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No. 1 of 1998 Directions/Other as made
This Direction sets out the policies and practices to be followed by the Industry Research and Development Board in performing the additional functions which include the provision of a competitive basis for granting financial assistance for Research and Development projects and concessional loans for the commercialisation of technological innovation.
Administered by: Innovation, Industry, Science and Research
Registered 19 Sep 2008
Gazetted 26 Aug 1998
Date of repeal 19 Apr 2000
Repealed by R & D Start Program Directions No. 1 of 2000

Commonwealth of Australia

 

Industry Research and Development Act 1986

 

R&D Start Program Directions No. 1 of 1998

 

 

I, JOHN COLINTION MOORE, Minister for Industry, Science and Tourism,         acting under subsections 19 (1) and 20 (1) of the Industry Research and       Development Act 1986, give the following directions to the Industry Research            and Development Board.

 

Dated Tenth August 1998

 

JOHN MOORE

Minister for Industry, Science and Tourism

______________________

 

 

PART 1 - PRELIMINARY

 

Name of directions

1. These directions are the R&D Start Program Directions No. 1                         of 1998.

 

Commencement

2.   These directions commence on the day on which the directions are    published in the Gazette

 

Object of these directions

3.   (1) The object of this instrument is to give directions to the Industry   Research and Development Board in relation to a function to be performed by the                   Board relating to the object of the Industry Research and Development Act 1986         and to certain policies and practises to be followed by the Board in the          performance of that function.

 

(2)   That function is an additional function of the Board.

 

(3) The polices and practises to be followed by the Board in the          performance of the additional function are intended to include the provision of a competitive basis for granting:

(a)   financial assistance for research and development projects; and

 

 

 

 

 

 

 

 

(b)   concessional loans for the commercialisation of technological       innovation.

 

Interpretation

 

4.   (1)   In these directions, unless the contrary intention applies:

agreement means an agreement mentioned in clause 16.

applicant includes a party to a joint application.

application means an application for financial assistance or a loan.

Concessional Loans means the program of concessional loans by the        Commonwealth for the commercialisation of technological innovation.

Core Start means the research and development program comprising the             following subprograms:

(a)  Start Grants;

(b)  Start Graduate;

(c)  Concessional Loans;

(d)  Innovation Ready.

eligible expenditure means expenditure:

                                    (a)  related to:

(i)    research and development activity for a project for which      financial assistance is provided under the R&D Start Program;

            or

(ii)    commercialisation of technological innovation under that       Program; and

(b)  that is eligible expenditure under the clause 18.

financial assistance means a payment under the R&D Start Program that:

(a)  is not a loan; or

(b)  is not made for the purposes of Innovation Ready.

Innovation Ready means the program to assist potentially innovative companies            to be competitive and efficient in order to undertake effective research and development activities.

            joint application means a single application made by more than 1 applicant.

loan means a Concessional Loans payment.

non tax-exempt company means a company, except a company to which             Division 50 of the Income Tax Assessment Act 1997 applies, that is incorporated            in Australia.

R&D Start Program means the research and development program comprising             the following component programs:

(a)   Core Start;

(b) Start Plus;

(c)   Start Premium.

relevant year, for an applicant, means:

(a)   if the applicant has been incorporated for each of the 3 years            preceding the year of income in which the application is made –                  each of those years; or

 

 

 

 

 

(b) if the applicant has been incorporated for fewer than 3 years of             income preceding the year of income in which the application is                    made – each of those years in which the applicant was incorporated.

revoked directions means the directions revoked in clause 30.

research institution includes:

(a)   the Commonwealth Scientific and Industrial Research Organisation;          

and

(b) a tertiary educational research institution; and

(c)   an institution that is recognised as a Cooperative Research Centre;         

and

(d) a medical or veterinary research institution; and

(e)   a body that, in the opinion of the Board:

(i)      conducts research and development as its primary activity;                and

(ii)      is primarily funded by the Commonwealth, or a State or    

          Territory, and conducts substantial research.

Start Graduate means the program of financial assistance for research and   development related projects conducted by graduates for non tax-exempt                               companies with turnovers of less than $50,000,000 in each relevant year.

Start Grants means the program of financial assistance for research and        development projects of non tax-exempt companies with turnovers of less than $50,000,000 in each relevant year.

Start Plus means the program of financial assistance for research and            development projects of non tax-exempt companies with turnovers of                            $50,000,000 or more in 1, or more than 1, relevant year.

Start Premium means the program of financial assistance:

(a)   for high merit research and development projects of non tax-exempt companies; and

(b) that is repayable to the Commonwealth.

year of income, of a company, means the period of 12 months to which the           income tax returns of the company relate.

 

(2) For these directions, whether 2 or more bodies corporate are related              to each other is determined in the same way as under the Corporations Law.

 

Board to have regard to certain policy objectives

5. The Board must have regard to the following policy objectives in            giving effect to these directions:

(a)  to increase the number of projects involving research and development activities with a high commercial potential that are undertaken by companies;

(b) to foster greater commercialisation of the outcomes of those projects;

(c)   to foster collaborative research and development activities in                  industry and between industry and research institutions;

(d) to encourage successful innovation in small companies by supporting commercialisation of internationally competitive products, processes and services;

 

 

 

(e)   to increase the level of research and development activity that is commercialised in Australia;

(f)   to provide national benefits.

 

When applications to be considered

6.  The Board must deal with an application as soon as practicable after                it is received by the board.

 

PART 2 – ADDITIONAL FUNCTION OF BOARD

 

Additional function

7.    (1) A function of the Board is to administer the R&D Start                   Program.

 

(2) The Board must administer the component programs of the R&D              Start Program, except the Innovation Ready component, by:

(a)    considering applications and selecting applicants for financial assistance and loans; and

(b)   entering into agreements, on behalf of the Commonwealth, with     applicants whose applications for financial assistance or loans are          granted; and

(c)    authorising payments for financial assistance and loans to be made             by the Commonwealth to those applicants; and

(d)   monitoring and evaluating projects for which financial assistance or         loans are provided.

                       

(3)   The Board must:

(a)    establish, develop and maintain procedures for the delivery of  services to companies for Innovation Ready; and

(b)   administer Innovation Ready by:

            (i)         providing those services; and

(ii)        authorising payments to be made by the Commonwealth for Innovation Ready in the financial year commencing on 1 July 1998 and each following year for which the R&D Start Program receives an appropriation.

 

            PART 3 – ELIGIBILITY FOR FINANCIAL ASSISTANCE

                       

Eligible applications – financial assistance

 

8. (1)   The Board must accept an application for financial assistance if                 the Board is satisfied that:

(a)    the applicant meets the requirements of clause 9; and

(b) the project to which the application relates meets the requirements of                   clause 10 that apply to the project.

 

 

 

 

 

(2) However, the Board may not accept an application for financial        assistance that the Board reasonably considers is the same, or substantially the         same, as another application for financial assistance:

(a)    that was not accepted by the Board; or

(b)   that was accepted by the Board, but related to a project for which the financial assistance (including financial assistance under the R&D                 Start Program as conducted under the revoked directions) was not     granted.

 

(3) Also, the Board must not accept an application for financial              assistance if acceptance of the application would be inconsistent with a       determination under subclause (4).

 

(4) The Board may determine that it will not accept an application for      financial assistance if the applicant has already made a number of applications:

(a)    that exceeds 1, or another number stated in the determination; and

(b)   in relation to which the Board has not decided whether to grant the    financial assistance.

 

Applicant requirements

9.     (1) If an application for financial assistance:

(a)    is not a joint application – the applicant must be a non tax-exempt  company; and

(b)   is a joint application – at least 1 party to the application must be a      non tax-exempt company.

 

(2)  The Board must not grant an application for Start Grants financial   assistance unless the combined turnover of the applicant, and of each body                          corporate (if any) related to the applicant, is less than $50,000,000 for each           relevant year.

           

(3) The Board must not grant an application for Start Plus financial        assistance unless the combined turnover of the applicant, and of each body          corporate (if any) related to the applicant, is $50,000,000 or more for 1, or more                       than 1, relevant year.

 

(4)  The Board must not grant an application for Start Premium financial assistance for a project unless:

(a)    the application accompanies an application for Start Grants or Start                Plus financial assistance for the project; and

(b)   Start Grants or Start Plus financial assistance is provided for the         project; and

(c)    the agreement between the Board and the applicant mentioned in    clause 16 provides for repayment of the Start Premium financial     assistance for the project in accordance with subclause (5).

 

 

 

 

 

 

(5) The agreement must provide that:

(a) if the applicant is a joint applicant – each party to the application            agrees to repay to the Commonwealth any amount of the Start          Premium financial assistance provided to the party for the project;            and

(b)  in any other case – the applicant agrees to repay to the           Commonwealth any amount of the Start Premium financial             assistance provided for the project.

 

(6) The Board must not grant an application for financial assistance for            the cost of a project unless the Board considers that the applicant is able to fund           the cost of the project that is not met by the financial assistance.

 

Project requirements

10.      (1)  A project to which an application for financial assistance,                except an application for Start Graduate financial assistance, relates:

(a)  must aim to produce a clearly identified product, process or service;         

       and

(b)  must involve research and development activities; and

(c)   may involve related product development and related market      

       research.

 

(2) A project to which an application for Start Graduate financial         assistance relates must:

(a)    involve a graduate working for the applicant in research and         

      development related activities; and

(b)     be intended, and likely, to form or strengthen links between the

      applicant and a research institution.

 

PART 4 – ELGIBILITY FOR LOANS

 

Eligible applicants and projects—loans

11.      (1) The Board must accept a loan application in relation to a project            if the Board considers that:

(a)    the applicant:

(i)     has less than 100 employees; and

(ii) is unable to obtain sufficient funding for the project from        financial institutions; and

(b) the project involves early commercialisation of technological        innovation in relation to the following aspects of an internationally competitive product, process or service:

(i)  design and documentation;

            (ii)  trial production runs, including tooling up;

            (iii)  compliance with regulatory requirements and other standards;

            (iv)  creation and protection of intellectual property rights;

            (v)  trial and demonstration activities.

 

 

 

 

 

(2)     However, the Board must not accept a loan application in relation to            a project unless the Board is satisfied that:

(a) if the application is not granted, the project will not proceed                 satisfactorily; and

(b)   the results of the project will be exploited for the benefit of Australia.

 

(3)     Also, the Board may not accept an application for a loan that the           Board reasonably considers is the same, or substantially the same, as another application for a loan:

(a)     that was not accepted by the Board; or

(b)                 that was accepted by the Board, but related to a project for which the

          loan (including a loan under the R&D Start Program as conducted   

          under the revoked directions) was not granted.

 

(4)     Further, the Board must not accept an application for a loan if       acceptance of the application would be inconsistent with a determination under subclause (5).

 

(5)     The Board may determine that it will not accept an application for a        loan if the applicant has already made a number of applications:

(a)      that exceeds 1, or another number stated in the determination; and

(b)                 in relation to which the Board has not decided whether to grant the       

          loan.

 

PART 5 – MERIT CRITERIA

 

Assessment of applications for financial assistance and loans

12.     If the Board accepts an application, it must assess the application:

(a)      by considering the merit of the application; and

(b)                 in the case of an application for financial assistance – by comparing        the merit of the application under clause 13 with the merit of other      applications accepted by the Board for the same kind of financial

          assistance; and

(c)           for an application for a loan – by comparing the merit of the      

          application under clause 14 with the merit of other applications

          accepted by the Board for loans.

 

Merit criteria – financial assistance

13.     (1) The merit of applications for Start Grants or Start Plus financial assistance is assessed under the following criteria:

(a)     the management capability of applicants;

(b)     the level of commercial potential of projects and applicants’      

          capacities to exploit that potential;

(c)     the level of relevant technical capability and resources of applicants

          and the technical soundness of projects to which applications relate;

(d)          the extent to which projects would benefit Australia, including

          Australian industry and the wider community;


 

(e)     whether projects would proceed satisfactorily without the financial assistance.

 

(2)     The merit of applications for Start Premium financial assistance is   assessed under the following criteria:

(a)     whether applications meet the criteria set out in subclause (1) to a         

          high degree;

(b)     the period and manner in which financial assistance is proposed to be  repaid by applicants.

 

(3)     The merit of applications for Start Graduate financial assistance is    assessed under the following criteria:

(a)     the management capability of applicants;

(b)     the extent to which projects to which applications relate would

          improve applicants’ performance through the adoption of appropriate technology or methodology;

(c)     the extent to which projects form or strengthen appropriate links

          between applicants and research institutions;

(d)     whether projects would proceed satisfactorily without financial

          assistance.

 

Meet criteria – loans

14.  (1) The merit of applications for loans for projects is primarily         assessed under the following criteria:

(a)      the management capability of applicants;

(b)     the demand, growth and size of markets for products, processes or

          services to which the projects relate;

(c)      the competitiveness and dynamism of the markets;

(d)     the technical and production synergies of projects;

(e)      the national benefits of the projects.

 

(2)  The merit of applications for loans for projects is also assessed under the following other criteria:

(a)      the expertise of the personnel to be involved in the projects;

(b)     the technical risk involved in projects;

(c)      the uniqueness or superiority of the products, processes or services to

          which the projects relate;

(d)     the prices envisaged for the products, processes or services.

 

 

PART 6 – GRANT OF FINANCIAL ASSISTANCE AND LOANS

 

Grant of financial assistance and loans

15.  After assessing an application in accordance with Part 5, the Board        may grant financial assistance, or a loan, for a project to which the application                 relates.

 

 

 

 

 

Board to enter agreements

 

16.    The Board must enter into an agreement with an applicant whose application is granted before financial assistance or a loan is provided to the      applicant.

 

What agreements must contain

 

17.                   An agreement:

(a)     must not be inconsistent with a law of the Commonwealth or these directions; and

(b)    must specify the amount of the financial assistance or loan for the   project to which the application relates and the timing and method of delivery of the assistance or loan; and

(c)     must require the applicant to conduct a project to which the       application relates in accordance with the application; and

(d)    must require the applicant to keep records relating to the conduct and management of the project; and

(e)     must provide for inspection by or for the Board of the premises        where the project is undertaken and of the records mentioned in paragraph (d); and

(f)     must require the applicant to report to the Board on the conduct and management of the project; and

(g)     in the case of an agreement relating to Start Premium financial   assistance or a loan:

(i)           must provide for repayment of the financial assistance or loan;

         and

(ii)         may provide that interest on the balance of financial assistance     to be repaid is charged in accordance with clause 25; and

(iii)        must provide that interest on the balance of a loan to be repaid            is charged in accordance with clause 26; and

(h)                must provide for variation and termination of the agreement; and           

(i)                 may include other matters.

 

PART 7- ELIGIBLE EXPENDITURE

 

Eligible expenditure

18.        (1)  This clause applies to projects for which financial assistance or a loan is granted.

           

(2)    The Board may determine in writing that expenditure for a project        that is incurred after the application for the financial assistance or loan for the        project is received by the Board is eligible expenditure.

 

(3)    However, expenditure is not eligible expenditure unless, at the time        of the expenditure:


 

(a)           in the case of expenditure by a person to whom financial assistance         is granted – that person meets the relevant requirements of clause 9        as if the person were an applicant to whom those requirements     continue to apply; and

(b)        in the case of expenditure for a project by a person to whom          financial assistance or a loan is granted – the project meets the       relevant requirements of clause 10, or paragraph 11 (1) (b) and     subclause 11 (2), as if the project were a project to which those requirements continue to apply.

 

Authorisation of payment of financial assistance

 

19.   The Board may authorise payments under the R&D Start Program to        be made for eligible expenditure in:

(a)     the financial year commencing on 1 July 1998; and

(b)     each following financial year for which the R&D Start Program    receives an appropriation.

 

Maximum financial assistance and loan based on eligible expenditure

20. (1)  The total amount of financial assistance for a project must not               exceed:

(a)     in the case of Start Graduate or Start Grants financial assistance –                     50% of the eligible expenditure for the project; and

(b)     in the case of Start Plus financial assistance – 20% of the eligible                                       expenditure for the project; and

(c)     in the case of Start Premium financial assistance – 56.25% of the     eligible expenditure for the project.

 

(2) The total loan amount for a project must not exceed 50% of the       eligible expenditure for the project.

 

PART 8 - OTHER REQUIREMENTS IN RELATION TO FINANCIAL ASSISTANCE AND LOANS

 

Minimum Start Program financial assistance

21. The amount of Start Premium financial assistance for a project must       be at least $60,000.

 

Maximum Start Graduate financial assistance

22. The amount of Start Graduate financial assistance for a project must      not exceed $100,000.


 

Maximum financial assistance for projects and linked projects

23.    (1) Financial assistance provided after 18 December 1996 for a         single project, or the total financial assistance provided after that date for a            number of linked projects (including the financial assistance provided under the       R&D Start Program as conducted under the revoked directions) must not exceed $15,000,000.

(2)     In determining the maximum amount of financial assistance for a    project, or a number of linked projects, the Board must disregard an amount of     financial assistance for the project that has been repaid to the Commonwealth.

 

Time limits on provision of financial assistance and loans

24.    (1) Financial assistance for a project (except Start Graduate          financial assistance) must not be provided for a period exceeding 3 years.

 

(2)   Start Graduate financial assistance for a project must not be provided    for a period exceeding 2 years.

 

(3)   However, the Board may extend the period for which financial     assistance (except Start Graduate financial assistance) may be provided for a          project to a maximum of 5 years if the Board reasonably considers that the        objectives of the project would be advanced significantly by the extension.

 

(4)   A loan must be fully paid by the Board within 3 years of the day on  which the agreement for the loan was made.

 

Interest charged on Start Premium financial assistance

25.    Interest on the balance of repayable Start Premium financial       assistance may be charged at a rate that is not greater than 1.5 times the bank        variable small business loan rate set out in Table F4 (Indicator Lending Rates)   published monthly in the Reserve Bank Bulletin or in a similar commercial      borrowing rate index.

 

Interest charged on loans

26.      (1) This clause applies subject to clause 27.

 

(2)   A loan must be repaid, and interest on the loan must be paid, to the Commonwealth within 6 years of the day on which the agreement for the loan            was made (the date of the agreement).

 

(3)  Interest on the balance of a loan:

(a)   must be charged at the rate of 40% of the Commonwealth Bank Loan   Reference Rate, or such other rate as the Board may decide; and

(b)   is fixed for the term of the loan; and

(c)      accrues daily from the end of 36 months after the date of the   

       agreement.

 

(4)   Unless repaid sooner, loan repayments must be made in 6 equal instalments in accordance with subclauses (5), (6) and (7).

 

(5)   The first repayment must be made no later than 42 months after the     date of the agreement.

 

(6)   The second repayment must be made no later than 6 months after the    day on which the first repayment was due to be made.

 

(7)   Succeeding repayments must be made no later than at 6 monthly   intervals after the day on which the second repayment was due to be made.

 

(8)   Interest payments must be made at the same time as the loan      repayments to which they relate.

 

Board may make other arrangements for loan repayments etc

27.    The Board may make provisions for the repayment of a loan, and payment of the interest for the loan, that are not the same as the provisions of          clause 26.

 

Board may waive certain repayments and payments

28.    The Board may waive repayment of the amount, or part of the       amount, of Start Premium financial assistance, or of interest in relation to that     financial assistance, for a project if the Board reasonably considers that it would be appropriate to do so, after taking into account the financial or other benefits gained, or likely to be gained, as a result of the project by the person, or persons, to whom the assistance was provided.

 

PART 9 – MONITORING AND EVALUATING PROJECTS

Monitoring and evaluating

29.    The Board must:

(a)     ensure that projects under the R&D Start Program are monitored to  obtain relevant information for evaluation; and

(b)     at the request of the Minister, facilitate and cooperate with       independent evaluation of the R&D Start Program.

 

PART 10 – REVOCATION OF EARLIER DIRECTIONS

 

Revocation of directions

30.    The following directions are revoked:

(a)     Directions in respect of additional functions of the Industry Research    and Development Board published in Gazette GN 28 on                          20 July 1994;

(b)     Directions in respect of concessional loans for the commercialisation      of technological innovation, published in Gazette GN 28 on                    20 July 1994;

(c)     R&D Start Program (additional function of the IR&D Board)       Direction No. 1 of 1996, published in Gazette S 496 on                           18 December 1996;

(d)     R&D Start Program (policies and practices of the IR&D Board)    Direction No. 1 of 1996, published in Gazette S 496 on                           18 December 1996;

(e)     R&D Start Program (Payments) Direction 1997, published in         Gazette GN 25 on 25 June 1997;

(f)       R&D Start Program (policies and practices of the IR&D Board)    Direction No. 1 of 1996 (Amendment No. 1 of 1997), published in  Gazette GN 25 on 25 June 1997;

(g)     R&D Start Program (additional function of the IR&D Board)       Direction No. 1 of 1996 (amendment No. 1 of 1997), published in Gazette S 335 on 22 August 1997.

 

PART 11 – TRANSITIONAL PROVISIONS

 

Transitional provisions – certain grants of financial assistance and loans

31.    The revoked directions, as the force immediately before the commencement of these directions, continue to apply in relation to financial     assistance or a loan provided under the revoked directions.

 

Transitional provision – certain applications for financial assistance and           loans

32.  (1) An application for financial assistance or a loan may be made      under the revoked directions until 30 September 1998 as if those directions, as in      force immediately before the commencement of these directions, continued to                  apply.

(2)   The Board must consider the application as if the revoked directions continued to apply.

 

(3)   The Board may grant the application as if the revoked directions continued to apply.

 

(4)   If the application is granted, the revoked directions are taken to     continue to apply in relation to the financial assistance of loan to which the      application relates.

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