EXPLANATORY STATEMENT
Issued by the authority of the Minister for Industry, Science and Technology
Industry Research and Development Act 1986
Industry Research and Development (Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program) Instrument 2019
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, 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 s36).
The purpose of the Industry Research and Development (Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program) Instrument 2019 (the Legislative Instrument) is to prescribe the Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program (the Program).
Ferretti International is an engineering and construction company that provides a wide range of goods and services to industrial customers. Ferretti International’s operations include a steel fabrication facility located in Whyalla, South Australia (SA).
The grant will be used by Ferretti International to conduct a detailed engineering and feasibility study for the development and operation of a transmission tower manufacturing plant in Whyalla using steel produced by the GFG Alliance in Australia.
The expected outcome of the grant activity is for Ferretti International to be able to participate in the proposed $1.5 billion NSW SA interconnector (Project EnergyConnect), which would transmit electricity between NSW and SA.
Funding for the Program will be provided through the 2019-20 Additional Estimates Appropriation Bills. The Program provides up to $600,000.00 through an ad-hoc grant to support Ferretti International Ottoway Pty Ltd (Ferretti International).
Funding authorised by this Legislative Instrument comes from Program 2: Growing Business Investment and Improving Business Capability, Outcome 1. Details will be set out in the Portfolio Additional Estimates Statements 2019-20, Industry, Innovation and Science Portfolio.
The Program will be delivered by the Department of Industry, Innovation and Science’s (the department’s) Business Grants Hub, which is a specialised design, management and delivery body with extensive expertise and capability in delivering similar programs.
As this is a one-off grant to an identified recipient, there are no selection criteria and the Program will not be subject to merits review.
The Program is administered by the Department in accordance with the Commonwealth Grant Rules and Guidelines 2017 (http://www.finance.gov.au/sites/default/files/commonwealth-grants-rules-and-guidelines.pdf).
Spending decisions will be made by the Program Delegate who is the AusIndustry General Manager responsible for administering the Program, taking into account the recommendations of the Department.
Corporations power
Section 51(xx) of the Constitution empowers the Parliament to make laws with respect to ‘foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’ (together, constitutional corporations).
In Williams v Commonwealth (2014) 252 CLR 416 (Williams No 2), the High Court, considering s 32B of the Financial Management and Accountability Act 1997 (the FMA Act), held (at [50]) that:
A law which gives the Commonwealth the authority to make an agreement or payment of that kind is not a law with respect to trading or financial corporations. The law makes no provision regulating or permitting any act by or on behalf of any corporation.
However, the relevant provisions of the IR&D Act are substantially different to the provisions considered by the High Court in Williams No 2. Section 34 of the IR&D Act corresponds to s 32B of the FMA Act considered by the High Court in Williams No 2. However, the FMA Act contained no provision in terms equivalent to those of s 35 of the IR&D Act.
Section 35(2) of the IR&D Act limits the arrangements made under s 34 so that, where a party to an arrangement made under s 34 is a constitutional corporation, the arrangement must be subject to a written agreement containing terms and conditions under which money is payable by the Commonwealth. The corporation must comply with the terms and conditions. The activities of the corporation are therefore regulated through the terms and conditions made under each agreement pursuant to s 35(2).
Further, s 35(3) provides that the agreement must provide for circumstances in which the corporation must repay amounts to the Commonwealth.
The Program prescribed by the Legislative Instrument confers on a trading corporation (Ferretti International) benefits which are directed to assisting Ferretti International in the conduct of its ordinary activities (namely to undertake an engineering and feasibility study for the development and operation of a transmission tower manufacturing plant in Whyalla using GFG Steel). The Program imposes terms and conditions on Ferretti International under a grant agreement in accordance with s 35 of the IR&D Act, in relation to receipt of benefits under the Program.
Trade and commerce power
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’.
In that regard, the Program prescribed by the Legislative Instrument is aimed at supporting an engineering and feasibility study for the development of a transmission tower manufacturing plant in Whyalla using GFG Steel to foster interstate trade and commerce in electricity, including the development of a potential supply chain that results in the interstate trade of electricity.
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 has been consulted on this Instrument.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor.
Details of the Industry Research and Development (Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program) Instrument 2019
Section 1 – Name of Instrument
This section specifies the name of the instrument as the Industry Research and Development (Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program) Instrument 2019 (the Legislative Instrument).
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 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 Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program (the Program) for the purposes of s 33 of the Act.
The Program provides Ferretti International financial assistance to undertake a detailed engineering and feasibility study for the development of a transmission tower manufacturing plant in Whyalla using steel produced by the GFG Alliance in Australia.
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 (s51(i) of the Constitution) and foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth (s51(xx) of the Constitution).
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program) Instrument 2019.
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 instrument provides legislative authority to commit Commonwealth funds for the Ferretti International Whyalla Transmission Towers Manufacturing Feasibility Study Program.
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 Karen Andrews MP
Minister for Industry, Science and Technology