Industry Research and Development (Support Plantation Establishment Program) Instrument 2023

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Agriculture, Fisheries and Forestry

Industry Research and Development Act 1986

Industry Research and Development (Support Plantation Establishment Program) Instrument 2023

Purpose and Operation

Section 33 of the Industry Research and Development Act 1986 (the 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 Minister for Industry and Science has delegated the Minister’s power under subsection 33(1) to the Minister responsible for administering the Regional Forest Agreements Act 2002, under subsection 33(6) of the Act to prescribe the Support Plantation Establishment Program (the Program). This is currently the Minister for Agriculture, Fisheries and Forestry.

The statutory framework provided by section 33 of the 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 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 (Support Plantation Establishment Program) Instrument 2023 (the Legislative Instrument) is to prescribe the Program. The funding for the Program has been secured through the Department of Agriculture, Fisheries and Forestry’s (the Department) 2022-23 Budget. The Program provides up to $86.2 million in funding over five years from 2022-23 as part of the Australian Government’s 2022 election commitment and is part of a package of forestry commitments under A Future Grown in Australia.

The Program will provide funding to Australian businesses, State forestry bodies and Territory forestry bodies to establish new long-rotation plantations on previously cleared land. This will increase the overall number of new plantation forests in Australia and increase carbon sequestration through those plantations.

The purpose of the Program is to support Australian businesses, State forestry bodies and Territory forestry bodies to establish new long-rotation plantations, reduce carbon emissions through the sequestration of carbon by trees growing in new long-rotation plantations and increase the supply of domestically grown timber to the Australian economy. The Program would assist with offsetting the high up-front costs associated with establishing a new plantation and also incentivise traditional agricultural operations to diversify into farm forestry.

Funding authorised by this Legislative Instrument comes from Program 1.3, Outcome 1, as set out in the Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.1, Agriculture, Fisheries and Forestry Portfolio (https://www.agriculture.gov.au/sites/default/files/documents/2022-23-october-daff-pbs.pdf) at pages 27 and 38.

The Program will be delivered by the Department and the Community Grants Hub.

The Program is a demand driven grants program. The Program is administered by the Department in accordance with the requirements of the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013 and the Commonwealth Grant Rules and Guidelines 2017 (https://www.finance.gov.au/sites/default/files/2019-11/commonwealth-grants-rules-and-guidelines.pdf).

Recipients of funding under the Program may also choose to apply to participate in the Emissions Reduction Fund (ERF) scheme under the Carbon Credits (Carbon Farming Initiative) Act 2011. The ERF is a separate scheme administered by the Clean Energy Regulator. Plantation forestry projects store carbon in plantation trees which earns Australian carbon credit units (ACCUs) in return for reducing the level of greenhouse gases in the atmosphere. Plantation projects include activities such as establishing a new plantation. Eligibility for funding under the Program aligns with the conditions for eligibility under the Carbon Credits (Carbon Farming Initiative—Plantation Forestry) Methodology Determination 2022.

To be eligible for the Program, applicants must:

• be an Australian business, State forestry body or Territory forestry body; and
• demonstrate that within the period of 7 years prior to the application date, the land on which the new plantation is to be established has not been a native forest or plantation; and
• commit to establishing a new plantation that is a long-rotation plantation that will contribute to meeting Australia’s carbon emission reduction targets, including under the United Nations Framework Convention on Climate Change, and the Kyoto Protocol to the Climate Change Convention. 

An Australian business is an entity that conducts a business in an Australian State or Territory and has an Australian Business Number under the A New Tax System (Australian Business Number) Act 1999. To be eligible for the Program, a business must be a company under the Corporations Act 2001, an incorporated association, an Aboriginal and Torres Strait Islander corporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006, a sole trader, a cooperative or a partnership.

A State forestry body is:

• an entity that is established by or under a law of a State; or.
• a part of a State government;

that manages one or more plantations, or engages in forestry-related activities.

A Territory forestry body is:

• an entity that is established by or under a law of a Territory; or
• a part of a Territory government;

that manages one or more plantations, or engages in forestry-related activities.

A long-rotation plantation is a plantation grown and managed to predominantly produce logs for processing into timber used for construction and manufacturing, and where the optimum length of time for maturity of the plantation is expected to be between 25 and 40 years. The optimum length of time depends on the species of trees being grown, the plantation site and the management regime.

Additional eligibility criteria will be outlined in the Program Guidelines.

Spending decisions will be made by the Minister for Agriculture, Fisheries and Forestry or the Program Delegate, against the Program Guidelines, taking into account the recommendations of an assessment panel made up of Departmental officers.

The delegate of the Minister for Agriculture, Fisheries and Forestry would be an SES employee, or acting SES employee, of the Department, and would have relevant expertise in, and understanding of, forestry policy, and be able to perform relevant functions in accordance with the Commonwealth resource framework. Applicants will be advised in writing about the outcome of their application. Successful applicants will be advised of any specific conditions attached to the grant.

Expenditure decisions made in connection with the Program are not considered suitable for independent merits review, as they are decisions relating to the allocation of a finite resource, from which all potential claims for a share of the resource cannot be met. In addition, any funding that has already been allocated would be affected if the original decision was overturned. The Administrative Review Council has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the guide, What decisions should be subject to merit review?).

Persons who are otherwise affected by decisions or who have concerns about the Program will be able to provide feedback 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 Act, the powers of the Parliament to make laws with respect to the following are specified for the Program prescribed by the Legislative Instrument:

• the corporations power in paragraph 51(xx) of the Constitution;
• the external affairs power in paragraph 51(xxix) of the Constitution;
• matters in respect of which the Constitution makes provision until the Parliament otherwise provides (within the meaning of paragraph 51(xxxvi) of the Constitution), together with the power to grant financial assistance to States in section 96 of the Constitution;
• the Territories power in section 122 of the Constitution.

Corporations power

Paragraph 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 [No 2] (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 Act are substantially different to the provisions considered by the High Court in Williams No 2. Section 34 of the Act corresponds to section 32B of the FMA Act considered by the High Court in Williams No 2. However, the FMA Act contains no provision in terms equivalent to those of section 35 of the Act. Subsection 35(2) of the 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 provide funding to Australian businesses. This may include constitutional corporations. Where a grant recipient is a constitutional corporation, the Program will impose terms and conditions on it in accordance with section 35 of the Act, in relation to receipt of that grant. In particular, the Program will provide funding to Australian businesses (some of which may be constitutional corporations) to establish new plantations which are long-rotation plantations, reduce carbon emissions through the sequestration of carbon by trees growing in new long-rotation plantations and increase the supply of domestically grown timber to the Australian economy.

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 United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol (entered into within the UNFCCC). Australia has the following relevant obligations under these agreements:

UNFCCC

Article 4.1(b) and (d) of the UNFCCC obliges contracting parties to:

(b) Formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, and measures to facilitate adequate adaptation to climate change;

(d) Promote sustainable management, and promote and cooperate in the conservation and enhancement, as appropriate, of sinks and reservoirs of all greenhouse gases not controlled by the Montreal Protocol, including biomass, forests and oceans as well as other terrestrial, coastal and marine ecosystems.

Article 4.2(a) of the UNFCCC relevantly obliges contracting parties to take measures on the mitigation of climate change by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs.

Kyoto Protocol

Article 2.1(a) of the Kyoto Protocol obliges contracting parties to “Implement and/or further elaborate policies and measures in accordance with its national circumstances”. Under Article 2.1(a)(ii), this includes the “Protection and enhancement of sinks and reservoirs of greenhouse gases not controlled by the Montreal Protocol, taking into account its commitments under relevant international environmental agreements; promotion of

sustainable forest management practices, afforestation and reforestation”.

Article 10(b) of the Kyoto Protocol relevantly obliges contracting parties to “Formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change”. Under Article 10(b)(i) of the Kyoto Protocol, these programs include programs in the forestry sector.

The UNFCCC and Kyoto Protocol as outlined above, impose general obligations on Australia to mitigate climate change, limit emissions of greenhouse gases, and protect, conserve and enhance greenhouse gas sinks and reservoirs. The Program provides funding to establish new long-rotation plantations. These new plantations will have the effect of mitigating climate change by addressing anthropogenic emissions by removals by sinks of relevant greenhouse gases, promoting the enhancement of sinks and reservoirs of relevant greenhouse gases, and mitigating climate change by enhancing greenhouse gas sinks and reservoirs.

Power to grant financial assistance to States

Paragraph 51 (xxxvi) of the Constitution empowers the Parliament to make laws in respect of which the Constitution makes provision until the Parliament otherwise provides’. Section 96 of the Constitution empowers the Parliament to ‘grant financial assistance to any State on such terms and conditions as the Parliament thinks fit’.

The Program provides funding to support State forestry bodies to establish new plantations which are long-rotation plantations, reduce carbon emissions through the sequestration of carbon by trees growing in the new long-rotation plantations and increase the supply of domestically grown timber to the Australian economy.

Territories power

Section 122 of the Constitution empowers the Parliament to ‘make laws for the government of any territory’.

The Program provides funding to support Territory forestry bodies to establish new plantations which are long-rotation plantations, reduce carbon emissions through the sequestration of carbon by trees growing in the new long-rotation plantations and increase the supply of domestically grown timber to the Australian economy.

Further details on the Legislative Instrument are set out in Attachment A.

Authority

Section 33 of the Act provides authority for the Legislative Instrument.

Consultation

In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department and the Department of Industry, Science and Resources have been consulted on this Legislative Instrument.

Regulatory Impact

It is estimated that the regulatory burden is likely to be minor (the Office of Best Practice Regulation reference number 22-02722).

Other

The Legislative Instrument is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment B.

ATTACHMENT A

Details of the Industry Research and Development (Support Plantation Establishment Program) Instrument 2023

Section 1 – Name

1. This section specifies the name of the Legislative Instrument as the Industry Research and Development (Support Plantation Establishment Program) Instrument 2023.

Section 2 – Commencement

2.      This section provides that the Legislative Instrument commences on the day after registration on the Federal Register of Legislation. 

Section 3 – Authority

3.      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

4.      This section provides for definitions of terms used in the Legislative Instrument, including Australian business, long-rotation plantation, plantation, State forestry body and Territory forestry body.

5.      The note to this section explains that a number of expressions used in the Legislative Instrument are defined in the Act, including entity.

Section 5 – Prescribed Program

6.      This section prescribes the Support Plantation Establishment Program (the Program) for the purposes of subsection 33(1) of the Act.

7.      The Program provides funding to Australian businesses, State forestry bodies and Territory forestry bodies to enable the establishment of new long-rotation plantations.

8.      The purpose of the Program is to support Australian businesses, State forestry bodies and Territory forestry bodies to undertake the following:

• Establish new plantations which are long-rotation plantations;
• Reduce carbon emissions through the sequestration of carbon by trees growing in new long-rotation plantations;
• Increase the supply of domestically grown timber to the Australian economy.

Section 6 – Specified Legislative Power

9.      This section specifies that, for the purposes of subsection 33(4) of the Act, the powers of the Parliament to make laws with respect to the following are specified:

• Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution);
• External affairs (within the meaning of paragraph 51(xxix) of the Constitution), as it relates to measures to give effect to Australia’s obligations under either or both of the following:
  1. The Kyoto Protocol, particularly Articles 2 and 10;
  2. The United Nations Framework Convention on Climate Change, particularly Article 4;

• Matters in respect of which the Constitution makes provision until the Parliament otherwise provides (within the meaning of paragraph 51(xxxvi) of the Constitution), together with section 96 of the Constitution (financial assistance to States);
• The government of a Territory (within the meaning of section 122 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 (Support Plantation Establishment Program) Instrument 2023

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 (Support Plantation Establishment Program) Instrument 2023 (the Legislative Instrument) is to prescribe the Support Plantation Establishment Program (the Program). The Program provides up to $86.2 million as part of the Australian Government’s 2022 election commitment and is part of a package of forestry commitments under A Future Grown in Australia.

The Program provides funding to Australian businesses, State forestry bodies and Territory forestry bodies to support the establishment of new long-rotation plantations. The purpose of the Program is to support Australian businesses, State forestry bodies and Territory forestry bodies to undertake the following:

• Establish new plantations which are long-rotation plantations;
• Reduce carbon emissions through the sequestration of carbon by trees growing in new long-rotation plantations;
• Increase the supply of domestically grown timber to the Australian economy.

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 Murray Watt

Minister for Agriculture, Fisheries and Forestry