EXPLANATORY STATEMENT
Issued by the authority of the Minister for Resources
Industry Research and Development Act 1986
Industry Research and Development (Critical Mineral Office Pilot Program) Instrument 2023
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 section 33 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 section 33, subsection 34(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 subsection 34(1) may be exercised on behalf of the Commonwealth by a Minister or an accountable authority of a non corporate Commonwealth entity, or by their delegate (under section 36).
The purpose of the Industry Research and Development (Critical Minerals Office Pilot Program Instrument 2023 (the Legislative Instrument) is to prescribe the Critical Minerals Office Pilot Program (the Program). The funding for the Program has been secured through the Department of Industry, Science and Resources (the Department) 2023-2024 Budget. The Program provides $1.39 million as part of the Australian Government’s commitment to support a growing critical minerals sector in Australia.
The Program is intended to strengthen, promote and leverage the environment, social and governance (ESG) credentials of Australia’s critical minerals sector to increase investment attractiveness and drive economic growth. In doing so, it will strengthen ESG practices and increase the sector’s social license to operate, ensuring broader benefits for Australian communities, including for First Nations Australians.
Funding authorised by this Legislative Instrument comes from program 1.3 – Supporting a strong resources sector, Outcome 1 – Support economic growth, productivity and job creation for all Australians by investing in science, technology and commercialisation, growing innovative and competitive businesses, industries and regions, and supporting resources, as set out in the Portfolio Budget Statements 2023-24, Budget Related Paper No. 1.11, Industry, Science, Energy and Resources Portfolio (https://www.industry.gov.au/sites/default/files/2023-05/2023-24-department-of-industry-science-resources-pbs.pdf) at page 40.
The Program will be delivered by the Minerals and Resources Division, which is a specialised design, management, and delivery body within the Department with extensive expertise and capability in delivering similar programs.
The Program provides funding to an ESG reporting platform to support small to medium‑sized critical minerals operators enhance their ESG reporting capabilities, and to support relevant trade promotion, and international engagement in collaboration with Austrade to ensure supply chain diversification and investment into the sector.
The Program Delegate will use Department and whole-of-government panel arrangements and processes to procure the services of a suitable supplier through a request for quote and independent evaluation process. Spending decisions will be made by the Program Delegate who is the Manager responsible for administering the Program, taking into account the recommendations of the independent evaluation panel. The Program Delegate is an officer who holds delegation under the Department’s general financial framework, including delegation under the Public Governance, Performance and Accountability Act 2013, and sections 34 and 35 of the IR&D Act.
The Program is administered by the Department in accordance with the [Commonwealth Grant Rules and Guidelines 2017 (https://www.finance.gov.au/sites/default/files/2019-11/commonwealth-grants-rules-and-guidelines.pdf).
The Departmental procurement of an ESG reporting platform to under ESG reporting activities will involve allocation of finite resources between competing tenders and therefore falls within the category of decisions that would not usually be subject to merits review according to paragraph 4.11 of the Administrative Review Council guide, What decisions should be subject to merits review? available at: https://www.ag.gov.au/legal-system/administrative-law/administrative-review-council-publications/what-decisions-should-be-subject-merit-review-1999. In addition, there is a robust and extensive assessment process, an enquiry and feedback process, and an existing complaints mechanism for affected tenderers. Therefore, external merits review does not apply to decisions about the provision of funding under the Program.
Persons who are otherwise affected by decisions or who have complaints about the Program will 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 powers in respect of which the Instrument is made are the following:
Commerce and trade power
The Legislative Instrument specifies that the legislative power in respect of which it is made is the trade and commerce power (section 51(i) of the Constitution).
Section 51(i) of the Constitution empowers the Parliament to make laws with respect to trade and commerce with other countries, and among the States. The trade and commerce power supports this Program as expenditure is directed at fostering and promoting international trade and commerce with regards to the critical mineral industry.
Executive power
The Legislative Instrument specifies that the legislative power in respect of which it is made is the executive power (section 61 of the Constitution).
Section 61 of the Constitution empowers the Commonwealth to negotiate and enter into international arrangements with foreign governments. In this regard, funding provided under the Legislative Instrument may provide for opportunities and uplift, and enhance small to medium-sized critical minerals operators’ ESG reporting capabilities.
Further details of the Legislative Instrument are set out at Attachment A.
Background
Companies and investors are increasingly working together to address major global challenges. The adoption of ESG considerations in private investments is evolving from a risk management practice to a driver of innovation and new opportunities that create long‑term value for business and society. Promoting ESG adoption throughout the investment value chain can encourage greater private investment in sustainable development, resulting in greater impact.
The various actors in the investment value chain, including investors, banks and companies (both small and large), have increasingly included ESG and sustainability information in their reporting processes. It will be important to create an enabling environment for sustainability and integrated reporting to flourish.
The Program is intended to strengthen, promote and leverage the ESG credentials of Australia’s critical minerals sector to increase investment attractiveness and drive economic growth.
Authority
Section 33 of the IR&D Act provides authority for the Legislative Instrument.
Consultation
In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department has been consulted on this Legislative Instrument.
The Department has engaged with industry stakeholders and Commonwealth agencies regarding the Program.
Statement of Compatibility with Human Rights
A Statement of Compatibility with Human Rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out at Attachment B
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor (Office of Impact Assessment Number: 23-04454).
Attachment A
Details of the Industry Research and Development (Critical Minerals Office Pilot Program) Instrument 2023
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Critical Minerals Office Pilot Program) Instrument 2023.
Section 2 – Commencement
This section provides that the Legislative Instrument commences on the day after registration on the Federal Register of Legislation.
Section 3 – Authority
This section specifies the provision of the IR&D Act under which the Legislative Instrument is made.
Section 4 – Definitions
This item provides for definitions of terms used in the Legislative Instrument.
In relation to ESG, the scope in intended to mimic the United Nations Principles for Responsible Investment (available at: https://www.unpri.org/about-us/what-are-the-principles-for-responsible-investment) which takes into consideration of the following:
• Responsible investment is an approach to investment that explicitly acknowledges (the relevance of ESG factors to the performance and profitability of investment and to the long-term health and stability of the market as a whole.)
• It recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems.
• It recognises that institutional investors have a duty to act in the best long-term interests of their beneficiaries and that ESG issues can affect the performance of investment portfolios.
• They also recognise that aligning investors objectives with broader objectives of society will result in greater financial and socio-economic returns.
Section 5 – Prescribed Program
This section prescribes the Program for the purposes of section 33 of the IR&D Act.
The Program provides funding to develop and deliver a pilot program to build environment, social and governance capability within the Australian critical minerals industry and showcase that capability to international markets.
Section 6 – Specified Legislative Power
For the purposes of subsection 33(3) of the Act, the power of the Parliament to make laws with respect to trade and commerce (within the meaning of paragraph 51(i) of the Constitution), as it relates to measures that would foster and promote international trade and commerce with regards to the critical mineral industry.
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Critical Minerals Office Pilot Program) Instrument 2023
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
The Industry Research and Development (Critical Minerals Office Pilot Program) Instrument 2023 (the Legislative Instrument) provides legislative authority to commit Commonwealth funding for the Critical Minerals Office Pilot Program (the Program). The Program is intended to strengthen, promote and leverage the environment, social and governance credentials of Australia’s critical minerals sector to increase investment attractiveness and drive economic growth.
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.
Hon Madeleine King MP
Minister for Resources