EXPLANATORY STATEMENT
Issued by the authority of the Acting Minister for Industry, Innovation and Science
Industry Research and Development Act 1986
Industry Research and Development (Advanced Manufacturing Growth Fund Program) Instrument 2017
Purpose and Operation
Section 33 of the Industry Research and Development Act 1986 (the IR&D Act) provides a mechanism for the Minister to prescribe programs, by disallowable legislative instrument, in relation to industry, innovation, science or research, including in relation to the expenditure of Commonwealth money under such programs.
The statutory framework provided by s33 of the IR&D Act enables a level of flexibility to provide authority for Commonwealth spending activities in relation to industry, innovation, science and research programs. This allows the Government to respond quickly and appropriately to the need to implement innovative ideas and pilot programs on an ongoing basis and as opportunities arise. Prescribing programs in legislative instruments provides transparency and parliamentary oversight of Government programs and spending activities, whilst reducing administrative burden on the Commonwealth.
Once a program is prescribed by the Minister under s33, s34(1) allows the Commonwealth to make, vary or administer arrangements in relation to activities under the prescribed program. Arrangements may include contracts, funding agreements or other arrangements, and may provide for money to be payable by the Commonwealth to one or more third parties. The power conferred on the Commonwealth by s34(1) may be exercised on behalf of the Commonwealth by a Minister or an accountable authority of a non-corporate entity, or by their delegate (under s36).
The purpose of the Industry Research and Development (Advanced Manufacturing Growth Fund Program) Instrument 2017 (the Legislative Instrument) is to prescribe the Advanced Manufacturing Growth Fund Program (the Program). The funding for the Program has been secured through the Department of Industry, Innovation and Science (the Department) 2017-18 Budget and supports the Australian Government’s commitment to transition the manufacturing sector to globally-focused, highly skilled, advanced manufacturing. The Program provides $47.5 million in grant funding as part of the Australian Government’s commitment to improve the overall efficiency and competitiveness of firms and the broader economy through advanced manufacturing. This includes the use of advanced technologies, design and engineering excellence, and innovative business processes.
Funding authorised by this instrument comes from Program 2: Growing Business Investment and Improving Business Capability, Outcome 1, as set out in the Portfolio Budget Statements 2017-18, Budget Related Paper No. 1.12, Industry, Innovation and Science Portfolio (https://industry.gov.au/AboutUs/Budget/Documents/PBS-2017-18.pdf) at page 31. Funding is available to successful small and medium-sized enterprises to undertake eligible capital projects to establish and expand advanced manufacturing activities in Victoria and South Australia. The Program is delivered by the Department’s Business Grants Hub, which is a specialised program design, management and delivery body with extensive expertise and capability in delivering similar programs.
The Program is a competitive, merits based grants program. The Program is administered by the Department in accordance with the Commonwealth Grant Rules and Guidelines (http://www.finance.gov.au/sites/default/files/commonwealth-grants-rules-and-guidelines-July2014.pdf). Eligibility and merit criteria are outlined in the Program guidelines available at https://www.business.gov.au/assistance/advanced-manufacturing-growth-fund.
Spending decisions are made by the Minister for Industry, Innovation and Science, taking into account the recommendations of an independent assessment committee.
Grants are a minimum of $500,000 and a maximum of $2.5 million. The grant amount may be up to one third of eligible project costs. The project costs must include at least $1.5 million in eligible expenditure. The Program involves the allocation of finite resources (grants of up to $2.5 million funded from a $47.5 million fund). In addition there is a robust and extensive assessment process, an enquiry and feedback process, and an existing complaints mechanism for affected applicants. Therefore, external merits review does not apply to decisions about the provision of grants under the Program.
Applications are assessed against the eligibility criteria and merit criteria set out in the Program guidelines in two stages. At first instance, applications are assessed by AusIndustry against the eligibility criteria. An independent assessment committee then considers eligible applications against the merit criteria. This includes comparing the applications and scoring each application out of 100. The committee comprises an independent chairperson, a representative from the Advanced Manufacturing Growth Centre, business representatives with knowledge of South Australian and Victorian manufacturing, and a departmental officer as an ex-officio member. The independent assessment committee may seek input from independent technical experts to inform their assessments.
Applications must address the eligibility criteria and all merit criteria and provide relevant supporting information. The amount of detail and supporting evidence should be relative to the project size, complexity and funding amount requested. Larger and more complex projects should include more detailed evidence. To be competitive, applications must score highly against each merit criterion.
After considering the applications, the independent assessment committee makes recommendations to the Minister on which applications are suitable for funding. The Minister makes the final decision about which grants to approve, taking into consideration the independent assessment committee’s recommendations, and the availability of grant funds. The Minister will not approve funding if there are insufficient Program funds available across relevant financial years for the Program.
Both successful and unsuccessful applicants are informed in writing. Unsuccessful applicants have an opportunity to discuss the outcome with the Department, and can submit a new application for the same or similar project in future funding rounds. Applicants should include new or more information to address the weaknesses identified in their previous application.
Persons who are otherwise affected by decisions or who have complaints about the Program also have recourse to the Department. The Department investigates any complaints about the Program in accordance with its complaints policy and procedures. If a person is not satisfied with the way the Department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.
The Legislative Instrument specifies that the legislative power in respect to which the instrument is made is the power of the Parliament to make laws with respect to foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth (s51(xx) of the Constitution) (the corporations power). The corporations power supports Commonwealth activities which assist the activities of foreign corporations, and trading or financial corporations (together, constitutional corporations). In that regard, the Program prescribed by the Legislative Instrument singles out and confers on some constitutional corporations (namely, trading or financial corporations) benefits which are directed to assisting those corporations in the conduct of their ordinary activities, and imposes terms and conditions on those corporations under the grant agreements in accordance with s35 of the Act, in relation to receipt of the benefits under the Program. In particular, the Program provides funding to trading or financial corporations to assist them to undertake eligible capital projects to establish and expand advanced manufacturing activities in Victoria and South Australia. Eligibility to receive funding under the Program is limited to businesses which are trading or financial corporations to which s51(xx) applies.
Authority
Section 33 of the Industry Research and Development Act 1986 provides authority for the Instrument.
Consultation
In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department have been consulted on this Legislative Instrument.
Regulatory Impact
It is estimated that the Regulatory Burden is likely to be minor (OBPR reference number 22208).
Details of the Industry Research and Development (Advanced Manufacturing Growth Fund Program) Instrument 2017
PART 1 – PRELIMINARY
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Advanced Manufacturing Growth Fund Program) Instrument 2017.
Section 2 – Commencement
This section provides that the Legislative Instrument commenced on the day after registration on the Federal Register of Legislation.
Section 3 – Authority
This section specifies the provision of the Industry, Research and Development Act 1986 (the Act) under which the Legislative Instrument is made.
Section 4 – Definitions
This item provides for definitions of terms used in the Legislative Instrument.
Section 5 – Prescribed Program
This section prescribes the Advanced Manufacturing Growth Fund Program (the Program) for the purposes of section 33 of the Act.
The Program provides grants to small and medium-sized businesses that have the capability to access and capture market opportunities in Australia and/or internationally, to undertake capital projects to establish and expand high‑value manufacturing operations in Victoria and South Australia.
To be classified as a capital project under the Program, the project must include buying, constructing, installing, or commissioning of manufacturing capital equipment. The project may include undertaking design and engineering activities; fit-out alterations and/or extensions to buildings; and training.
High‑value manufacturing operations can include the use of advanced technologies; design and engineering excellence; and innovative business processes that improve the overall efficiency and competitiveness of firms.
Advanced manufacturing includes a broad set of enabling technologies, processes and practices that businesses from a wide range of industry sectors can adopt to improve their productivity and competitiveness.
Section 6 – Specified Legislative Power
This section specifies that the legislative power in respect of which the Legislative Instrument is made is the power of the Parliament to make laws with respect to the foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth (s51(xx) of the Constitution).
Section 7 – Eligibility criteria relating to program
This section sets out the eligibility criteria relating to the Program for the purposes of subsection 33(4) of the Act. The eligibility criteria include that applicants must be trading or financial corporations to which paragraph 51(xx) of the Constitution applies.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Advanced Manufacturing Growth Fund Program) Instrument 2017
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
This Legislative Instrument provides legislative authority to commit Commonwealth funds for the Advanced Manufacturing Growth Fund Program.
The Program provides $47.5 million in grant funding as part of the Australian Government’s commitment to improve the overall efficiency and competitiveness of firms and the broader economy through advanced manufacturing. This includes the use of advanced technologies, design and engineering excellence, and innovative business processes.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Senator the Hon. Michaelia Cash
Acting Minister for Industry, Innovation & Science