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Textile, Clothing and Footwear Strategic Investment Program Amendment (Building Innovative Capability) Bill 2010

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2008-2009

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

TEXTILE, CLOTHING AND FOOTWEAR STRATEGIC INVESTMENT PROGRAM AMENDMENT (BUILDING INNOVATIVE CAPABILITY) BILL 2009

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of Senator the Hon Kim Carr, Minister for Innovation, Industry, Science and Research)

 

 



TEXTILE, CLOTHING AND FOOTWEAR STRATEGIC INVESTMENT PROGRAM AMENDMENT (BUILDING INNOVATIVE CAPABILITY) BILL 2009

 

OUTLINE

 

The Textile, Clothing and Footwear Strategic Investment Program Amendment (Building Innovative Capability) Bill 2009 amends the Textile, Clothing and Footwear Strategic Investment Program Scheme Act 1999 (“the Act”) to provide authority for the formulation of the new Clothing and Household Textile (Building Innovative Capability) scheme which will replace the TCF Post-2005 (SIP) Scheme for the 2010-2011 to 2014-2015 program years. 

 

The object of the new scheme is to foster the development of a sustainable and internationally competitive manufacturing industry and design industry for clothing and household textiles in Australia by providing incentives which will promote innovation.

 

The new scheme is part of the Government’s textile, clothing and footwear innovation package which demonstrates the Government’s commitment to securing the long-term viability of the textile, clothing and footwear industries in Australia.

 

Funding for the TCF Post-2005 (SIP) Scheme will no longer be available after the 2010-2011 financial year as funding for the new scheme takes over for the following five years.

 

The Bill inserts a new Part into the Act that largely replicates the Part under which the TCF Post-2005 (SIP) Scheme is formulated, with some minor drafting changes that do not change the effect of the law.  The new Part 3C, which empowers the making of the Clothing and Household Textile (BIC) scheme, comprises:

·          provisions about caps to put limits on the amount payable under BIC;

·          a standing appropriation;

·          the policy objectives towards which the scheme is directed to achieving;

·          the availability of only one type of grant (innovation grants);

·          search and seizure powers to monitor compliance; and

·          a list of additional matters that the new scheme can cover, including the transition from the TCF Post-2005 (SIP) Scheme to the new scheme.

 

Part 2 (which deals with the original TCF (SIP) Scheme) and Part 3 (which deals with supplementation of the defunct Regional Assistance Program) of the Act are repealed as they are spent provisions.

 

A number of consequential amendments to the Act are required as a result of these amendments (including amendments of the short and long titles of the Act). 

 

The opportunity is being taken to update the language of the Act in the light of the Legislative Instruments Act 2003 and to provide greater flexibility in the ways in which the Commonwealth may recover scheme debts (through debt set-off against advances in addition to set-off against grants).

 

Section 37X of the Act is amended to make it clear that particular types of decisions of the Secretary may be excluded from merits review.  These decisions relate to the application of caps, expenditure thresholds and the modulation factor for grants and advances on account of grants.  The new Part 3C replicates the amended section 37X for the purposes of the new scheme.

 

A reading down provision is inserted to ensure that the Act validly applies, and is taken to have always validly applied, to payments to entities for which there is a connection with relevant Commonwealth heads of legislative power.  Whilst the Act relies on the executive power, it takes additional power from the listed powers.  

 

A transitional provision relating to section 37X of the Act and a savings provision relating to the repeal of Parts 2 and 3 of the Act are also provided.

 

FINANCIAL IMPACT STATEMENT

 

Innovation grants will be funded from a standing appropriation.  The total of the grants paid under the Clothing and Household Textile (BIC) scheme for the five program years 2010-2011 to 2014-2015 must not exceed $112.5 million.



TEXTILE, CLOTHING AND FOOTWEAR STRATEGIC INVESTMENT PROGRAM AMENDMENT (BUILDING INNOVATIVE CAPABILITY) BILL 2009

 

NOTES ON CLAUSES

 

Clause 1:  Short title

 

1.         This clause provides for the Bill, once enacted, to be cited as the Textile, Clothing and Footwear Strategic Investment Program Amendment (Building Innovative Capability) Act 2009.

 

Clause 2:  Commencement

 

2.         This clause provides for the Bill to commence on the day that it receives the Royal Assent. 

 

Clause 3:  Schedule(s)

 

3.         Clause provides for the Act specified in Schedule 1 to be amended as set out in the applicable items to the Schedule and that any other item in the Schedule has effect according to its terms.

 

Schedule 1—Textile, Clothing and Footwear Strategic Investment Program Act 1999

 

Item 1:  Title

 

4.         This item has the effect of changing the long title to “An Act about the Textile, Clothing and Footwear Investment and Innovation Programs, and for other purposes”.

 

Item 2:   Section 1

 

5.         This item changes the short title to the Textile, Clothing and Footwear Investment and Innovations Programs Act 1999 to better reflect the programs provided under the Act.

 

Item 3:  Section 3

 

6.         This item substitutes a new simplified outline consequential on the amendments made by the Bill.

 

Items 4-9:  Section 4

 

7.         These items provide for definitions of authorised Commonwealth contractor , business day , Clothing and Household Textile (BIC) scheme and clothing/finished textile expenditure and repeal the redundant definitions of bounty and loan .

 



Item 10:  Section 4 (definition of scheme debt)

 

8.         This item repeals the definition of scheme debt and substitutes a new definition to include the new Clothing and Household Textile (BIC) scheme and to omit reference to loans as loans are only capable of being given under Part 2 which is repealed by item 13.

 

Item 11:  Section 4

 

9.         This item inserts the definition of TCF Scheme in section 4.  Under the definition a TCF scheme means the TCF Post-2005 (SIP) scheme or the Clothing and Household Textile (BIC) scheme.

 

Item 12:  Section 4 (definition of TCF (SIP) scheme )

 

10.       This item substitutes a new definition of TCF (SIP) Scheme consequential on the repeal of Part 2 of the Act (see item 13).

 

Item 13:  Parts 2 and 3

 

11.       This item repeals the parts of the Act that provide for the TCF (SIP) Scheme (Part 2) and supplementation of the Regional Assistance Program (Part 3).  Grants are no longer payable under the TCF (SIP) Scheme and the Regional Assistance Program has ceased.

 

Items 14 and 15:  Subsection 37A(2)

 

12.       These items amend the simplified outline of the TCF Post-2005 (SIP) scheme consequential on the amendments effected by items 18, 22, 24 and 26.

 

Item 16:  Section 37B (definition of clothing/finished textile expenditure )

 

13.       This item repeals the definition of clothing/finished textile expenditure as the definition is now dealt with in Section 4 (see item 8).

 

Item 17:  Subsection 37D(1)

 

14.       This item effects a technical amendment consequential on the amendment effected by item 19.

 

Item 18:  Subsection 37D(1)

 

15.       The item reduces the total cap on the amount of grants available under the TCF Post-2005 (SIP) scheme from $575,000,000 to $487,500,000.

 

Item 19:  Subsections 37D(2) and (3)

 

16.       This item repeals subsections 37D(2) and (3) consequential on the amendment effected by items 18, 22, 24 and 26.

 



Items 20-27:  Paragraphs 37G(2)(b) and (c), Subsection 37G(2) (note), Paragraphs 37G(4)(b) and (c), Subsection 37G(4) (note), Paragraph 37G(5)(b), Subsection 37G(5) (note), Paragraphs 37H(1)(b) and (c), and Subsection 37H(1) (note)

 

17.       These items limit the income years in which grants are to be made under the TCF Post-2005 (SIP) scheme to the 2005-2006 to 2009-2010 income years and repeal the notes referring to clothing/finished textile expenditure as this is now defined in section 4 (see item 8).

 

Item 28:  Subsection 37P(8)

 

18.       This item repeals the subsection consequential on the amendments effected by items 4 and 6.

 

Item 29:  After subsection 37X(2)

 

19.       This item inserts new subsection 37X(2A) to provide that the TCF Post-2005 (SIP) scheme may contain provisions that specify decisions in relation to which the provisions mentioned in subsection 37ZZF(2) do not apply. 

 

20.       These decisions are those that arise from the application, in relation to the entitlement to be paid a grant or to the amount of a grant, and to the eligibility for an advance of a grant or to the amount of an advance, of:

·          the prescribed caps on the maximum payment rates for grants and advances on account of grants;

·          the prescribed sales-based caps for grants (which are based on a percentage of revenue or investment amounts);

·          the prescribed expenditure thresholds (which must be exceeded before grants and advances on account of grants can be paid); and

·          the modulation factor (which ensures that the total of grants (including advances on account of grants) does not exceed the expenditure limit on the scheme).

 

21.       Subjecting decisions of the Secretary that arise from the application of these caps, expenditure thresholds or modulation factor to merits review risks frustrating the operation of the scheme.  For example, the amounts of grants payable in a financial year are determined late in the year once all claims for grants have been made.  If the total of the claims exceeds the annual limit on payments, each entity’s grant amount is adjusted by the modulation factor to ensure that the total payment limit is not exceeded.  The modulation factor is worked out in accordance with a prescribed formula and must be applied to each entity’s grant eligibility amount.  Review of the Secretary’s decision on one entity’s modulated grant amount arising out of the application of the modulation factor would affect the payment of grants to all other entities (which is required in early June) as all payments would have to be delayed until the review process is completed in order to ration the available funds equitably.  For equity reasons, the same modulation factor in a particular program year is applied to each entity’s grant eligibility amount.  

 

22.       The TCF Post-2005 (SIP) Scheme is a beneficial, demand-driven scheme in contrast with, for example, a licensing scheme where the livelihood of a person depends on whether or not a licence is obtained.  Details of the Scheme are prescribed in the legislative instrument which provides an element of flexibility to adjust the operating parameters to respond to new circumstances.  This includes prescribing parameters such as the caps, expenditure thresholds and modulation factor and adjusting them in response to changes in demand.  It is therefore appropriate that the decisions that are exempt from merits review be prescribed in the legislative instrument.  Participants in the Scheme are used to looking only at the legislative instrument and are cognisant of the lack of review for certain decisions on grants and advances. 

 

Item 30:  Section 37ZG

 

23.       This item amends section 37ZG, which provides for an instrument made under section 37C to be a disallowable instrument, consequential on the Legislative Instrument Act 2003.

 

Item 31:  Section 37ZI

 

24.       This item amends the requirement to publish the name of each entity paid a grant and the amount of grants paid, consequential on the amendments effected by items 22, 24 and 26.

 

Item 32:  After Part 3B

 

25.       This item inserts new Part 3C under which the Clothing and Household Textile (BIC) scheme can be made.  Part 3C largely replicates Part 3A (under which the TCF Post-2005 (SIP) scheme is made) with some minor drafting changes to the structure and language that are not intended to change the effect of the law. 

 

Part 3C—Clothing and Household Textile (BIC) scheme

 

Division 1—Preliminary

 

Section 37ZK  Object of Part and simplified outline

 

New section 37ZK sets out the object of Part 3C and provides a simplified outline. 

 

Subsection 37ZK(1) provides that the object of the Part is to foster the development of a sustainable and internationally competitive manufacturing industry and design industry for clothing and household textile in Australia by providing incentives which will promote innovation. 

 

Subsection 37ZK(2) provides a simplified outline of the Part which provides that:

·              the Minister must formulate a scheme (the Clothing and Household Textile (BIC) scheme) for the making of grants in connection with the design and manufacture, in Australia, of eligible clothing and household textile products;

·              the total of the grants paid under the Clothing and Household Textile (BIC) scheme must not exceed $112.5 million;

·              the Clothing and Household Textile (BIC) scheme will provide for innovation grants in respect of clothing/finished textile expenditure;

·              the Clothing and Household Textile (BIC) scheme will provide for the making of those grants in respect of expenditure incurred in the 2010-2011 to 2014-2015 income years;

·              grants under the Clothing and Household Textile (BIC) scheme are to be made in arrears; and

·              entities wishing to obtain grants under the Clothing and Household Textile (BIC) scheme may be required to register under the scheme and to submit strategic business plans and accounts.

 

Section 37ZL   Definitions

 

New section 37ZL provides definitions in relation to Part 3C:

·              authorised officer means a person appointed under subsection 37ZY(1) as an authorised officer of the Department; and

·              innovation grant has the meaning given by section 37ZQ.

 

Division 2 Formulation of Clothing and Household Textile (BIC) scheme

 

Section 37ZM  Clothing and Household Textile (BIC) scheme

 

New section 37ZM empowers the Minister to formulate, by legislative instrument, the Clothing and Household Textile (BIC) scheme for the making of grants in connection with, or incidental to, the following:

·              the manufacture in Australia of products that, under the scheme, are taken to be eligible clothing and household textile products;

·              the design in Australia, for manufacture in Australia, of products:

-         that, under the scheme, are taken to be eligible clothing and household textile products; and

-         some or all of which are intended to be sold in Australia;

·              the design in Australia, for manufacture outside Australia, of products to which both of the following apply, if the importation into Australia of some or all of the products is or will be covered by a designated industry program:

-         products that, under the scheme, are taken to be eligible clothing and household textile products;

-         products, some or all of which are intended to be sold in Australia.

 

The note to section 37ZM makes it clear that the title Clothing and Household Textile (BIC) scheme is short for Clothing and Household Textile (Building Innovative Capability) scheme (see item 7).

 

Section 37ZN  Caps

 

New section 37ZN provides that the scheme must make provision for ensuring that the total of innovation grants (including advances on account of innovation grants) paid under the scheme does not exceed $112,500,000. 

 

The note to section 37ZN draws attention to section 37ZZE, which provides for funding to be provided to entities by way of advances on account of innovation grants.

 

Section 37ZO  Appropriation

 

New section 37ZO provides that innovation grants (including advances on account of innovation grants) are to be paid out of the Consolidated Revenue Fund, which is appropriated accordingly.

 

A standing appropriation is warranted for the Clothing and Household Textile (BIC) scheme in order to provide participating entities with a degree of certainty that innovation grants will be funded in future years of the scheme.  This is important because participating entities incur clothing/finished textile expenditure in one year and then wait until the following year before being able to claim innovation grants to which they are entitled to be paid.

 

Parliamentary control over expenditure for the purposes of the Clothing and Household Textile (BIC) scheme is effected by new section 37ZN and new paragraph 37ZR(2)(b), which operate to restrict the standing appropriation in both amount and duration.

 

Division 3—General policy objectives

 

Section 37ZP   General policy objectives

 

New section 37ZP provides that the general policy objectives of the Clothing and Household Textile (BIC) scheme must be directed towards ensuring the achievement of the policy objectives set out in Division 3.

 

Section 37ZQ  Type of grants

 

New section 37ZQ describes the types of grants available under the Clothing and Household Textile (BIC) scheme, namely: that there are to be innovation grants in respect of clothing/finished textile expenditure.  The note refers to section 4 where clothing/finished textile expenditure is defined (see item 8) .

 

Section 37ZR  Provisions relating to innovation grants in respect of clothing/finished textile expenditure

 

New section 37ZR sets out the policy objective that prescribes the nature of the eligible expenditure and the income years in which it can be incurred for the purpose of the Clothing and Household Textile (BIC) scheme.  Specifically, it provides for innovation grants only in respect of expenditure that, under the scheme, is taken to be clothing/finished textile expenditure, and that such expenditure is incurred by an entity during any of the 2010-2011 to 2014-2015 income years of the entity. 

 

The note to section 37ZR refers to section 4 where clothing/finished textile expenditure is defined (see item 8).

 

Section 37ZS   Grants to be made in arrears

 

New section 37ZS sets out the policy objective to the effect that innovation grants must be paid in arrears.  It does this by providing that an innovation grant must not be made to an entity in respect of expenditure incurred by the entity during an income year of the entity unless the entity makes a claim for the innovation grant after the end of the income year.

 

Section 37ZT  Grants cap based on eligible revenue and eligible start-up investment amount

 

New section 37ZT sets out the grant caps that place a ceiling on grant amounts paid in relation to an income year based on an entity’s eligible revenue for the relevant income year or, in the case of an entity start-up, the eligible start-up investment amount of the entity.  

 

Subsections 37ZT(1) and (2) provide that it is a policy objective for the Clothing and Household Textile (BIC) scheme that there be a cap on the total of the innovation grants that become payable to an entity during an income year (the claim year ) of the entity in respect of expenditure incurred by the entity otherwise than during a period that, under the scheme, is taken to be an eligible start-up period of the entity.  The total of the innovation grants must not exceed five per cent of the amount that, under the scheme, is taken to be the total eligible revenue derived by the entity, during the income year of the entity before the claim year, from sales of products that, under the scheme are taken to be eligible clothing and household textile products.

 

Subsections 37ZT(3) and (4) provide that it is also a policy objective for the Clothing and Household Textile (BIC) scheme that there be a cap on the total of the innovation grants that become payable to an entity during an income year (the claim year ) of the entity and any income years of the entity that are earlier than the claim year in respect of expenditure incurred by the entity during a period that, under the scheme, is taken to be an eligible start-up period of the entity.  The total of the innovation grants must not exceed 15 per cent of the amount that, under the scheme, is taken to be the total of the eligible start-up investment amounts of the entity for each of the income years of the entity that is earlier than the claim year.

 

Subsection 37ZT(5) provides that, for the purposes of section 37ZT, an innovation grant becomes payable to an entity when a determination is made under the scheme that the entity is entitled to be paid the innovation grant.

 

Division 4 Registration for the purposes of the scheme

 

Section 37ZU  Registration for the purposes of the scheme  

 

New section 37ZU empowers the Minister to impose requirements in the Clothing and Household Textile (BIC) scheme. 

 

Subsection 37ZU(2) sets out requirements that may be included but makes it clear that the requirements are not limited to these.  The requirements to be included may include that entities must register to participate in the scheme, and requirements relating to the statements, information and fees that must accompany applications for registration.

 

Subsection 37ZU(3) provides that the scheme may provide for one or more of the following consequences for an entity that does not comply with a particular requirement relating to registration: ineligibility for an innovation grant, restriction or reduction of an innovation grant, and deferral of payment of an innovation grant.

 

Division 5 Strategic business plans and accounts

 

Section 37ZV  Strategic business plans

 

New section 37ZV provides, in effect, that the Clothing and Household Textile (BIC) scheme must provide that an entity is not eligible for an innovation grant if it fails to comply with requirements (if any) imposed by the scheme in relation to the content and submission of strategic business plans and variations of strategic business plans.

 

Section 37ZW  Accounts  

 

New section 37ZW provides that the Clothing and Household Textile (BIC) scheme may provide that an entity is ineligible for an innovation grant if it does not comply with requirements relating to the submission of audited accounts and audited financial statements or the submission of unaudited accounts and unaudited financial statements.

 

Division 6 Conditional grants

 

Section 37ZX  Conditional grants

 

New section 37ZX provides that payment of innovation grants is subject to conditions that relate to the administration of the scheme, including compliance with notices, provision of false and misleading information and entry to premises.

 

Subsection 37ZX(1) provides that t he Clothing and Household Textile (BIC) scheme may make provision for and in relation to the payment of innovation grants subject to conditions (whether conditions precedent or conditions subsequent). 

 

Subsections 37ZX(2) and (3) impose conditions that relate to compliance with any notice given to the entity under section 38, provision of false or misleading statement in relation to a claim for the grant, false or misleading information or evidence given, or a false or misleading document produced in relation to compliance with section 38.

 

Subsection 37ZX(4) provides a condition that an innovation grant paid to an entity is subject to the condition that in relation to the premises covered by subsection 37ZX(5), the entity;

·              allow access to premises by authorised officers, and any authorised employees of an authorised Commonwealth contractor accompanying those officers, at any reasonable time of a business day for the purpose of monitoring compliance with other conditions to which the innovation grant is subject;

·              allow authorised officers during that access to inspect and search the premises and any thing on the premises for the purpose of that monitoring;

·              allow authorised officers to operate electronic equipment at the premises to see whether documents in electronic form relevant to that monitoring are accessible by doing so;

·              allow authorised officers to make copies of any documents in hard copy form found on the premises that are relevant to that monitoring; and

·              provide authorised officers with all reasonable facilities and assistance in connection with that monitoring.

 

Subsection 37ZX(5) provides that the subsection covers business premises specified in the notice that is given to the entity notifying the entity that the entity is entitled to be paid the innovation grant or business premises specified in a later notice given to the entity by the Secretary under subsection 37ZX(6).

 

Subsection 37ZX(6) provides that the Secretary may, by written notice given to an entity, specify business premises for the purposes of paragraph 37ZX(5)(b).

 

Section 37ZY  Appointment of authorised officers and authorised employees of Commonwealth contractors

 

New section 37ZY empowers the Secretary to appoint authorised officers and authorised employees of Commonwealth contractors.

 

Subsection 37ZY(1) provides that the Secretary may, by writing, appoint an APS employee in the Department to be an authorised officer of the Department for the purposes of this Part.  The Secretary may do so only if the Secretary is satisfied that the employee has suitable qualifications for such an appointment. 

 

Subsection 37ZY(2) provides that the Secretary may, by writing, appoint an employee of an authorised Commonwealth contractor to be an authorised employee of the contractor for the purposes of this Part.  The Secretary may do so only if the Secretary is satisfied that the employee has suitable qualifications for such an appointment.

 

Division 7 Monitoring of compliance

 

Section 37ZZ  Operation of electronic equipment by authorised officers

 

New section 37ZZ provides for the situation where an authorised officer has gained access to premises and needs to access information by operating electronic equipment.

 

Subsection 37ZZ(1) sets out the conditions that an authorised officer having obtained access to premises for the purpose of monitoring compliance with the conditions of an innovation grant finds that documents in electronic form, relevant to that monitoring, are accessible by operating electronic equipment at the premises.

 

Subsection 37ZZ(2) provides that the authorised officer may do only one of two things, as set out in subsection 37ZZ(3) or (4), namely: operate the equipment or other facilities at the premises to put the documents in hard copy form or transfer the documents to a storage device (including a disk or tape) if the storage device is brought to the premises for the exercise of the power, or the storage device is at the premises, and its use has been agreed to in writing by the occupier of the premises.

 

Subsection 37ZZ(5) provides that the authorised officer may then remove the documents in hard copy form or remove the storage device.

 

Section 37ZZA  Operation of electronic equipment by experts

 

New section 37ZZA provides for the situation where an authorised officer has gained access to premises and needs to access information by operating electronic equipment and requires expert assistance to access the information.

 

Subsection 37ZZA(1) sets out the conditions where an authorised officer has obtained access to premises for the purpose of monitoring compliance with the conditions of an innovation grant and the officer believes on reasonable grounds that:

·              documents in electronic form, relevant to that monitoring, may be accessible by operating electronic equipment at the premises; and

·              expert assistance is required to operate the equipment; and

·              an authorised employee (the expert) of an authorised Commonwealth contractor accompanying the officer in relation to that monitoring has the expertise to operate the equipment.

 

Then, under subsection 37ZZA(2), the expert may operate the equipment to determine whether such documents are accessible. If they are, the expert may do only one of two things, as set out in subsection 37ZZA(3) or (4), namely: operate the equipment or other facilities at the premises to put the documents in hard copy form or transfer the documents to a storage device (including a disk or tape) if the storage device is brought to the premises for the exercise of the power, or the storage device is at the premises, and its use has been agreed to in writing by the occupier of the premises.

 

Subsection 37ZZA(5) provides that the authorised officer may then remove the documents in hard copy form or remove the storage device.

 

Subsection 37ZZA(6) provides that for the purposes of the application of the definition of Commonwealth officer in subsection 3(1) of the Crimes Act 1914 to section 70 of that Act, an authorised employee of an authorised Commonwealth contractor who exercises a power referred to in this section is taken to be a person who performs services for the Commonwealth.

 

Section 37ZZB  Pre-condition to operating electronic equipment

 

New Section 37ZZB provides that a person may operate electronic equipment at premises as mentioned in Division 7 only if he or she believes on reasonable grounds that the operation of the equipment can be carried out without damage to the equipment.

 

Section 37ZZC  Compensation for damage to electronic equipment

 

New Section 37ZZC provides for compensation to be paid to an entity by the Commonwealth if electronic equipment is operated without sufficient care by an authorised officer or authorised employee and is damaged, or data or schemes related to that equipment are damaged.

 

Subsection 37ZZC(1) applies if, as a result of equipment being operated as mentioned in section 37ZX, 37ZZ or 37ZZA, damage is caused to the equipment, the data recorded on the equipment is damaged, or schemes associated with the use of the equipment, or with the use of the data, are damaged or corrupted and the damage or corruption occurs because insufficient care was exercised in selecting the person who was to operate the equipment, or insufficient care was exercised by the person operating the equipment.

 

Subsection 37ZZC(2) provides that the Commonwealth must pay the owner of the equipment, or the user of the data or schemes, such reasonable compensation for the damage or corruption as the Commonwealth and the owner or user agree on.

 

Subsection 37ZZC(3) provides that, if the owner or user and the Commonwealth fail to agree, the owner or user may institute proceedings in the Federal Court of Australia for such reasonable amount of compensation as the Court determines.

 

Subsection 37ZZC(4) provides that, in determining the amount of compensation payable, regard is to be had to whether the occupier of the premises, or the occupier’s employees or agents, if they were available at the time, provided any appropriate warning or guidance on the operation of the equipment.

 

Subsection 37ZZC(5) provides for compensation to be payable out of money appropriated by the Parliament.

 

Subsection 37ZZC(6) provides that, for the purposes of subsection 37ZZC(1), damage, in relation to data, includes damage by erasure of data or addition of other data.

 



Section 37ZZD  Identity cards

 

New section 37ZZD provides, under subsection 37ZZD(1), that the Secretary must issue an identity card to an authorised officer.

 

Subsection 37ZZD(2) provides that the identity card must be in the form prescribed by the regulations and contain a recent photograph of the authorised officer.

 

Subsection 37ZZD(3) provides that a person commits an offence if the person has been issued with an identity card, the person ceases to be an authorised officer, and the person does not return the identity card to the Secretary as soon as practicable.  The penalty provision is 1 penalty unit.

 

Subsection 37ZZD(4) provides that an offence against subsection 37ZZD(3) is an offence of strict liability.  Strict liability is appropriate because subsection 37ZZD(3) involves an offence that would be difficult to prosecute as a fault provision, particularly involving intent. 

 

The offence of subsection 37ZDD(3) would depend on the action or lack of action of a person who was formerly an authorised officer and who would be actually liable for the offence.  Making the offence one of strict liability affords a greater degree of protection to entities subject to the actions of an authorised officer by only having to rely on the transgressing action to establish a prosecution.  This protection also gives greater confidence that the exercise of the power would be publicly acceptable. 

 

As a former authorised officer (see subsection 37ZDD(1)) the person concerned would be expected to know the requirements and obligations provided for by the Clothing and Household Textile (BIC) scheme, including those of section 37ZZD.  Further, the strict liability offence is the same as that of subsection 37U(3) for the TCF Post-2005(SIP) Scheme which has been in the public domain since its introduction by the Textile, Clothing and Footwear Strategic Investment Program Amendment (Post-2005 Scheme) Act 2004 .  The penalty of 1 penalty unit is a minimal amount.

 

Subsection 37ZZD(5) provides that subsection 37ZZD(3) does not apply if the identity card was lost or destroyed, although it is noted that a defendant bears an evidential burden in relation to the matter in this subsection (see subsection 13.3(3) of the Criminal Code ).

 

Subsection 37ZZD(6) provides that an authorised officer must carry his or her identity card at all times when exercising powers as an authorised officer.

 

Subsection 37ZZD (7) provides that an authorised officer is not entitled to exercise any powers referred to in Division 7 in relation to premises if the occupier of the premises has requested the officer to produce the officer’s identity card for inspection by the occupier, and the officer fails to comply with the request.

 

Division 8 Other matters for which the scheme may provide

 

Section 37ZZE  Advances on account of grants

 

Subsection (1) of new section 37ZZE provides that the Clothing and Household Textile (BIC) scheme may provide for advances on account of innovation grants that may become payable.

 

Subsection 37ZZE (2) provides that, if an entity receives an amount by way of an advance on account of a grant that may become payable to the entity; and that amount exceeds the amount of the grant, then the entity is liable to pay to the Commonwealth the amount of the excess.

 

Subsection 37ZZE (3) provides that an entity is liable to pay to the Commonwealth the whole amount of an advance mentioned in paragraph 37ZZE(2)(a) if the entity does not receive the innovation grant on account of which the advance was given.  This provision is included in the interest of certainty.

 

Section 37ZZF  Reconsideration and review of decisions

 

New section 37ZZF requires that the Clothing and Household Textile (BIC) scheme must have provisions for review of decisions.

 

Subsection 37ZZF(1) provides that the Clothing and Household Textile (BIC) scheme must contain provisions for and in relation to the review of decisions of the Secretary under the scheme that affect an entity.

 

Subsection 37ZZF(2) provides that the scheme must contain provisions under which:

·              an entity that is affected by an initial decision of the Secretary under the scheme may, if dissatisfied with the decision, request the Secretary to reconsider the decision; and

·              the Secretary is required to reconsider the initial decision and to confirm, revoke or vary the decision; and

·              an application may be made to the Administrative Appeals Tribunal for review of an initial decision that has been confirmed or varied.

 

Subsection 37ZZF(3) provides that the scheme may contain provisions that specify decisions in relation to which the provisions mentioned in subsection 37ZZF(2) do not apply.  The exempted decisions will be equivalent to those exempted from merits review under the TCF Post-2005 (SIP) Scheme (see item 29).

 

Subsection 37ZZF(4) provides that, if the scheme provides that the Secretary is taken to have confirmed an initial decision after a specified period, the scheme must specify the prescribed time for making an application for review of the initial decision as so confirmed for the purposes of section 29 of the Administrative Appeals Tribunal Act 1975 .

 

Section 37ZZG  Guarantees relating to payment of scheme debts

 

New section 37ZZG provides that the Clothing and Household Textile (BIC) scheme may provide that an entity ascertained in accordance with the scheme is not eligible for an innovation grant, or is not entitled to request an advance on account of an innovation grant, unless another entity ascertained in accordance with the scheme gives a guarantee to the Commonwealth that any scheme debts owed by the eligible entity will be paid.

 

Section 37ZZH  Non-arm’s length transactions

 

New section 37ZZH provides that t he Clothing and Household Textile (BIC) scheme may provide that, if an entity incurs expenditure under a transaction that is not at arm’s length, the amount of that expenditure is taken to be the amount that would reasonably have been expected to be incurred if the parties had been dealing with each other at arm’s length.

 

Section 37ZZI  Grants and advances to be inalienable

 

New section 37ZZI provides that the Clothing and Household Textile (BIC) scheme may provide for innovation grants (including advances on account of innovation grants) to be absolutely inalienable (whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise) except with the approval of the Secretary.

 

Section 37ZZJ  Other matters

 

New section 37ZZJ provides for other matters.  These matters concern administrative requirements of the Clothing and Household Textile (BIC) scheme that relate to the making and assessment of claims for innovation grants, apportionment of expenditure, transfer of business, timing of grant payments and transitional arrangements arising out of the transition from the TCF Post-2005 (SIP) Scheme.

 

The Clothing and Household Textile (BIC) scheme, rather than the Act, is considered to be the most appropriate vehicle for setting out transitional arrangements as the scheme is more highly visible to participants because it details how the scheme works.  Allowing for these matters to be provided for in the legislative instrument also provides flexibility to modify the scheme should new circumstances arise. 

 

Under subsection 37ZZJ(1), the Clothing and Household Textile (BIC) scheme may provide for:

·              the making of claims for innovation grants;

·              the times within which claims for innovation grants are to be made;

·              requiring that a claim for an innovation grant made by an entity ascertained in accordance with the scheme be accompanied by an audited statement relating to specified activities;

·              requiring that a claim for an innovation grant made by an entity ascertained in accordance with the scheme be accompanied by an unaudited statement relating to specified activities;

·              requiring that a claim for an innovation grant be accompanied by such a fee as is ascertained in accordance with the scheme;

·              the assessment of claims for innovation grants;

·              the apportionment of expenditure;

·              the adjustment of eligibility for innovation grants in relation to the transfer of the whole or a part of a business, including (but not limited to):

-         treating the transferee as if the transferee had incurred particular expenditure, had derived particular revenue and had done particular acts or things; and

-         treating the transferor as if the transferor had not incurred particular expenditure, had not derived particular revenue and had not done particular acts or things;

·              the times when innovation grants become payable; and

·              matters of a transitional nature (including any saving or application provisions) arising out of the transition from the TCF Post-2005 (SIP) scheme to the Clothing and Household Textile (BIC) scheme.

 

It is appropriate for the Clothing and Household Textile (BIC) scheme to able to prescribe matters of a transitional nature as the legislative instrument sets out details of the scheme and, as a consequence, has greater visibility to participants than does the Act.  It also provides flexibility to change the details of the scheme should new circumstances arise.

 

Subsection 37ZZJ(2) provides that subsection 37ZZJ(1) does not, by implication, limit section 37ZM (power to make Clothing and Household Textile (BIC) scheme).

 

Subsection 37ZZJ(3) provides that the amount of a fee under the Clothing and Household Textile (BIC) scheme must not be such as to amount to taxation.

 

Section 37ZZK  Scheme may confer administrative powers on the Secretary

 

New section 37ZZK provides that the Clothing and Household Textile (BIC) scheme may confer administrative powers on the Secretary.  This is to facilitate the administration of the scheme.

 

Section 37ZZL  Ancillary or incidental provisions

 

New section 37ZZL provides that the Clothing and Household Textile (BIC) scheme may contain such ancillary or incidental provisions as the Minister considers appropriate.

 



Section 37ZZM  Variation of scheme

 

Subsection (1) of new section 37ZZM provides that the Clothing and Household Textile (BIC) scheme may be varied, but not revoked, in accordance with subsection 33(3) of the Acts Interpretation Act 1901 .

 

Subsection 37ZZM(2) provides that subsection 37ZZM(1) does not limit the application of subsection 33(3) of the Acts Interpretation Act 1901 to other instruments under the Textile, Clothing and Footwear Investment and Innovation Programs Act.

 

Division 9 Publication of grant totals

 

Section 37ZZN  Publication of grant totals

 

New section 37ZZN provides that, as soon as practicable after the end of each of the 2011-2012 to 2015-2016 financial years, the Minister must publish the name of each entity paid an innovation grant (including an advance on account of an innovation grant) during the financial year and the total of innovation grants (including advances on account of innovation grants) paid to the entity during the financial year.

 

Item 33:  Paragraphs 38(1)(a) and (b)

 

26.       This item amends the information gathering provisions of the Act consequential on the amendments effected by items 11 and 13.

 

Item 34:  Paragraph 43(a)

 

27.       This item amends the recovery of conditional grants provisions of the Act consequential on the amendments effected by items 11 and 13.

 

Item 35:  Section 46

 

28.       This item amends the debt recovery by set-off provisions to the effect that the scheme debts can be set-off against advances on account of grants as well as grants. 

 

Items 36 and 37:  Subparagraph 49(c)(i) and Subsection 52(1)

 

29.       These items amend the false or misleading information offence provisions, and the delegation powers of the Act consequential on the amendments effected by items 11 and 13.

 

Item 38:  Subsection 52(1A)

 

30.       This item omits reference to the TCF (SIP) Scheme and includes reference to the Clothing and Household Textile (BIC) scheme for the purposes of the powers of delegation, consequential on the amendments effected by items 13 and 32.

 



Item 39:  Subsection 52(3)

 

31.       This item repeals subsection 52(3) consequential on the amendments effected by item 13.

 

Item 40:  After subsection 52(3A)

 

32.       This item inserts new subsection 52(3B) to provide for delegation powers of the Secretary under the Clothing and Household Textile (BIC) scheme in the same way as subsection 52(3A) provides for delegations to one or more senior employees of an authorised Commonwealth contractor under the TCF Post-2005 (SIP) scheme .

 

Item 41:  Subsection 52(4)

 

33.       This item is a technical amendment, consequential on the amendment effected by item 40.

 

Item 42:  Section 53

 

34.       This item amends the availability of grants provisions of the Act consequential on the amendments effected by items 11 and 13.

 

Item 43:  Section 54

 

35.       This item repeals section 54, which deals with uniformity of bounties, consequential on the amendments made by item 13.

 

Item 44:  Subsection 55(3)

 

36.       This item amends the international obligations provisions of the Act consequential on the amendments effected by items 11 and 13.

 

Item 45:  After section 55

 

37.       This item inserts new section 55A which ensures that the Act validly applies, and is taken to have always validly applied, to payments to entities for which there is a connection with relevant Commonwealth heads of legislative power, viz. a corporation to which section 51(xx) of the Constitution applies, international and interstate trade (section 51(i) of the Constitution), and entities carrying on business in a Territory (section 122 of the Constitution).

 

Item 46:  Transitional provision—section 37X

 

38.       This item inserts a transitional provision that deems an existing provision of the TCF Post-2005 (SIP) Scheme to be part of the Scheme for the purposes of the new power inserted into section 37X by item 29 and ensures that the validity of the Scheme is unaffected by the amendment made by item 29.

 



Item 47:  Savings provision

 

39.       This item preserves the recovery of scheme debt provisions and offence provisions that relate to the TCF (SIP) scheme despite the repeal of Part 2 (TCF (SIP) scheme) and Part 3 (Supplementation of the Regional Assistance Program) effected by item 13.