Farm Water Development Act 1985

The central concept is the eligible person, defined in s 3 as a person engaged in farming operations whose sole or principal source of income is derived from those operations. This is a gatekeeping test: only individuals or entities that obtain the preponderance of their earnings from farming can apply. The term “farming operations” is not further defined in the Act, leaving interpretive room. A farmer who derives a majority of income from off farm wages, for example, would not qualify. The definition also uses “person”, which under Tasmanian interpretation legislation includes a body corporate, so incorporated farming enterprises are eligible provided the company’s sole or principal income is from farming. The loan is simply a loan under the Act; no standard form or maximum is prescribed. TDR is the statutory authority (Tasmania Development and Resources) that administers the scheme. The Act does not specify TDR’s governance or funding beyond the appropriation and internal funds noted in s 12.

The purposes in s 5 are tightly scoped. Dam works must be for irrigation storage and must be undertaken “in accordance with a permit under the Water Management Act 1999”. This ties the loan to existing water licensing and dam safety approvals. The well or bore purpose covers drilling and construction but does not mention ongoing extraction permits; presumably the borrower must separately hold appropriate water rights under the Water Management Act. The irrigation system purpose is the broadest, covering any system for distributing water on the farm, but it is still limited to infrastructure on land owned or occupied by the applicant.

The concept of security in s 9 is important: TDR “shall take and require such security for the repayment of loans as in each case it considers to be adequate”. This gives TDR unlimited discretion to demand mortgages over land, charges over plant and equipment, personal guarantees, or other forms of security. No minimum or maximum is set, and there is no provision for review of TDR’s assessment. Borrowers have no statutory right to challenge the security requirement.

The interest rate variation power in s 15 is another key concept. It applies only to loans granted before the commencement of the Farm Water Development Amendment Act 1990 (which would be around 1990). For those legacy loans, TDR can unilaterally change the interest rate by giving at least six weeks’ written notice specifying the new rate and the effective date. This is an unusual legislative override of contractual terms and exposes long standing borrowers to rate risk even on loans that were originally fixed or concessional.

Finally, the offence provisions in s 13 create liability for false or misleading statements in connection with a loan application, and for obtaining a loan by fraud. These are standard integrity measures but are notable for extending vicarious liability to directors, managers, and secretaries of corporate borrowers, and for allowing the court to order repayment of the outstanding balance plus interest on conviction.

The primary group affected is eligible farmers , individuals or companies whose sole or principal income comes from farming operations. A farmer who needs capital for dam construction, well drilling, or an irrigation system may apply for a loan. The Act does not impose a maximum farm size, income threshold, or asset test beyond the income source requirement, so theoretically it covers a wide range of primary producers from small family farms to large agricultural enterprises. However, the “sole or principal source of income” test excludes those for whom farming is a secondary or sideline activity. For instance, a grazier who also earns significant consulting income might not qualify. The Act also affects body corporates engaged in farming: their directors, managers, and secretaries face personal criminal liability under s 13(5) for offences committed by the company, even if the company itself is not charged. That is a significant personal risk for corporate officers.

Tasmania Development and Resources is the administering body. It is affected in that it must process applications, assess eligibility, determine terms, take security, and manage the loan book. TDR’s discretion is broad but brings operational burdens and potential political pressure, especially if loan defaults arise. The Treasurer and Parliament are affected because s 12 requires money to be appropriated from the Public Account or drawn from TDR’s funds. This means the scheme competes with other spending priorities. Taxpayers ultimately bear the cost if loans are not repaid; the Act provides no loan loss reserve or guarantee fund, so defaults reduce the money available for other TDR purposes or require fresh appropriations.

Holders of pre 1990 loans are a specific affected group. They took out loans under original terms that TDR can now vary under s 15. A farmer who borrowed in 1988 at a fixed 8% could find the rate raised to 12% on six weeks’ notice. This creates uncertainty and may have discouraged long term planning. The power is not reciprocal: borrowers cannot demand a rate reduction if market rates fall.

Private lenders are indirectly affected. The scheme provides a state subsidised alternative to commercial farm finance. To the extent that TDR offers below market rates or more lenient terms, it may crowd out private lenders or reduce the demand for bank loans. Conversely, if TDR imposes stringent security or high rates, it may have little impact. The Act does not require TDR to price loans at market rates, so the competitive distortion depends on TDR’s undisclosed discretion.

Legal practitioners acting for farmers or TDR must navigate the Act’s minimal detail: advising on eligibility, preparing applications, ensuring compliance with s 13, and documenting security. The exemption from stamp duty and registration fees under s 10 is a practical benefit for borrowers.

Duties on applicants: An applicant must apply in writing in a form provided by TDR and containing the specified particulars and information (s 7(2)). TDR may require further information to establish eligibility (s 7(3)) and also require an authorisation to obtain information from any person about the applicant (s 8(a)), as well as production of documents (s 8(b)). These are broad investigatory powers with no specified limit; refusal to cooperate could be grounds for refusal. The most significant duty is the prohibition on making false or misleading statements in connection with an application (s 13(1)), which is a criminal offence punishable by a fine of up to 20 penalty units. A more serious offence is obtaining payment of a loan by a false statement, impersonation, or fraudulent device (s 13(2)), punishable by up to 50 penalty units or 12 months imprisonment. The court may also order repayment of the outstanding loan balance plus interest on conviction (s 13(3)). There is a defence if the applicant believed on reasonable grounds that the statement was not false or misleading (s 13(4)), but the burden of proof lies on the defendant. For corporate applicants, the duty extends to directors, managers, and secretaries who are deemed to have committed the offence unless they prove the act or omission took place without their knowledge or consent (s 13(5) (6)). This creates a positive duty on officers to ensure applications are truthful.

Rights of applicants: An eligible person has the right to apply for a loan (s 7(1)). However, TDR retains an unfettered discretion to grant or refuse the application (s 7(4)). There is no right to reasons for refusal, no appeal mechanism, and no requirement that TDR treat like cases alike. The Act does not create a right to a loan even if the applicant meets the eligibility criteria and proposes a permitted purpose. This is a permissive, not mandatory, scheme. If a loan is granted, the borrower has the right to receive the funds subject to TDR’s terms and conditions (s 6). Those terms are not prescribed in the Act, so the borrower must accept whatever TDR offers or negotiate, but TDR is not obliged to bargain.

Rights of TDR: TDR has the right to determine all terms and conditions of a loan (s 6), to require adequate security (s 9), to demand information from applicants (s 8), to refuse applications without cause (s 7(4)), and to vary interest rates on pre 1990 loans with six weeks’ notice (s 15). TDR also has the right to receive loan repayments and interest and must pay them into Treasury accounts as directed (s 11). The exemption from fees and stamp duty (s 10) is a right exercisable by TDR when creating instruments under the Act.

Borrower rights: Once a loan is made, the borrower has the right to use the funds only for the specified purpose (dam works, well/bore, irrigation system). There is no statutory right to prepayment, renegotiation, or variation of terms. The Act is silent on default remedies, so those would be governed by the loan contract and general law. For pre 1990 loans, the borrower has the right to at least six weeks’ notice of any interest rate increase (s 15(2)), but no right to object or exit without penalty.

The Act creates two specific offences under s 13. The first is making a false or misleading statement in connection with or in support of a loan application, whether orally or in writing, knowing it is false or misleading in a material particular. This carries a maximum fine of 20 penalty units (s 13(1)). The second is obtaining payment of a loan by means of a false or misleading statement, impersonation, or a fraudulent device, knowing the statement is false or misleading. This carries a fine of up to 50 penalty units or imprisonment for up to 12 months, or both (s 13(2)). Both offences are criminal and require proof of knowledge; the defence of reasonable belief applies (s 13(4)). The term “fraudulent device” is not defined but would likely encompass forgery, impersonation, or using a shell entity.

Enforcement is bolstered by s 13(3), which allows a court of conviction to order the offender to pay TDR the outstanding balance of the loan plus interest up to a date determined by the court. This is a civil restitution order attached to a criminal conviction; it is not a separate civil proceeding. The court has discretion as to the interest calculation date, which could be the date of conviction or an earlier date. This provision means that a borrower who commits fraud not only faces criminal penalties but also loses the benefit of the loan entirely, even if they have already used the funds for legitimate purposes. The order is additional to the penalty.

Corporate liability is addressed in s 13(5) and (6). If a body corporate commits an offence under s 13, every director or member of the governing body, and every manager or secretary, is deemed also to have committed the offence and may be convicted separately, even if the body corporate is not charged. The only defence is proving that the act or omission took place without the officer’s knowledge or consent. This imposes a stringent duty on company officers to supervise loan applications and disclosures. An officer who approved an application containing a false statement could be convicted personally, regardless of whether they knew it was false, unless they can prove ignorance and lack of consent. This is a reverse onus provision.

Regulations under s 14 can also create offences punishable by a fine not exceeding 10 penalty units, with an additional daily fine of 0.5 penalty unit for continuing offences (s 14(3)). These are summary offences. The content of any regulations is not specified in the Act, so they could impose duties related to record keeping, inspection, or reporting, with penal consequences.

Enforcement is not otherwise detailed. There is no provision for administrative penalties, suspension of loan approval, or civil recovery without criminal conviction. TDR could likely sue for breach of contract in the civil courts for non repayment, but the Act does not grant TDR any special enforcement powers beyond those available to any lender. The criminal offences are likely prosecuted by the police or the Director of Public Prosecutions. Given the relatively low penalties, the scheme may rely more on the civil remedies in the loan contract.

The Act explicitly references the Water Management Act 1999 in s 5(a): dam works must be undertaken in accordance with a permit under that Act. This means a loan for dam construction cannot be used unless the borrower has already obtained the necessary water management and dam safety approvals. The loan scheme thus operates within the broader regulatory framework for water extraction and infrastructure. If the Water Management Act requirements become more stringent, the practical scope of eligible dam works may shrink, but the Act does not require TDR to verify permit compliance before disbursing funds.

The exemption from fees and stamp duty in s 10 overrides any other Tasmanian legislation that would otherwise impose a fee for filing, recording, or registering a TDR instrument. This interacts with the general law on land titles and personal property securities. For example, a mortgage given as security for a loan under this Act would be exempt from registration fees under the Land Titles Act or from stamp duty under the Duties Act 2001 (if that Act would otherwise apply). The exemption is limited to instruments “made by TDR for the purposes of this Act”. A document signed by the borrower alone may not be covered. Practitioners should confirm that the instrument is executed by TDR to claim the exemption.

The appropriation in s 12 interacts with the Tasmanian Constitution and Financial Management Acts. Money must be appropriated by Parliament from the Public Account, or come from TDR’s other funds. If TDR uses its own funds, it may be subject to its governing legislation and any investment or expenditure constraints. The Act does not appropriate money itself; it merely authorises loans to be made from money that is or becomes available.

The offences under s 13 interact with the general criminal law. The Tasmanian Criminal Code contains offences for fraud and false statements, but s 13 is a specific statutory offence that may be prosecuted instead of or in addition to common law charges. The double jeopardy principle would generally prevent multiple convictions, but the Act does not expressly exclude the operation of other laws. The reverse onus in s 13(5) for body corporate officers may interact with human rights legislation or the presumption of innocence, but the Act predates such protections.

The interest rate variation power in s 15 interacts with the general law of contract. It overrides the agreed terms of pre 1990 loan contracts by enabling TDR to unilaterally change the interest rate. This is a statutory override that would otherwise be a breach of contract. Borrowers cannot sue for breach when TDR exercises this power, because the Act expressly authorises it. It also interacts with the usury laws or any interest rate caps, but Tasmanian usury limits were largely removed. The six weeks notice requirement provides some procedural protection.

The Act does not reference the Farm Debt Mediation Act or similar Tasmanian farm debt relief legislation; but if TDR is a lender, it may be required to comply with any applicable farm debt mediation obligations. No mention is made of interaction with the Australian Consumer Law; TDR is likely not a trader in the relevant sense, but if loan contracts contain unfair terms, consumer protections might still apply if the borrower is an individual.

The Farm Water Development Act 1985 has been amended several times. The original Act was No. 42 of 1985. The first substantial amendment was by No. 17 of 1990, which amended s 5 (the loan purposes) and substituted a new s 6 for the original terms and conditions provision. This 1990 amendment appears to have removed earlier statutory specification of loan terms and replaced it with TDR’s discretion. The same 1990 Act also likely introduced the interest rate variation power that was later incorporated as s 15 in 1996.

No. 77 of 1995 made widespread changes, amending s 3 (definition of TDR), s 4, s 6, s 7 (all four subsections), s 8, s 9, s 10, s 11, s 12, s 13, and s 14. These amendments substituted “TDR” for the previous administering body, which appears to have been “the Corporation” or “the Authority”. The effect was to rename the lender and update references following the establishment of Tasmania Development and Resources.

No. 56 of 2008 amended s 5(a) by inserting a reference to the Water Management Act 1999 in place of an earlier water management statute. This was a consequential amendment to reflect the consolidation of Tasmanian water law.

No. 15 of 2001 amended s 10 to remove stamp duty exemption references after the abolition of stamp duty in Tasmania (but the exemption from fees remains).

No. 34 of 2015 again amended s 5(a), likely updating the reference to the Water Management Act 1999 to include a specific permit requirement.

No. 4 of 2017 amended s 12(a) by replacing “money appropriated by Parliament from the Public Account” with current wording that refers to “money appropriated by Parliament from the Public Account for the purpose”, clarifying that appropriation must be for the specific purpose.

No. 17 of 1996 inserted s 15, which explicitly confers the power to vary interest rates on pre 1990 loans, though the provision notes it is an incorporation of a provision from the 1990 amendment. This suggests that the 1990 amendment originally contained the variation power but it may have been inadvertently omitted or re enacted for clarity.

No. 43 of 1991 amended s 13 and s 14 to substitute references to penalty units for fixed dollar amounts, aligning with changes to the penalty unit system.

The Act has not been amended since 2017. It remains in force, though its practical use may have diminished with the availability of alternative farm finance and water infrastructure grants. No sunset or review clause is present.

The Act does not appear to have generated any reported litigation in Tasmania, or at least no cases are referenced in the text or commonly known. This could be because the loan amounts are modest, the borrowers are not litigious, or TDR’s discretion to refuse applications and set terms leaves little room for dispute. The absence of a statutory right to a loan means an unsuccessful applicant cannot sue for denial. The only potential litigation would be over defaults or criminal prosecutions under s 13, but such cases would likely be dealt with summarily and not reported. The interest rate variation power under s 15 could theoretically be challenged on administrative law grounds, but no such challenge is known. The fact that the Act is almost forty years old with no litigation history suggests either that the scheme is well accepted, or that borrowers lack the resources or incentive to take legal action. For a deep dive, it is enough to note that the source provides no litigation history, and independent research is not required.

1. Eligibility is not permanent: The definition of “eligible person” requires that farming be the sole or principal source of income at the time of application. But nothing in the Act ensures that eligibility continues during the term of the loan. A borrower who later ceases farming or obtains significant off farm income remains liable under the loan contract. However, TDR might have the ability to call the loan if the borrower no longer fits the original purpose. The Act is silent.

2. TDR can change its mind on loan terms after application: Section 6 gives TDR absolute discretion to determine terms and conditions. An applicant cannot rely on informal indications. TDR could demand more onerous security or higher rates at the final stage. There is no statutory right to withdraw without penalty once an application is made.

3. No appeal from refusal: Section 7(4) allows TDR to grant or refuse an application without any criteria or reasons. An applicant cannot appeal to a court or tribunal. If TDR refuses one applicant but approves another in similar circumstances, that is not reviewable under the Act. The only possible avenue would be judicial review for procedural fairness, but the Act seems to exclude any obligation to give reasons.

4. Personal liability for corporate officers: Directors, managers, and secretaries of a body corporate that commits an offence under s 13 are deemed to have committed it personally, unless they can prove lack of knowledge or consent. This reverse onus means an officer who signs a loan application on behalf of a company must personally verify the truth of every statement, or risk criminal conviction. The defence is not simply that the officer delegated the task; they must show the act occurred without their knowledge or consent.

5. Pre 1990 loans can have rates varied upward without limit: Section 15 allows TDR to vary the interest rate on pre 1990 loans with six weeks’ notice. There is no cap on the new rate. A borrower who took a 30 year loan at a fixed 6% in 1988 could see the rate raised to 15% in 2025. The only safeguard is the notice period. This is a trap for unwary borrowers who assumed their loan terms were fixed. For post 1990 loans, the Act does not confer such power, so the terms in the loan contract would govern variation rights.

6. Exemption from fees only covers TDR instruments: Section 10 exempts “an instrument made by TDR” from filing, recording, or registration fees. If a borrower needs to register a mortgage or charge and TDR is not the executing party, the exemption may not apply. Also, the exemption does not cover fees payable by the borrower for obtaining title searches or other costs.

7. No maximum loan amount: The Act does not limit how much TDR can lend to a single borrower or in aggregate. This creates risk of concentrated exposure. Taxpayers could be on the hook for very large loans to a single enterprise if that enterprise defaults. TDR’s internal policies may impose limits, but the Act gives no floor or ceiling.

8. Secondary liability risk for guarantors: The Act requires security but does not mention personal guarantees. TDR could require a director or relative to guarantee the loan. If the borrower defaults, the guarantor is pursued. There is no statutory protection for guarantors comparable to the National Consumer Credit Protection Act.

9. No provision for hardship or variation: Once a loan is made, the borrower has no statutory right to seek a variation due to drought, illness, or market downturn. TDR may agree to vary terms, but is not obliged. The Act’s only variation provision is for TDR to raise interest rates on old loans. This is a one way street.

10. Regulations can impose additional duties: Section 14 allows the Governor to make regulations, which can create offences and delegate powers to TDR. Practitioners must check whether any regulations have been made that impose reporting, inspection, or record keeping requirements not evident in the Act itself.

For a farming enterprise seeking a loan under the Act, the first step is to confirm eligibility. The applicant must be a person (including a company) whose sole or principal source of income comes from farming operations. This requires a review of income sources over a recent period , usually the last financial year. If off farm income exceeds farm income, the applicant does not qualify. A company must assess its revenue streams similarly. Directors should document the basis for the eligibility conclusion to defend against any later allegation of false statement.

The applicant must then prepare an application in the form provided by TDR. The form will require particulars of the proposed project: the location and description of the farm, the nature of the dam works, well/bore, or irrigation system, and an estimate of costs. Supporting documents should include land ownership or occupation evidence, and for dam works, evidence of a permit under the Water Management Act 1999. It would be prudent to obtain that permit before applying, because the Act requires loans to be for dam works undertaken “in accordance with” such a permit. If the permit is later refused or varied, the loan may be subject to recall.

The applicant must provide all information TDR requests under s 7(3) and s 8. This can include authorisations to obtain financial records, tax returns, or bank statements from third parties. Refusal to provide information may result in the application being refused. All information supplied must be accurate. The prohibition in s 13(1) applies to any statement made in connection with the application, whether oral or written. Even a casual remark during a meeting could be a statement. The defence of reasonable belief is available, but the burden of proving that belief on reasonable grounds lies with the applicant.

If the application is granted, the loan will be made subject to terms and conditions determined by TDR under s 6. The applicant should carefully review those terms before acceptance. Key points to negotiate (to the extent TDR is willing) include interest rate, repayment schedule, covenants, events of default, and prepayment rights. TDR will also require security under s 9. The borrower should understand what assets are being charged and whether personal guarantees are needed. The security documents should be drafted to reflect the arrangement, and advantage should be taken of the fee and stamp duty exemption under s 10 , but only if instruments are executed by TDR.

The loan proceeds must be used only for the purposes stated in s 5. Using funds for general working capital or other capital expenditure would breach the loan terms and could amount to a false statement if the application misrepresented the use. The borrower should keep detailed records of expenditure to demonstrate compliance.

For corporate borrowers, officers must be particularly vigilant. Section 13(5) creates personal criminal liability for directors, managers, and secretaries if the company commits an offence under s 13. This means that every statement in the loan application and every subsequent representation must be verified by those officers. It is not enough to rely on a farm manager or accountant without independent checking. The best practice is to have a designated officer certify the accuracy of all information after due inquiry, and to keep records of the verification process.

For borrowers with pre 1990 loans, compliance with s 15 notice requirements is straightforward: TDR must give at least six weeks’ written notice of any interest rate variation. The borrower should monitor correspondence from TDR and consider refinancing if the rate becomes unfavourable. There is no statutory right to challenge the variation, but the borrower can terminate the loan if the contract permits prepayment.

Finally, all loan repayments and interest payments must be made as directed. Loans are not dischargeable by insolvency in any special way; they remain ordinary debts. If the borrower encounters financial difficulty, early communication with TDR may lead to a workout, but the Act provides no formal hardship mechanism. Borrowers should also check whether any regulations under s 14 impose additional obligations such as periodic reporting or inspection rights, and comply accordingly.