EXPLANATORY STATEMENT
Issued by the authority of the Minister for Energy and Emissions Reduction
Industry Research and Development Act 1986
Industry Research and Development (Electric Vehicle Manufacturing Program) Instrument 2021
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 entity, or by their delegate (under section 36).
The purpose of the Industry Research and Development (Electric Vehicle Manufacturing Program) Instrument 2021 (the Legislative Instrument) is to prescribe the Electric Vehicle Manufacturing Program (the Program). The funding for the Program has been secured through the Department of Industry, Science, Energy and Resources (the department) 2020-21 Budget.
The Program provides $5 million as part of the Australian Government’s commitments to advanced manufacturing, increasing consumer choice for future fuels technologies, and supporting technologies to integrate battery electric vehicles into the grid. The initial funding available is for an ad hoc grant to Loddon Clean Energy Pty Ltd, ABN 39617788226, trading as Australian Clean Energy Electric Vehicle Group (ACE-EV), to establish an advanced manufacturing facility to assemble electric vehicles and to conduct a bidirectional vehicle-to-grid charging trial.
Activities that may be funded for the fit out of the advanced manufacturing facility include:
• manufacturing facility site upgrades
• purchase of plant and equipment
• purchase of hardware and software equipment
• preparation and development of environment for the assembly
• costs related to engineering and product design and development.
Activities that may be funded for the vehicle-to-grid trials include:
• undertaking prototyping and testing
• data collection and analysis
• stakeholder and user surveys
• conducting trials and demonstrating grid security and reliability
• compliance testing
• measuring the technical performance of the electric vehicles and prove the bi-directional charging capabilities.
The Program is expected to increase the manufacture, sale and use of electric vehicles in Australia and overseas and to investigate mechanisms by means of which electric vehicles can support the electricity grid and use renewable energy. The expanded use of electric vehicles, their support for the electricity grid and use of renewable energy will help reduce emissions of greenhouse gases in Australia and increase consumer choice for future fuel and vehicle technologies.
Funding authorised by this Legislative Instrument comes from Program 1.2: Growing innovative and competitive businesses, industries and regions, in Outcome 1, as set out in the Portfolio Budget Statements 2020, Budget Related Paper No 1.9, Industry, Science, Energy and Resources Portfolio (https://www.industry.gov.au/sites/default/files/2020-10/2020-21-department-of-industry-science-enery-and-resources-pbs.pdf) at page 35.
The Program will be delivered by the department’s AusIndustry Division, which has specialist and extensive expertise and capability in delivering similar programs.
The Program is an ad hoc grants program. 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). Eligibility criteria and eligible activities will be outlined in the Program guidelines, currently being created.
Spending decisions will be made by the Minister, taking into account the recommendations of the department.
Subject to meeting the program guidelines, as the initial funding is a one-off grant to an identified recipient, the grant will not be subject to merits review.
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:
Trade and commerce power
The Legislative Instrument specifies that one of the legislative powers in respect of which it is made is the Commonwealth trade and commerce power. Paragraph 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 fit out of the advanced manufacturing facility element of the Program prescribed by the Legislative Instrument is aimed at supporting the development of an advanced manufacturing facility to assemble electric vehicles for interstate and international trade and commerce. It is expected that the electric vehicles assembled at the new facility would be sold interstate and the facility is looking at export to overseas markets. The purchase of vehicle components for assembly in Australia will also involve trade and commerce with other countries.
External affairs power
The Legislative Instrument specifies that a further legislative power in respect of which it is made is the external affairs power (paragraph 51(xxix) of the Constitution). The external affairs power supports Commonwealth legislation implementing Australia’s international obligations under treaties to which it is a party. Australia has obligations under the following relevant treaties related to climate change.
The United Nations Framework Convention on Climate Change [1994] ATS 2 (the UNFCCC) includes a range of obligations on Australia to take domestic actions that reduce Australia’s emissions of greenhouse gases.
The UNFCCC relevantly provides that Australia shall:
• formulate, implement, publish and regularly update national and, where appropriate, regional programs containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, and measures to facilitate adequate adaptation to climate change (Article 4.1(b));
• promote and cooperate in the development, application and diffusion of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases in all relevant sectors including energy, transport, industry, agriculture, forestry and waste management sectors (Article 4.1(c)); and
• adopt national policies and take corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs (Article 4.2(a)).
The Kyoto Protocol to the United Nations Framework Convention on Climate Change [2008] ATS 2 also includes obligations on Australia to take action to reduce emissions, such as Article 10(b). Article 10(b) imposes obligations to formulate, implement and report upon climate change mitigation and adaptation programs.
The Paris Agreement [2016] ATS 24 was entered into by the parties to the UNFCCC to enhance its implementation. Under the Paris Agreement, Australia has a ‘nationally determined contribution’ of a 2030 emissions reduction target of 26 to 28 per cent below 2005 levels. Relevantly, Article 4.2 of the Paris Agreement provides that ‘[e]ach Party shall prepare, communicate and maintain successive nationally determined contributions that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions’.
The program is expected to expand the up-take of electric vehicles in Australia, which will reduce Australia’s emissions of greenhouse gases from fossil fuels used as transport fuels. The vehicle-to-grid trials element of the Program is aimed at developing new technologies which could increase the viability and use of renewable technologies. This in turn would reduce and prevent greenhouse gas emissions. The reduced fossil fuel use supported by the program will therefore contribute to Australia’s obligations to reduce greenhouse gas emissions under these treaties.
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. ACE-EV has also been consulted on the development of the program.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor (OBPR reference number 43327).
Details of the Industry Research and Development (Electric Vehicle Manufacturing Program) Instrument 2021
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Electric Vehicle Manufacturing Program) Instrument 2021.
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 Industry, Research and Development Act 1986 (the IR&D Act) under which the Legislative Instrument is made.
Section 4 – Definitions
This section provides for definitions of terms used in the Legislative Instrument.
The Paris Agreement, Kyoto Protocol and United Nations Framework Convention on Climate Change are defined in the same way as other Commonwealth legislation and are available from the Australian Treaty Series at http://www.austlii.edu.au/au/other/dfat/treaties/ATS/. These treaties are defined for the purpose of specifying the external affairs power as the relevant legislative power for the Legislative Instrument under subsection 33(3) of the IR&D Act.
The text of the treaties is not applied, adopted or incorporated by the Legislative Instrument and so subsection 14(2) of the Legislation Act 2003 does not apply to limit the reference to these treaties as in force for Australia from time to time. Australia continues to implement the obligations under these treaties as amended over time, such as in relation to Australia’s ratification of the Doha Amendment to the Kyoto Protocol, which commenced on 31 December 2020.
Section 5 – Prescribed Program
This section prescribes the Electric Vehicle Manufacturing Program (the Program) for the purposes of section 33 of the IR&D Act.
The Program covers the provision of financial support for the manufacture and assembly of electric vehicles and trials of electric vehicle technologies relating to the use of renewable energy to charge electric vehicles and/or the support of the electricity grid.
The purposes of the Program are to increase the manufacture, sale and use of electric vehicles in Australia and overseas and to investigate mechanisms by means of which electric vehicles can support the electricity grid and use renewable energy. The expanded use of electric vehicles, their support for the electricity grid and use of renewable energy will help reduce emissions of greenhouse gases in Australia and increase consumer choice for future fuel and vehicle technologies.
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 trade and commerce with other countries, and among the States (within the meaning of paragraph 51(i) of the Constitution) and external affairs (within the meaning of paragraph 51(xxix) of the Constitution).
The grounds for why this instrument is supported by the external affairs power and trade and commerce power are set out in the sections above titled “External affairs power” and “Trade and commerce power”.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Electric Vehicle Manufacturing Program) Instrument 2021
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 Legislative Instrument establishes the Electric Vehicle Manufacturing Program to provide financial support for the manufacture and assembly of electric vehicles and trials of electric vehicle technologies relating to the use of renewable energy to charge electric vehicles and/or the support of the electricity grid. This program will enable the provision of $5 million to Loddon Clean Energy Pty Ltd, ABN 39617788226, trading as Australian Clean Energy Electric Vehicle Group to establish an advanced manufacturing facility to assemble electric vehicles and to conduct a bidirectional vehicle-to-grid charging trial.
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.
The Hon Angus Taylor MP
Minister for Energy and Emissions Reduction