Commonwealth of Australia Explanatory Memoranda

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PRIMARY INDUSTRIES AND ENERGY RESEARCH AND DEVELOPMENT AMENDMENT BILL 2007

                               2004-2005-2006-2007



   THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                       HOUSE OF REPRESENTATIVES




PRIMARY INDUSTRIES AND ENERGY RESEARCH AND DEVELOPMENT
                   AMENDMENT BILL 2007


                      EXPLANATORY MEMORANDUM




  (Circulated by authority of the Minister for Agriculture, Fisheries and Forestry,
                           the Hon Peter McGauran MP)
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    PRIMARY INDUSTRIES AND ENERGY RESEARCH AND DEVELOPMENT
                       AMENDMENT BILL 2007

GENERAL OUTLINE

This bill provides for amendments to the Primary Industries and Energy Research and
Development Act 1989 (PIERD Act) to improve the governance of the eight statutory rural
Research and Development Corporations (RDCs). The PIERD Act provides the legislative
basis for the funding and administration of the RDCs.

These amendments reflect the Government's endorsement of the assessments by the Minister
for Agriculture, Fisheries and Forestry of the RDCs against the Review of the Corporate
Governance of Statutory Authorities and Office Holders (the Uhrig Report). This Review had
been undertaken by Mr John Uhrig AC to assess the governance arrangements of
Commonwealth statutory authorities, with particular focus on those that impacted on the
business sector.

For the RDCs, the key conclusions of the Minister's assessments were that the Board template
(identified in the Uhrig Report) should continue to apply for each RDC. It was also agreed
that appointment of an Australian Government Director to each RDC Board should be
discontinued to remove the potential for conflict of interest for serving public servants. The
skills set for Board selection would be expanded to include expertise in public administration.

Other amendments to the PIERD Act also respond to the Uhrig Report's intent to improve
corporate governance and will improve board expertise, experience and management
arrangements. These follow an internal review by the Department of Agriculture, Fisheries
and Forestry of the PIERD Act's operational and reporting requirements to consider the
appropriate balance between the Minister's role, effective communications and accountability
and the role of the RDC boards. The interactions of the PIERD Act with the Commonwealth
Authorities and Companies Act 1997 (CAC Act) in regard to accountability and management
obligations were also considered.

FINANCIAL IMPACT STATEMENT

The proposed amendments to the Primary Industries and Energy Research and Development
Act 1989 will have no financial impact on the Commonwealth.




NOTES ON CLAUSES

Clause 1:      Short title
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This clause provides for the short title of the Act to be the Primary Industries and Energy
Research and Development Amendment Act 2007.

Clause 2:      Commencement

This clause provides that the Bill will commence on the day it receives Royal Assent.

Clause 3:      Schedule

Clause 3 provides that each item in the Schedule to this Act is amended or repealed as set out
in the Schedule and that any other item in the Schedule to this Act has effect according to its
terms.

Schedule 1 - Amendments

PRIMARY INDUSTRIES AND ENERGY RESEARCH AND DEVELOPMENT ACT
1989

Items 1, 2, 3, 4, 5 and 6
These items delete various references to government director and government member under
subsection 4(1) [Definitions].

Item 7
This item inserts at subsection 11(d) [Functions] an additional assessment function and
reporting function (to the Parliament, Minister and representative organizations) of the impact
on the primary industry in respect of which a Corporation was established, of R&D activities
that it coordinated or funded.

Item 8
This item repeals the reference to government director in subsection 16(1) [Constitution].

Item 9
This allows for the number of directors, as determined by the Minister, to remain an odd
number once the position of government director has been repealed by omitting "not fewer
than 4 nor more than 6" and substituting "not fewer than 5 nor more than 7" in paragraph
16(1)(d) [Constitution].

Item 10
This item repeals the reference to government director in subsection 17(2) [Appointment of
directors].




Item 11
This item inserts a reference to the Minister in section 24 [Consultation]. This will require the
RDC to consult with the Minister in preparing or varying an R&D plan and provide a
consultative link between the Minister and the RDC in developing R&D plans following
removal of the government director.
                                           4



Item 12
This item inserts a reporting requirement after subparagraph 28(1)(a)(iia) [Annual report] in
the annual report consistent with subsection 11(d) [Functions] on the impact on the primary
industry or class of primary industries in respect of which a Corporation was established.

Item 13
This item omits the government director from subparagraph 63(2) (b) (ii) [Motions of no
confidence].

Items 14 and 15
This item omits the reference to government director in paragraph 66(1) (b) and the reference
to government director in subsection 66(2) [Term of office].

Item 16
This item omits reference to government director in subsection 71(2) [Leave of absence].

Item 17
This item omits the reference to government director in subsection 77(2) [Appointment].

Item 18
This item repeals section 84 [Disclosure of interests] and removes a potential inconsistency
between the PIERD Act and the Commonwealth Authorities and Companies Act 1997 (CAC
Act), leaving it clear that all directors on RDC boards, including the Executive Director, are
subject to the notification regime for material personal interest in the CAC Act.

Item 19
This item inserts after subsection 93(d) [Functions] an additional assessment function and
reporting function of the impact on the primary industry or class of primary industries in
respect of which a Council was established, consistent with those inserted at subsection 11(d)
[Functions] and subparagraph 28(1)(a)(iia) [Annual report].

Item 20
This item omits the reference to government member in paragraph 97(1)(b) [Constitution of
R&D Councils].
Item 21
This item omits the reference to government member in subsection 98(2) [Appointment of
members].

Item 22
This item omits the reference to government director and government member in paragraph
100(1)(e) [Applied provisions].

Item 23
This item inserts a reporting requirement after subparagraph 105(2)(a)(ii) [Annual report] in
the annual report consistent with subsection 11(d) [Functions], subparagraph 28(1)(a)(iia)
[Annual report] and subsection 93(d) [Functions] on the impact on the primary industry or
class of primary industries in respect of which a Council was established.

Items 24 and 25
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These items insert a requirement after paragraph 123(1) (c) and paragraph 123(2) (d)
[Minister may request the establishment of a Selection Committee] requesting the Presiding
Member of a Selection Committee to ask each of the R&D Corporation's or R&D Council's
representative organisations to have regard to the desirability of reflecting a diversity of
expertise, experience and gender among the persons nominated for appointment to the
Selection Committee.

Item 26
This item inserts requirements in paragraph 124(1)(b) [Establishment of Selection
Committees - R&D Corporations], consistent with paragraph 123(1)(c) and paragraph
123(2)(d) [Minister may request the establishment of a Selection Committee], for the
Presiding Member to give each of the Corporation's representative organisations written
notice requesting that nominations to the Minister of persons for appointment to the Selection
Committee should having regard to the desirability of reflecting a diversity of expertise,
experience and gender among the nominees.

Item 27
This item inserts requirements in paragraph 125(3)(b) [Establishment of Selection
Committees - predominantly Commonwealth funded R&D Corporations], consistent with
paragraph 123(1)(c), paragraph 123(2)(d) [Minister may request the establishment of a
Selection Committee] and paragraph 124(1)(b) [Establishment of Selection Committees -
R&D Corporations], for the Presiding Member to give to each of the representative
organisations of the predominantly Commonwealth funded R&D Corporations written notice
requesting that nominations to the Minister of persons for appointment to the Selection
Committee should have regard to the desirability of reflecting a diversity of expertise,
experience and gender among the nominees.

Item 28
This item inserts requirements in paragraph 126(1)(b) [Establishment of Selection
Committees - R&D Councils], consistent with paragraph 123(1)(c), paragraph 123(2)(d)
[Minister may request the establishment of a Selection Committee], paragraph 124(1)(b)
[Establishment of Selection Committees - R&D Corporations] and paragraph 125(3)(b)
[Establishment of Selection Committees - predominantly Commonwealth funded R&D
Corporations], for the Presiding Member to give each of the representative organisations of
the R&D Councils written notice requesting that nominations to the Minister of persons for
appointment to the Selection Committee should have regard to the desirability of reflecting a
diversity of expertise, experience and gender among the nominees.




Item 29
This item repeals the current paragraph 130(3) (b) [Nominations to be made by Selection
Committees] and substitutes a new paragraph that requires the Selection Committee to specify
how nominations to the R&D Corporation or the R&D Council concerned collectively
possess an appropriate balance of expertise as set out in subsection 131(1) [Selecting persons
for nominations] and experience in board affairs.

Item 30
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This item adds a new expertise (public administration) in subsection 131(1) [Selecting
persons for nominations] to respond to the removal of the government member.

Item 31
This item inserts two new paragraphs after subsection 131(1) [Selecting persons for
nomination] that requires the Selection Committee to consult with the Chairperson (if any) of
an R&D Corporation (new paragraph 131(1)(1A)) or the Chairperson (if any) of an R&D
Council (new paragraph 131(1)(1b)) on the appropriate balance of expertise and experience
required that would best ensure the effective performance of the organisation.

Item 32
This item requires nominations under subsection 131(2) [Selecting persons for nominations]
to collectively possess an appropriate balance of expertise defined in subsection 131(1) in
regard to the particular primary industry or class of primary industries in respect of which the
R&D Corporation or R&D Council is established and experience in board affairs.

Item 33
This item allows for transition provisions to apply to items 23 to 31 despite the amendments
of Part 4 of the Primary Industries and Energy Research and Development Act 1989 made by
this Act. Provisions in force immediately before the commencement of this item continue to
apply in relation to a written notice given by the Minister before that commencement under
subsection 123(1) or (2) as if these amendments had not been made.

Item 34
This item inserts a provision after subsection 141(1) [Annual reports of Selection
Committees] for reports of a Selection Committee for a financial year to include an
assessment of the processes undertaken by each Selection Committee to identify the widest
possible field of available candidates for nomination for appointment.

Item 35
This item allows for the amendment made by item 33 to apply in relation to financial years
starting on or after the commencement of this item.