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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
INDUSTRY RESEARCH AND DEVELOPMENT AMENDMENT BILL 2003
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Industry, Tourism and Resources, the Honourable Ian Macfarlane MP)
This Bill amends the Industry Research and Development Act 1986 (the Act). The Bill will amend the Act to remove the existing powers of the Industry Research and Development Board (the Board), under the Act, to commit, approve or recommend the expenditure of Government funds with respect to research and development, and will provide that such functions cannot be conferred on the Board by ministerial directions under the Act. This will require the repeal of Parts III and IV of the Act and a number of other consequential amendments.
The Bill does not alter the Board’s functions under Part IIIA of the Act which confers various duties and powers on the Board in relation to income tax concessions for expenditure on research and development.
The Bill provides that the Board will, through ministerial directions under section 19 and proposed section 18A, have the function of making independent technical assessments of proposals for research and development funding or innovation funding under programs administered by the Department of Industry, Tourism and Resources (the Department), and evaluating the progress of projects approved for funding under those programs.
The financial tasks previously undertaken by the Board, including the entry into research and development agreements and the authorisation of payments in relation to those agreements, will be undertaken by the Department. To this extent, the amendments will bring the statutory regime into line with the current practical position under which officers of the Department exercise the power to enter into agreements and commit expenditure as delegates of the Board.
The tasks to be conferred on the Board in relation to the making of technical assessments will be exercised in relation to programs established by the Minister and administered by the Department under the Commonwealth’s executive power. The programs currently prescribed by ministerial direction under section 19 of the Act will not continue to operate except in relation to applications made, or projects approved, before the commencement date. The Bill contains express transitional provisions to this effect.
The Bill also amends the Act to indicate that the Board’s role is concerned with the encouragement of innovation programs as well as research and development programs. Although the Board currently assists in the administration of a number of Government programs to encourage innovation, the Act currently only refers expressly to research and development activities. Consistent with the underlying purpose of the amendments, the Bill will make clear that the Board will have no power to commit, approve or recommend the expenditure of Government funds with respect to innovation programs, and will provide that such functions cannot be conferred on the Board by ministerial directions under the Act.
This Bill will not have any financial impact on Commonwealth revenue or expenditure.
1. The short title of this Act is the Industry Research and Development Amendment Act 2003.
2. This clause is about the commencement of the Act and provides that sections 1, 2 and 3 of this Act and any other provisions not specifically mentioned by this provision commence on assent.
3. Schedule 1, which relates to the amendments to the Act, commences on a single day to be proclaimed, or within 6 months of the day the Act receives assent, whichever is sooner.
4. This clause gives effect to the provisions in the Schedule to the Act.
5. This item amends section 3 of the Act, which relates to the object of the Act. This item provides that the object of the Act, which currently is promoting the development, and improving the efficiency and international competitiveness, of Australian industry by encouraging research and development activities, also includes encouraging innovation activities.
6. These items repeal several definitions from subsection 4(1) of the Act. These definitions are no longer necessary in light of the repeal of Parts III and IV of the Act.
7. This item amends the definition of ‘researcher’ in subsection 4(1) of the Act. This item expands this definition to include innovation activities.
8. This item inserts a definition of ‘technical assessment’ at the end of subsection 4(1). With respect to a relevant application for Government funding, a ‘technical assessment’ will be an assessment of the eligibility and merits of a proposal for research and development or a proposal for innovation. Alternatively, where the Government funding of a particular research and development or a particular innovative initiative has been approved, a ‘technical assessment’ will be an assessment of its progress. The Minister will also be able to issue directions, under proposed section 18A, regarding the provision of technical assessments. These directions may also specify other matters which should be assessed in a technical assessment.
9. This item repeals subsections 4(3) and (4) of the Act. These subsections are no longer necessary in light of the repeal of the definitions in subsection 4(1) and Part III of the Act.
10. This item inserts a paragraph (aaa) into section 7 of the Act. This item provides that the functions of the Board include providing technical assessments to the Minister.
11. This item is a minor technical amendment. This item adds the word ‘and’ to the end of paragraphs 7(a) and 7(aa).
12. This item repeals paragraph (b) of section 7 of the Act. This paragraph currently provides that a function of the Board is to make recommendations to the Minister regarding the commitment of Government monies for certain research and development agreements. In light of the proposed changes to the responsibilities of the Board, this function is no longer necessary.
13. This item inserts a section 18A into the Act. Section 18A of the Act will allow the Minister to give directions to the Board concerning its provision of technical assessments to the Minister. These directions will be able to be made in relation to any program relating to research and development matters or innovation matters that are administered by the Department. With respect to research and development or innovation proposals, these directions may include a requirement that the Board consider and report to the Minister on whether the proposal is likely to lead to results that can be exploited on normal commercial terms or will otherwise benefit the Australian economy.
14. This item repeals subsection 19(2) of the Act. This subsection is being repealed because its requirement that all directions made under section 19, and any revocation of these directions, be published in the Gazette will instead be included in the proposed section 19A.
15. This item is a saving provision with respect to subsection 19(2) of the Act. It provides that, despite its repeal, this provision still operates in relation to any section 19 ministerial directions which were made before Schedule 1 to this Act commences. It also provides that subsection 19(2) still operates with respect to any revocation of these ministerial directions made after Schedule 1 to this Act commences.
16. This item inserts a section 19A into the Act. Subsection 19A(1) provides that to avoid any doubt, after its commencement, any directions given by the Minister to the Board under section 18A or 19 must not confer a function on the Board to commit, authorise or recommend the expenditure of Government money. Subsection 19A(2) also provides that the Minister must publish in the Gazette any directions made under section 18A or 19 or any revocation of such a direction.
17. This item repeals Part III of the Act. Part III of the Act confers powers on the Board to commit and approve the expenditure of Government funds under various specified categories of agreements on research and development. Most of the provisions of Part III have no current practical operation given that the time limits prescribed by the Act which control when the Board could enter into most of these categories of agreement has already expired.
18. Item 27 provides for transitional arrangements. It deals with outstanding applications for research and development funding agreements made to the Board before the commencement of Schedule 1 to this Act and existing agreements with the Board under which there are still outstanding obligations.
19. More specifically, item 27 provides that, after the commencement of Schedule 1 to this Act, any section 19 ministerial directions made in relation to a program of research and development funding continue in force for the purpose of these transitional arrangements. However no new applications for research and development proposals may be made under these programs (subitem 27(1)). This does not adversely affect the power of the Minister to make new directions under proposed section 18A of the Act, in relation to a program of research and development funding substantially similar to the program funding for which the section 19 ministerial directions had been made (subitem 27(2)). This provision recognises that the programs established by the Minister and administered by the Department may be substantially the same as those currently prescribed by ministerial direction under section 19.
20. Item 27 also provides that the Board may still consider and deal with applications for research and development agreements made before the commencement of Schedule 1 to this Act and, with respect to these applications, that it may also enter into agreements for the provision of Government money, as if the amendments made by Schedule 1 to this Act had not been made (subitem 27(3)).
21. Item 27 also provides that, if before the commencement of Schedule 1 to this Act, the Board has entered into agreements under the Act for which obligations remain, these agreements continue in force, according to their terms, as if the amendments made by Schedule 1 to this Act had not been made (subitem 27(4)).
22. Item 27 also provides that the Board, in determining whether there are obligations to be met under these transitional agreements, may exercise any powers that had been conferred on the Board by or under the Act or the agreement, as if the amendments made by Schedule 1 to this Act had not been made (subitem 27(5)).
23. Item 27 also provides that prosecutions may still be commenced in respect of any offences concerning these transitional applications or agreements, as if the amendments made by Schedule 1 to this Act had not been made (subitem 27(6)).
24. This item repeals Part IV of the Act, which deals with the financing of research and development subsidies to eligible recipients. These provisions need to be repealed as the Board will no longer be responsible for the commitment and approval of Government expenditure.
25. This item amends subsection 44(6) of the Act, to reflect the new financing arrangements for research and development and innovation programs. It will continue to provide that applicants for Government assistance who are convicted of the Criminal Code offence of improperly obtaining a financial advantage can not also be convicted of certain other Criminal Code offences, dealing with the provision of false or misleading information, documents or statements in applications.
26. This item repeals subsection 44(11) of the Act. This definition of ‘subsidy’ is no longer necessary in light of the amendment of subsection 44(4).
27. These items make a number of consequential amendments to section 46 of the Act, which deals with the contents of the Board’s Annual Report. These changes reflect the new financing arrangements for research and development and innovation programs. In doing so, they provide that the Board will still be required to report on any agreements entered into by the Board under the Act which are still in force. This requirement includes reporting on any agreements entered into by the Board under the transitional arrangements provided for in item 27.