EXPLANATORY STATEMENT
Issued by the authority of the Minister for Resources and Northern Australia
Industry Research and Development Act 1986
Industry Research and Development (Gas Acceleration 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 (Gas Acceleration Program) Instrument 2017 (the Legislative Instrument) is to prescribe the Gas Acceleration Program (the Program). The funding for the Program has been secured through the Department of Industry, Innovation and Science (the Department) 2017-18 Budget. The Program provides $26 million in grant funding as part of the Australian Government’s commitment to accelerate the responsible development of onshore natural gas for Australian users. Program funding will help to stimulate investment in a diverse range of projects from competing gas producers, and support activities that bring forward new gas flows. These activities include the deployment of new technologies or techniques to lift existing and new well productivity; the opening of new gas pilot and/or production or exploration wells; better utilisation of existing, or the establishment of new, gas processing, storage and transport facilities; and design, construction and engineering activities directly related to bringing forward new gas supply.
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 18.
Funding is available to successful companies to undertake eligible projects to bring new gas flow to domestic gas consumers in target markets by 30 June 2020. Target markets are domestic gas markets containing a substantial number of domestic consumers who are affected by a forecast tight supply‑demand balance, and who would experience a material benefit from additional gas becoming available.
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 2017 (http://www.finance.gov.au/sites/default/files/commonwealth-grants-rules-and-guidelines.pdf). Eligibility and merit criteria are outlined in the Program guidelines, available at https://www.business.gov.au/assistance/gas-acceleration-program.
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 an independent assessment committee.
Grants are up to a maximum of $6 million. The grant amount may be up to half of eligible project costs. No more than 50 per cent of eligible project costs can be funded from Commonwealth, State, Territory or local government grants. The Program involves the allocation of finite resources between competing applicants (grants of up to $6 million funded from a $26 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 will be assessed against the eligibility criteria and merit criteria set out in the Program guidelines in two stages. At first instance, applications will be assessed by AusIndustry against the eligibility criteria. An independent assessment committee will then consider eligible applications against the merit criteria. This will include comparing the applications and scoring each application out of 100. The committee may comprise representatives from the Australian Government, selected state and territory governments, Geoscience Australia, CSIRO, and other independent technical experts. The independent assessment committee may seek input from independent experts to inform their assessments.
Applications must address the eligibility and 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 will make recommendations to the Program Delegate regarding those applications suitable for funding. The Program Delegate will make the final decision about which grants to approve, taking into consideration the independent assessment committee’s recommendations, and the availability of grant funds. The Program Delegate will not approve funding if there are insufficient Program funds available across relevant financial years for the Program.
Both successful and unsuccessful applicants will be 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. Where this occurs, 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 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 power in respect of 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 (para 51(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 projects to bring new gas flow to domestic gas consumers in target markets. 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 Legislative 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 22281).
Details of the Industry Research and Development (Gas Acceleration 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 (Gas Acceleration Program) Instrument 2017.
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 section provides for definitions of terms used in the Legislative Instrument.
Section 5 – Prescribed Program
This section prescribes the Gas Acceleration Program (the Program) for the purposes of section 33 of the Act.
The Program provides grants to companies in order to help fund projects that have the capability to bring new gas flow to domestic consumers in target markets by 30 June 2020. Target markets are domestic gas markets containing a substantial number of domestic consumers who:
- are affected by a forecast tight supply‑demand balance; and
- would experience a material benefit from additional gas becoming available.
To be classified as an eligible project under the Program, a project must include activities that bring new gas flow for domestic consumers in target markets. These activities can include the deployment of new technologies or techniques to lift existing and new well productivity; the opening of new gas pilot and/or production or exploration wells; better utilisation of existing, or the establishment of new, gas processing, storage and transport facilities; and design, construction and engineering activities directly related to bringing forward new gas supply.
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 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 s51(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 (Gas Acceleration 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 Gas Acceleration Program.
The Program provides $26 million in grant funding as part of the Australian Government’s commitment to accelerate the responsible development of gas for Australian users. It includes the deployment of new technologies or techniques to lift existing and new well productivity, the opening of new gas pilot and/or production or exploration wells, better utilisation of existing or the establishment of new gas processing, storage and transport facilities, and design, construction and engineering activities directly related to bringing forward new gas supply.
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. Matt Canavan
Minister for Resources and Northern Australia