Industry Research and Development Act 1986 - Re-tooling for Climate Change Program Ministerial Directions No. 1 of 2009

The primary private actors affected are organisations that undertake manufacturing activities in Australia, as defined by the physical or chemical transformation of materials into new products. These organisations may apply for funding to improve the energy or water efficiency of their production processes. Only those whose projects fall within the narrow definition of Eligible Project will be considered. The instrument thus favours firms in traditional manufacturing sectors such as metal fabrication, chemical processing, food and beverage production, textiles, machinery manufacturing, and similar activities. It excludes service providers, utilities (unless they also manufacture something), construction firms, software companies, logistics providers, and any organisation whose core activity is not goods production. Within manufacturing, only projects targeting the production process itself (including raw materials storage and finished goods warehousing, but excluding administration) are eligible. This means a factory's lighting or HVAC in administrative offices does not qualify, even if energy savings are significant.

Innovation Australia (the Board) is directly directed. Its members must adapt their practices to comply with these directions, including the expanded function of merit ranking. The Board's independence is constrained by the requirement to take into account departmental policy advice. The Program Delegate, an employee of the Department of Innovation, Industry, Science and Research, is the gatekeeper who determines eligibility and refers applications for assessment. The Program Delegate retains the final decision on funding and on whether to accept variations. The Minister, who made the directions, may request advice and receive performance data from the Board.

Taxpayers and the broader economy are indirectly affected. The program allocates public funds to selected manufacturing projects. The merit ranking system concentrates benefits on a few firms while costs are diffuse. Competing manufacturers not receiving funding may be disadvantaged if subsidised rivals gain cost advantages from retooled processes. The program may also distort investment decisions: firms may pursue projects that score well on the merit criteria rather than those with the highest commercial return, because grant funding lowers the effective cost of compliant projects. This creates a substitution effect where government-directed projects replace privately funded ones. Workers in funded firms may benefit from improved equipment and job retention, but if the funding supports labour-saving automation, employment outcomes can be negative. The environment is an intended beneficiary, but the instrument does not measure actual outcomes or impose post-project verification obligations.

The instrument imposes duties primarily on the Board. Under clause 5, the Board must assess eligible applications referred by the Program Delegate and provide a merit ranking. Clause 6 requires the Board to consider applications as soon as practicable after referral. Clause 8 mandates that the Board assess each eligible application on its merit and rank it against all others according to the extent to which the application meets the merit criteria. This implies a relative, not absolute, assessment: even a strong application could rank low if others are stronger. Clause 9 requires the Board to take into account Department policy advice when considering applications. Under clauses 11-12, when referred a variation proposal, the Board must assess it as soon as practicable and provide the assessment. Clause 16 requires the Board to conduct technical assessments within a reasonable time.

The Board has discretionary rights under clause 7 to refuse to provide a merit ranking if not satisfied with an application's merit or if the project is not an eligible project. It may also under clause 17 advise the Minister on non-financial administration matters, and under clause 18 collect and analyse data on program performance and cooperate with evaluations. The Board may decide to refuse ranking without providing reasons.

The Program Delegate has the right to refer eligible applications (implied), variation proposals (clause 11), and technical matters (clause 14). The Program Delegate also has the final say on funding, as the Board only provides rankings and assessments; the instrument does not give the Board decision-making power over funding. The Program Delegate's duties are not specified in this instrument but presumably arise from the Act and Program Guidelines.

Applicants have only the right to submit an application. They have no right to have it ranked, to receive reasons for refusal, or to appeal a decision. If an application is approved, the recipient will have rights and duties under the separate Agreement, which is not part of this instrument. The Agreement must have as a minimum the terms described in the Program Guidelines. Recipients may propose variations, but there is no right to have those variations approved; the Board's assessment under clause 13 is advisory to the Program Delegate. The instrument does not provide for applicant input during assessment, no right to respond to negative policy advice, and no hearing before a refusal to rank.

This instrument does not itself create any penalties. It is a set of directions to the Board, not a regulation imposing obligations on applicants or third parties. If the Board fails to comply with these directions, such as by not assessing applications within a reasonable time or ignoring departmental policy advice, the Minister could potentially issue further directions, remove Board members under the parent Act, or take administrative action. However, no specific penalty provision is contained in this instrument. The Industry Research and Development Act 1986 likely includes general provisions about Board member misconduct, confidentiality breaches, and false statements under other provisions of Commonwealth law, but those are not referenced.

Enforcement of program conditions would occur through the separate Agreement between the Commonwealth and the recipient. Typical grant agreements include conditions on project delivery, reporting, acquittal, and clawback of funding for non-compliance. The Board's technical assessments and variation assessments may inform the Department's decisions on whether to enforce those conditions. The instrument does not mention audits, inspections, or compliance powers. If an applicant provides false or misleading information in their application, they may be liable under the Criminal Code (Cth) sections dealing with fraud or giving false information to a Commonwealth entity, but that is not a penalty in this instrument. The Board's assessments are not subject to merits review in this instrument; judicial review under the Administrative Decisions (Judicial Review) Act 1977 may be available for decisions made under an enactment, but the Board's rankings are likely not themselves decisions that affect legal rights, as final funding decisions rest with the Program Delegate.

The instrument provides no mechanism for the Board to sanction applicants directly. Its role is advisory. The Program Delegate could theoretically rely on a negative Board assessment to refuse a variation, but if the Board assesses slowly, there is no penalty for delay beyond a possible direction from the Minister. The absence of enforcement provisions in the instrument itself means the real teeth lie in the Agreement and in broader Commonwealth grant administration rules, which are outside this instrument's text.

The instrument is made under the Industry Research and Development Act 1986 (Cth), specifically sections 18A, 19 and 20(1). That Act establishes Innovation Australia, sets out its general functions (such as advising on research and development, administering programs, and evaluating outcomes), and allows the Minister to give directions. This instrument adds a specific function for this program and does not purport to override the Act's general provisions. The Act may contain provisions about disclosure of interests, confidentiality, and reporting that continue to apply to the Board.

The instrument does not reference the Public Governance, Performance and Accountability Act 2013 (PGPA Act), which governs how Commonwealth entities manage public resources. However, the Program's funding agreements and the Department's administration of grants would be subject to the PGPA Act and the Commonwealth Grants Rules and Guidelines. The Board's role in merit ranking supports the proper use of public money by ensuring competitive assessment, but the instrument does not itself impose PGPA obligations.

The Competition and Consumer Act 2010 may be relevant if funding distorts competition. Subsidising certain manufacturers could give them an advantage over unsubsidised competitors; this is a policy choice not addressed in the instrument. Environmental laws such as the Environment Protection and Biodiversity Conservation Act 1999 may apply to retooling projects that impact matters of national environmental significance, but the instrument does not address environmental approvals; it merely asks for evidence of projected savings.

Tax laws interact indirectly: retooling expenditure may be deductible or may qualify for the research and development tax incentive, depending on the nature of the project. The instrument does not address taxation. The Board's assessment under Criterion 2, which asks about "innovative transferable technology", could overlap with R&D tax incentive definitions, but no cross-reference is given.

State and territory laws on building approvals, water rights, energy regulations, and workplace safety may also apply to retooling projects. The instrument does not provide any exemption from those laws. The Program Guidelines, not provided in this instrument, may contain further interactions. The Board must consider departmental policy advice, which could change in response to other legal developments. The instrument is silent on how conflicts between its direction and other legal obligations would be resolved. The Board presumably must comply with both, but no hierarchy is stated.

The instrument as provided is titled "Re-tooling for Climate Change Program Ministerial Directions No. 1 of 2009". It states it was signed by the Minister on 31 August 2009 and takes effect on 24 August 2009 or the later date of Gazette publication. No amendment history is provided within the text. There is no indication of whether this instrument has been amended, replaced, or remains in force. It appears to be the original and only version of this particular direction. The "No. 1" designation suggests it is the first direction under this program, implying that subsequent directions may have been made. However, without further source material, we cannot confirm any amendments. The program itself, the Re-tooling for Climate Change Program, may have ceased to exist or been subsumed into later programs, such as the Clean Technology Program or similar initiatives. The instrument does not include a sunset clause. Users should verify the current status of both the instrument and the program before relying on it. The Industry Research and Development Act 1986 may have a general provision allowing the Minister to revoke or vary directions; that provision is not referenced here.

The source instrument does not mention any litigation history. There are no references to previous cases, judicial decisions, or administrative reviews related to these directions. This is typical for a ministerial direction that does not itself create rights enforceable by private parties. However, it is possible that administrative decisions made under the program (such as refusal of funding, or disputes over variation assessments) have been challenged in the courts or before the Administrative Appeals Tribunal. Such challenges would likely be based on the parent Act or general administrative law principles rather than on this instrument directly. The Board's refusal to rank an application under clause 7 could theoretically be challenged as an improper exercise of power, but the instrument gives broad discretion and does not require reasons, making judicial review difficult. Without reported cases, we cannot assess whether the instrument has been interpreted or applied in litigation. The absence of litigation history in the source does not mean none exists; it simply is not provided.

Several features of this instrument contain potential traps for applicants and for the Board itself. The narrow definition of Manufacturing excludes many activities that might intuitively seem like manufacturing, such as assembly that does not involve chemical or physical transformation, or value added work done on materials owned by others. The exclusion of administration from the Production Process definition means that energy efficiency projects for a factory's corporate offices, staff amenities, or management buildings are not eligible, even if they are on the same site. Applicants must carefully map their proposed project to the precise definitions: the project must be directed to improving energy and or water efficiency of processes that are part of manufacturing production, not peripheral activities.

The merit criteria are deliberately vague. Criterion 2's reference to projects "above what could be seen as routine" invites subjective judgement. An applicant that replaces a boiler with an identical model would likely be considered routine; one that installs a completely new energy system might not. But without clear benchmarks, the Board has wide discretion. Similarly, the phrase "appropriate evidence" in Criterion 1 is undefined. The Board may request specific types of evidence not initially provided, and there is no opportunity for the applicant to supplement.

The Board's power under clause 7 to refuse to rank an application if not satisfied with its merit is a binary gate: the Board can simply decide not to rank, without ranking it low. This effectively kills the application from further consideration, since the Program Delegate only receives rankings of those that are ranked. There is no requirement for the Board to state which criteria are not satisfied. An applicant whose application is refused ranking gets no explanation and no appeal.

The Board must take into account departmental policy advice under clause 9. This advice could change during the assessment period, and the Board might apply different policies to applications on the same program round. The instrument does not require the advice to be disclosed to applicants. Variation assessments under clause 13 include a requirement of consistency with "Program Policy Objectives as outlined in the Program Guidelines", which are not publicly available in this instrument. Recipients may not know what those objectives are until they are applied.

The instrument does not contain any time limits for the Board to complete assessments beyond "as soon as practicable" (clauses 6, 12) and "within a reasonable time" (clause 16). This vagueness could lead to delays that affect project timelines for recipients. There is no penalty for delay. The Board's technical assessments under clause 14 can be on any matter "rele vant to or impacting on a merit criterion", which is very broad and could include policy issues, market considerations, or even political sensitivities, eroding the technical nature.

Finally, the instrument provides no mechanism for applicants to respond to adverse policy advice or to challenge a Board refusal. The Program Delegate could reject a variation based on the Board's assessment, but the recipient has no right to address the Board. The system concentrates discretion in the Board and the Department, with minimal procedural protections for applicants.

For an organisation seeking funding under the Re-tooling for Climate Change Program, compliance begins with ensuring the proposed project falls within the strict definitions. The organisation must be engaged in manufacturing as defined: the physical or chemical transformation of materials or components into new products. Activities such as assembling components without transformation, packaging, warehousing of purchased goods for resale, or providing services do not qualify. The project must be directed to improving the energy and or water efficiency of a production process. Production process includes raw materials storage and finished goods warehousing but excludes administration. Therefore, any efficiency improvements targeted at administrative buildings, corporate offices, or staff facilities must be excluded from the scope, or they risk rendering the entire project ineligible.

The application must address the three merit criteria with concrete evidence. For Criterion 1, quantify current energy and water consumption, projected savings, and carbon emission reductions. Provide third party verification where possible: energy audits, engineering reports, manufacturer specifications. For Criterion 2, demonstrate that the project goes beyond routine maintenance or incremental upgrades. Show how the project will have sustainable long term impact on the manufacturing operation's capacity to respond to climate change. Highlight any supply chain benefits or demonstration potential, such as publishing case studies or sharing technology. For Criterion 3, provide evidence of the organisation's project management experience and technical capacity. Include resumes of key staff, details of subcontractors, and a detailed project plan with realistic milestones and timelines.

Applicants should engage early with the Department to understand any policy guidance that the Board will be required to take into account under clause 9. This policy advice is not published in the instrument, so informal discussions may be essential. If the Board refuses to rank the application, there is no formal avenue for reconsideration, so the application must be strong on its face. Consider seeking feedback from the Department on draft applications if that is offered.

If funding is approved and an Agreement executed, compliance does not end. Any proposal to vary the project must be referred to the Board for assessment under clauses 11-13. Variations could include changing activities, timelines, or outcomes. To avoid delay, plan the project thoroughly and minimise the need for post-approval changes. If a variation is unavoidable, prepare a submission showing how the change enhances the ability to achieve outcomes and remains consistent with Program Policy Objectives. Maintain records of project costs, energy/water savings achieved, and compliance with Agreement terms. The Board may collect performance data under clause 18, and recipients should cooperate with any evaluations. There is no right to reasons if a variation is rejected, so anticipate possible objections and address them proactively.

Overall, the onus is on the applicant to make a compelling, well evidenced case that satisfies the Board's discretion. The instrument provides minimal procedural safeguards, so careful preparation and ongoing communication with the Department are the best strategies for compliance.