EXPLANATORY STATEMENT
Issued by the authority of the Minister for Industry, Science and Technology
Industry Research and Development Act 1986
Industry Research and Development (National Innovation Games 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 (National Innovation Games Program) Instrument 2019 (the Legislative Instrument) is to prescribe the National Innovation Games (the Program). The funding for the Program has been secured through the Department of Industry, Innovation and Science 2019-20 Budget. The Program provides $3.5 million over two years (starting 2019-20) as part of the Australian Government’s commitment to increase Australian small and medium businesses’ access to science, technology, engineering and maths (STEM) skills.
The purpose of the Program is to produce new and innovative solutions to challenges facing small and medium enterprises (SMEs), by bringing together SMEs and higher education students and graduates, in particular STEM students and graduates, to collaborate in relation to these challenges.
Each National Innovation Games event will see approximately ten participating teams. Each team will include SME representatives, corporate sponsor representatives, students and graduates, and a facilitator. Each participating SME will identify a challenge facing their business within a theme set by the corporate sponsor, which their allocated team will be tasked with solving on the day. Design thinking methodology will be used to guide the teams towards the solutions.
At the end of each National Innovation Games event, all participating teams will pitch their solutions and the winner will be chosen by the judging panel.
Participation in the Games is expected to introduce SMEs to new ways of thinking and may result in further development and implementation of innovative solutions for their business following the event. The solutions developed for each participating SME are expected to deliver improvements such as cost savings, new business processes or new or improved product or service offerings.
The National Innovation Games is also expected to improve employment prospects for students and graduates with STEM skills. In developing solutions for participating businesses, STEM students and graduates will be able to demonstrate the relevance of their skills to SMEs. Those SMEs may then consider employing a student or graduate they worked with at the National Innovation Games, or may subsequently identify new job opportunities for STEM-skilled graduates within their business.
In addition, each student or graduate can book an individual mentoring session with an SME or corporate sponsor, where the student or graduate will receive career advice.
The successful applicant will be required to use the funds provided under the Program to deliver up to 15 National Innovation Games events per year for two years, comprising one to three game events per state and territory each year starting 2019-20. SMEs and students participate free of charge. The National Innovation Games will also be delivered in regional areas, and each game will use metrics to monitor the diversity of participants.
Funding authorised by this Legislative Instrument comes from Program 2: Growing Business Investment and Improving Business Capability, Outcome 1, as set out in the Portfolio Budget Statements 2019-20, Budget Related Paper No. 1.13A, Industry, Innovation and Science Portfolio (https://www.industry.gov.au/sites/default/files/2019-04/2019-20-department-of-industry-innovation-and-science-pbs.pdf)(described at page 14 with forward estimates at page 31)
The Program will be delivered by the Department of Industry, Innovation and Science’s Business Grants Hub, which is a specialised design, management and delivery body with extensive expertise and capability in delivering similar programs.
The Program is an ad hoc grants program, with funding provided to the grantee to support activities in relation to the management, operation and delivery of the National Innovation Games. The Program is administered by the Department of Industry Innovation and Science (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).
Total funding for the measure is $3.5 million over two years (starting 2019-20). Corporate sponsors will be expected to contribute up to $100,000 per event.
A Deputy Secretary of the Department will make the final decision to approve the grant. The Deputy Secretary will not approve funding if there are insufficient Program funds available across the relevant financial years for the Program.
The applicant will be informed in writing.
Persons who are otherwise affected by decisions or who have complaints about the Program will 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.
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 provides funding to the successful applicant to support the management, operation and delivery of the National Innovation Games. The Instrument provides that the eligibility criteria relating to the program include the requirement that applicants must be trading or financial corporations to which paragraph 51(xx) of the Constitution applies. The Program imposes terms and conditions on the successful applicant under a grant agreement in accordance with s 35 of the IR&D Act, in relation to receipt of benefits under the Program.
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 has been consulted on this Legislative Instrument.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor (OBPR reference number 24753).
Details of the Industry Research and Development (National Innovation Games Program) Instrument 2019
PART 1 – PRELIMINARY
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (National Innovation Games Program) Instrument 2019.
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 National Innovation Games (the Program) for the purposes of s 33 of the Act.
The purpose of the Program is:
- to produce new and innovative solutions to challenges facing small and medium enterprises (SMEs), by bringing together SMEs and higher education students and graduates, in particular science, technology, engineering and mathematics (STEM) students and graduates, to collaborate in relation to these challenges.
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 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 (National Innovation Games 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
The National Innovation Games Program brings together small and medium size businesses and higher education students and graduates to work with a facilitator to solve a broad innovation, technology and/or digital challenge set by a corporate sponsor. Each challenge is designed with the intention of providing a solution that meets the needs of each small business. A proportion of the National Innovation Games will be delivered in regional areas.
The National Innovation Games supports improved employment prospects in SMEs for graduates with STEM skills.
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