EXPLANATORY STATEMENT
Issued by the authority of the Minister for Energy and Emissions Reduction
Industry Research and Development Act 1986
Industry Research and Development (Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program) Instrument 2020
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 (Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program) Instrument 2020 (the Legislative Instrument) is to prescribe the Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program (the Program). The Program will provide $2 million to Blue Hydro Project Pty Ltd to undertake a pre-feasibility study into the viability of a new pumped hydro-electric power plant in central Queensland. The funding will be provided by way of an ad-hoc grant.
Funding for the Program was secured through the Department of Industry, Science, Energy and Resources 2019-20 Budget process and comes from Program 3.1, Supporting Reliable Energy Infrastructure, Outcome 3: Support the affordable, reliable, secure and competitive operation of energy markets for the long term benefit of the Australian community through improving Australia’s energy supply, efficiency, quality, performance and productivity, as set out in the Department’s Portfolio Additional Estimates Statement 2019-20 (https://www.industry.gov.au/sites/default/files/2020-02/2019-20-department-of-industry-science-energy-and-resources-paes.pdf) at page 50.
The Program will be delivered by the Department in accordance with the Commonwealth Grant Rules and Guidelines 2017 (https://www.legislation.gov.au/Details/F2017L01097). As this is a one-off grant to an identified recipient, there are no selection criteria.
Spending decisions will be made by the Minister for Energy and Emissions Reduction, taking into account the recommendations of the Department.
Persons who are 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
Subsection 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.
The Program prescribed by the Legislative Instrument will confer on Blue Hydro Project Pty Ltd (which is a corporation established to develop the proposed hydro-electric power plant and which is itself owned by other trading corporations) benefits which are directed to assisting that corporation in the conduct of its ordinary activities (in this case, undertaking a pre-feasibility study into the viability of the project). The Program will impose terms and conditions on the corporation under a grant agreement in accordance with section 35 of the IR&D Act, in relation to the receipt of benefits under the Program. The terms and conditions will set out what the funding may be used for, and the circumstances in which it must be repaid.
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.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor (OBPR reference number 42480)
Details of the Industry Research and Development (Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program) Instrument 2020
Section 1 – Name
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program) Instrument 2020.
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 IR&D 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 Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program (the Program) for the purposes of section 33 of the IR&D Act.
The Program provides funding to Blue Hydro Project Pty Ltd to undertake a pre-feasibility study into the viability of a new pumped hydro-electric power plant in central Queensland.
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 (subsection 51(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 (Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland Program) Instrument 2020
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 Pre-feasibility Study on a Proposed Pumped Hydro-electric Power Plant in Central Queensland 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 Angus Taylor MP
Minister for Energy and Emissions Reduction