Details of the Financial Framework (Supplementary Powers) Amendment (Defence Measures No. 1) Regulations 2017

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Defence Measures No. 1) Regulations 2017.

 

Section 2 - Commencement

 

This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation. 

 

Section 3 - Authority

 

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

 

Section 4 - Schedules

 

This section provides that the Financial Framework (Supplementary Powers)

Regulations 1997 are amended as set out in the Schedule to the Regulations.

 

Schedule 1 - Amendments

 

Item 1 - In the appropriate position in Part 4 of Schedule 1AB (table)

 

This item adds a new table item to Part 4 of Schedule 1AB to establish legislative authority for government spending on an initiative that falls within the responsibility of the Department of Defence. 

 

New table item 230 establishes legislative authority for government spending on the Defence Cooperative Research Centre (CRC) Program.

 

The Program is a key deliverable of the Next Generation Technologies Fund, which was announced in the 2016 Defence Industry Policy Statement accompanying the 2016 Defence White Paper.  The Fund is one of four initiatives under a new approach to innovation by the Australian Defence Force and the Department of Defence (collectively, Defence).  Other initiatives include the Defence Innovation Hub, the Defence Innovation Portal, and changed culture and business processes to systematically remove barriers to innovation.

 

The Next Generation Technologies Fund will invest around $730 million over ten years from 2016-17 in strategic next generation technologies that have the potential to deliver game-changing military capabilities.  Among other activities, the Fund will provide grants to Defence CRCs. 

 

The Program will increase participation of academia and industry, especially small to medium enterprises, in collaborative research of critical importance to defence and national security.  Access to research outcomes will enhance the potential for Australian companies to supply to Defence and gain better access to global markets.

 

Several Defence CRCs are expected to be established under the Program.  The number of CRCs, their respective research areas and goals, and funding allocation will be approved by the Minister for Defence Industry.  Each CRC will focus on research in one technology priority area.  For example, the first CRC, which will be established during 2017, will undertake research in trusted autonomous systems.  The total funding allocation to an individual CRC is expected to be up to $30 million over a period of five to seven years.

 

Each Defence CRC will be established as a company limited by guarantee under the Corporations Act 2001.  The company will be governed by a Board that will be responsible for its day-to-day operation.  The Chair will be appointed by the Minister for Defence Industry, with the remaining Board members selected by the members.  The Department of Defence will be a minority member of each Defence CRC company.

 

Funding of $29.9 billion for the 2016 Defence White Paper was included in the 2016-17 Budget under the measure '2016 Defence White Paper - additional funding' for a period of ten years commencing in 2016-17.  Details are set out in Budget 2016-17, Budget Measures, Budget Paper No. 2 2016-17 at page 169.

 

Grants awarded to Defence CRCs will not be subject to competition.  Each Defence CRC will research a topic approved by the Minister for Defence Industry.  Prior to the formation of each Defence CRC, the Chair, in consultation with the relevant industry and research sectors, will develop a plan outlining proposed goals and objectives, and a summary of the proposed work program for the Defence CRC.  This plan will form the basis of a grant application.  

 

The Department of Defence will be responsible for the Program, which will be administered together with AusIndustry, a division of the Department of Industry, Innovation and Science.   The Department of Defence will propose research topics and evaluate proposed CRC plans and grant applications.  The department will also evaluate achievements against the goals and objectives of Defence CRCs and advise the Minister in relation to the continuation of funding and the approval of any extension to the funding terms.  AusIndustry will manage enquiries, feedback and reporting activities, and may undertake compliance visits and reviews of records maintained by CRCs.

 

The Minister will be responsible for approving grants to Defence CRCs based on their proposed plans and advice from the Department of Defence.  The CRCs will use grant funding for eligible activities including research projects undertaken by participants.  Eligible activities will be outlined in the program guidelines which will be published at www.business.gov.au/cdic. 

 

Eligible organisations such as companies incorporated in Australia and publicly funded research agencies, or companies incorporated in Australia that conduct research and development, may apply at any time to become an industry or research participant, respectively.  Selection of participants will be undertaken by the Defence CRC Boards based on eligibility and merit criteria outlined in the program guidelines.  Proposed projects will also be approved by the Defence CRC Boards.

 

Participant opportunities to engage in approved projects will be published on the Defence Innovation Portal website at www.business.gov.au/centre-for-defence-industry-capability/defence-innovation-portal.  All participants in the respective Defence CRC will be eligible to apply to participate in approved projects under the terms of an industry participant agreement or a research participant agreement as appropriate.  The project agreement templates, together with further information about the Program, will be available on the AusIndustry website at www.business.gov.au.  Participants whose bids do not succeed will have an opportunity to bid for future projects.

 

Grant processes will be conducted in accordance with the relevant legislation and policies, including the Public Governance, Performance and Accountability Act 2013 and the Commonwealth Grants Rules and Guidelines.  Grants awarded to Defence CRCs will be published at www.business.gov.au/cdic.

 

Given that grants to Defence CRCs will be made using a non-competitive process, merits review will not apply.  The Minister's decisions will be final in all matters including:

*         Defence CRCs to be established;

*         the Chairs of Defence CRCs;

*         the maximum grant funding available to a Defence CRC;

*         the funding term of a Defence CRC;

*         the plan; and

*         the terms and conditions of funding.

 

Complaints about the grant process may be lodged with the respective Defence CRC Board or AusIndustry.  If unsatisfied with the outcome, complainants may also contact the Commonwealth Ombudsman.

 

Funding for this item will come from Program 2.13: Defence Science and Technology, which is part of Outcome 2.  Details are set out in the Portfolio Budget Statements 2017-18, Budget Related Paper No. 1.4A, Defence Portfolio at page 80.  Funding of up to $27.5 million over four years from 2017-18 has been allocated to support the Program.

 

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the defence power (section 51(vi)) of the Constitution.

 

With respect to the defence power, the research that will be undertaken under the Program relates to the development and improvement of technology for defence and operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Framework (Supplementary Powers) Amendment (Defence Measures No. 1) Regulations 2017

 

These Regulations are 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

 

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations.  Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs.  The FF(SP) Act applies to Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013. 

 

The Regulations amend Schedule 1AB to the FF(SP) Regulations to establish legislative authority for government spending on the Defence Cooperative Research Centre (CRC) Program.  The CRCs will undertake research on next generation technologies that have the potential to deliver game-changing capabilities critical to defence and national security.  Each CRC will focus on research in one technology priority area. 

 

The Program will increase participation of academia and industry, particularly small to medium enterprises, in collaborative research of critical importance to defence and national security.  Access to research outcomes will enhance the potential for Australian companies to supply to the Australian Defence Force and the Department of Defence and gain better access to global markets.

 

The Defence CRCs will be funded through grants from the Next Generation Technologies Fund which was announced in the 2016 Defence Industry Policy Statement. 

 

The Minister for Defence Industry has responsibility for this initiative.

 

Human rights implications

 

The Regulations do not engage any of the applicable rights or freedoms.

 

Conclusion

 

These Regulations are compatible with human rights as they do not raise any human rights issues.

 

Senator the Hon Mathias Cormann

Minister for Finance