House of Representatives

Explanatory Memorandum

(Circulated by authority of the Honourable Greg Hunt MP, the Minister for Industry, Innovation and Science)

Outline

Background

1. On 7 December 2015, the Government released the National Innovation and Science Agenda (the Agenda), a blueprint for a more innovative and entrepreneurial Australia, that seeks to transform Australia into a leading innovation nation and position our country to seize the next wave of economic prosperity. The Agenda is a plan to ensure Australia utilises innovation and science to embrace and shape the future of its economy, and remains a high-wage first world economy with a generous social welfare safety net.

2. The Industry Research and Development Amendment (Innovation and Science Australia) Bill 2016 (the Bill) is a key component of the Agenda. The Bill will address the need for a more coordinated whole of government approach to, and return on, the Government's substantial annual investment in science, research and innovation ($10.1 billion in 2016-17). It will also promote the development, and improve the efficiency and competitiveness, of Australian industry by supporting greater engagement in science, research and innovation.

3. The Bill seeks to achieve these aims by amending the Industry Research and Development Act 1986 (the Act) in two key ways: firstly, by transitioning Innovation Australia to become a new body, Innovation and Science Australia; and secondly, by inserting a statutory framework to provide legislative authority for Commonwealth spending activities in relation to industry, innovation, science and research programs.

Overview of Innovation and Science Australia

4. The Bill will transition the current board, Innovation Australia, to become Innovation and Science Australia, a new independent body responsible for strategic whole of government advice on all science, research and innovation matters. Innovation and Science Australia will work across government and directly with international, business and community sectors to develop extensive stakeholder links and improve the national innovation system's overall performance. As part of its strategic advice, Innovation and Science Australia will undertake comprehensive audits and regular reviews of Australia's science, research and innovation system to assess and make recommendations to align Government strategic priorities. It will also develop a long term, fifteen year National Innovation and Science Plan to identify science, research and innovation investment priorities and specific areas for policy and program reform.

5. Beyond providing advice to Government, Innovation and Science Australia will have a strong role in stimulating public discussion and debate about innovation and science. It will publish its research and advice, and will publicly advocate reforms on key issues, such as innovation investment, innovation, collaboration and skills, delivering and operating research infrastructure, and how to better plan and use Australia's investment in research and development. This role will be augmented by the creation of a new position of Deputy Chair, which will be filled by Australia's Chief Scientist.

6. Innovation and Science Australia will complement the Commonwealth Science Council, which will continue to advise Government on the high level science challenges facing Australia. Innovation and Science Australia will also continue to perform the work of its predecessor Innovation Australia, including the administration, monitoring, oversight and operation of programs such as the R & D Tax Incentive, Entrepreneurs Programme, Cooperative Research Centres Programme, programs under the Venture Capital Act 2002 and Pooled Development Funds Act 1992 and legacy programs.

Overview of statutory framework for spending activities in relation to industry, innovation, science and research programs

7. A key pillar of the National Innovation and Science Agenda is that the Government will lead by example, embracing innovation and agility in everything it does. The amendments in this Bill embrace this principle by allowing Government to be agile and respond quickly and appropriately to the need to implement innovative ideas and pilot programs on an ongoing basis and as opportunities arise. This level of flexibility is enabled by creating a statutory framework to provide legislative authority for Commonwealth spending activities in relation to industry, innovation, science and research programs. This will provide transparency and parliamentary oversight of Government programs and spending activities, while also reducing administrative burden on the Commonwealth.

8. The amendments in this Bill allow the responsible Minister to prescribe industry, innovation, science and research programs in disallowable legislative instruments, which will be subject to parliamentary scrutiny. The legislative instruments may make provision for operational elements of spending programs, such as eligibility criteria and the process for making applications. The Minister's power to create disallowable legislative instruments will be delegable to other Ministers, which will support collaboration across the whole of government on activities related to industry, innovation, science and research. Improved collaboration for the innovation and science system is a key objective of the National Innovation and Science Agenda.

9. The amendments to this Bill would also provide authority for a Minister, an accountable authority, or their delegates, to make, vary and administer arrangements in relation to the carrying out of activities by a person under a program prescribed by legislative instrument, and for money to be payable by the Commonwealth to the person for that purpose. These amendments will operate consistently and in conjunction with the spending powers under the Financial Framework (Supplementary Powers) Act 1997 and Public Governance, Performance and Accountability Act 2013.

10. This framework is a simple and flexible approach which will allow the Commonwealth to meet changing public demands whilst ensuring its activities and programs are effective, transparent, robust, and operate under clear legislative authority provided by the Parliament. The amendments in this Bill do not purport to provide a general authority to spend and contract, but to allow instruments to be created authorising spending for the purposes of prescribed programs.

Consultation about provisions in the Bill

11. The Attorney-General's Department (including the Australian Government Solicitor, Office of Constitutional Law and the Office of International Law), the Department of Finance, the Department of the Treasury, the Department of Prime Minister and Cabinet and the Department of Health have been consulted on all relevant provisions of the Bill.