EXPLANATORY STATEMENT
Issued by the authority of the Minister for Industry and Innovation and Minister for Science
Industry Research and Development Act 1986
Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026
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 (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026 (the Legislative Instrument) is to repeal and replace the Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2023 (2023 Instrument). The 2023 Instrument, which enabled the Commonwealth to provide a one-off ad-hoc grant to Ethical Clothing Australia (ECA) to promote and expand ECA’s accreditation arrangements for businesses in the textiles, clothing and footwear industry, and to support an industry-led campaign to help consumers choose ethically-sourced Australian textiles, clothing and footwear, is being repealed and replaced to provide for further funding to ECA to support it to transition to a self-sustaining funding model by 1 July 2027.
The funding for the Program has been secured through the Mid-Year Economic and Fiscal Outlook 2025-26. The Program provides $1.0 million over the 2026-27 financial year to the Homeworker Code Committee Incorporated, trading as Ethical Clothing Australia, as part of the Australian Government’s commitment to building a future made in Australia.
The Program provides grant funding to support ECA to transition to a self-sustaining funding model by 1 July 2027. ECA accredits Australian textiles, clothing and footwear manufacturers that comply with workplace laws, including wages, entitlements, and safe working conditions, with a particular focus on protecting vulnerable outworkers. Activities under the Program will include continued expansion of ECA’s nation-wide accreditation program for textiles, clothing and footwear manufacturing businesses; garment outworker outreach activities and regular compliance audits on accredited businesses. The Program will also support an industry-led campaign to help consumers choose ethically sourced Australian textiles, clothing and footwear products. The Program aims to build a more transparent, legally compliant and ethical supply chain for textiles, clothing and footwear products, including ensuring compliance to relevant labour regulations to support the protection of the rights of Australian garment workers.
Funding authorised by this Legislative Instrument comes from the Building a Future Made in Australia measure as set out in the Mid-Year Economic and Fiscal Outlook 2025-26, Appendix A: Policy decisions taken since the 2025 PEFO (https://budget.gov.au/content/myefo/download/myefo-2025-26.pdf) at page 265.
The Program will be delivered by the Business Grants Hub, which is a specialised design, management and delivery body within the Department of Industry, Science and Resources (the Department) with extensive expertise and capability in delivering similar programs.
The Program is administered by the Department in accordance with the Commonwealth Grant Rules and Principles 2024 (https://www.legislation.gov.au/F2024L00854/latest/text). The grant amount can only be used for eligible expenditure as set out under the Grant Opportunity Guidelines. The grant amount cannot be used for activities and project costs funded by other Commonwealth, State, Territory or local government grants. As this is a one-off ad hoc grant to the identified eligible recipient (which is a trading corporation), there are no selection criteria; however, the grant is contingent on the submission of an acceptable project proposal with sufficient relevant supporting information commensurate with the funding amount. This is subject to assessment of merit in accordance with the Grant Opportunity Guidelines, including, but not limited to, consideration of value for money, ability of the project to deliver intended outcomes, and associated risk. To be successful, the application must demonstrate merit in each of these areas.
Spending decisions will be made by the Program Delegate who is the General Manager responsible for administering the Program. The Program Delegate is a Senior Executive Service (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 Program will not be subject to merits review. Merits review of the Program would not be appropriate because decisions will relate to the provision of a one-off ad hoc grant to a certain service provider over other service providers. The Administrative Review Council has recognised that decisions of this nature should be excluded from merits review (see paragraphs 4.16 to 4.19 of What decisions should be subject to merits review? available at https://www.ag.gov.au/legal-system/publications/arc-what-decisions-should-be-subject-merit-review-1999).
Persons who are otherwise affected by decisions or who have complaints about the Program will also 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 power in respect of which the Legislative Instrument is made is the corporations power in paragraph 51(xx) 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 (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 ECA, a constitutional corporation, will be eligible to receive benefits under the Program prescribed by the Legislative Instrument. The benefits conferred by the Program will be directed to assisting ECA in the conduct of its ordinary activities (accrediting local textiles, clothing and footwear businesses). The Program will impose terms and conditions under a grant agreement in accordance with section 35 of the IR&D Act, in relation to 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.
Further details of the Legislative Instrument are set out at Attachment A.
Authority
Section 33 of the IR&D Act provides authority for the Legislative Instrument.
Consultation
The Department consulted with ECA on the activities necessary to promote and expand its accreditation arrangement, and transition to a self-sustaining funding model by 1 July 2027. This consultation informed the design of the Program.
In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department has been consulted on this Legislative Instrument.
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 (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026.
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 – Schedules
This section is a machinery clause that allows the Schedule to the Legislative Instrument to operate according to its terms.
Section 5 – Definitions
This item provides for definitions of terms used in the Legislative Instrument.
Section 6 – Prescribed Program
This section prescribes the Program for the purposes of section 33(1) of the IR&D Act.
The Program provides funding to ECA to promote and expand ECA’s accreditation arrangement for businesses in the textiles, clothing and footwear industry. The purpose of the program is to support Australia’s textiles, clothing and footwear industry and to support ECA to transition to a self-sustaining funding model by 1 July 2027.
Section 7 – 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).
Schedule 1 – Repeals
Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2023
Item 1 – The whole of the instrument
This Schedule repeals the Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2023 (the 2023 Instrument). The Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026 replaces that instrument.
The Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026 reflects changes made to the Program since the 2023 Instrument.
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 (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026
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 Industry Research and Development (Supporting Australia’s Textiles, Clothing and Footwear Industry Program) Instrument 2026 (the Legislative Instrument) provides legislative authority to commit Commonwealth funding for the Supporting Australia’s Textiles, Clothing and Footwear Industry Program (the Program).
The Program provides funding to the Homeworker Code Committee Incorporated, trading as Ethical Clothing Australia (ECA) to promote and expand ECA’s accreditation arrangement for businesses in the textiles, clothing and footwear industry. The purpose of the program is to support Australia’s textiles, clothing and footwear industry and to support ECA to transition to a self-sustaining funding model by 1 July 2027.
Human rights implications
Article 7 of the International Covenant on Economic, Social and Cultural Rights (the ICESCR) provides that everyone has the right to the enjoyment of just and favourable conditions of work, which ensure, in particular fair wages, safe and healthy working conditions, equal opportunity employment and reasonable limitations of working hours.
This Legislative Instrument prescribes the Program which positively engages the right to the enjoyment of just and favourable work conditions by supporting an industry-led campaign to help consumers choose ethically sourced Australian textiles, clothing and footwear. The Program will encourage better compliance with minimum ethical standards, including relevant labour regulations to support the protection of the rights of Australian garment workers, including outworkers.
Conclusion
The Legislative Instrument is compatible with human rights because it promotes the protection of human rights.
Senator the Hon Tim Ayres
Minister for Industry and Innovation
Minister for Science