Tuesday, 22 November 2022
Emergency Response Fund Amendment (Disaster Ready Fund) Bill 2022; In Committee
by leave—I move Greens amendments (1) to (3) on sheet 1703 together:
(1) Schedule 1, page 7 (after line 28), after item 26, insert:
26A Section 4
fossil fuel financial asset means a financial asset that relates directly to:
(a) infrastructure that is intended to be used wholly or predominantly for extracting, processing (including refining), transporting or exporting coal, gas or oil; or
(b) a person that operates such infrastructure; or
(c) a related body corporate (within the meaning of the Corporations Act 2001) of a body corporate that operates such infrastructure.
(2) Schedule 1, item 105, page 20 (line 21), omit paragraph 34(1)(c), substitute:
(c) $300 million; or
(3) Schedule 1, page 23 (after line 4), after item 112, insert:
112A After section 36
36A Prohibition on investing in fossil fuel financial assets
(1) The Future Fund Board must ensure that no investments of the Disaster Ready Fund are fossil fuel financial assets.
(2) Subsection (1) does not apply in relation to a financial asset to which section 9A (about transitioning investments of the Emergency Response Fund) applies.
(3) However, if a financial asset to which section 9A applies is a fossil fuel financial asset, the Future Fund Board must realise the financial asset as soon as practicable after the commencement of this section.
(4) This section has effect despite any other provision of this Act.
I foreshadowed the amendments in my speech, so I don't need to speak to them.
The government does not support the amendments proposed by the Greens, and I will quickly run through why. One of the amendments seeks to increase the annual disbursement amount from what will be the Disaster Ready Fund from $200 million per year to $300 million per year. I inform Senator Pocock that, fundamentally, the reason for us opposing this amendment is to preserve, if you like, the principal of the fund so that it has enough money in it to be invested and to keep generating the return that we would then be spending on disaster mitigation going forward.
The Future Fund Management Agency has considered the proposal in your amendment and advised that it would likely deplete the fund. It would essentially be taking out too much every year from that principal, rather than making sure that there were funds left to be invested. The bill's $200 million per year limit for resilience mitigation has been set for long-term sustainability of the fund, making sure that we can deliver sufficient funding for disaster resilience, while not overdrawing the fund. None of us, I think, would want to get to a point where this fund is fully depleted and unable to invest in that disaster mitigation going forward, and $200 million a year is the amount that we're advised can be spent from the fund every year without depleting it.
Aside from that, that figure lines up with what has been recommended for investment in disaster mitigation at the federal level by the Productivity Commission. They delivered a report in 2015 which recommended that the Commonwealth invest up to $200 million per year on resilience projects and for that to be matched by the states and territories. That's what we're proposing to do here. The amount also lines up with figures that the Insurance Council of Australia has called for to be invested in mitigation, which hopefully will provide some level of insurance relief to Australians as well.
This is far from the only investment that our government is making in disaster resilience. While I appreciate Senator Pocock's desire to see even greater investment in disaster mitigation, our position is that we're keen to do that but not necessarily only through this fund. In addition to the funds that this bill will provide for, we've recently committed $800 million with the New South Wales government to the New South Wales Resilient Homes Program for home buybacks and house raising and mitigation. We've also committed $750 million with the Queensland government for a similar program in Queensland. So there is significant money for betterment funding of infrastructure to bring it to a higher standard in both Queensland and New South Wales.
The second proposal put forward by Senator Pocock in her amendments is essentially around the investment strategy to be used by the Future Fund. The government is not able to support this proposed amendment to introduce what would be a prohibition on certain types of investments from the Future Fund. However, the finance minister will work with the Future Fund and the Department of Finance to explore options for investments within the Future Fund that better align with the government's commitment to net zero by 2050.
The legislation governing the Commonwealth's investment funds requires the board to maximise returns over the long term, consistent with best practice for institutional investment. The board integrates environmental, social and governance considerations into its decision-making process by assessing the potential impacts of ESG matters on the risk and return of the portfolio. The board also exercises its ownership rights associated with investments according to the board's ESG policy, which considers a range of issues, including climate change, human and labour rights, sustainable supply chains, corruption and bribery. For those reasons, we'll be opposing the amendments.
The opposition will also be opposing these amendments. As pointed out by the minister, one of the core things that would make for the success of this bill is the ability for the fund to generate returns. I note the government have made quite the story about the fact that, since its inception, the Emergency Response Fund has generated $800-odd million of returns on the initial investment. They are returns that are now in the fund. They are not returns that have been squandered or used by the former government in any way, shape or form, and they now underpin the ability for this fund to generate further returns. I really do want that noted.
We also would not support anything that ties the hands of the Future Fund and its ability to invest following best practice and due diligence. On that basis, we will not be supporting these amendments.
If I may, I'll follow up with a question to the minister relating to this amendment. I'm interested to understand the government's thinking and direction it intends to go with the Future Fund in maximising returns versus investing in industries that are adding to climate change—which we are seeking, in this piece of legislation, to mitigate and adapt to. How are you weighing that up? Do you not see something like the Future Fund as having a requirement to invest in companies and industries that are congruent, that align with a future that Australians can be excited about and where young people can look us in the eye and know that we're doing what's required?
Thanks, Senator Pocock, and thank you for your constructive engagement on this bill more generally. As I was saying in my speech—I'm not sure if you were here for that part of it—of course our government is taking serious action on climate change and the root causes of it, being carbon emissions. I think you supported the legislation that we put through the parliament around increasing Australia's emission reduction targets. That's what we really need to do, to bring down those emissions, and we're taking action on a global stage by being an active participant in negotiations around these issues internationally.
When it comes to these investments, the finance minister is intending to work with the Future Fund and the Department of Finance to explore what options there are for investments, with the Future Fund, that better align with the government's commitment to net zero by 2050. I'm not in a position—that's not my role, finance minister—to give you a lot more detail at this point about exactly where that's heading, but that certainly signals to me an intention from the government to consider these issues.
I have two questions for the minister, and thank you for that clarification. You've used the language of 'alignment with the government's values' in the direction that you will now give to the Future Fund. Can you explore, a little further, what lies underneath that alignment? Is that an instruction to not invest in climate-destroying fossil fuels? What will that instruction say about fossil fuels? That's my first question.
My second question is this. The PBO says that, at $3 billion in the fund, a drawdown of $300 million a year will permit the fund to last until 2047. When do you want to exhaust the fund? On your projections, keeping at $200 million a year drawdown, what year would you be exhausting the fund as currently proposed in the bill?
or WATT (—) (): Thanks, Senator Pocock. In relation to your first question, I probably can't give too much more detail than what I've already said today, which is that this is something that is being explored by the finance minister in discussions with the Future Fund, as to what the investment strategy of the Future Fund is. I'm sure that Senator Gallagher would be happy to talk with you a bit further if you'd like to have some more detail about that. But, clearly, by me saying that we intend to better align the investment options with the government's commitment to net zero by 2050, this is clearly something that the finance minister is giving some thought to.
For your second question, I must admit I haven't seen that PBO research that you're citing. What we're relying on, as I said earlier, is the advice from the Future Fund. That advice is that, really, we can only have a maximum of $200 million per year to ensure that we don't run down the principle of this fund at any point. I stand to be corrected by the advisers who are here, but my understanding is that we don't see the fund being fully depleted by setting a $200 million mark. Obviously, the amount that the fund earns every year will differ depending on investment returns in the market. Even in the time I was the shadow minister, I remember there were some years that generated a very big return, and some years generated a lower return. But, if you like, the $200 million figure is essentially an averaging out—and I don't mean that precisely; I'm just talking generally. But that is an average amount that we could spend from this fund while maintaining that principle at around the $4 billion mark so that we can keep investing it and generate the kinds of returns that we can then spend every single year.
Minister, I'll take you back to my time as policy director with the Pastoralists and Graziers Association. One of the difficulties Western Australia had with the exceptional circumstances legislation in agricultural support is that the particular circumstances of Western Australia, in terms of its geographical spread of population, was quite different to the eastern states. Have you considered how disbursements from this fund will cater for the particular requirements of the jurisdiction of Western Australia, given that, whilst we are relatively small in terms of population, we are a significant contributor to both the economic output of Australia and the economic exports from Australia?
I'm not sure if you heard the part of the debate where I was mentioning that we're currently in the process of developing the guidelines for how this fund will be used, the types of things it will be able to be used for and where it would be spent.
I would not envisage that we would go forward with a specific allocation by state or territory, and I don't think that was done under the former scheme by the former government. But I would certainly expect that all states and territories would share in the benefit of these funds. I think it's pretty commonly known that there are some parts of the country that are more disaster prone than others, so it may well end up being that there is a bit of weighting towards those. But none of those decisions have been made at this point in time. I'd be more than happy, if you'd like to participate in the consultation about those guidelines, to include you in that.
I certainly accept that some parts of Australia are more population heavy and differ, perhaps, in terms of the particular needs of individuals and communities within the Australian society. However, I'm wondering if, for those guidelines, you would envisage taking in economic impacts as well as purely human impacts?
The TEMPORARY CHAIR: Senator Brockman, in future, wait for the call, please. Minister.
Thank you, Chair. I'm sure the former President of the Senate respects your upholding of the standing orders and processes here! As I say, Senator Brockman, we're still working through what the guidelines would involve. But I think it's a fair point that you make—that we need to be thinking not just about human impact but about economic impact. I had some meetings today with some groups about the economic impacts on supply chains that we see from natural disasters, so I think it would be reasonable to expect that there would be a broad range of factors that would be taken into account in determining what gets funded and what doesn't. But again I'd be happy to take any thoughts that you've got as we're preparing these guidelines.
ator DAVEY (—Deputy Leader of the Nationals and Deputy Leader of the Nationals in the Senate) (): Just a follow-up question to that: given that the provisions of this bill commence from 1 July 2023, what do you envisage as the time line to see draft guidelines and finalisation of the guidelines because that deadline is going to be upon us before we even realise it?
As I say, there is a consultation process underway at the moment. Again, I'm more than happy to have our agency brief you on where they're up to it and to take your thoughts on that. I would hazard a guess that we'd be looking at early 2023 by the time the guidelines are finalised. Given that money is available under this fund from 1 July next year, I'd be quite keen to start an application process in the first half of next year so that we can then start funding projects as early as possible once that financial year starts. I'd be looking at early 2023 finalising the guidelines.
Just by way of example, the port of Port Hedland is obviously a significant economic driver both for the economy of Western Australia and the economy of Australia and so, if there were some resilience measures that could be put in place in terms of natural disasters in that port, I would hope that this would be considered, even though the population of that area is very small. I'll take that as a comment, and I will absolutely take you up on your offer for a further briefing and consultation on the matter.
To move back to Senator Barbara Pocock's question about the investment strategy of the Future Fund, are you proposing an extension of investment restrictions as part of the finance minister's consultation with the Future Fund?
Again, Senator Brockman, not being the finance minister I'm not really in a position to say anything other than what I've advised, which is that the finance minister will be working with the Future Fund to explore options for investments within the Future Fund that do better align with the government's commitment to net zero by 2050.
I can't add anything to what I've said, but I don't think that anyone should be ruling things in or out. I don't think that anyone should be taking what I'm saying as anything other than the finance minister exploring options. No decisions have been made about what types of investments would occur and which ones wouldn't. But clearly the finance minister is intending to have this matter discussed with the Future Fund at some point in the future.
Minister, firstly, as a former emergency management minister, I want to congratulate the Labor government on continuing an investment fund that will ensure that our nation can invest in mitigation projects on the ground in local communities to really flip the traditional model in this country of droughts and flooding rains, where we spend 97 per cent of money on fixing up floods and bushfires and cyclonic activity and only three per cent in actually preparing for the future. It's one of the great legacies of the coalition government that we took the brave step of setting up this fund and setting aside portions annually to be supporting state and local governments to mitigate against future disasters.
I had the great pleasure of speaking at the AustralianFinancial Review NationalInfrastructure Summit this morning and caught up with the Lismore mayor, Steve Krieg, who had been speaking at the summit about the importance of exactly these types of projects. He thanked me for our government's commitment—and your government's similar commitment following ours—to provide the Northern Rivers in New South Wales every support to ensure that their community can build the types of infrastructure on the ground that will ensure that what happened in the Northern Rivers—and particularly to the city of Lismore—won't happen again.
I do have a couple of questions. My first is: how has this money has been raised? I had the opportunity to speak at the Australian local government roads seminar down in Hobart a couple of weeks ago. I'm sure a lot of local mayors have all contacted you and your office about the torrential rains and flooding that we're going through at the moment, but the ongoing La Nina situation has also wrought havoc on rural and regional roads. The New South Wales regional councils have come out saying it's a crisis. The Victorian regional councils have all similarly come out saying it is a crisis. Some are looking to the DRFA arrangements to really fund that recovery process; others are looking at similar times in our history when we've had to go to the infrastructure portfolio to fund the particular and specific needs of such unique situations that we're finding ourselves in at the moment with the flooding impact on regional roads in particular. Would you be able to give us an understanding of whether it's going to be DRFA? Is it this particular funding pool that will be able to be accessed or is it a matter for infrastructure ministers—state and federal—to come to an agreement on?
Thanks, Senator McKenzie. I well remember our many discussions about these funds in past estimates hearings and on other occasions. You're right—and I've made this point in the Senate just this week—that one of the major consequences of the flooding that we're seeing at the moment is the massive damage to roads and infrastructure around a lot of rural and regional Australia. I've seen those roads, I've driven on those roads, and you probably have as well. Whether we're talking about roads that are cut off or bridges that are suffering from erosion or potholes, or rail impacts, there are massive impacts out there and it's going to be a very costly bill. I've had a number of discussions with mayors already as I've travelled around the country into these flood areas, and it's pretty much the No. 1 issue they are raising with me.
At this point in time, our intention is to fund those sorts of repairs through the DRFA arrangements, as your government often did in these situations. In some parts of the country we're still at a relatively early stage of assessing the exact impacts of these floods. There are some parts of the country where we still have flood waters in place at the moment and we may well be seeing more. I know for a fact that there are state governments and local governments who have already begun the work of repairs to infrastructure in some parts of the country. In other parts of the country, that hasn't been possible yet because of the conditions. I have personally told a number of mayors that they can absolutely rely on the federal government to deliver funding for those repairs and infrastructure in the way your government did, through those DRFA arrangements. If something additional to that is necessary through the general infrastructure program, then of course we would consider that, but at this point in time what we're trying to do is make those DRFA arrangements work.
I should also say that, even in the short time we have been in office, we have announced substantial amounts of funding for betterment of roads and infrastructure. That's something that mayors have been speaking to me about for many years—back to my days in the Queensland government. We need to be building back better, not just repairing things to the standard they were, so we've done a lot of that already in New South Wales. I feel like we may have committed to a similar program in Queensland as well, and where there's an opportunity to do that around the current floods, we'd look at doing that as well.
Thanks, Minister. That's of great relief. I just last week had a hook-up with my Wangaratta, Towong, Wodonga and Indigo mayors, who just at a rough guesstimate—and these were councils not as severely impacted as further upstream and downstream of the Murray and into western New South Wales, Mayor Jamie Chaffey's shire et cetera—did talk about at a minimum $5 million to $7 million a pop for bridges which were out that were going to impede not just social connectivity but obviously significant economic activity. There was a real concern that the money that the state government had put on the table, when you shared it around, wasn't actually going to cut the mustard, so that will be of great relief. You mentioned building back better under the DRFA, and I know when we were in government we started a review of the DRF Arrangements to have those sorts of much more forward-looking and futureproofing arrangements with state governments. Have the regulatory guidelines and frameworks within the DRFA itself been changed so that state governments will be applying to build back better on assessments, or is that still work that is under discussion with states?
The short answer is that the work is still under discussion with state and local governments. I am aware that your government commenced two reviews of the DRFA, neither of which were completed by the time of the election, so that is work that we've picked up. To be honest we have decided to broaden that further, and we're in discussions with the states and territories about that at the moment. Having said that, where there are opportunities to streamline payments while we're doing that broader review, we're taking those opportunities, and we've made some changes to that effect already, not so much in the infrastructure space but in payments to individuals, small businesses and other groups—I think primary producers as well. That review I expect to be kicking off before too long. Certainly, as I say, we would like to think that building resilience into the system would be an outcome of that review, and it sounds like it's something that you've been a fan of as well.
My question probably goes back to how we can actually be building back better in this round of DRFA, given that work is yet to be completed, because—and correct me if I'm wrong—under the current guidelines we can only build back to spec rather than the 'build back better' piece. So I just want clarity around that, please.
You're right that the general way that the DRFA works is to repair infrastructure back to its pre-disaster standard, but as I'm sure you would recall, the DRFA also does allow for betterment funding, if you like, as a separate stream of funding. My recollection is that it's categories B and D of the DRFA that allow for betterment funding to be provided. That's the way that we have provided that betterment funding to New South Wales, and I think Queensland was the other state we've done it for since taking office. So there is still the ability to do betterment programs, but they have to be, if you like, separate to the usual repair programs. We may well end up doing similar things for these floods, but as I say, it's still fairly early days in actually assessing the scale of the damage across the number of different states that it's impacting on.
McKENZIE (—) (): I did come in for two questions, but thank you, Minister, for your openness. Looking at Victoria, I know in the Western District a local member had a farmer who has a photo of somebody with a sinkhole in his local road up to his hip. We've got the Rutherglen situation of our local roads, and no matter where we go across regional Victoria, whether they've been flood-impacted or indeed just subjected to the torrential rains over probably the last 12 to 18 months, there's significant degradation of our local roads. Has the Victorian government requested the betterment stream, as have Queensland and New South Wales, for these rain events and roads?
I would have to take on notice whether that request has come in—to see whether anything has come into our agency or my office. I know that officials at NEMA, the new agency, have been in regular discussion with the Victorian government about repairs to infrastructure. I myself have had conversations with the Victorian emergency management minister about this issue and that there is going to be a need for significant funding. We've talked about the potential for betterment as well.
One of the issues is that Victoria is in caretaker mode at the moment, which you would recall makes these discussions a little more difficult than usual. Also, as I said, I know that some road infrastructure repairs have already started in Victoria, but there are still a huge number of assessments going on because of the scale of the damage.
You are right; definitely sinkholes exist out there. As I said, on Sunday when I was in Eugowra I saw potholes across the roads there. Equally, a lot have been fixed due to the hard work of local and state governments and many others as well.
I absolutely agree, Minister. It's my understanding from communities in Victoria that your forward-leaning posturing as a federal government with that jurisdiction would be much appreciated, as there has been with other jurisdictions. As the DFRA arrangements have become more sophisticated over time and the emergencies these communities have faced over time have become more complex and more critical some state governments have been better than others at actually understanding their responsibilities under the DFRA arrangements to access the critical funds that we have available at a federal level. We saw that obviously with New South Wales in the Northern Rivers situation where there was confusion about who was doing what. That has obviously been ironed out, which is great. Thanks.
I would appreciate you leaning very forwardly into the Victorian jurisdiction to assist them. Queensland is very highly developed. Unfortunately, Queensland is a jurisdiction that experiences more than its fair share of natural disasters, but as a result it has a very highly developed and professional response to those disasters and a very nuanced understanding of the opportunities available between state and federal governments.
I want to finally address an issue that was raised with me by ALGA and by local governments more broadly about the changes the government is bringing in for the Emergency Response Fund. Did we change the name?
There we go. For my sake let's call it the Emergency Response Fund. Local governments already have long pipelines of local projects that they know they need to deliver to mitigate future disasters, whether they be flood levees, seawalls or other hard infrastructure to protect their communities from a future disaster. There is a concern that this money will be set aside for mitigation projects. It is often hard for local governments to actually source that funding from state governments. There is a concern that this will be going towards those pipelines of infrastructure projects that already exist across the country with local governments in conjunction with state governments and won't be going to social services, charities et cetera. It will be for those hard, often unsexy, infrastructure projects that actually do the heavy lifting during natural disasters.
Just before I respond to your questions, Senator McKenzie, I want to say that your questions have obviously been about Victoria, but I have now had similar discussions with emergency management ministers in a number of states—not just in Victoria—about repairs to infrastructure and betterment opportunities. As I said, we have approved funding for betterment definitely in New South Wales and I'm pretty sure in Queensland as well, but that's in relation to events that took place several months ago, so no criticism should be levelled at the Victorian or any state government about what's happening right now. As you would know, sometimes those betterment discussions happen a little bit further along after the event.
I think I understand your question to mean, 'Will we use what will be the Disaster Ready Fund to invest in physical infrastructure?' I would certainly expect that a sizeable portion would be used for that purpose. You may not have heard me say we're in the process of consulting on guidelines for the fund now. I've invited the shadow minister and Senator Brockman and I'd be happy to invite you to be part of those discussions about what we should use these funds for.
The examples I've always given in the public about how this fund would be used have tended to be physical infrastructure like flood levees, drainage improvements and cyclone shelters—things like that. But that doesn't rule out potentially using them for social services, community resilience and those kinds of things as well. You would know, I'm sure, that there are many communities out there, including local governments, that want to prepare community resilience plans. That's a really worthwhile thing to do. We're waiting until we have that consultation occur to finalise exactly how it could be spent, but I would certainly expect to see a substantial portion of this used to clear the long backlog of local government mitigation projects that exists.
I have a final question on the back of that. There is grave concern in the local government community. Can I have your guarantee that you will deeply consult with ALGA on where they see the best spend for this money? It is incredibly difficult for local councils to get the type of money they need to build these sorts of projects. It's been expressed to me that it is a great concern for them that this bill will change how that money is spent—on that community resilience piece instead of the types of infrastructure projects we need to stop the need for, potentially, those future resilience projects in communities. I understand it is not the government's intention for 100 per cent of the funds to be used to address the local government infrastructure pipeline that already exists in this country against natural disasters.
I think it is worth pointing out that, had the Emergency Response Fund been used more by the former government, we may not have had quite as long a backlog of local government and mitigation projects. But we are where we are, and we do have that backlog. For starters, local governments are being consulted, and heavily consulted, about how these funds should be used. If ALGA haven't been consulted so far, then they are absolutely on the list and will be consulted.
I should say that the discussions and consultation we undertook with ALGA, with state based local government associations and with individual state governments were one of the reasons we committed to creating this fund. The feedback we were getting was that we weren't seeing the level of federal investment in disaster mitigation at a local level that we needed to see. That's one of the reasons that we've decided to go down this path and set up the fund this way. They will certainly be consulted if they haven't been already.
I would expect that we would see a substantial amount of this funding used to assist local governments to build those projects that are needed; I would certainly expect to see that. I've said already that, where possible, we want to see our funds matched by state, territory and local governments. I always say 'where possible' because we recognise there are some extremely remote local governments, for example, that might have only a couple of hundred ratepayers but have a lot of disaster resilience needs. There might be exceptions in certain cases. But we want to work with local governments and we recognise they play an important role here.
Thank you, Minister, for your earlier offer of a briefing and discussion with the Minister for Finance. I'd be delighted to take that up. I have just one question. You indicated that you don't support the amendment we've proposed for a larger drawdown annually. We're suggesting $300 million. My question is: what's the purpose of having a fund last beyond a period in which we are theoretically at net zero, when temperatures are rising right now and natural disasters are getting worse right now? Isn't it sensible to be spending now for preparation, rather than holding on to the funds for later?
Thanks, Senator Pocock. I've been reminded that the legislation provides for a review of the annual disbursement level in five years time, so there would be an opportunity to have a look at it at that point in time. I would like to see this fund last in perpetuity, beyond 2047, beyond 2050. I think that as a country we always need to be investing more in disaster resilience, and should the fund end up, due to very high investment returns, earning a much higher principal, it may be possible to increase the annual disbursement amount down the track. But the advice that we've received so far is that, if we want to be able to continue generating roughly $200 million a year in investment returns that can be used for this purpose, that is the limit of what we can be spending from the fund every year. If we were to go to $300 million in the way that you've proposed, that would gradually erode the principal of the fund, which would mean that we would not be generating the kinds of investment returns we need every year to be able to keep going at the $200 million level, let alone $300 million.
With your indulgence, Minister, I want to bring you back to a couple of issues that you raised when you were responding to Senator McKenzie. The first was about the existing disaster recovery funding arrangements and the investment in the response of the government. As I said before, I credit your government with taking the off-the-shelf arrangements that you inherited and utilising them. Having learned from past experiences, you are rolling it out. I have a question that was put to me today. There was an announcement put out by you and the Premier of South Australia about the funding for a pre-emptive flood response before the flood peak hits South Australia, whereas some local government areas in New South Wales are still waiting to find out whether they are eligible for disaster recovery payments, for example. I'm interested to understand from you how we can pre-emptively declare disaster recovery payments for South Australia while local government areas in New South Wales and, indeed, in Victoria—although a lot of them have been brought on board now—have had to wait for the flood peaks to pass for assessments to be made. That's my first question.
Thanks, Senator Davey. The announcement we made today for disaster assistance for South Australia is actually for nine local government areas that are already experiencing some level of flooding along the river, so they're not pre-emptive. I know the state opposition in South Australia have called for pre-emptive action here, and you might want to chat with them about why they think that should happen. But, in fact, the LGAs in South Australia that are eligible for funding are already experiencing a level of flooding. Of course, every indication is that that flooding is going to get worse, whether it be in those LGAs or in others. As that flooding occurs, we will inevitably end up extending the LGAs that receive that assistance. If you have examples of LGAs in New South Wales or any other state where flooding is occurring and people aren't currently getting disaster assistance, I invite you to provide that information so we can take it up.
Thank you, and I appreciate your offer. I will certainly take it up, and I also acknowledge the work that your office has done in keeping my office informed, as your shadow. There's only one other thing I want to ask about. Earlier I thought I heard you say that the Disaster Ready Fund going forward would be matched by the states. Have you got an intergovernmental agreement with the states already about them matching the funding for mitigation processes, or is that a work in progress?
That is a work in progress. What I have said is that, where possible, we want to see that funding matched by state, territory and local governments. As I said, we're working through the guidelines at the moment about how that will work, so it's a work in progress. Thank you for prompting me, Senator Davey, about the incredible work of my staff, some of whom are in the chamber here today. I think you have some appreciation of the amount of work that is involved in dealing with disasters on such a wide scale. My office and my agency have been working incredibly long hours on this, not just in relation to the current floods but really since we took office—so through July as well. I want to put on record my gratitude to them; they're a great team.
Minister, I want to go back to the investment strategy—and I admit I didn't hear the earlier conversation. Are you proposing a different investment strategy for this particular fund as opposed to the Future Fund, or are you just operating under the Future Fund's investment strategy?
This fund is, if you like, a subset of the Future Fund. So whatever investment strategy applies to the Future Fund in effect applies to this subset of the Future Fund as well. My recollection is that there's more than one of what I call sub-funds of the Future Fund, but there is one overarching investment strategy that applies across the board.
My recollection—I admit that it's been a while since I looked at this—is that the only veto, the only bar, within the Future Fund at the moment is investments in tobacco. You can correct me if I'm wrong on that, but are you flagging a further restriction on investments of the Future Fund, particularly into gas?
I've been informed that, in addition to the ban on investments in tobacco, there's also a ban for weapons, or armaments—I'm not exactly sure what word is used in the investment mandate. But I've already answered your question about gas. All I can do is keep repeating what I said earlier, which is that the finance minister will work with the Future Fund to explore options for investments within the Future Fund that better align with the government's commitment to net zero by 2050.
WATT (—) (): I might need to take it on notice, and it may be that I slightly misheard the earlier advice. It sounds like the prohibition is in relation to weapons that are banned by treaties, including nuclear weapons and landmines. But why don't I get you the precise details so that I don't mislead the Senate.
I've answered that question from you probably six times and from other senators about ten times, and I keep repeating the same advice. It's a matter for you, if you want to twist what I'm saying, to say that we are considering certain things. I have said that we're considering options for investments that better align with our commitment to net zero by 2050.
I move amendment (1) on sheet 1734:
(1) Schedule 1, page 14 (after line 7), after item 71, insert:
71A At the end of Division 2 of Part 3
26A Annual report regarding arrangements and grants
(1) The Emergency Management Minister must cause to be prepared, as soon as practicable after the end of each financial year, an annual report on the exercise of the Minister's functions and powers under section 20 (which deals with arrangements and grants) during the year.
(2) Without limiting subsection (1), the report must include the following in relation to each process by which a decision was made during the year to make one or more section 20 arrangements or section 20 grants:
(a) details of how the process was conducted;
(b) for each arrangement or grant that was made as a result of the process:
(i) the name of the person (other than an individual) or body with or to which the arrangement or grant was made; and
(ii) details of the arrangement or grant made;
(c) for each person or body that, as part of the process, made an unsuccessful application (however described) for an arrangement or grant:
(i) the name of the person (other than an individual) or body; and
(ii) details of the arrangement or grant applied for.
(3) However, information described in paragraph (2)(c) can only be included in the report if the person or body that made the unsuccessful application provides their agreement in writing.
(4) The Emergency Management Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the end of the financial year to which the report relates.
26B Review of arrangements and grants
(1) The Emergency Management Minister must cause an independent review of the following matters to be undertaken before the fifth anniversary of the commencement of this section:
(a) the section 20 arrangements and section 20 grants that have been made, including their purposes and the payments made in relation to them;
(b) the appropriateness of the processes by which decisions to make or not to make such arrangements and grants have been made, taking into account the information reported under section 26A;
(c) the implementation of any guidelines for making decisions of that kind, and compliance with the Public Governance, Performance and Accountability Act 2013 and instruments made under that Act in relation to those decisions;
(d) whether any additional measures should be taken (including amendments of this Act) to improve transparency relating to decisions of that kind, and if so what those measures should be.
(2) The person or persons who conduct the review must:
(a) give the Emergency Management Minister a written report of the review; and
(b) do so before the fifth anniversary of the commencement of this section.
(3) The Emergency Management Minister must cause a copy of:
(a) the terms of reference for the review; and
(b) 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.
(4) The Emergency Management Minister must also cause a copy of the terms of reference and report to be published on the NEMA's website as soon as practicable after the report is given to the Minister.
I move opposition amendment (1) on sheet 1726, in the name of Senator Hume:
(1) Schedule 1, item 105, page 22 (after line 15), at the end of section 34A, add:
(6) The advice given by the Future Fund Board in accordance with subparagraph (1)(b)(i) must be tabled in each House of the Parliament with the relevant determination.
Note: As the determination is a legislative instrument, it is also tabled in each House of the Parliament under section 38 of the Legislation Act 2003.
This amendment gives effect to the recommendation included in the Senate legislation committee's coalition senators' additional comments that division 1, part 5 of the bill be amended to require the full advice of the Future Fund Board to be tabled with the legislative instrument that adjusts the maximum annual disbursement.
We'll be supporting this amendment. We welcome the increased transparency that it underpins.
Question agreed to.
Bill, as amended, agreed to.
Bill reported with amendments; report adopted.