R & D Start Program (policies and practices of the IR&D Board) Direction No. 1 of 1996 (Cth)
Commonwealth of Australia
Industry Research and Development Act 1986
R&D Start Program (policies and practices of the IR&D Board) Direction No. 1 of 1996
I, JOHN COLINTON MOORE, Minister for Industry, Science and Tourism of the Commonwealth of Australia, acting under subsection 20 (1) of the Industry Research and Development Act 1986, give the following direction to the Industry Research and Development Board.
Dated Tenth of December 1996.
John Moore
Minister for Industry, Science and Tourism
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PART 1 - PRELIMINARY
Citation
1. This direction may be cited as the R&D Start Program (policies and practices of the IR&D Board) Direction No. 1 of 1996.
Commencement
2. This direction commences on the day on which particulars of the direction are published in the Gazette.
[NOTE: For the publication of the particulars, see s. 20 (3) of the Act.]
Interpretation
3. (1) In this direction, unless the contrary intention appears:
“advance approval opinion”, in respect of a proposed project, means an informal written opinion given by the Board, otherwise than in connection with a decision of the Board under the finance scheme guidelines, concerning:
(a) whether the proposed project would comprise or include research and development activities; and
(b) whether a proposed finance scheme in relation to those activities would not be taken to be an ineligible finance scheme for the purposes of Part IIIA of the Act;
“application” means an application for financial assistance under the R&D Start Program;
“competitive allocation round” means the process used by the Board for selecting applications for financial assistance under the R&D Start Program;
“core technology expenditure” has the same meaning as in section 73B of the Income Tax Assessment Act 1936;
“eligible expenditure”, for a project, means the expenditure (other than core technology expenditure) determined by the Board to be eligible expenditure for the project and may, in the case of an application for a grant for a Research and Development Project based on an unregistered Research and Development Syndicate Proposal, include expenditure incurred for the project before the application was lodged;
“R&D Start Program” means the Research and Development Start Program for the following financial assistance, namely:
(a) grants for Large Research and Development Projects in Small to Medium Sized Enterprises;
(b) grants for Small Research and Development Projects in Small to Medium Sized Enterprises;
(c) grants for Collaborative Research and Development Projects between Research Institutions and Australian Companies;
(d) grants for Graduate Based Research and Development Related Projects in Small to Medium Sized Enterprises;
(e) grants for Research and Development Projects based on unregistered Research and Development Syndicate Proposals;
(f)loans for the Commercialisation of Technological Innovation;
“the Act” means the Industry Research and Development Act 1986.
(2) For this direction, the question whether 2 or more bodies corporate are related to each other must be determined in the same way as that question would be determined for the Corporations Law.
Purpose
4. (1) The purpose of this direction is to set out policies and practices to be followed by the Board in the performance of its functions under the R&D Start Program.
(2) These policies and practices are designed to provide a competitive basis for giving financial assistance for projects that:
(a)aim to produce a clearly defined product, process or service; and
(b)clearly demonstrate a high degree of commercial potential; and
(c)link research and development activities with commercialisation and financial capability; and
(d)provide national benefits; and
(e)would not proceed satisfactorily without the financial assistance.
Board to have regard to certain policy objectives
5. The Board must have regard to the following policy objectives in the performance of its functions under the R&D Start Program:
(a)to increase the number of projects of research and development activities having a high commercial potential that are undertaken by companies;
(b)to increase the successful commercialisation of those projects;
(c)to increase the finance sector funding of those projects and their commercialisation.
Publicise closing dates for competitive allocation rounds
6. (1) For the financial year commencing 1 July 1996 the Board must conduct 2 competitive allocation rounds and publicise the closing dates for applications for each round.
(2) For the financial year commencing 1 July 1997, and each subsequent financial year, the Board must conduct at least 3 competitive allocation rounds and publicise the closing dates for applications for each round.
When applications must be considered
7. (1) Subject to subclause (3), applications for grants of less than $1,000,000 must be considered by the Board as soon as practicable.
(2) Applications for grants of at least $1,000,000 must be considered by the Board in the competitive allocation round next after lodgment of the relevant application.
(3) Applications for grants for Research and Development Projects based on unregistered Research and Development Syndicate Proposals can only be considered by the Board if they are lodged before the publicised closing date for the second competitive allocation round in the financial year commencing 1 July 1996.
PART 2 – ELIGIBILITY FOR FINANCIAL ASSISTANCE
Eligible applicants
8. An applicant is eligible for financial assistance if the Board is satisfied that the applicant, and the project for which the relevant application is made, meet the requirements of this Part.
Requirements concerning projects
9. (1) A project under application:
(a) must be a project of research and development activities; and
(b) may involve related product development and related market research.
Graduate based projects
(2) In addition to (1), to qualify for a grant for Graduate Based Research and Development Related Projects in Small to Medium Sized Enterprises, a project must involve a graduate working on a specific company-based research and development related project that would result in the formation of new and appropriate linkages between a company and a tertiary or research institution.
Collaborative projects
(3) In addition to subclause (1), to qualify for a grant for Collaborative Research and Development Projects between Research Institutions and Australian Companies, a project must:
(a) be conducted jointly by at least 1 incorporated Australian company and at least 1 body registered as an Australian research agency under section 39F of the Act; and
(b) involve high technical risk; and
(c) if successful, provide extensive national benefits.
Requirements concerning applicants
10. (1) Subject to subclause (2), an applicant:
(a) must not be exempt from income tax; and
(b) must be incorporated under a law of the Commonwealth or of a State or Territory.
Collaborative projects
(2) An applicant for a grant for a Collaborative Research and Development Project between Research Institutions and Australian Companies must:
(a) satisfy paragraphs (1) (a) and (b); or
(b) be registered as an Australian research agency under section 39F of the Act.
SME and graduate based applicants
(3) In addition to subclause (1), to qualify for:
(a) grants for Large Research and Development Projects in Small to Medium Sized Enterprises; or
(b) grants for Small Research and Development Projects in Small to Medium Sized Enterprises; or
(c) grants for Graduate Based Research and Development Related Projects in Small to Medium Sized Enterprises;
an applicant, and any body corporate related to the applicant, must have had a combined annual turnover of less than $50,000,000 for each of the 3 years of income immediately before the year of income in which the application is made.
Unregistered syndicate applicants
(4) In addition to subclause (1), for an applicant to qualify for a grant for a Research and Development Project based on an unregistered Research and Development Syndicate Proposal:
(a) the Board must be satisfied that, according to the expressed intention of the Government under its policies announced in the joint statement issued by the Treasurer and the Minister for Industry, Science and Tourism on 23 July 1996, the applicant should not be entitled to registration under section 39P of the Act; and
(b) the applicant must have been, on 23 July 1996, the researcher for a project:
(i) substantially the same as the project for which the application is made; and
(ii) for which:
(A) an application under subsection 39P (1) of the Act was pending on that day; or
(B) a request for an advance approval opinion concerning registration of the applicant under subsection 39P (1) of the Act was pending on that day.
PART 3 – RELATIVE MERIT CRITERIA
Competitive basis for financial assistance
11. (1) The Board must not enter into an agreement with an applicant for financial assistance for a project under the R&D Start Program unless it is satisfied that:
(a) the applicant is eligible for financial assistance under Part 2; and
(b) the applicant and the project have a high order of merit according to the relative merit criteria; and
(c) there are sufficient funds available to provide the financial assistance to the applicant.
(2) For paragraph (1) (c), the Board must make a competitive assessment having regard to:
(a) the amount of funds it determines are available for the kind of financial assistance applied for; and
(b) the relative merit of the applicants being considered for that kind of financial assistance; and
(c) preference being given to applicants and projects with a higher degree of merit.
Relative merit criteria
12. For clause 11, the relative merit criteria are:
(a) management capabilities (the level of management capability of the applicant); and
(b) commercial potential (the level of commercial potential of the project and the applicant’s capability to exploit that potential); and
(c) technical strength (the level of relevant technical capabilities and resources of the applicant and the technical soundness of the project); and
(d) national benefits (the degree to which the project would benefit Australia, including Australian industry and the wider community);
and
(e) need for R&D Start funding (the degree to which the project would not proceed satisfactorily without financial assistance under the R&D Start Program).
PART 4 – BASIS FOR AGREEMENTS
Basis for agreements
13.The Board must not enter into agreements with applicants under the
R&D Start Program except in accordance with this Part.
Maximum financial assistance based on eligible expenditure
14. The financial assistance provided by the Board for a project under the R&D Start Program, other than grants for Research & Development Projects based on unregistered Research and Development Syndicate Proposals, must not exceed 50% of the eligible expenditure for the project.
Time Limits on the provision of financial assistance
15. (1) Subject to subclause (2), the financial assistance provided by the Board for a project under the R&D Start Program must not be provided for a period exceeding 3 years.
(2) The Board may extend the period in which it provides financial assistance by not more than 2 years if it is satisfied that the objectives of the project would be advanced significantly by the extension.
Maximum financial assistance for projects and families of interlinked projects
16. (1) For a project, and family of interlinked projects, the total financial assistance:
(a) under the R&D Start Program; and
(b) by way of Competitive Grants for Research and Development; and
(c) by way of Concessional Loans for Commercialisation of Technological Innovation;
in respect of applications made after the commencement of this direction must not exceed $15,000,000.
(2) For subclause (1), financial assistance by way of a loan must only be included in the total to the extent that the loan has not been repaid at the time the application is made for the project.
(3) In a financial year, the financial assistance that the Board agrees to provide for a project under the R&D Start Program must not exceed $5,000,000 unless the Board has reasonable grounds for exceeding that limit.
Reduction of financial assistance if other finance becomes available
17. The Board must not agree to provide financial assistance to an applicant for a project under the R&D Start Program unless the Board is satisfied that the agreement, or a law of the Commonwealth, would enable the Board to reduce the amount of the assistance to such extent as it considers appropriate in a case where:
(a) the applicant receives financial assistance otherwise than under the Act (whether or not from, or out of money provided by, the Commonwealth); and
(b) it appears to the Board that the financial assistance would aid the applicant to carry out the project.
Graduate based projects
18. Financial assistance by way of a grant for a Graduate Based Research and Development Related Project in a Small to Medium Sized Enterprises must not exceed $100,000 and must not be provided for more than 2 years.
Limits on the Board’s expenditure for financial assistance
19. (1)The Board must not authorise payments for:
(a) grants for Research Development Projects based on unregistered Research and Development Syndicate Proposals; and
(b) other grants of at least $1,000,000 under the R&D Start Program; totalling more than $40,000,000 to be made in the financial year commencing 1 July 1996.
(2) The Board must not authorise payments under the R&D StartProgram to be made in the financial year commencing 1 July 1997, or a subsequent financial year, until the Minister directs the Board to do so under section 20 of the Act.
Maximum financial assistance for collaborative projects
20. Total financial assistance for a project by way of grants for Collaborative Research and Development Projects between Research Institutions and Australian Companies must not exceed $1,000,000.
Maximum financial assistance (based on eligible expenditure) for a project of an unregistered syndicate
21. Financial assistance for a project by way of a grant for Research and Development Projects based on unregistered Research and Development Syndicate Proposals must not:
(a) if the eligible expenditure for the project is at least $2,000,000 – exceed 90% of the eligible expenditure; and
(b) in any other case – exceed 100% of the eligible expenditure for the project.
Maximum financial assistance by way of grants to unregistered syndicates
22. Total financial assistance by way of grants for Research and Development Projects based on unregistered Research and Development Syndicate Proposals must not exceed $100,000,000.
Repayment of certain parts of grants to unregistered syndicates
23. The Board must not agree to provide financial assistance to an applicant for a project by way of a grant for a Research and Development Project based on an unregistered Research and Development Syndicate Proposal unless the Board is satisfied that the agreement would require the applicant to repay (from any income generated from the results of the project) any part of the financial assistance that exceeds 50% of the eligible expenditure of the project.
Unregistered syndicates not to take action in relation to section 39P
24. The Board must not agree to provide financial assistance to an applicant for a project by way of grants for Research and Development Projects based on unregistered Research and Development Syndicate Proposals unless the Board is satisfied that:
(a) the project is not the subject of any claim or action in respect of rights or benefits under section 39P of the Act; and
(b) the applicant agrees not to take or pursue any claim or action in relation to those rights or benefits; and
(c) the applicant agrees to indemnify the Board against any other claims or actions that may arise in relation to those rights or benefits.
PART 5 – LOANS FOR THE COMMERCIALISATION OF TECHNOLOGICAL INNOVATION
Loans applications to be considered under Concessional Loans direction
25. If the Board receives an application for financial assistance by way of Loan for the Commercialisation of Technological Innovation:
(a) the application is taken to be an application for a Concessional Loan for Commercialisation of Technological Innovation; and
(b) the Board must consider the application in accordance with the direction entitled “Directions in Respect of Concessional Loans for the Commercialisation of Technological Innovation”:
(i) given under section 20 of the Act on 6 July 1994; and
(ii) published in the Gazette on 20 July 1994.
PART 6 – EVALUATING AND MONITORING PROJECTS
Evaluating and monitoring projects
26.The Board must:
(a) cooperate with and facilitate any independent evaluations of the R&D Start Program in accordance with advice from the Minister;
and
(b) ensure that projects under the R&D Start Program are monitored to obtain relevant information for the evaluations.
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