EXPLANATORY STATEMENT
Issued by the authority of the Minister for Agriculture and Northern Australia
Industry Research and Development Act 1986
Industry Research and Development (Northern Australia Development 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 administering the Act 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 IR&D Act also provides a mechanism for the relevant Minister to delegate to another Minister the power to prescribe such programs. The Minister for Industry, Science and Technology has delegated to the Minister for Agriculture and Northern Australia (the Minister) the power to make the Industry Research and Development (Northern Australia Development Program) Instrument 2021 (the Legislative Instrument).
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 Legislative Instrument is to prescribe the Northern Australia Development Program (the Program). This instrument is made by the Minister for Agriculture and Northern Australia.
Funding for the Program was secured through the Department of Industry, Science, Energy and Resources 2021-2022 Budget. The Program provides $111.9 million over five years as part of the Australian Government’s commitment to the next phase of northern Australian economic development.
The Program seeks to encourage job creation and economic diversification in northern Australia through support for scaling up businesses and growing business in northern Australia. Support is through co-investment grant funding to de-risk the higher risk business environment in northern Australia and providing business advisory services. Additionally, the Program seeks to increase opportunities for Indigenous economic development and Indigenous economic participation. The Program aligns with and contributes to fulfilling the goals of the Our North, Our Future: White Paper on Developing Northern Australia (the White Paper). The White Paper is a 2015 policy document that is freely available on the website of the Department of Infrastructure, Transport, Regional Development and Communications (the Department) (https://www.regional.gov.au/regional/northernaustralia/). It explains the Australian Government’s 20 year framework for northern Australia economic development.
Funding will be provided through three separate elements of the Program as follows:
- Northern Australia Business Development Grants: This element will provide grant funding to northern Australia Small to Medium Enterprises (SMEs), including Indigenous organisations, to take the next step to diversify or grow their business. This may involve grants for activities such as acquiring infrastructure and assets, feasibility studies, business planning and marketing activities.
- Northern Australia Industry Transformation Grants: This element will provide grant funding to medium to large businesses aiming to establish a new industry or significantly grow the value of an existing industry and contribute to transformational change in a northern Australian region.
- Strengthening Northern Australia Business Advisory Services: This element will provide eligible northern Australian businesses who apply for grants through the Program with access to support from an expert facilitator, and / or workshops to build long term resilience and business strength. Funding will be provided to the Department in a direct allocation to deliver this element of the Program through the established frameworks of the Department of Industry, Science, Energy and Resources’s (DISER). The service will connect SMEs with the capabilities and networks they need to grow. It will be provided though a network of independent business experts, who work closely with clients to determine the businesses needs and how best to achieve them in the short, medium and long term.
Eligibility for the Program will require applicants to have an Australian business number and be an entity incorporated in Australia and a trading corporation, or an incorporated trustee on behalf of a trust. Trading activities must form a sufficiently significant proportion of the corporation or trusts’ overall activities and be a substantial and not a merely peripheral activity. The proposed project must be located in or significantly benefit Northern Australia. There are further requirements relating to business size and purpose of project dependant on the grant stream. Grant opportunity guidelines and program advice specify eligibility for each grant opportunity. A co-contribution requirement for grants is set out in grant opportunity guidelines, where appropriate.
Funding authorised by this Legislative Instrument comes from Program 1.4, Outcome 1, as set out in the Portfolio Budget Statements 2021-2022, Budget Related Paper No. 1.9, Industry, Science, Energy and Resources Portfolio (https://www.industry.gov.au/sites/default/files/2021-05/2021-22-department-of-industry-science-energy-and-resources-pbs.pdf) at page 25.
Funding for this Program has now transferred to the Department of Infrastructure, Transport, Regional Development and Communications as part of the Machinery of Government (MoG) change announced by the Government on 2 July 2021. The Office of Northern Australia (ONA) and Northern Australia Infrastructure Facility (NAIF) formally transferred to the Department and portfolio on 1 September 2021.
The Program is a merits based grants program, supported by an advisory service. 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).
Spending decisions will be made by the Minister for Agriculture and Northern Australia, or their delegate, taking into account the recommendations of an independent assessment committee. The Program will be delivered by DISER’s Business Grants Hub, which is a specialised design, management and delivery body with extensive expertise and capability in delivering similar programs.
Assessment processes will be determined within the design phase in line with the Commonwealth Grant Rules and Guidelines 2017, and clearly set out for each grant opportunity in grant opportunity guidelines.
Eligibility of grant applications will be assessed by Business Grants Hub against the eligibility criteria set out in the grant opportunity guidelines. Business Grants Hub will then consider eligible applications against the assessment criteria. An independent assessment committee will then consider these assessments and make recommendations. The eligibility and assessment criteria for each grant opportunity is available on business.gov.au. The committee may comprise of representatives from the Australian Government, selected state and territory governments, northern Australian business experts, and other independent technical experts. Applications must address the eligibility and assessment criteria, and provide relevant supporting information. The amount of detail and supporting evidence required will 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 assessment criterion.
After considering the applications, the independent assessment committee will make recommendations to the Minister for Agriculture and Northern Australia, or his delegate, regarding those applications suitable for funding. The Minister for Agriculture and Northern Australia, or his 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 decision maker will not approve funding if there are insufficient Program funds available across relevant financial years for the Program.
Grant amounts will vary depending on the project. The grant opportunity guidelines provide more information about available funding for each grant stream.
Funding decisions made in connection with the grants to successful applicants are not considered appropriate for independent merits review as they involve the allocation of a finite resource, and an allocation that has already been made to another party would be affected by overturning the original allocation. In addition, there is a robust and extensive assessment process, an enquiry and feedback process, and an existing complaints mechanism for affected applicants.
Both successful and unsuccessful applicants will be informed in writing and may have access to advice from a Strengthening Northern Australian Business facilitator (depending on the needs and experience of the applicant and their project). 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 will investigate 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:
Communications power
Section 51(v) of the Constitution empowers the Parliament to make laws with respect to 'postal, telegraphic, telephonic, and other like services'.
Funding provided under the program may include grants to provide or enhance communications infrastructure.
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 section 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 section 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 section 35 of the IR&D Act.
Subsection 35(2) of the IR&D Act limits the arrangements made under section 34 so that, where a party to an arrangement made under section 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 subsection 35(2).
Further, subsection 35(3) provides that the agreement must provide for circumstances in which the corporation must repay amounts to the Commonwealth.
Only entities which are constitutional corporations will be eligible to receive benefits under the Program. The benefits conferred by the Program will be directed to assisting those corporations in the conduct of their ordinary activities (scaling-up and diversifying their businesses, growing existing industries and developing new industries). Terms and conditions with which grantees must comply to receive funding under the Program will be set out in grant agreements in accordance with section 35 of the Act.
Similarly, only entities which are constitutional corporations will be engaged to provide advisory services under the Program.
Race power
Section 51(xxvi) of the Constitution empowers the Parliament to make laws with respect to ‘the people of any race for whom it is deemed necessary to make special laws’.
The funding provided under the Program may assist Indigenous organisations to scale-up and diversify their businesses, build capability and resilience, and encourage Indigenous participation in economic development activities.
External affairs power
Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to ‘external affairs’. The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party.
Australia has obligations under the International Covenant on Economic, Social and Cultural Rights (ICESCR), including:
- Article 2 of the ICESCR provides that each State Party undertakes to take steps to progressively realise the rights recognised in the Covenant ‘by all appropriate means, including particularly the adoption of legislative measures’.
- Article 6 of the ICESCR provides that States Parties recognise the right to work and will take appropriate steps to achieve the realisation of this right including through ‘technical and vocational guidance and training programmes, policies and techniques’.
In addition, Australia has obligations under the International Labour Organisation’s Convention concerning Employment Policy (ILO Convention 122), including:
- Article 1 of the ILO Convention 122 requires Members to pursue ‘an active policy designed to promote full, productive and freely chosen employment’.
- Article 2 of the ILO Convention 122 requires Members to ‘decide on and keep under review… measures to be adopted for attaining the objectives specified in Article 1’.
The funding provided under the program will support and promote employment.
Territories power
Section 122 of the Constitution empowers the Parliament to ‘make laws for the government of any territory’.
The funding provided under the Program may assist entities which are located in a Territory (for example, the Northern Territory).
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.
Consultation on the design of this Program occurred with the National Indigenous Australia Agency, northern Australian State and Territory representatives, the Cooperative Research Centre for Northern Australia, the Northern Australia Infrastructure Facility and other key industry stakeholders.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor and are consistent with Australian Government grant programs, including mandatory reporting and compliance requirements (OBPR reference number 43756).
Details of the Industry Research and Development (Northern Australia Development Program) Instrument 2021
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Northern Australia Development 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.
Section 5 – Prescribed Program
This section prescribes the Northern Australia Development Program (the Program) for the purposes of section 33 of the IR&D Act.
The Program provides funding for activities that will support job creation and business growth in northern Australia.
Funds will be used to:
- provide support for northern Australian SMEs, including Indigenous organisations, to scale up or diversify;
- provide advisory services to northern Australian SMEs, including Indigenous organisations, to strengthen their impact; and
- provide support for businesses to establish or significantly grow a new industry in a northern Australian region through undertaking a transformational project.
Section 6 – Specified Legislative Power
This section specifies that the legislative powers in respect of which the Legislative Instrument is made are the powers of the Parliament to make laws with respect to postal, telegraphic, telephonic, and other like services (section 51(v) of the Constitution); foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth (section 51(xx) of the Constitution); the people of any race for whom it is deemed necessary to make special laws (section 51(xxvi) of the Constitution); external affairs (section 51(xxix) of the Constitution); and the government of a Territory (section 122 of the Constitution).
Section 7 – Eligibility Criteria
This section sets out eligibility criteria relating to the Program for the purposes of subsection 33(4) of the IR&D Act. The eligibility criteria include that:
- applicants for the grant funding must be trading or financial corporations to which paragraph 51(xx) of the Constitution applies; and
- providers of advisory services must be foreign, 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 (Northern Australia Development 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 Program seeks to encourage job creation and economic diversification in northern Australia through support for scaling up and growing business in northern Australia by providing co-investment grant funding to de-risk the higher risk business environment in northern Australia. It will:
- provide support for new activities undertaken by small to medium enterprises, including Indigenous organisations, to grow or diversify, complemented by expert business advice to assist businesses to build their capabilities; and
- provide support for businesses to undertake transformative projects to significantly grow or establish a new industry in northern Australia.
Human rights implications
This Legislative Instrument positively engages with the right to work and does not raise any other human rights issues.
Conclusion
This Legislative Instrument is compatible with human rights as it advances human rights.
The Hon David Littleproud MP
Minister for Agriculture and Northern Australia