Annual Report 2018–19

Our annual report provides details about our activities and performance, including financial statements 2018-19.

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Transmittal letter
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Overview and Highlights
1.1 Chair’s report
1.2 CEO’s report
1.3 Authority and direction
1.4 Our operating environment
1.5 Year in review
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Our organisation
2.1 About our organisation
2.2 Our people
2.3 Board and committees
2.4 Corporate governance
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Annual performance statements
3.1 Statement of preparation
3.2 Performance framework
3.3 Performance against our measures
3.4 Performance against our strategic objectives
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Our Financial performance
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Appendix
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Transmittal letter

Ref: RIC 069
The Hon. David Littleproud MP
Minister for Agriculture and Water, Resources Drought, Rural Finance, Natural Disaster & Emergency Management
Parliament House
CANBERRA ACT 2600

Senator the Hon. Mathias Cormann
Minister for Finance
Parliament House
CANBERRA ACT 2600

Dear Ministers,

Regional Investment Corporation Annual Report 2018–19

I am pleased to submit to you the 2018–19 Annual Report for the Regional Investment Corporation
(the RIC). This report has been prepared in accordance with the Regional Investment Corporation Act
2018 (RIC Act), the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the
Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).

The report is made in accordance with a resolution of the Board of the RIC, which is responsible
under section 46 of the PGPA Act for presenting an annual report to you, for presentation to the
Parliament, on RIC’s activities during the period.

As required by sections 10 and 17AG(2)(b) of the PGPA Rule, I certify that I am satisfied that the RIC:
a) has prepared fraud risk assessments and fraud control plans
b) has in place appropriate fraud prevention, detection, investigation and reporting mechanisms
that meet its specific needs, and
c) has taken all reasonable measures to appropriately deal with fraud.

Yours sincerely

David Foster
Chair of the Board
cc: Senator the Hon. Bridget McKenzie, Minister for Agriculture

1 Overview and highlights

1.1 Chair's report

Australia’s agriculture sector is integral to our country’s social, economic, and environmental fabric. It is our privilege to support the many Australian farmers who need help through our provision of timely and substantial financial assistance. The Regional Investment Corporation (RIC) operating mandate and strategic objectives ensure regional and rural communities have the very best opportunity to grow and prosper.

We are acutely aware that many Australian farmers and regional communities are doing it tough. Some farm businesses need assistance to get through the current drought. Other farm businesses may be seeking funds to better position their business for future growth and increase their resilience in the face of forthcoming challenges. Regardless of the individual drivers, our farm loans aim to help farmers make their businesses stronger, more resilient and more profitable.

We also acknowledge the significance of water infrastructure projects in improving water efficiency, security and sustainability for regional and rural communities. Our National Water Infrastructure Loan Facility (NWILF) provides a mechanism for the Australian Government to work with the states and territories and private sector partners to finance the construction or enhancement of major water infrastructure projects.

In this context, I am privileged to present the RIC Annual Report 2018–19.

Since our establishment, we have worked hard to build the level of awareness around the RIC and our service offering. One of our major achievements was to open our permanent office in Orange, New South Wales, where we are closer to the communities we support. We will build our national network through our business development managers and our assessors, who are based at various locations around the country. I am proud of our achievements over the past year while acknowledging the significant amount of work that is still required.

Our work and the outcomes we have achieved for the year would not have been possible without the close working relationship we had with the Hon. David Littleproud MP, Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management. We also welcome the additional engagement we had with the Hon. Bridget McKenzie, Minister for Agriculture, and ministry officials, and we acknowledge the ongoing support of Senator the Hon. Matthias Cormann, Minister for Finance.

We are proud of the collaborative relationships we have fostered with a variety of stakeholders, including state and territory governments, regional community organisations, research partners, local banks, agriculture consultants and the Rural Financial Counselling Service, in delivering and continuing to improve our services. We will continue to build on work achieved over the past year as well as focus on maturing our business, laying the corporate building blocks for our future and evolving our services and products in line with external pressures and challenges.

I thank the Board, which provides outstanding leadership to the organisation and sets a strong governance example. Board support is critical to the organisation achieving our objectives. Moreover, I am grateful to the small and dedicated team that has worked tirelessly for the sake of our Australian farmers and regional communities for the broader benefit of the nation.

David Foster
Chair of the Board.

1.2 CEO's report

The RIC has delivered significant results in 2018–19, its establishment year. These included setting up a new head office in Orange, New South Wales; establishing sound corporate capacity and capability; maintaining new and improved loan products and services; and building awareness and understanding of our role in regional communities.

Of greatest significance was our approval of $155 million in finance for over 160 farmers; and the launch of our first natural disaster loan for flood-impacted producers—the AgRebuild Loan—in June 2019. The AgRebuild Loan was developed in response to flooding in North Queensland. It provides concessional loans to farm businesses to help them restock, replant and recover from this natural disaster.

As a new organisation, we are focused on improving our business operations and delivering a high level of service, while looking for opportunities to drive investment and growth in rural and regional communities. I am excited about what the future holds for the RIC and the difference we can make to regional communities across Australia.

The challenges of farmers are particularly close to my heart, having grown up in central Queensland. We know that farming is less predictable than it has ever been. We face more frequent extreme weather events than ever before, meaning we need to be more flexible and responsive to the varying challenges.

By working in partnership with industry, banks and government, we can be more flexible in our approach and meet the changing needs of farmers. Our affordable loans allow farmers to improve their balance sheets and bring forward investments that strengthen their operations. Our work can improve the long-term viability of not just individual businesses but also the entire agriculture sector, supporting the government’s $100 billion target to accelerate the growth of the agriculture industry. Working across, and with, the sector will allow us all to make the most of opportunities to provide smart financial solutions.

Our aim is to build upon the strength, resilience and innovation that exists in our regions.By investing in projects that allow us to do more with less, we are providing an avenue for growth and challenging the next productivity frontier. We know the regional areas are full of proud communities underpinned by a successful agricultural sector. The success of our farmers is important not just to these regions but also to the success of the whole nation.

Most of our output has been around our Farm Investment Loans and Drought Loans, but our efforts have also been well spent administering the NWILF. Our focus on NWILF at this foundational stage has been to build awareness, understand the market’s appetite for this loan and, in turn, inform government policy changes to help drive uptake. We have developed some valuable relationships and are positive about our future potential to support Australia’s investment in necessary water infrastructure.

It has been a big year for us in establishing the RIC and developing and delivering our products, but it really is just the beginning. There is a lot to be excited about in our plan for the next period: the implementation of a revised NWILF, greater insight identified through our expanded engagement program, and the delivery of innovative new loan programs.

We will launch our new AgriStarter Loan, which is a finance solution to kickstart the next generation of farmers. We will implement this loan through an agile program delivery team and use it as a pilot to test the value of agile work delivery for subsequent loan programs.

We are unwavering in our commitment to listening and learning and to improving our products and services. We understand the significance of the responsibility vested in us and the real value we can add for our farmers and our communities.

I thank the Board, which has set a strong strategic agenda and challenges us to keep moving. I would also like to express my appreciation to the Hon. David Littleproud MP, Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management, the Hon. Bridget McKenzie, Minister for Agriculture, and Senator the Hon. Matthias Cormann, Minister for Finance, whose commitment to Australian agriculture and national industry sustainability has been critical in the establishment of the RIC.

Finally, our staff continue to inspire me with their flexibility, commitment to service delivery and passion for our work. I thank them for making our valuable achievements possible.

Bruce King
Chief Executive Officer

1.3 Authority and direction

The RIC was established on 1 July 2018 and operates under the Regional Investment Corporation Act 2018 (the RIC Act).

Our purpose is to encourage growth, investment and resilience in Australian farm businesses and rural and regional communities by delivering the Australian Government’s farm business concessional loans and the NWILF.

The RIC works to achieve our purpose through our two key legislative functions: administration of farm business loans; and administration of the NWILF.

Administration of farm business loans On behalf of the Australian Government we administer farm business loans, to help farmers support their long-term strength, resilience and profitability. Administration of farm business loans includes:

 

providing such loans to farm businesses, subject to relevant lending criteria being satisfied

consulting with commercial lenders and other industry bodies representing
persons likely to seek a loan

determining, in accordance with the strategies and policies decided by the Board,
the terms and conditions on which approved loans are provided

managing approved loans

Administration of the National Water Infrastructure Loan Facility On behalf of the Australian Government we administer financial assistance to states
and territories in relation to water infrastructure projects.
Administration of the NWILF includes:
 

liaising, negotiating and cooperating with states and territories and other parties
on possible water infrastructure projects

providing advice to responsible ministers on a water infrastructure project

implementing directions of the responsible ministers to enter into agreements, on
behalf of the Australian Government, for the grant of financial assistance to states
or territories in relation to water infrastructure projects

periodically reviewing financial assistance granted, and the terms and conditions.

Ministerial direction

For the reporting period, two ministers were responsible for the RIC. The Hon. David Littleproud MP was the Minister for Agriculture and Water Resources for the period 1 July 2018 to 29 May 2019, and Senator the Hon. Matthias Cormann, Minister for Finance, was a responsible Minister for the duration of the reporting period. On 29 May 2019, the Hon. David Littleproud MP became the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management and held joint responsibility with Senator the Hon. Bridget McKenzie, Minister for Agriculture, until 30 June 2019. There were no ministerial directions for the reporting period. No government policy orders were issued to the RIC under section 22 of the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) during the reporting period.

1.4 Our operating environment 

During 2018–19 we served a range of Australian farmers with acute needs stemming from the current climate. Australia’s $59 billion agriculture sector has undergone considerable change in the past few decades, driven by shifts in consumer demand, market volatility, technological advances and emerging environmental challenges. Farm businesses were afflicted by drought, bushfires, monsoons and floods during the reporting period.

Through our loan delivery, we had the opportunity and responsibility to support existing farm businesses and to deliver benefits for Australian farmers and the broader economy.

Our work involved collaboration and consultation across the Australian Government and with state and territory governments, the agricultural sector and rural and regional communities. Together, we built awareness of the RIC’s role and offerings, strengthened our working relationships, and identified opportunities where our financial assistance can build resilience and encourage growth. We also explored water infrastructure projects that align with the National Water Initiative and present an opportunity for co-investment for the states and territories under the NWILF.

The RIC’s focus areas included the timely processing of loan requests, supporting the embedding of innovation and climate sustainability into initiatives, and ensuring that our provision of loans is fit for purpose and an appropriate use of government funds.

1.5 Year in review

Figure 1 Year in review

year in review

2 OUR ORGANISATION

2.1 About our organisation 

Type of entity

The RIC is a corporate Commonwealth entity under the PGPA Act. We have annual reporting responsibilities under section 46 of the PGPA Act and a range of reporting and other responsibilities under legislation generally applicable to Commonwealth government authorities.

The RIC is governed by an independent board appointed by the Minister for Agriculture and the Minister for Finance. The role of the Board is to ensure the proper, efficient and effective performance of the RIC’s functions. The Board of the RIC is accountable to the Minister for Agriculture and the Minister for Finance.

Our role

Our role is to administer Commonwealth farm business loans and the NWILF. Our farm business loans provide breathing space for farmers impacted by events outside their control; and present them with an opportunity to modernise, diversify and head in a new direction. They provide an opportunity for farmers to build and maintain diversity in the markets they supply and to take advantage of new and emerging opportunities across Australia and overseas. These loans replace previous state-delivered loans and streamline the application process, ensuring applications are assessed in a nationally consistent way.

The NWILF provides a mechanism for the Australian Government to work with the states and territories and their private sector partners to finance the construction or enhancement of major water infrastructure projects. Loan funding aims to accelerate the construction of major water infrastructure projects such as dams, weirs, pipelines, managed groundwater (aquifer) recharge and wastewater reuse schemes that deliver broad public benefits.

For farm business loans, the RIC works with individual applicants. However, our primary stakeholders in managing the NWILF are state and territory governments. The RIC also provides independent recommendations on water projects to the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management, the Hon. David Littleproud MP, and the Minister for Agriculture, Senator the Hon. Bridget McKenzie.

2.2 Our people 

Our people are our most important resource in delivering our work. Our workforce is accountable, collaborative and future oriented. Through high levels of engagement and support, we have successfully delivered on our strategic objectives and will continue to do so over the next reporting period.

Organisational structure

Figure 2: The RIC's organisational structure

RIC organisational structure

Workforce Profile

At 30 June 2019, the RIC employed 19 people in New South Wales, Queensland and the Australian Capital Territory (see Figure 3). Our staff are located across six locations. Our head office is in Orange, New South Wales.

Figure 3: The RIC's workforce profile

RIC worforce profile

Diversity
The RIC is committed to fostering diversity and a workplace where all employees are treated with respect and their contribution embraced. The diversity of our workforce helps us to better innovate, anticipate and respond to a changing environment and engage with our stakeholders. We use policies and behavioural expectations to keep our workplace fair and encourage a culture of mutual respect. We do this by:

■ promoting and encouraging a diverse workforce
■ fostering an environment for mutual learning, respect and appreciation of differences
■ ensuring our business practices encourage equal opportunity within the RIC and complement
our measures to improve diversity and inclusion
■ using fair and transparent recruitment processes
■ providing employees with equal opportunity access to professional development and training
opportunities
■ consistently applying performance review processes to all employees
■ providing flexible work arrangements for employees to balance personal and work
responsibilities
■ ensuring there is no discrimination towards or against employees in the workplace.

We value differences, promote inclusiveness, encourage our employees to achieve their potential, and abide by the Equal Employment Opportunity (Commonwealth Authorities) Act 1987 (Cth)

Work health and safety

This section is presented in accordance with the requirements of the Work Health and Safety Act 2011 (Cth).

The RIC continues to develop a health, safety and wellbeing (HSW) management system to discharge our legislative obligations and ensure safe outcomes for our employees and for others to whom we owe a duty of care.

HSW policies and procedures continue to be drafted to ensure all areas of HSW risk are identified and mitigated. Standard risk assessment templates have been and continue to be developed to tailor the identification and mitigation of risks against key areas of the RIC’s business. Key areas include remote travel, attendance at third-party premises, and isolated and remote working arrangements.

There were no notifiable HSW issues reported during the period.

2.3 Board and committees

Board members and activity

The RIC Board is the Accountable Authority under the PGPA Act. The Board decides the objectives and strategies of the RIC and ensures that it fulfils its statutory functions in a proper, efficient and effective manner. The Board also oversees a range of RIC governance and compliance-related matters, such as the endorsement of the RIC’s financial statements, performance statements, annual report and corporate plan.

In accordance with the RIC Act, the Board must meet at least four times per year. In the reporting period it met on 10 occasions in order to make key decisions and progress priority work during establishment.

During 2018–19, the fifth and final board member for the RIC was announced. On 4 April 2019, Ms Sharon Starick was appointed for a three-year term. The Board played a significant decision-making and advisory role throughout the RIC’s establishment phase, including appointing the CEO and approving all policy frameworks and governance material for the Board and Audit Committee. The Board regularly evaluates its own performance and the performance of its committees.

Appendix 1 provides details of the Accountable Authority during the reporting period.

The Audit Committee is a subcommittee of the Board. It was established in July 2018. The committee consists of two Board members—Ms Lucia Cade and Mr Mark Lewis—and two independent members—Mr Tim Youngberry (Chair) and Ms Emily Canning.

The Audit Committee’s role is to provide independent assurance and advice to the Board and to assist in maintaining reliable financial and performance reporting, as well as effective systems for risk management and internal control. The committee helps the Board to ensure the RIC complies with all relevant legislative and regulatory obligations, including those under the RIC Act and PGPA Act.

During the reporting period, the Audit Committee played an important role during the RIC’s establishment phase in advising on many components of the RIC’s assurance framework, such as risk management, fraud control and Accountable Authority Instructions. The committee also oversaw the RIC’s internal audit program to ensure compliance and continuous improvement in our operations.

Membership of the Audit Committee has remained constant during the reporting period. In this reporting period the Audit Committee met on five occasions and all members attended each meeting.

Table 2 Independent audit committee members as at 30 June 2019

Tim Youngberry
Chair of the audit committee

Mr Youngberry has extensive experience in the successful implementation of public financial management reforms. He has held senior executive roles in the Australian Government with responsibilities covering whole-of-government financial reporting, accounting policies, budget framework and appropriations management.

From 2010 to 2015, Tim was a member of the International Public Sector Accounting Standards Board. He has also completed the Executive Fellows Program at the Australia and New Zealand School of Government.

Emily Canning
Audit committee member

After five years in private practice, Ms Canning joined the Australian Public Service in 2001, with the Australian Quarantine Inspection Service. Since this time, Ms Canning has had the opportunity to work for the then Department of Family and Community Services; Compeer; the then Department of Education, Employment, and Workplace Relations; and the then Department of Human Services.

Ms Canning is currently the First Assistant Secretary—Biosecurity Operations Division for the Department of Agriculture.

Directors and officers indemnities and insurance 

In 2018–19, the RIC held Directors and Officers Liability Insurance and premiums are paid up to date. There have been no claims against the liability insurance for the reporting period.

2.4 Corporate Governance 

Our governance framework provides the context within which the organisation operates to achieve its objectives, ensuring transparent, ethical and accountable evidence-based decision making, and effectively managing risk and key stakeholder relationships.

Our approach to risk management

The RIC has established a Risk Management Framework which follows best practice principles and aligns with the requirements of the Commonwealth Risk Management Policy and ISO 31000:2018 Risk Management—Principles and Guidelines. Our Risk Management Framework is connected with our planning, monitoring and reporting processes. We will continue to evolve our risk management practices in line with the RIC operating environment.

We face a wide range of operating risks that are inherent to our responsibilities as both a service provider and a policy adviser. These include risks in our core business areas of farm business lending and complex water infrastructure project advice, as well as in our corporate and governance functions. We recognise it is not feasible or desirable to eliminate all risks inherent in our work. Establishing a culture that engages in, and accepts, some degree of risk across business practices will promote efficiency and innovation. In other areas, particularly the financial risk to the farm businesses we support, the level of risk the RIC is willing to accept is low.

Our integrity

We take our exposure to fraud seriously and have a zero-tolerance approach. We take all reasonable measures to control fraud and properly manage public resources in a way that assures the integrity of the RIC’s activities while maximising benefits for the Australian people. Our staff are expected to demonstrate high standards of professionalism, integrity and ethics. Fraud awareness forms part of the RIC’s mandatory training requirements. All current staff have undertaken training on understanding, recognising and reporting fraud and corruption and are required to refresh this awareness each reporting period. Fraud awareness training is also included in the RIC’s new starter induction arrangements.

Our Fraud and Corruption Control Plan provides a comprehensive framework for identifying, deterring, investigating and reporting fraud and corruption and meets the requirements of the Commonwealth Fraud Control Guidelines. Fraud and corruption risk assessments were also undertaken to identify risks, treatment strategies, responsibilities, target dates and reporting obligations.

Our security

Successfully managing our security risks and protecting people, information and assets requires an understanding of what needs protecting, what the threat is and how assets will be protected. Our security plan specifies the approach, responsibilities and resources applied to managing protective security risks. Our security plan allows us to review the degree of security risk that exists in different areas of our operations and take mitigating action. Our security has been developed in accordance with the Australian Government’s Protective Security Policy Framework.

As part of our recruitment processes for identified roles, staff are required to obtain an appropriate security clearance. All staff are required to complete security training in recognising security vulnerabilities, applying security protocols and reporting security incidents. 

In May 2019, representatives from the Department of Agriculture conducted a session for the RIC staff on government security and integrity obligations to raise general awareness across these areas.

The RIC reports annually on our compliance with the Protective Security Policy Framework to the Attorney-General’s Department and other key stakeholders.

Environmental sustainability

During 2018–19, we delivered programs supporting technologically and ecologically sustainable development. Our farm loans can be used by farm businesses to implement modernised and increasingly efficient technologies, infrastructure, farm production systems and sustainable resource management techniques such as employing proactive water management measures and water-efficient cropping techniques.

The NWILF will fund projects that produce public benefits to the broader economy, community and environment. As part of our assessment, the RIC will require that relevant environmental approvals have been or will be obtained. We will also take environmental impact assessments into account when considering the viability of the project over its operational life. We will deliver our water loans in a manner consistent with the Water Act 2007 (Cth), the Murray–Darling Basin Plan and broader national water policy, which contribute directly to ecologically sustainable development. We will seek out projects that bring innovation to the forefront, use water in a more sustainable and efficient manner and maximise the value added with the water’s ultimate use.

Judicial decision and reviews by outside bodies 

In 2018–19, the RIC was not subject to any judicial decisions or decisions of administrative tribunals or the Information Commissioner that have had, or may have, a significant effect on the RIC’s operations.
There were also no reports made about the RIC by the Commonwealth Ombudsman, the Office of the Australian Information Commissioner or the Auditor-General. The RIC was not subject to any parliamentary inquiries outside of attendance at Senate Estimates hearings.

3 Annual performance statements

3.1 Statement of preperation

I, on behalf of the Board of the Regional Investment Corporation, present the 2018–19 annual performance statements of the Regional Investment Corporation, as required under the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) (paragraph 39(1)(a)).

In our opinion, at the date of this statement, based on the material provided to the Board, these annual performance statements accurately reflect the performance of the entity, and comply with subsection 39(2) of the PGPA Act.

David Foster
Chair of the Board

3.2 Performance framework

The RIC promotes and administers low-interest farm business loans to help farmers in need and delivers the NWILF to assist state and territory government co-investment in vital water infrastructure.

In 2018–19, the RIC was responsible for a single portfolio outcome as set out in our Portfolio Budget Statements 2018–19 (PBS):

Encourage growth, investment and resilience in Australian farm businesses and rural and regional communities by delivering the Commonwealth’s farm business concessional loans and the National Water Infrastructure Loan Facility.

The RIC established a suite of strategic objectives to focus its operations and deliver on our portfolio outcome. These objectives are captured in the RIC’s Corporate Plan 2018–19 along with performance measures for delivering farm loans and water infrastructure loans (incorporating our PBS measures) and for corporate establishment. The relationship between these elements is represented in our performance framework (see Figure 4). We expect the performance framework to evolve over time as we continue to develop our business and planning processes.

We monitor and measure our performance against this framework and report back to government through our annual performance statements.

Figure 4: The RIC's performance framework

performance framework

 

3.3 Performance against our measures 

In our Corporate Plan 2018–19, the RIC established a set of performance measures for our core business of delivering loans. We also recognised the significance of building our operations and created a supplementary set of performance measures for our corporate establishment. These measures allowed us to monitor our performance against our five strategic objectives.

Results: Corporate establishment 

As a fledgling organisation, it was paramount that the RIC’s corporate capabilities be established in order to deliver on its core business of delivering loans. We consistently monitored this performance during the period and continue to improve our activities as required.

During 2018–19, we established a presence in six locations, including a head office in Orange, New South Wales. The opening of our office in Orange has had a real impact on economic investment in the region, which has been welcomed by the community. Our head office fit‑out was completed using a majority of locally based professionals, trades and retailers.

Establishing our systems has been critical to support loan delivery. We are the first Commonwealth agency to have a completely cloud-based IT system, meaning our people can work anywhere at any time—a fact we use to our advantage in sustaining a flexible workforce.

Recruitment of our core workforce in early 2019 was critical to standing up our operations, and further recruitment activity will be driven by evolving organisational requirements. While our processes and systems need further maturation, we have focused on safety and security across our people, our processes and systems and our workplace. The RIC has developed a range of policies, processes and procedures to support our business and meet legislative and governance obligations.

Table 3: Performance measures: Corporate establishment

Results: Delivering loans

During 2018–19 we focused our awareness-raising activities heavily in New South Wales and Queensland, where there were ongoing drought conditions and higher demand for our loans. We held information sessions, attended field days and conferences and undertook a range of advertising. We targeted farmers and their trusted advisors, including banks, accountants, local government and farm and commodity organisations. We also developed relationships with the Rural Financial Counselling Service.

Demand for the RIC’s farm business loans via the nationally consistent delivery model was high during our first year of operation. In 2018–19 we made decisions on 212 applications, approving 166 loans to the value of over $155 million. Through customer feedback, we are confident our loans are providing tangible improvements to Australian farm businesses.

In 2018–19, in addition to our efforts to build awareness of our farm business loans, we also focused on building awareness for the NWILF through extensive stakeholder engagement. This engagement provided a comprehensive understanding of the market’s appetite for this loan and, in turn, informed government policy changes to help drive uptake. The RIC met with the key state, territory and Commonwealth departments with responsibility for water infrastructure; local government; the key market participants; project proponents; consultants; academia; and water associations. We also investigated key water projects that are of substantial magnitude and provide reliable water sources to regional communities. We expect funding opportunities will present themselves as our relationships mature and stakeholders appreciate our place in the market.

Table 4: Performance measures: Delivering loans

performance measure deliver loans

3.4 Performance against our strategic objectives

In 2018–19, the RIC delivered against its purpose through five strategic objectives:

1 Establish our corporate capability.
2 Raise awareness of the RIC and our products.
3 Use local networks to establish a national footprint.
4 Provide streamlined and nationally consistent products and services.
5 Improve our products and services and explore new offerings.
These strategic objectives allowed us to prioritise our activities to deliver on our portfolio outcome.

Strategic objective 1

Establish our corporate capability

The RIC has focused our efforts on establishing our corporate capability through building a capable and effective workforce and meeting our corporate responsibilities, such as physical and information infrastructure and governance and accountability.

Activities and achievements

The activities performed in pursuit of this objective were critical in establishing the RIC and its ensuing value to farm businesses and the Australian agriculture industry. Establishing our permanent office in Orange, New South Wales, places us closer to the communities we support. This regional presence improves our understanding of the customer challenges that exist, their impact and how our products and services can assist in addressing them.

Table 5: Establish our corporate capability - Activities and achievements

Building a capable and effective workforce in Orange, NSW, and meeting our corporate responsibilities

Activities Achievements
Appointing a permanent Chief Executive Officer
(CEO)
Bruce King was appointed as CEO on 13 December 2018.
Recruiting, and ensuring a smooth transition to,
our permanent workforce
A bulk recruitment process at the end of 2018 secured the majority of staff who commenced at the beginning of 2019. Further recruitment is underway to fill the remaining vacancies.
Establishing our office in Orange Our head office was established in Orange, New South Wales, in December 2018 and was officially opened on 28 February 2019.
Establishing our foundational information and
communications technology (ICT) infrastructure
ICT systems have been implemented to support the ongoing and evolving operations of the RIC and the administration of the farm business and water loans. These ICT systems will continue to evolve and be strengthened with the RIC’s operational requirements.
Consolidating our corporate governance and
accountability arrangements and meeting our
requirements under relevant legislation
Corporate governance arrangements have been established to comply with the RIC Act and the PGPA Act. These corporate governance arrangements will continue to be strengthened as the RIC continues to mature its operations.

Case study: Our partnership with regional Australia begins

The RIC’s headquarters in Orange, New South Wales, officially opened on 28 February 2019, demonstrating the agency’s long-term partnership with rural and regional Australia.

The official proceedings were conducted by the RIC’s inaugural CEO, Bruce King, the then Minister for Agriculture and Water Resources, the Hon. David Littleproud MP, and local federal Member for Calare, the Hon. Andrew Gee MP.

There was plenty of excitement about the economic impact the RIC’s presence in Orange will have. Bruce King acknowledged the importance of our location but also highlighted the national role the RIC plays.

‘As a new organisation, our focus is delivering a high quality of service to those who need our loans and looking at opportunities where we can drive further investment outside the capital cities’, Mr King said. ‘We will work in partnership with industry, the banks and government to make this investment happen.’

Mr King spoke of the significance of being in a regional location and the direct contact his team has with the types of communities the RIC is working with. ‘It’s a daily reminder of what we are here to do. A simple conversation at the swimming club or school drop-off about how our finances are helping farmers is hard to get from an office tower in Sydney or Canberra’, Mr King told the room.

The Orange head office team consists of locals and people from surrounding communities like Cowra, Blayney and Millthorpe—but we’ve also lured people from Brisbane, Sydney and Canberra who are keen to make a lifestyle change. Opening the Orange headquarters is a significant milestone for our new organisation. With 32 fully funded positions available in Orange, we will continue to ‘think local and think regional’.

Strategic objective 2

Raise awareness of the RIC and our products

It is critical to the RIC’s success to increase awareness of our role and what we have to offer. We raise awareness through targeted marketing, communications and engagement activities. We then apply our learnings from these activities to raise our profile and ensure we are meeting the needs of Australian farm businesses.

Activities and achievements 

The RIC has undertaken various communication, advertising and stakeholder engagement events and activities across Australia. Demand for loans has been strong due to continued evidence-based, targeted engagement and marketing activities to build awareness of our products and services. Our efforts have focused on taking our message to the farmers in their environment, in a community-focused manner, in response to weather events and with sensitivity to personal and situational challenges.

Table 6: Raise awareness of the RIC and our products - Activities and achievements

Using evidence-based communication to strategically reach our key 

Activities Achievements
Raising awareness about our loans with farmers and other important
stakeholders through a range of activities including events, field days and information sessions.
A significant number of communication and stakeholder engagement
events and activities have been conducted across Australia.

This has significantly increased demand for loans. Events and activities included:
■ conducting face-to-face information sessions targeting farmers’
key financial influencers
■ attending field days to directly connect with farmers
■ attending farming/agricultural events around the country
■ hosting an online webinar about our loans.

The RIC also received media coverage around its events, office opening
and recruitment, uptake of loans and the launch of the AgRebuild Loan
(North Qld flood) in June 2019.
Targeted advertising to increase awareness of the RIC and its products in the areas most in need. Targeted advertising has been placed in different media to increase
awareness of the RIC’s farm business loans. Activities included:
■ targeted advertising in rural weekly publications
■ advertorials in rural papers and magazines and online articles
■ advertising to accountants through CPA Australia
■ hosting a national webinar.
Engaging with state and territory
governments and industry
to discuss potential water
infrastructure projects.
Our head office was established in Orange, New South Wales, in December 2018 and was officially opened on 28 February 2019.
Establishing our foundational information and
communications technology (ICT) infrastructure
Meetings have been held with state, territory and Commonwealth departments with responsibility for water infrastructure; local governments; the key market participants; project proponents; academia;
and water associations. These meetings involved identifying potential water infrastructure opportunities and understanding key stakeholder outcomes.
Market research on rural and regional
communities to inform our longer‑term
communication and engagement
strategy, and to ensure communication is
targeted, evidence-based and tailored to
our audiences’ expectations and needs.
Market research has been undertaken and has provided valuable insights on the positioning of the RIC, rural and regional community attitudes and views, and how the customer experience can be improved. This information has been fed into ongoing refinement and adaptation of the RIC’s communications and engagement approaches.

Case Study We've been everywhere

everywhere
 

In 2018–19, members of the RIC team hit the road, phones and web to get the message out that the RIC was open and accepting applications from across the nation. The list of towns and organisations we hit is long. The team focused its engagement activity on the states in most need of our loans—New South Wales and Queensland. We spoke with farmers directly at a range of field days, including Henty Field Days, AgQuip, the Australian National Field Days and the Regional Beef Forum in Singleton.

Trusted financial advisors, including banks and accountants, were targeted in face-to-face information sessions held in Roma, Toowoomba, Tamworth, Muswellbrook, Orange, Dubbo, Moree, Longreach, Emerald and Rockhampton. We presented at the A Country Practice Accountants Conference 2019 in Newcastle—an event attended by accountants based across Queensland, New South Wales and Victoria.

We conducted a range of in-person presentations to Rural Financial Counselling Service counsellors, including those located in southern Queensland, South Australia, Northern Territory, Tasmania and Victoria.

Presentations were given to the National Farmers Federation Economic and Farm Business Committee and the NSW Farmers Executive Council. We had a trade stand at the NFF Congress, held in Canberra, and attended Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Regional Outlook conferences in Nuriootpa, South Australia; Shepparton, Victoria; and Narrogin, Western Australia.

The RIC has been responsive. When the hail hit Queensland’s Lockyer Valley, we attended the town hall event to speak directly with those affected. When the monsoonal floods hit North Queensland, we attended the community forums in Hughenden, Richmond, Julia Creek, Cloncurry and Normanton.

For those we couldn’t get to see face to face, we held a webinar online utilising the Farm Table platform. The webinar allowed farmers from across the country to further understand our loans and it has since been available on our website for viewing.

 

Strategic objective 3

Use local networks to establish a national footprint

Our focus for this reporting period was on building and maintaining effective partnerships across Australia, with a focus on regional outreach. To stay in touch with current issues and events, we use local connections and links into existing trusted networks. Our partnerships with onground networks are critical so that we can share information about trends and emerging issues and work together to grow a resilient agriculture sector.

Activities and achievements

In our establishment year, the RIC has prioritised networking with the farming community and their trusted advisors. Through our networks and relationships, we have anchored our understanding of the issues across the agriculture industry, identified how our products and services can evolve to better meet the needs of those they are intended to support, and taken appropriate action. These relationships and networks also provide great support in building awareness around our role and in connecting us to potential loan recipients. We have started to build relationships with the state and territory governments and their industry partners to identify and better understand their water infrastructure projects.

Table 7: Use local networks to establish a national footprint- Activities and achievements 

Activities Achievements
Establishing networks with the farming community and trusted advisors, including local accountants, agribusiness consultants, local banks and the Rural Financial Counselling Service (RFCS). Through our awareness activities, we started building relationships with the farming community and their trusted advisors, primarily in NSW and Qld in the first instance. These relationships have allowed the RIC to build awareness of our products and services among those we aim to support. They have informed us of differing needs among farmers and assisted us in evolving our offering to better meet those needs.
Developing relationships with state and territory governments and their industry partners for water projects. Meetings have been held with state, territory and Commonwealth departments with responsibility for water infrastructure, local governments, the key market participants, project proponents, academia and water associations. These meetings involved identifying potential water infrastructure opportunities and understanding the key stakeholders and their preferred outcomes.
Keeping abreast of ongoing and emerging agriculture industry issues
to manage demand for finance and ensure assistance is reaching those most in need.
Our head office was established in Orange, New South Wales, in December 2018 and was officially opened on 28 February 2019.
Establishing our foundational information and
communications technology (ICT) infrastructure
Ongoing and emerging agriculture issues have been monitored through:
■ extensive market research
■ communication and engagement with farmers and their key financial
influencers in NSW and Qld
■ consultation with key stakeholders and target audiences including
key government and agricultural industry representatives. This information and feedback has provided insight into stakeholders’ awareness of and attitudes and behaviours concerning government funded farm loans.
Engaging staff specifically for regional outreach and stakeholder engagement. In early June 2019, we engaged our first business development (BD) manager for Qld/NT and northern SA. Another three BD managers will be engaged in 2019–20. These roles will be integral in contributing to, and delivering, communication and engagement activities to drive awareness and uptake of the RIC’s loans in key industry stakeholder groups. They will provide business intelligence back to the RIC to inform policy development and business improvement. In addition, greater coordination and prioritisation are emerging around our approach through structured stakeholder engagement plans.

Strategic objective 4

Provide streamlined and nationally consistent product and services 

In 2018–19, we met our commitment to customers to deliver coordinated services across Australia by providing nationally consistent and streamlined finance to regional Australia. Our guiding values are fairness, consistency, efficiency and transparency in all our dealings with customers. For farm business loans, our service delivery approach recognises the types of customers we have and the financial difficulties they may be facing. We provide personalised services to our customers as they apply for, receive and manage a RIC-administered loan.

Activities and achievements
The RIC has streamlined our operations and improved our offering, making our loans more accessible to eligible farm businesses. We have focused our efforts on strengthening the user experience to ensure it encourages participation and minimises the time from consideration of application to loan approval. We pride ourselves on our ongoing commitment to continuous improvement and customer service and our continued refinement and improvement of services.

Table 8: Provide streamlined and nationally consistent product and services

Meeting our commitment to customers to deliver efficient and consistent services across Australia

Activities Achievements
Developing and publishing information for customers, continually improving information based on feedback. Intelligence and feedback have been gathered from our stakeholders
and community on possible improvements to our loan offerings via:
■ a complaints/feedback register
■ a loan process review
■ application form review.
Developing and implementing national service standards for the delivery of our programs. Service standards were developed and are outlined on our website.
Our standards adhere to our operating mandate of being impartial,
committed, accountable, respectful and ethical.
Building expertise at the RIC and working with our service providers
in assessing and managing loans appropriately with a customer focus.
Improving the customer experience has been a priority.
The RIC’s loan assessment team has tripled in size and the loan
assessment process has become more efficient.
Growing a pipeline of water infrastructure projects. Various activities to grow a pipeline of water infrastructure activities
were undertaken—for example, we:
■ drafted a new operating mandate and supporting guidelines for
the NWILF to identify a broader range of water-related project
opportunities
■ built stakeholder awareness of the NWILF
■ investigated key water projects that are of substantial magnitude
and provide reliable water sources to the agricultural sector
■ built key stakeholder relationships with state and territory
government counterparts
■ took a whole-of-government approach to identifying and
understanding projects and their key stakeholders.

Strategic objective 5

Improve our products and services and explore new offerings

The RIC responds to stakeholder needs by understanding emerging issues and trends and actively pursuing opportunities. As we move forward, we will further support rural and regional communities by working to improve our current products, finesse our service delivery, address eligibility gaps and explore new offerings.

Activities and achievements

The RIC has worked closely with industry to monitor emerging issues and respond accordingly through product design. A specific area of focus has been to not just evolve but also explore innovative opportunities to address these emerging issues and better position Australian farm businesses. A current example of this innovative approach is our investigation of how the RIC can deliver an effective and enticing loan program for farmers to take up climate smart farming practices and technologies.

These efforts are complemented by our advances in securing a research partner to better understand the issues affecting farmers. This partnership arrangement will enhance the depth and breadth of our current considerations for greater focus and precision of our actions. It will be finalised in the next reporting period.

Table 9: Improve our products and services and explore new offerings

Responding to stakeholder needs by understanding emerging issues and trends, and actively pursuing opportunities

Activities Achievements
Working closely with industry to monitor emerging issues and responding accordingly. Close engagement with industry to monitor emerging issues has occurred through:
■ participation in relevant industry events and associations to build professional networks
■ stakeholder consultation with state and territory governments and a broad cross-section of industry players to understand industry outcomes.
Monitoring demand for products and identifying any barriers to uptake. A bulk recruitment process at the end of 2018 secured the majority of staff who commenced at the beginning of 2019. Further recruitment is underway to fill the remaining vacancies.
Establishing partnerships with research institutions, technical experts and relevant government agencies to build our understanding of the issues affecting Australian farmers and how best to support the long-term resilience and growth of our agriculture sector. Demand for our loans remains strong and, as of 30 June 2019, applications had been received from every state and the Northern Territory, with:
■ 25 Farm Investment Loans approved with an average value of $693,390
■141 Drought Loans approved with an average value of $980,076.
Barriers to loan uptake were monitored and measured through the ollowing considerations:
■ program eligibility
■ loan settings.
Establishing partnerships with research institutions, technical experts and relevant government agencies to build our understanding of the issues affecting Australian farmers and how best to support the long-term resilience and growth of our agriculture sector. The Australian National University has been engaged as a preferred partner for research services. This partnership will investigate how the RIC can deliver an effective loans program to encourage farmers to take up climate-smart farming practices and technologies. This study will consider practices and technologies, program eligibility, loan settings,
adoption barriers and perverse outcomes. This climate smart research project commenced in May 2019.
 

Case study: Throwing our arms around North Queensland

June 2019 we delivered our AgRebuild Loan, which is helping graziers and producers to recover following the devastating monsoonal trough which killed approximately 600,000 livestock in north-west Queensland earlier this year.

‘This is the first disaster recovery loan the Australian Government has asked us to deliver’, CEO Bruce King said. ‘What we’ve built can be rolled out in other states and territories that suffer natural disasters, should the government ask us to help.’

AgRebuild Loan (North Qld flood) provides up to $5 million to help Queensland producers to restock or replant, replace infrastructure, or refinance existing debt. Applications for this loan close on 30 June 2020.

‘We listened to producers impacted by thesedevastating floods and understand each
recovery journey is different, so we built this loan to be both flexible in terms of repayment
periods, and scalable in terms of size.’

We’ve focused our awareness raising efforts onthe banks, accountants, councils, rural financial counsellors and other networks. We’ve also been on the ground in the north-west, talking to graziers at a range of events

 

4 Our financial performance 

Certification
Independent Audit Report
Statement by the Chair of the Board,
the Chief Executive Officer and
Chief Financial Officer
Primary financial statements
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Cash Flow Statement
Overview

Notes to the financial statements
1. Financial performance
1.1 Expenses
1.2 Own-source revenue and gains

2. Financial position
2.1 Financial assets
2.2 Non-financial assets
2.3 Payables

3. People and relationships
3.1 Employee provisions
3.2 Key management personnel
remuneration
3.3 Related party disclosures

4. Managing uncertainties
4.1 Contingent assets and liabilities

5. Other information
5.1 Aggregate assets and liabilities
5.2 Assets held in trust
5.3 Budget variances

Auditor report
cerrtification 2
Auditor report

Audited financial statements

Regional Investment Corporation overview

Functions of the Regional Investment Corporation

The Regional Investment Corporation is an Australian Government controlled entity. It is a not‑for-profit entity.

The functions of the Regional Investment Corporation, as prescribed under its enabling legislation are:

a) to administer farm business loans

b) to administer, on behalf of the Commonwealth, financial assistance granted before the start day to states and territories in relation to water infrastructure projects

c) to administer, on behalf of the Commonwealth, financial assistance to states and territories in relation to water infrastructure projects

d) to set, and adjust as required, the interest rates applicable to loans and financial assistance

e) to provide advice to the responsible ministers on the activities that are or could be undertaken by the corporation

f) to provide advice and assistance to borrowers in relation to approved loans, and prospective borrowers in relation to loans

g) to administer programs prescribed by rules made by the corporation’s responsible ministers

h) any other functions conferred on the corporation by the Regional Investment Corporation Act 2018 (and associated rules), or any other Commonwealth law and

i) anything incidental to, or conducive to, the performance of the above functions.

The continued existence of the entity is dependent on government policy and on continuing funding by parliament for the entity’s administration and programs.

The basis of preparation

The financial statements are general purpose financial statements as required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with:
a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR)
and
b) Australian Accounting Standards and Interpretations—Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities which are recorded at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest dollar, unless otherwise specified.

New accounting standards 

All new, revised or amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on the entity’s financial statements.

Taxation

The entity is exempt from all forms of taxation except fringe benefits tax (FBT), the goods and services tax (GST) and payroll tax. 

Events after the reporting period

There are no known events occurring after the reporting period that could have a material impact on the financial statements.

figure 2 financial
figure 3 financial
4 financial
3.4

 

 

a2
a6
a7