R & D Start Program Directions No. 1 of 1998 (Cth)
Commonwealth of Australia
Industry Research and Development Act 1986
R&D Start Program Directions No. 1 of 1998
I, JOHN COLINTION MOORE, Minister for Industry, Science and Tourism, acting under subsections 19 (1) and 20 (1) of the Industry Research and Development Act 1986, give the following directions to the Industry Research and Development Board.
Dated Tenth August 1998
JOHN MOORE
Minister for Industry, Science and Tourism
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PART 1 - PRELIMINARY
Name of directions
1. These directions are the R&D Start Program Directions No. 1 of 1998.
Commencement
2. These directions commence on the day on which the directions are published in the Gazette.
Object of these directions
3. (1) The object of this instrument is to give directions to the Industry Research and Development Board in relation to a function to be performed by the Board relating to the object of the Industry Research and Development Act 1986 and to certain policies and practises to be followed by the Board in the performance of that function.
(2) That function is an additional function of the Board.
(3) The polices and practises to be followed by the Board in the performance of the additional function are intended to include the provision of a competitive basis for granting:
(a) financial assistance for research and development projects; and
(b) concessional loans for the commercialisation of technological innovation.
Interpretation
4. (1) In these directions, unless the contrary intention applies:
agreement means an agreement mentioned in clause 16.
applicant includes a party to a joint application.
application means an application for financial assistance or a loan.
Concessional Loans means the program of concessional loans by the Commonwealth for the commercialisation of technological innovation.
Core Start means the research and development program comprising the following subprograms:
(a) Start Grants;
(b) Start Graduate;
(c) Concessional Loans;
(d) Innovation Ready.
eligible expenditure means expenditure:
(a) related to:
(i) research and development activity for a project for which financial assistance is provided under the R&D Start Program;
or
(ii) commercialisation of technological innovation under that Program; and
(b) that is eligible expenditure under the clause 18.
financial assistance means a payment under the R&D Start Program that:
(a) is not a loan; or
(b) is not made for the purposes of Innovation Ready.
Innovation Ready means the program to assist potentially innovative companies to be competitive and efficient in order to undertake effective research and development activities.
joint application means a single application made by more than 1 applicant.
loan means a Concessional Loans payment.
non tax-exempt company means a company, except a company to which Division 50 of the Income Tax Assessment Act 1997 applies, that is incorporated in Australia.
R&D Start Program means the research and development program comprising the following component programs:
(a) Core Start;
(b) Start Plus;
(c) Start Premium.
relevant year, for an applicant, means:
(a) if the applicant has been incorporated for each of the 3 years preceding the year of income in which the application is made – each of those years; or
(b) if the applicant has been incorporated for fewer than 3 years of income preceding the year of income in which the application is made – each of those years in which the applicant was incorporated.
revoked directions means the directions revoked in clause 30.
research institution includes:
(a) the Commonwealth Scientific and Industrial Research Organisation;
and
(b) a tertiary educational research institution; and
(c) an institution that is recognised as a Cooperative Research Centre;
and
(d) a medical or veterinary research institution; and
(e) a body that, in the opinion of the Board:
(i) conducts research and development as its primary activity; and
(ii) is primarily funded by the Commonwealth, or a State or
Territory, and conducts substantial research.
Start Graduate means the program of financial assistance for research and development related projects conducted by graduates for non tax-exempt companies with turnovers of less than $50,000,000 in each relevant year.
Start Grants means the program of financial assistance for research and development projects of non tax-exempt companies with turnovers of less than $50,000,000 in each relevant year.
Start Plus means the program of financial assistance for research and development projects of non tax-exempt companies with turnovers of $50,000,000 or more in 1, or more than 1, relevant year.
Start Premium means the program of financial assistance:
(a) for high merit research and development projects of non tax-exempt companies; and
(b) that is repayable to the Commonwealth.
year of income, of a company, means the period of 12 months to which the income tax returns of the company relate.
(2) For these directions, whether 2 or more bodies corporate are related to each other is determined in the same way as under the Corporations Law.
Board to have regard to certain policy objectives
5. The Board must have regard to the following policy objectives in giving effect to these directions:
(a) to increase the number of projects involving research and development activities with a high commercial potential that are undertaken by companies;
(b) to foster greater commercialisation of the outcomes of those projects;
(c) to foster collaborative research and development activities in industry and between industry and research institutions;
(d) to encourage successful innovation in small companies by supporting commercialisation of internationally competitive products, processes and services;
(e) to increase the level of research and development activity that is commercialised in Australia;
(f) to provide national benefits.
When applications to be considered
6. The Board must deal with an application as soon as practicable after it is received by the board.
PART 2 – ADDITIONAL FUNCTION OF BOARD
Additional function
7. (1) A function of the Board is to administer the R&D Start Program.
(2) The Board must administer the component programs of the R&D Start Program, except the Innovation Ready component, by:
(a) considering applications and selecting applicants for financial assistance and loans; and
(b) entering into agreements, on behalf of the Commonwealth, with applicants whose applications for financial assistance or loans are granted; and
(c) authorising payments for financial assistance and loans to be made by the Commonwealth to those applicants; and
(d) monitoring and evaluating projects for which financial assistance or loans are provided.
(3) The Board must:
(a) establish, develop and maintain procedures for the delivery of services to companies for Innovation Ready; and
(b) administer Innovation Ready by:
(i) providing those services; and
(ii) authorising payments to be made by the Commonwealth for Innovation Ready in the financial year commencing on 1 July 1998 and each following year for which the R&D Start Program receives an appropriation.
PART 3 – ELIGIBILITY FOR FINANCIAL ASSISTANCE
Eligible applications – financial assistance
8. (1) The Board must accept an application for financial assistance if the Board is satisfied that:
(a) the applicant meets the requirements of clause 9; and
(b) the project to which the application relates meets the requirements of clause 10 that apply to the project.
(2) However, the Board may not accept an application for financial assistance that the Board reasonably considers is the same, or substantially the same, as another application for financial assistance:
(a) that was not accepted by the Board; or
(b) that was accepted by the Board, but related to a project for which the financial assistance (including financial assistance under the R&D Start Program as conducted under the revoked directions) was not granted.
(3) Also, the Board must not accept an application for financial assistance if acceptance of the application would be inconsistent with a determination under subclause (4).
(4) The Board may determine that it will not accept an application for financial assistance if the applicant has already made a number of applications:
(a) that exceeds 1, or another number stated in the determination; and
(b) in relation to which the Board has not decided whether to grant the financial assistance.
Applicant requirements
9. (1) If an application for financial assistance:
(a) is not a joint application – the applicant must be a non tax-exempt company; and
(b) is a joint application – at least 1 party to the application must be a non tax-exempt company.
(2) The Board must not grant an application for Start Grants financial assistance unless the combined turnover of the applicant, and of each body corporate (if any) related to the applicant, is less than $50,000,000 for each relevant year.
(3) The Board must not grant an application for Start Plus financial assistance unless the combined turnover of the applicant, and of each body corporate (if any) related to the applicant, is $50,000,000 or more for 1, or more than 1, relevant year.
(4) The Board must not grant an application for Start Premium financial assistance for a project unless:
(a) the application accompanies an application for Start Grants or Start Plus financial assistance for the project; and
(b) Start Grants or Start Plus financial assistance is provided for the project; and
(c) the agreement between the Board and the applicant mentioned in clause 16 provides for repayment of the Start Premium financial assistance for the project in accordance with subclause (5).
(5) The agreement must provide that:
(a) if the applicant is a joint applicant – each party to the application agrees to repay to the Commonwealth any amount of the Start Premium financial assistance provided to the party for the project; and
(b) in any other case – the applicant agrees to repay to the Commonwealth any amount of the Start Premium financial assistance provided for the project.
(6) The Board must not grant an application for financial assistance for the cost of a project unless the Board considers that the applicant is able to fund the cost of the project that is not met by the financial assistance.
Project requirements
10. (1) A project to which an application for financial assistance, except an application for Start Graduate financial assistance, relates:
(a) must aim to produce a clearly identified product, process or service;
and
(b) must involve research and development activities; and
(c) may involve related product development and related market
research.
(2) A project to which an application for Start Graduate financial assistance relates must:
(a) involve a graduate working for the applicant in research and
development related activities; and
(b)be intended, and likely, to form or strengthen links between the
applicant and a research institution.
PART 4 – ELGIBILITY FOR LOANS
Eligible applicants and projects—loans
11. (1) The Board must accept a loan application in relation to a project if the Board considers that:
(a) the applicant:
(i) has less than 100 employees; and
(ii) is unable to obtain sufficient funding for the project from financial institutions; and
(b) the project involves early commercialisation of technological innovation in relation to the following aspects of an internationally competitive product, process or service:
(i) design and documentation;
(ii) trial production runs, including tooling up;
(iii) compliance with regulatory requirements and other standards;
(iv) creation and protection of intellectual property rights;
(v) trial and demonstration activities.
(2) However, the Board must not accept a loan application in relation to a project unless the Board is satisfied that:
(a) if the application is not granted, the project will not proceed satisfactorily; and
(b) the results of the project will be exploited for the benefit of Australia.
(3) Also, the Board may not accept an application for a loan that the Board reasonably considers is the same, or substantially the same, as another application for a loan:
(a) that was not accepted by the Board; or
(b) that was accepted by the Board, but related to a project for which the
loan (including a loan under the R&D Start Program as conducted
under the revoked directions) was not granted.
(4) Further, the Board must not accept an application for a loan if acceptance of the application would be inconsistent with a determination under subclause (5).
(5) The Board may determine that it will not accept an application for a loan if the applicant has already made a number of applications:
(a) that exceeds 1, or another number stated in the determination; and
(b) in relation to which the Board has not decided whether to grant the
loan.
PART 5 – MERIT CRITERIA
Assessment of applications for financial assistance and loans
12. If the Board accepts an application, it must assess the application:
(a) by considering the merit of the application; and
(b) in the case of an application for financial assistance – by comparing the merit of the application under clause 13 with the merit of other applications accepted by the Board for the same kind of financial
assistance; and
(c)for an application for a loan – by comparing the merit of the
application under clause 14 with the merit of other applications
accepted by the Board for loans.
Merit criteria – financial assistance
13. (1) The merit of applications for Start Grants or Start Plus financial assistance is assessed under the following criteria:
(a) the management capability of applicants;
(b) the level of commercial potential of projects and applicants’
capacities to exploit that potential;
(c) the level of relevant technical capability and resources of applicants
and the technical soundness of projects to which applications relate;
(d)the extent to which projects would benefit Australia, including
Australian industry and the wider community;
(e) whether projects would proceed satisfactorily without the financial assistance.
(2) The merit of applications for Start Premium financial assistance is assessed under the following criteria:
(a) whether applications meet the criteria set out in subclause (1) to a
high degree;
(b) the period and manner in which financial assistance is proposed to be repaid by applicants.
(3) The merit of applications for Start Graduate financial assistance is assessed under the following criteria:
(a) the management capability of applicants;
(b) the extent to which projects to which applications relate would
improve applicants’ performance through the adoption of appropriate technology or methodology;
(c) the extent to which projects form or strengthen appropriate links
between applicants and research institutions;
(d) whether projects would proceed satisfactorily without financial
assistance.
Meet criteria – loans
14. (1) The merit of applications for loans for projects is primarily assessed under the following criteria:
(a) the management capability of applicants;
(b) the demand, growth and size of markets for products, processes or
services to which the projects relate;
(c) the competitiveness and dynamism of the markets;
(d) the technical and production synergies of projects;
(e) the national benefits of the projects.
(2) The merit of applications for loans for projects is also assessed under the following other criteria:
(a) the expertise of the personnel to be involved in the projects;
(b) the technical risk involved in projects;
(c) the uniqueness or superiority of the products, processes or services to
which the projects relate;
(d) the prices envisaged for the products, processes or services.
PART 6 – GRANT OF FINANCIAL ASSISTANCE AND LOANS
Grant of financial assistance and loans
15. After assessing an application in accordance with Part 5, the Board may grant financial assistance, or a loan, for a project to which the application relates.
Board to enter agreements
16. The Board must enter into an agreement with an applicant whose application is granted before financial assistance or a loan is provided to the applicant.
What agreements must contain
17. An agreement:
(a) must not be inconsistent with a law of the Commonwealth or these directions; and
(b) must specify the amount of the financial assistance or loan for the project to which the application relates and the timing and method of delivery of the assistance or loan; and
(c) must require the applicant to conduct a project to which the application relates in accordance with the application; and
(d) must require the applicant to keep records relating to the conduct and management of the project; and
(e) must provide for inspection by or for the Board of the premises where the project is undertaken and of the records mentioned in paragraph (d); and
(f) must require the applicant to report to the Board on the conduct and management of the project; and
(g) in the case of an agreement relating to Start Premium financial assistance or a loan:
(i)must provide for repayment of the financial assistance or loan;
and
(ii)may provide that interest on the balance of financial assistance to be repaid is charged in accordance with clause 25; and
(iii)must provide that interest on the balance of a loan to be repaid is charged in accordance with clause 26; and
(h) must provide for variation and termination of the agreement; and
(i) may include other matters.
PART 7- ELIGIBLE EXPENDITURE
Eligible expenditure
18. (1) This clause applies to projects for which financial assistance or a loan is granted.
(2) The Board may determine in writing that expenditure for a project that is incurred after the application for the financial assistance or loan for the project is received by the Board is eligible expenditure.
(3) However, expenditure is not eligible expenditure unless, at the time of the expenditure:
(a)in the case of expenditure by a person to whom financial assistance is granted – that person meets the relevant requirements of clause 9 as if the person were an applicant to whom those requirements continue to apply; and
(b) in the case of expenditure for a project by a person to whom financial assistance or a loan is granted – the project meets the relevant requirements of clause 10, or paragraph 11 (1) (b) and subclause 11 (2), as if the project were a project to which those requirements continue to apply.
Authorisation of payment of financial assistance
19. The Board may authorise payments under the R&D Start Program to be made for eligible expenditure in:
(a) the financial year commencing on 1 July 1998; and
(b) each following financial year for which the R&D Start Program receives an appropriation.
Maximum financial assistance and loan based on eligible expenditure
20. (1) The total amount of financial assistance for a project must not exceed:
(a)in the case of Start Graduate or Start Grants financial assistance – 50% of the eligible expenditure for the project; and
(b) in the case of Start Plus financial assistance – 20% of the eligible expenditure for the project; and
(c) in the case of Start Premium financial assistance – 56.25% of the eligible expenditure for the project.
(2) The total loan amount for a project must not exceed 50% of the eligible expenditure for the project.
PART 8 - OTHER REQUIREMENTS IN RELATION TO FINANCIAL ASSISTANCE AND LOANS
Minimum Start Program financial assistance
21. The amount of Start Premium financial assistance for a project must be at least $60,000.
Maximum Start Graduate financial assistance
22. The amount of Start Graduate financial assistance for a project must not exceed $100,000.
Maximum financial assistance for projects and linked projects
23. (1) Financial assistance provided after 18 December 1996 for a single project, or the total financial assistance provided after that date for a number of linked projects (including the financial assistance provided under the R&D Start Program as conducted under the revoked directions) must not exceed $15,000,000.
(2) In determining the maximum amount of financial assistance for a project, or a number of linked projects, the Board must disregard an amount of financial assistance for the project that has been repaid to the Commonwealth.
Time limits on provision of financial assistance and loans
24. (1) Financial assistance for a project (except Start Graduate financial assistance) must not be provided for a period exceeding 3 years.
(2) Start Graduate financial assistance for a project must not be provided for a period exceeding 2 years.
(3) However, the Board may extend the period for which financial assistance (except Start Graduate financial assistance) may be provided for a project to a maximum of 5 years if the Board reasonably considers that the objectives of the project would be advanced significantly by the extension.
(4) A loan must be fully paid by the Board within 3 years of the day on which the agreement for the loan was made.
Interest charged on Start Premium financial assistance
25. Interest on the balance of repayable Start Premium financial assistance may be charged at a rate that is not greater than 1.5 times the bank variable small business loan rate set out in Table F4 (Indicator Lending Rates) published monthly in the Reserve Bank Bulletin or in a similar commercial borrowing rate index.
Interest charged on loans
26.(1) This clause applies subject to clause 27.
(2) A loan must be repaid, and interest on the loan must be paid, to the Commonwealth within 6 years of the day on which the agreement for the loan was made (the date of the agreement).
(3) Interest on the balance of a loan:
(a) must be charged at the rate of 40% of the Commonwealth Bank Loan Reference Rate, or such other rate as the Board may decide; and
(b) is fixed for the term of the loan; and
(c)accrues daily from the end of 36 months after the date of the
agreement.
(4) Unless repaid sooner, loan repayments must be made in 6 equal instalments in accordance with subclauses (5), (6) and (7).
(5) The first repayment must be made no later than 42 months after the date of the agreement.
(6) The second repayment must be made no later than 6 months after the day on which the first repayment was due to be made.
(7) Succeeding repayments must be made no later than at 6 monthly intervals after the day on which the second repayment was due to be made.
(8) Interest payments must be made at the same time as the loan repayments to which they relate.
Board may make other arrangements for loan repayments etc
27. The Board may make provisions for the repayment of a loan, and payment of the interest for the loan, that are not the same as the provisions of clause 26.
Board may waive certain repayments and payments
28. The Board may waive repayment of the amount, or part of the amount, of Start Premium financial assistance, or of interest in relation to that financial assistance, for a project if the Board reasonably considers that it would be appropriate to do so, after taking into account the financial or other benefits gained, or likely to be gained, as a result of the project by the person, or persons, to whom the assistance was provided.
PART 9 – MONITORING AND EVALUATING PROJECTS
Monitoring and evaluating
29.The Board must:
(a)ensure that projects under the R&D Start Program are monitored to obtain relevant information for evaluation; and
(b)at the request of the Minister, facilitate and cooperate with independent evaluation of the R&D Start Program.
PART 10 – REVOCATION OF EARLIER DIRECTIONS
Revocation of directions
30.The following directions are revoked:
(a)Directions in respect of additional functions of the Industry Research and Development Board published in Gazette GN 28 on 20 July 1994;
(b)Directions in respect of concessional loans for the commercialisation of technological innovation, published in Gazette GN 28 on 20 July 1994;
(c)R&D Start Program (additional function of the IR&D Board) Direction No. 1 of 1996, published in Gazette S 496 on 18 December 1996;
(d)R&D Start Program (policies and practices of the IR&D Board) Direction No. 1 of 1996, published in Gazette S 496 on 18 December 1996;
(e)R&D Start Program (Payments) Direction 1997, published in Gazette GN 25 on 25 June 1997;
(f)R&D Start Program (policies and practices of the IR&D Board) Direction No. 1 of 1996 (Amendment No. 1 of 1997), published in Gazette GN 25 on 25 June 1997;
(g)R&D Start Program (additional function of the IR&D Board) Direction No. 1 of 1996 (amendment No. 1 of 1997), published in Gazette S 335 on 22 August 1997.
PART 11 – TRANSITIONAL PROVISIONS
Transitional provisions – certain grants of financial assistance and loans
31. The revoked directions, as the force immediately before the commencement of these directions, continue to apply in relation to financial assistance or a loan provided under the revoked directions.
Transitional provision – certain applications for financial assistance and loans
32. (1) An application for financial assistance or a loan may be made under the revoked directions until 30 September 1998 as if those directions, as in force immediately before the commencement of these directions, continued to apply.
(2) The Board must consider the application as if the revoked directions continued to apply.
(3) The Board may grant the application as if the revoked directions continued to apply.
(4) If the application is granted, the revoked directions are taken to continue to apply in relation to the financial assistance of loan to which the application relates.
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