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Corporate Governancde

The RIRDC Board is committed to governance systems that enhance performance and compliance. Each year's Annual Report will include a description of how strategic directions, policies and processes have been applied during the year. The Board will continually review policies and processes concerning all major areas of Board operations, including Director and Board performance, risk management, conflicts of interest, Board sub-committees and the Managing Director's performance. The Corporation's management policies and procedures will also continue to be documented.

The Board will also ensure that RIRDC staff are provided with strong leadership, and that their qualifications, skills and experience are enhanced with formal and on-the-job training. An audit committee and other committees of the Board as deemed necessary from time to time, will act on the Board's behalf. Appropriate advisory committees will also be established to ensure that projects are properly guided and that industry and Government funds are spent wisely. RIRDC's Corporate Plan 2003-2008 , Page 5

The Board
Board composition
RIRDC's Board now has eight Directors—a Chairperson, an Executive Director titled Managing Director and six other Nominated Directors. One of the Nominated Directors is the Deputy Chairperson. The position of Government Director was abolished as of 28 May 2007

Board appointments
The Minister appoints Directors other than the Managing Director who is appointed by the Board.

The Chairperson is appointed by the Minister and is not a Nominated Director.

Six of the Directors are nominated by a Selection Committee established by the Minister in consultation with the National Farmers Federation and the Australian Chicken Meat Federation (‘Nominated Directors').

The Minister appoints a Nominated Director as the Deputy Chairperson.

The Board appoints the Managing Director and may appoint an Acting Managing Director.

Board terms
Directors other than the Government Director and Managing Director are appointed by the Minister and hold office for a specified term not exceeding three years.

The former position of Government Director was appointed by the Minister and holds office at the Minister's pleasure.

The Managing Director is appointed by the Corporation for a specified term. An Acting Managing Director may be appointed by the Corporation for a specified term.

Board expertise
The Directors are selected from a wide cross-section of the rural business community and offer expertise in production, processing, marketing, R&D administration, business management, technology transfer and environmental and ecological matters.

Ms Mary Boydell- Chairperson
Ms Boydell is a Chartered Accountant with extensive experience in business, finance and management. She is currently Chairperson of the Gladstone Area Water Board, a Director of BSES Limited and a Director of Energex Limited. She is an external member of the Australian Government Department of Agriculture, Fisheries and Forestry Audit Committee and the Maroochy Shire Council Audit Committee and a member (currently Deputy Chairman) of the Queensland Regional Council of the Institute of Chartered Accountants. She is a former Director of the Australian Trade Commission and Burnett Water Pty Ltd, and a former Chief Financial Officer Australia and Asia for the international law firm Deacons. Re-appointed 19 January 2007 for three years. B. Comm., FCA

The Board
Mr Steve Marshall
Non-Executive Director, Deputy Chairperson
Mr Marshall is a consultant with a background in science and international food processing. He has held senior managerial roles here and overseas, and has extensive experience in food technology and production. He is a current director of the Grains Research and Development Corporation and Go Grains Health and Nutrition Ltd. He is a former Director of the Australian Rural Leadership Foundation. Re-appointed 1 July 2005 for three years. B.Sc (Hons), M.App.Sc

Mr Robert Boshammer
Non-Executive Director
Mr Boshammer is an agricultural producer from northern Western Australia. He is a director of the Cambridge Gulf Ltd, Ord Canegrowers Pty Ltd, Plantation Management Services WA Pty Ltd, Odeum Produce Pty Ltd, Ord Fuels Pty Ltd, and Kimberley Land Holiday Park Pty Ltd. His focus is the development of rural and regional Australia through fostering the development of people skills, supply lines and quality small/medium enterprises. Re-appointed 1 July 2005 for three years. B.App.Sc (Hons), DipT

Ms Lindy Hyam
Non-Executive Director
Ms Hyam is currently the CEO of Plant Health Australia (PHA) and a Director of Oz Green She has held a number of other Directorships and CEO roles in agriculture, including Executive Director of the Horticultural Research and Development Corporation and Non-Executive Director of HortResearch, New Zealand. Other previous roles in international education include Chief Executive, IDP Education Australia, CEO of IELTS Australia (Winner of a National Export Award in 200) and founding CEO of the Peace Scholarship Trust. Lindy has held a number of senior roles within State and local Government and business, including former President of the Women Chiefs of Enterprises International Australia. Appointed 1 July 2005 for three years. MBA, B.Ed, Dip. Teach, MAICD

Dr Andrew Johnson
Non-Executive Director
Dr Johnson has extensive experience in science, economics, conservation, natural resource management, technology transfer and administering R&D. He is CSIRO Group Executive—Environment and is also a Director of Reef and Rainforest Research Ltd. He was formerly Chief of CSIRO Sustainable Ecosystems and a Director of the CRC for Tropical Savannas Management, the Australian National Wildlife Collection Foundation and the Centre of Rural and Regional Innovation.  Appointed 1 July 2005 for three years. BAgrSc (Hons), PhD, MPA (Harvard) GAICD

Mr John Lawrenson
Non-Executive Director Non-Executive Director Government Director Mr Lawrenson has a background in agribusiness, finance, governance, international trade and marketing. He is Chairperson of the Australian Fresh Fruit Company Ltd and Pink Lady Australia Ltd, a Director with Apple and Pear Australia Ltd and Bonlac Supply Compan Ltd and former managing director of the Australian WheatBoard. Re-appointed 1 July 2005 for three years. Associate CPA, FCA (UK)

Mr Norman McAllister
Non-Executive Director
Mr McAllister has extensive experience in agricultural production, marketing and processing. He is Chairman of Rice Research Australia Pty Ltd and is a Director of Rice Growers Ltd, Riviana Foods Pty Ltd, and Silica Resources Pty Ltd. He is also a past Chair of RIRDC’s Rice Research Program. Appointed 1 July 2005 for three years. Dip.Ap. Sc, G.ARLP, FAICD

Mr Simon Murnane
Government Director
Mr Murnane is a Senior Executive with the Department of Agriculture, Fisheries and Forestry, with responsibility for policies and programs in the meat, wool and dairy industries. He has extensive experience in policy and programs affecting rural Australia, having worked in the fields of natural resource management as well as regional economic development. Appointed 2 November 2005. The position of Government Director was abolished as of 28 May 2007. BA

Dr Peter O’Brien
Managing Director
Dr O’Brien is a scientist with extensive experience as a chief executive and in providing scientific advice to policy. His career includes Executive Director of the Bureau of Rural Sciences and membership of the Executive Leadership Team of the Australian Government Department of Agriculture, Fisheries and Forestry. In 2006– 07 he was a Director of the Australian Poultry CRC. He is a member of the Expert Advisory Board of the Agriculture Institute of the University of Western Australia. He is a former Director of the Australian Fisheries Management Authority and the Greenhouse Cooperative Research Centre. Dr O’Brien’s research has included wildlife management and exotic disease contingency planning and he has published on performance management and scenario planning. Appointed 21 February 2005. BSc (Hons1), PhD

Governance

Post Uhrig Review
The position of Government Director was abolished in May 2007. RIRDC thanks Mr Simon Murnane for his contribution in that capacity. To ensure close, responsive communication between RIRDC and the Government, RIRDC has routine formal and informal communications with the Parliamentary Secretary and officials. We have now augmented those contacts with additional regular meetings and Board briefings by a Senior Department of Agriculture official.

Statement of Expectations and Statement of Intent
In addition the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry the Hon. Sussan Ley, MP has provided a Statement of Expectation and RIRDC has responded with our Statement of Intent. Both documents are available on RIRDC's website (www.rirdc.gov.au).

The Corporation's implementation of the Statement of Intent is provided in this Annual Report setting out how we have responded in terms of our role, government policies, performance reporting, communications and accountability.

RIRDC R&D Advisory Committees
The PIERD Act provides for an R&D Corporation to establish committees to assist in the performance of its functions and the exercise of its powers. Legal advice obtained in 1999 indicated that members of advisory committees are officers of the Corporation under the Commonwealth and Authorities and Company Act 1997 (CAC Act) and are therefore covered by the provisions of that legislation.

Advisory Committee Review and Development of New Policy
RIRDC depends on the expertise and experience of its Advisory Committees to develop relevant five-year R&D plans, select priority R&D projects, and evaluate performance of R&D. To ensure the close alignment of Committee operations with RIRDC's objectives, a review of the operations of Advisory Committees and Panels were implemented during the year.

The aim was to implement advisory arrangements that provide advice on research and development investment, and integrate with the Investment Framework. The new policy provided clear guidelines for Advisory Committees on their roles and responsibilities in monitoring investment performance and membership criteria.

Annual RIRDC Board - Advisory Committee Forum
RIRDC has continued a Forum where Advisory Committee representatives and RIRDC Board Directors meet annually to discuss common issues relating to the committees and their relationship with RIRDC.

Advisory Committees are fundamental to RIRDC's function.They are the‘engine room'of RIRDC. They provide a direct voice for industry and government stakeholders, and ensure research outcomes meet stakeholder needs.

The forum provided an opportunity to consult on industry issues and discuss RIRDC's strategic directions.

RIRDC has also initiated an annual forum with its key research providers.

The meeting provides RIRDC with an opportunity to understand the issues and drivers for the research community and for researcher to be briefed on directions and developments in the Corporation.

Directors' Reports

Accountability to industry
For the purposes of reporting on operations in 2006-07, RIRDC had two organisations prescribed by Section 7 of the PIERD Act 1989. This requires RIRDC to report annually on its activities each financial period. This accountability runs parallel to RIRDC's Annual Report to the Minister and the Parliament. Separately, it is relevant to note that the Deer, Honeybee and Rice Industries are nominated as representative bodies for the Primary Industry (Excise) Levies Act 1999. Formal reporting during 2006-07 occurred as follows:

• National Farmers'Federation (NFF) 28 November 2006 in Canberra
• Australian Chicken Meat Federation (ACMF) 29 November 2006 in Sydney.

RIRDC reported to these prescribed bodies during industry meetings being held for their own purposes. The Corporation made no payments towards the costs of these meetings. The reporting of these consultation arrangements is in accord with guidelines issued by the then Minister for Agriculture, Fisheries and Forestry, the Hon. Warren Truss, MP on 6 July 1998 on the‘Funding of Consultation Costs by Primary Industry and Energy Portfolio Statutory Authorities'.

Board committees as at June 2007
During 2006-07, the Board operated one committee—the Audit Committee.The Board Chairperson was an ex-officio member of this committee. The record of meetings is taken by the Board Secretary.

Audit Committee
Chair: John Lawrenson
Members: Norman McAllister; Steve Marshall

Charter
The objective of the Audit Committee is to provide independent assurance and assistance, and to make appropriate recommendations to the Board on the Corporation's risk, control and compliance framework, and its external accountability.

The Managing Director and the General Manager-Corporate have a standing invitation to attend these meetings but are not members of the Committee. During 2006-07 the Committee oversighted our financial and management accounts, reviewed the Fraud Control and Risk Management Plans, directed the internal audit function, monitored the implementation of new business systems and contributed to the development of a new compliance framework.

In March 2007 the Board approved a revised Audit Committee Charter which assigned responsibility for the oversight of the new compliance report of government to the Committee.

Ad hoc committee
The Board may from time to time establish ad hoc committees of the Board to deal with specific items. In November 2006 the Board established an ad hoc committee to oversight the development of principles and policy for enhanced executive performance management. This committee was chaired by Lindy Hyam and other members were Steve Marshall and Mary Boydell. The Committee completed its work in May 2007

Board Performance Review

During 2006-07, the Board engaged an independent consultant to review Board performance and provide advice on better practice governance initiatives. The review was finalised in March 2007. The consultant's report provided a series of recommendations and Board improvement actions for implementation, including development of a new Board Charter.

Board remuneration
Directors'fees are set by the Remuneration Tribunal. As at 0 June 2007 these fees were $1,510 per annum for the Chairperson and $2,70 for Directors (other than the Managing Director and Dr A Johnson. The Managing Director's remuneration arrangements are determined by the Board and Dr Johnson is an employee of another Australian Government agency and therefore does not receive remuneration.

In recognition of the increased role and responsibilities of Audit Committees, the Remuneration Tribunal approved additional fees for members of RIRDCs Audit Committee, effective 9 May 2007. The fees are $7,120 per annum for the Committee Chair and $,560 for Committee members.

Board training and professional advice
During the year Directors participated in various industry conferences and workshops to further their knowledge of stakeholder issues and emerging contemporary issues. Individual Directors also participated in professional development programs with the Australian Institute of Company Directors. Board members consult with the Chairperson and/or Managing Director when they consider external advice or expertise is required.

Board meetings
During 2006-07 the Board held six meetings: five in Canberra and one in Pokolbin. The dates of these meetings were 5 July 2006, 6 September 2006, 15 November 2006,  December 2006, 7 March 2007 and 9 May 2007.

Attendance at Board and committee meetings

Potential conflict of interest
Section 21 of the Commonwealth Authorities and Companies Act 1997 requires that a Director who has a direct personal interest in a matter that is being considered by the Board must disclose the nature of the interest at a meeting of the Board. The Board manages the potential for conflict of interest for Directors and senior management by an annual declaration of potential conflicts and by a standing agenda item at each Board meeting that requires Directors who may have a conflict of interest in any matter to be discussed at that meeting to identify the potential conflict. Where a material potential conflict is identified the Director leaves the meeting during discussion of the matter. Potential conflicts are recorded in the Board minutes and are available for consideration by the Corporation's Auditors.

Indemnities and insurances for Directors and Officers
Since February 1999, the Corporation has been a member of Comcover, the Australian Government's self-managed fund for insurance cover. The Corporation's insurance covers Directors and officers against various liabilities that they may incur in their capacity as officers of the Corporation. The Comcover insurance contract prohibits disclosure of the nature and limit of the liabilities covered and the amount of the Corporation's membership premium.

No insurance claims were made by the Corporation during 2006-07.

Risk management
The Corporation's 2006-09 Risk Management Plan was approved by the Board in September 2006. It comprises a risk assessment methodology, a risk register with relevant mitigation strategies.

In 2006-07, the Corporation conducted a formal risk assessment. The process identified material risks facing the Corporation at both strategic and operational levels using best practice methodology. Action plans were developed to address significant risks during 2006-07. During the year the Corporation was invited to participate in the new Risk Management Assessment Service (RMAS) provided by Comcover, and undertaken by Echelon. The objective of RMAS is to assist agencies to improve their overall risk management capability and culture.

The Board's Audit Committee oversees preparation and implementation of the Corporation's risk management initiatives.

Fraud control
The Corporation's 2006-09 Fraud Control Plan was approved by the Board in September 2006.

In 2006-07, the Corporation conducted a formal risk assessment. The process identified potential areas of risk facing the Corporation in relation to fraud.

The Corporation's Managing Director is satisfied that:

• a fraud risk assessment and fraud control plan has been prepared in compliance with the Commonwealth's Fraud Control Guidelines as set out in the Corporation's Fraud Control Plan 2006-09
• appropriate fraud prevention, detection, investigation and reporting procedures and processes are in place as specified in the Corporation's Fraud Control Plan 2006-09;
• annual fraud data have been collected and reported in compliance with the Commonwealth's Fraud Control Guidelines

Accordingly, the Board is satisfied that the Corporation's fraud control policies, procedures and initiatives are in accordance with the Commonwealth's Fraud Control Guidelines.

The Board's Audit Committee oversights preparation and implementation of the Corporation's fraud control policy.

Ministerial reporting
Our key stakeholder is the Australian Government. It provides around 61% of overall Corporation funding (excluding industry levies) and the legislative framework under which we operate.

In addition to the specific linkages of Board appointments and corporate documentation such as the R&D Plan, the Annual Operational Plan and this Annual Report, the Corporation also writes to the responsible Minister after each Board meeting outlining the key outcomes of the meeting. As well, the Corporation copies all Ministerial correspondence and raises significant issues with the Australian Government Department of Agriculture, Fisheries and Forestry. The Corporation also keeps other ministers aware of issues and developments relevant to them. For example, the Trade Minister, the Hon. Warren Truss, MP was involved in the launch of a RIRDC publication on trade policy in 2006-07.

Ministerial directions
Under Section 143 of the Primary Industries and Energy Research and Development Act 1989,

the Minister may give written directions to the Corporation as to the performance of its functions and the exercise of its powers—no such directions were given in 2006-07.

Under Section 28 of the Commonwealth Authorities and Companies Act 1997, the Minister may give written directions to the Corporation regarding complying with the general policies of the Government. On 24 January 2007 the Minister wrote to the Chair notifying that the Protective Security Manual will apply to RIRDC as a general policy of the government, effective 1 March 2007.

The Corporation also complies with the following continuing notifications of general policies of the Government under Section 28 of the

Commonwealth Authorities and Companies Act 1997:

• Australian Government Property Ownership Policy 2005, 2005-06
• The National Code of Practice for the Construction Industry (National Code) and the Australian Government Implementation Guidelines for the National Code of Practice for the Construction Industry (Implementation Guidelines), 200-0
• Cost recovery policy, 2002-0
• Foreign exchange risk management policy, 2002-0
• Commonwealth Fraud Control Guidelines 2002, 2002-0

CAC Act Compliance Report
In August 2006 the Minister for Finance advised the Chair of a new requirement for

Commonwealth Authorities and Companies Act 1997 bodies. The requirement is for Directors to complete an annual compliance report by the 15

October attesting to the best of their knowledge compliance with the CAC Act and associated regulations and financial sustainability. In response to this the Corporation has undertaken a significant exercise, led by the Audit Committee, in ensuring that the Directors are well informed when completing such a declaration.

Protective Security Manual
On 24 January 2007 Minister for Agriculture, Fisheries and Forestry, Minister McGauran wrote to the Chair advising that in accordance with subsection 28(1) of the CAC Act the Protective Security Manual 2005 applies to RIRDC as a general policy of the Australian Government from 1 March 2007. The Corporation has undertaken a review of its compliance with the Protective Security Manual and an implementation plan for areas of non compliance with a view to be fully compliant by 30 December 2007. The Board has identified that this is an area of non-compliance in the CAC Act Compliance Report.

Judicial decisions
None recorded for 2006-07.

Significant events
There were no significant events as described under Section 15 of the CAC Act.

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