EXPLANATORY STATEMENT
Issued by the authority of the Minister for Industry and Science
Industry Research and Development Act 1986
Industry Research and Development (Silicon Quantum Computing Support Program) Instrument 2024
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 Commonwealth entity, or by their delegate (under section 36).
The purpose of the Industry Research and Development (Silicon Quantum Computing Support Program) Instrument 2024 (the Legislative Instrument) is to prescribe the Silicon Quantum Computing Support Program (the Program).
The Commonwealth has invested a total of $40 million in Silicon Quantum Computing (SQC). Under the SQC Shareholders’ Agreement, the Commonwealth has the right to appoint a nominee director (the nominee director) to the SQC Board. The nominee director will play a key role in maintaining oversight of the Commonwealth’s investment in SQC. They will also be selected so as to contribute valuable experience to the SQC Board as required by the business needs of SQC, thereby helping to maximise the value of the Government’s investment. The nominee director will act in accordance with all duties and obligations of an SQC Director arising under the SQC Constitution and Shareholders’ Agreement. This will include preparation for and attendance at board meetings. They will also keep the Department of Industry, Science and Resources (the Department) informed in relation to SQC business, including its finances, accounts, and any other affairs relevant to the Commonwealth as a shareholder in SQC.
The Program will provide appropriate financial support to the nominee director of the SQC Board. This includes entering into arrangements related to their remuneration, travel expenses, and any other matter that would facilitate their duties as an SQC Director. The purpose of the Program is to support SQC in carrying out its activities, particularly its contributions to nationally significant research and development in the field of quantum computing.
The Program will be delivered by the Department which has extensive expertise and capability in delivering similar programs as it is responsible for managing the Commonwealth’s ongoing involvement in SQC as a shareholder.
The process for determining a successful candidate is:
- The Department, with the support of executive search firms as needed, and in consultation with the Minister for Industry and Science, develops a shortlist of potential nominee directors.
- Shortlisted candidates are assessed based on the skill needs of the SQC Board to support SQC to achieve its objective of developing leading quantum technologies. The prior experiences, skills, and positions of the shortlisted persons are considered.
- The appointment of a nominee director to the SQC Board is a non‑statutory appointment and proceeds via the standard portfolio appointment process.
- The successful candidate is informed by letter from the Minister for Industry and Science.
Spending decisions will be made by the Program Delegate who is the General Manager responsible for administering the Program, taking into account the recommendations of the Department. The Program Delegate is an SES officer who holds delegation under the Department’s general financial framework, including delegation under the Public Governance, Performance and Accountability Act 2013, and sections 34 and 35 of the IR&D Act.
The nominee director will be engaged directly by the Department as an independent contractor. Remuneration will be negotiated with the appointed person with reference to determinations made by the Remuneration Tribunal for similar appointments. Travel costs will be negotiated with the appointed person with reference to travel tier 1 of the current Remuneration Tribunal (Official Travel) Determination.
Funding authorised by this Legislative Instrument comes from existing resources through a reclassification of expense from the Department’s departmental operating appropriation to an administered operating appropriation; and/or a reallocation of administered expense within the same Central Budget Management System (CBMS) program or between CBMS programs. The total Program cost for 2023/24 through to 2026/27 - which includes remuneration and reasonable incidental costs such as travel – will be up to $250 thousand.
The Program involves appointing a person to undertake a specified function based on their particular expertise and understanding of the role of a company director and therefore falls within the category of decisions that would not usually be subject to merits review according to paragraph 4.40 of the Administrative Review Council guide, What decisions should be subject to merits review? available at https://www.ag.gov.au/legal-system/administrative-law/administrative-review-council-publications/what-decisions-should-be-subject-merit-review-1999.
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.
Statement of the Relevance and Operation of Constitutional Heads of Power
For the purposes of subsection 33(3) of the IR&D Act, the Legislative Instrument specifies that the legislative powers in respect of which the Instrument is made are the following:
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’.
In New South Wales v Commonwealth (2006) 229 CLR 1, a majority of the High Court adopted (at [178]) the following statement of the scope of section 51(xx) from the decision of Gaudron J in Re Pacific Coal Pty Limited; Ex parte Construction, Forestry, Mining and Energy Union (2002) 203 CLR 346, [83]:
I have no doubt that the power conferred by s 51(xx) of the Constitution extends to the regulation of the activities, functions, relationships and the business of a corporation described in that sub-section, the creation of rights, and privileges belonging to such a corporation, the imposition of obligations on it and, in respect of those matters, to the regulation of the conduct of those through whom it acts, its employees and shareholders and, also, the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business.
In that regard, the SQC Shareholders’ Agreement confers on the Commonwealth various rights in relation to SQC, including (as noted above) the right to appoint a nominee director. By authorising funding for the engagement and remuneration of that director, the Program is regulating an aspect of the conduct of a person who is capable of affecting the activities, functions, relationships and business of SQC (which is a trading corporation).
Executive power and express incidental power, including the nationhood aspect
The express incidental power in section 51(xxxix) of the Constitution empowers the Parliament to make laws with respect to matters incidental to the execution of any power vested in the Parliament, the executive or the courts by the Constitution. Section 61 of the Constitution supports activities that are peculiarly adapted to the government of a nation and cannot be carried out for the benefit of the nation otherwise than by the Commonwealth.
In that regard, funding provided by the Program will contribute to nationally significant research and development in quantum computing.
Authority
Section 33 of the IR&D Act provides authority for the Legislative Instrument.
Further details of the Legislative Instrument are set out at Attachment A.
Consultation
In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department has been consulted on this Legislative Instrument.
SQC has been consulted regarding the desired skills composition of its board and the shortlist of candidates for the nominee director will be developed taking this into consideration. Broader consultation was not considered necessary because the Commonwealth will be exercising a right to make an appointment to the SQC Board that has already been negotiated as part of the Shareholders’ Agreement.
Regulatory Impact
The proposal is non-regulatory in nature and has zero regulatory cost (Office of Impact Analysis (OIA) ref ID: OIA23-04399).
Statement of Compatibility with Human Rights
A Statement of Compatibility with Human Rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out at Attachment B
Attachment A
Details of the Industry Research and Development (Silicon Quantum Computing Support Program) Instrument 2024
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Silicon Quantum Computing Support Program) Instrument 2024.
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 item provides for definitions of terms used in the Legislative Instrument.
Section 5 – Prescribed Program
This section prescribes the Program for the purposes of section 33 of the IR&D Act.
It supports an appointed person to act as nominee director of the SQC Board. This includes entering into arrangements involving expenditure related to remuneration, travel costs, and other matters that facilitate their duties as a nominee director of SQC. The Program also supports SQC to carry out its work, particularly nationally significant research in the field of quantum computing.
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 (paragraph 51(xx) of the Constitution);
- enterprises and activities that are peculiarly adapted to the government of a nation and cannot otherwise be carried on for the benefit of the nation (paragraph 51(xxxix) and section 61 of the Constitution).
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Silicon Quantum Computing Support Program) Instrument 2024
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 purpose of the Industry Research and Development (Silicon Quantum Computing Support Program) Instrument 2024 (the Legislative Instrument) is to prescribe the Silicon Quantum Computing Support Program (the Program).
The purpose of the Program is to support a Commonwealth appointed person to act as a nominee director of the Silicon Quantum Computing (SQC) Board. The nominee director will play a key role in maintaining oversight of the Commonwealth’s investment in SQC (currently totalling $40 million). They will also be selected to contribute valuable experience to the SQC Board as required by the needs of SQC, thereby helping to maximise the value of the Government’s investment in SQC. The total Program cost for 2023/24 through to 2026/27 - which includes remuneration and reasonable incidentals such as travel costs – will be up to $250 thousand.
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 Ed Husic MP
Minister for Industry and Science