be repaid to the Commonwealth, generally within six months of the end of the underlying loan to a community housing provider. Repayments incorporate an additional interest-like component to allow the Commonwealth to recover its borrowing costs.

1.9                  Any amount paid from the reserve to the Commonwealth would not be available to NHIFC to draw down again without the funds being the subject of a new appropriation.

Summary of new law

1.10              Schedule 1 to the Bill establishes a $1 billion special account for the purpose of the AHBA. This will allow the NHFIC to draw down on a $1 billion line of credit to support the AHBA. The existing $150 million appropriated for the AHBA is credited to the special account.

1.11              These amendments bring forward planned annual appropriations for the AHBA and allow the NHFIC to redraw amounts repaid to the Commonwealth. The amendments ensure the NHFIC is better placed to respond to demand from community housing providers. The amendments also provide certainty over the NHFIC’s available finance in future years so it can commit to potential loan transactions at a later date.

Comparison of key features of new law and current law

New law

Current law

$1 billion is appropriated over four years for the Commonwealth to lend to the NHFIC to support the AHBA.

$150 million is appropriated for the Commonwealth to lend to the NHFIC to support the AHBA.

The $1 billion is credited to a special account, which provides a line of credit to the NHFIC to support the AHBA. When the NHFIC repays an amount it has borrowed, the amount is credited to the special account and is available to be redrawn.

When NHFIC repays an amount it borrows to support the AHBA, the amount is not available to be redrawn by the NHFIC unless the amount is appropriated again by the Parliament.

Detailed explanation of new law

1.12              Schedule 1 to the Bill establishes a $1 billion special account for the purposes of the NHFIC AHBA. [Schedule 1, item 1, section 47A of the NHFIC Act]

1.13              The purpose of the special account is for the Commonwealth to provide loans to the NHFIC to support its function of providing loans to registered community housing providers under the AHBA. The NHFIC must apply borrowed funds to support this function and in accordance with the Investment Mandate, in particular section 11. [Schedule 1, item 1, section 47C of the NHFIC Act]

1.14              The special account is credited with the following amounts:

       the $150 million already appropriated for the Commonwealth to lend to the NHFIC to support the AHBA;

       a new appropriation of $850 million;

       amounts of principal NHFIC repays to the Commonwealth.

1.15              The first amount credited to the special account is the $150 million already appropriated to support the AHBA. This amount will be reduced by any amount the Commonwealth has already lent to the NHFIC before the commencement of this Bill. These amounts will be credited to the special account once the NHFIC repays the amounts.

1.16              The first amount is credited to the special account under section 15 of the Appropriation Act (No. 2) 2018-2019. [Schedule 1, item 1, Notes 2 and 3 to section 47B of the NHFIC Act]

1.17              The second amount credited to the special account is a new appropriation of $850 million made over four years where:

       $105 million is credited on the commencement of the Bill;

       $310 million is credited on 1 July 2019;

       $270 million is credited on 1 July 2020; and

       $165 million is credited on 1 July 2021.

[Schedule 1, item 1, paragraphs 47B(a) to (d) and Note 1 to section 47B of the NHFIC Act]

1.18              The third class of amounts credited to the special account are principal repayments from NHFIC. The payments made by NHFIC to compensate the Commonwealth’s borrowing costs are not credited to the special account, nor are dividends NHFIC makes under section 49 of the NHFIC Act. [Schedule 1, item 1, paragraph 47B(e) of the NHFIC Act]

1.19              The sum of funds in the special account and those on loan to the NHFIC and allocated to the AHBA reserve will generally equal $1 billion. Repaid amounts are credited to the special account and are available to be redrawn as required. If the balance of the special account ever exceeds $1 billion, the account is debited by the amount of the excess and that excess amount is returned to consolidated revenue. [Schedule 1, item 1, subsection 47D(1) of the NHFIC Act]

1.20              The Minister may direct that a specific amount be debited from the special account and returned to consolidated revenue. Before the Minister is able to make this direction, the Minister must consult with the Board. [Schedule 1, item 1, subsections 47D(2) and (3) of the NHFIC Act]

1.21              The direction to debit an amount from the special account is not a legislative instrument within the meaning of subsection 8(1) of the Legislation Act 2003. [Schedule 1, item 1, subsection 47D(4)of the NHFIC Act]

1.22              The Minister must provide a copy of a direction debiting the special account to the Minister for Finance. [Schedule 1, item 1, subsection 47D(5)of the NHFIC Act]

Consequential amendments

1.23              Section 50 of the NHFIC Act provides for the NHFIC to borrow money from the Commonwealth and from other sources. Subsection 50(5) provides that the NHFIC cannot borrow money otherwise than under this section. A consequential amendment is made to allow the NHFIC to borrow money under the provisions establishing the special account. [Schedule 1, item 2, subsection 50(5) of the NHFIC Act]

1.24              New headings are inserted into the NHFIC Act to accommodate the new provisions. [Schedule 1, item 1, the headings to Divisions 1 and 2 of Part 5 of the NHFIC Act]

Application and transitional provisions

1.25              The amendments commence on the day following Royal Assent. The special account is established and begins to operate on this day. 60T[Clause 2 of the Bill]

 


Chapter 2         
Other amendments

Outline of chapter

2.1                  Schedule 2 to the Bill makes minor amendments to the National Housing Finance and Investment Corporation Act 2018 to:

       ensure the members of the Board of the National Housing Finance and Investment Corporation collectively have an appropriate balance of relevant qualifications, skills or experience, including at least one Board member with a background in social or affordable housing; and

       require a review of the Act to commence as soon as possible after 30 June 2020.

Context of amendments

2.2                  During parliamentary debate on the Bill that became the NHFIC Act, Senator the Hon. Doug Cameron circulated two amendments on behalf of the Opposition. The Government supports these amendments. To expedite the passage of the Bill so as to facilitate the NHFIC’s establishment on 30 June 2018, the Government undertook to bring forward the Opposition’s amendments at a later time. Schedule 2 to the Bill fulfils this commitment.

2.3                  The amendments concern sections 18 and 57 of the NHFIC Act. Section 18 of the NHFIC Act allows the Minister to appoint a person to the NHFIC Board if they have appropriate qualifications, skills or experience in one or more of the following areas outlined in subsection 18(2):

       banking and finance;

       law;

       housing (including social or affordable housing);

       infrastructure planning and financing;

       local government;

       public policy;

       an area of expertise prescribed by the rules made under section 58 of the NHFIC Act.

2.4                  Section 57 of the NHFIC Act requires the Minister to undertake a review of the Act as soon as possible after the period of three years beginning when the Act commenced. This would require a review to begin after 30 June 2021.

Summary of new law

2.5                  The amendments in Schedule 2 to the Bill make two changes to the NHFIC Act.

2.6                  Firstly, in appointing NHFIC Board members, the Minister must ensure that the Board members collectively have an appropriate balance of qualifications, skills or experience in the fields mentioned in paragraph 2.3. At least one Board member has appropriate qualifications, skills or experience in social or affordable housing.

2.7                  Secondly, the Minister must cause a review of the operation of the NHFIC Act to be undertaken as soon as possible after 30 June 2020.

Comparison of key features of new law and current law

New law

Current law

In addition, the Minister must ensure that the NHFIC Board members collectively have an appropriate balance of qualifications, skills or experience in the listed fields.

Each NHFIC Board member must have one of more of the listed qualifications.

In addition, at least one NHFIC Board member has appropriate qualifications, skills or experience in social or affordable housing.

The Minister must cause a review of the operation of the NHFIC Act to be undertaken as soon as possible after 30 June 2020.

The Minister must cause a review of the operation of the NHFIC Act to be undertaken as soon as possible after 30 June 2021.

Detailed explanation of new law

Board appointments

2.8                  In appointing the NHFIC Board members, the Minister must ensure that the Board members collectively possess an appropriate balance of qualifications, skills or experience in the fields mentioned in paragraph 2.3. 60T[Schedule 2, item 1, paragraph 18(3)(a) of the NHFIC Act]

2.9                  While it would generally be expected that the Board would be comprised of members possessing an appropriate balance of relevant backgrounds, this amendment makes this an explicit requirement.

2.10              At least one Board member must have appropriate qualifications, skills or experience in social or affordable housing.60T [Schedule 2, item 1, paragraph 18(3)(b) of the NHFIC Act]

2.11              60TThis amendment strengthens the current law, which provides that qualifications, skills or experience in social or affordable housing are relevant for appointment to the NHFIC Board.

Review of the NHFIC Act

2.12              The Minister must cause a review of the NHFIC Act to be undertaken as soon as possible after 30 June 2020, two years after the Act commenced. This is a reduction from the current period of three years. 60T[Schedule 2, item 2, subsection 57(1) of the NHFIC Act]

2.13              The persons undertaking the review must give the Minister a written report of the review. The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament within 15 sitting days of that House after the report is given to the Minister (see section 57 of the NHFIC Act).

Application provisions

2.14              The amendments commence on the day after Royal Assent. 60T[Clause 2 of the Bill]

2.15              The amendments to the appointment of Board members apply to appointments made on or after commencement. 60T[Schedule 2, item 3]


Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

3.1                  The Bill is 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

3.2                  The Bill amends the National Housing Finance and Investment Corporation Act 2018 to:

       establish a $1 billion special account to support the National Housing Finance and Investment Corporation (NHFIC) bond aggregation function;

       ensure the members of the Board of the NHFIC collectively have an appropriate balance of relevant qualifications, skills or experience, including at least one Board member with a background in social or affordable housing; and

       require a review of the Act to commence as soon as possible after 30 June 2020.

Human rights implications

3.3                  The Bill does not engage any of the applicable rights or freedoms.

Conclusion

3.4                  The Bill is compatible with human rights as it does not raise any human rights issues.