Section 3
Corporate Governance
Innovation Australia
Innovation Australia is an independent statutory body established to assist with the administration of the Australian Government's industry innovation, clean technology and venture capital programs. Through these programs Innovation Australia seeks to increase and support the level of investment and innovation activity in Australian industry and improve the commercial success.
Established on 27 September 2007, Innovation Australia is an amalgamation of the former Industry Research and Development (IR&D) Board originally established in 1986 and the Venture Capital Registration (VCR) Board (formerly known as the Pooled Development Funds Registration Board). On its establishment, Innovation Australia assumed the roles, responsibilities and powers of the two former Boards and, as such, it carries responsibility for past decisions taken by the former Boards.
Innovation Australia reports to the Minister for Industry and Innovation.
Legislation
Innovation Australia operates under the auspices of the Industry Research and Development Act 1986 (IR&D Act). The aim of the IR&D Act is to promote the development, and improve the efficiency and international competitiveness, of Australian industry by encouraging research and development, innovation and venture capital activities.
The IR&D Act was amended in September 2007 by the Tax Laws Amendment (2007 Measures No.5) Act 2007, which established Innovation Australia and thereby consolidated the administration and oversight of the government's innovation and venture capital programs as prescribed in the IR&D Act, the Pooled Development Funds Act 1992 (PDF Act) and the Venture Capital Act 2002 (VCAct). The Board also advises government on income tax law (Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997) as they operate in relation to those Acts.
Financial Responsibilities of Innovation Australia under the IR&D Act
Amendments were made to the IR&D Act with effect from 11September2004 to remove ambiguity between the Financial Management and Accountability Act 1997 and the IR&D Act. The amendments removed prospectively the powers of the Board to commit, approve or recommend expenditure of Australian Government funds and further safeguarded members from any personal liability stemming from Board membership.
The Board therefore retains financial responsibilities for all grant, loan and licence agreements which were in place at 10 September 2004. This approach, while avoiding the need to amend existing program documentation (including agreements), has nonetheless complicated the Board’s working environment requiring two operational models until all existing agreements are concluded. In the case of the now closed R&DStart program, contractual obligations may run until 2014-15.
Functions
Innovation Australia’s functions are set out in the IR&D Act and associated Ministerial Directions. The Board's functions include:
· administering and monitoring aspects of the R&D Tax Concession program and the R&D Tax Incentive program;
· administering the Commercialisation Australia program, the Clean Technology Investment Program, the Clean Technology Food and Foundries Investment Program, the Innovation Investment Fund, the Pre-Seed Fund, the Commercial Ready and Commercial Ready Plus programs, the Climate Ready program, the Renewable Energy Development Initiative, the Re-Tooling for Climate Change program and the Green Car Innovation Fund and the R&D Start program;
· registering, monitoring and revoking the registration of Pooled Development Funds, Venture Capital Entities, Venture Capital Limited Partnerships, Australian Venture Capital Funds of Funds, Eligible Venture Capital Investors, Early Stage Venture Capital Limited Partnerships, the Innovation Investment Follow-on Fund and making determinations in relation to these entities; and
· advising the Minister about the operation of the IR&D Act, the PDF Act and the VC Act, and the Commonwealth's income tax laws as they operate in relation to those Acts.
Additional Functions
Ministerial Directions last issued by the then Minister for Innovation Australia on 4November 2009 directs Innovation Australia to carry out the following activities:
· study industry research and development, innovation and venture capital, and provide advice to the Minister;
· promote and market industry innovation activities, programs, and benefits by acting as ambassadors for industry innovation;
· collect and analyse data on industry research and development, innovation and venture capital programs for which the Board has an administrative responsibility, including the extent to which programs are meeting their objectives, and advise the Minister of outcomes;
· monitor the administration, delivery and performance of industry research and development, innovation and venture capital programs for which the Board has an administrative responsibility, and advise the Minister of outcomes;
· maintain the effectiveness and integrity of the industry research and development, innovation and venture capital programs for which it has responsibility, including undertaking legal action if required;
· cooperate with any reasonable independent evaluation of the industry research and development, innovation and venture capital programs for which the Board has administrative responsibility; and
· consider options to support the commercialisation of Australian ideas and technology, address systematic and market failures along the pathway to commercialisation, and provide advice to the Minister.
Innovation Australia and its committees engage in activities which support its decision-making and advisory functions. The Board also contributes its views and practical advice in relation to the programs for which it is responsible to the Minister through regular correspondence and meetings.
Powers
Innovation Australia derives various powers from the provisions of the IR&D Act. Section 8 of the Act gives the Board power to take all necessary and convenient action to ensure the proper performance of its functions.
Membership
Members of Innovation Australia are appointed in writing by the Governor-General, through Executive Council. The IR&D Act provides for a maximum of 15 Board members, including the Chair and an ex-officio member. At a meeting of the Board, four members constitute a quorum.
Innovation Australia Committee members are appointed by the Minister for Industry and Innovation. Committees operate under delegation from the Board and comprise of a Chair and up to six members. At a Committee meeting, three members are required to form a quorum.
Board and Committee members are predominantly drawn from industry, industry representative organisations and the research community and their qualifications and experience cover a broad range of commercial and technical areas of expertise.
Innovation Australia and its Committee members, other than the ex-officio members, are remunerated in accordance with determinations set by the Remuneration Tribunal.
Organisation and Management
Innovation Australia uses a committee structure to help administer and provide expert advice on innovation, clean technology and venture capital programs.
As of 30 June 2012, seven committees report under Innovation Australia; each Committee has the following specific functions[1]:
· R&D Incentives Committee– formerly the Tax Concession Committee - The R&D Incentives Committee is responsible for providing advice to Innovation Australia about the operations of the R&D Tax Concession program for income years commencing before 1 July 2011 and the R&D Tax Incentive for income years commencing on or after 1 July 2011. In particular it is responsible for assessing activities registered across all sectors including providing certificates to the Commissioner for Taxation about the eligibility of activities registered for the Concession and the Incentive. The Committee also provides advice about operational policy aspects of the R&D Tax Concession program and the R&D Tax Incentive.
· R&D Tax Incentive Advisory Committee - is responsible for providing advice to Innovation Australia about the R&D Tax Incentive. In particular it is responsible for monitoring the implementation and operation of the program and identifying areas where the R&D Tax Incentive is not operating in accordance with its policy intent or matters that produce unforeseen consequences, or unintended and significant compliance costs.
· Venture Capital Committee - assists Innovation Australia to administer the suite of venture capital investment programs by assessing applications for fund manager licences and fund registrations, and monitoring activities for the following programs; Innovation Investment Fund (IIF); Renewable Energy Equity Fund (REEF); PreSeed Fund (PSF); Pooled Development Funds (PDF); Venture Capital Limited Partnerships (VCLP); Early Stage Venture Capital Limited Partnerships (ESVCLP). The Committee also monitors activities under the Innovation Investment Follow-on Fund (IIFF).
· Commercialisation Australia Board - provides expert advice, technical assessments, merit ranking and monitoring of projects under the Commercialisation Australia program.
· Clean Technology Investment Committee - assesses and merit ranks applications received under the Clean Technology Investment Program and the Clean Technology Food and Foundries Investment Program. These programs offer competitive grants for manufacturing businesses to assist investment in energy efficient capital equipment and less emissions-intensive technologies, processes and products that will enhance their competitiveness.
· Innovation Grants Committee - is responsible for monitoring and assessing requests for variations and other matters as required under grant agreements, such as dealing with intellectual property and change of company control matters under legacy programs, including Commercial Ready, R&D Start, Climate Readyand the Renewable Energy Development Initiative (REDI).
Innovation Australia Disclosure of Interest
Members of Innovation Australia and of its committees are expected to observe the following standards when dealing with Board related matters.
· Members should perform the duties of their office impartially, uninfluenced by fear or favour.
· Members should be frank and honest in official dealings with colleagues.
· Members should avoid any situation in which the private interests of themselves or of their immediate family, whether pecuniary or otherwise, conflict or might reasonably be thought to conflict with their public duty.
· Members should not use information obtained in the course of official duties to gain directly or indirectly a pecuniary or other advantage for themselves or for any other person.
· Members should not:
a) solicit or accept from any person any remuneration or benefit for the discharge of the duties of their office over and above the official remuneration;
b) solicit or accept any benefit, advantage or promise of further advantage, whether for themselves, their immediate family or any business concern or trust with which they are associated from persons who are in, or seek to be in, any contractual or special relationship with government; or
c) accept any gift, hospitality or concessional travel offered in connection with the discharge of the duties of the office (except as permitted by the Department of Innovation, Industry, Science, Research and Tertiary Education’s Guidelines on the Acceptance of Gifts and Other Benefits - Secretary’s Direction).
· Members should be scrupulous in their use of public property and services, and should not permit their misuse by other persons.
· Members should not allow the pursuit of their private interests to interfere with the proper discharge of their public duties.
The above Code of Conduct was last reviewed by the Board on 12August 2008.
Innovation Australia Disclosure of Interest (DOI) Guidelines
In running its programs Innovation Australia (the Board) wishes to observe statutory requirements and generally applicable standards concerning the management, handling and recording of relevant interests. Accordingly the Board wishes to address indirect and direct pecuniary interests as the IR&D Act requires but also intends the scope of these guidelines to cover other personal or family interests.
The Board is conscious that perceptions of conflict of interest may be as important as actual conflict. The following describes the procedures, based on the Code of Conduct adopted by the Board, that are to be followed.
Section 16 of the IR&D Act requires Board members to disclose at a meeting of the Board the nature of any direct or indirect pecuniary interest in matters considered or about to be considered by the Board. The Act requires such disclosures to be recorded in minutes of meetings. This process also applies to members of the Board’s committees (section 24).
The Board has also adopted a process whereby Board and committee members (upon appointment) prepare and lodge with the Secretariat a disclosure statement of known pecuniary (and other personal) interests of themselves and of their immediate family/spouse. The contents of the statement are recorded, electronically, on the Register of Private Interests.
In addition, the Board has established formal procedures for the handling of matters involving actual or potential conflicts of interest, which it requires all Board and committee members to meet. These are set out below.
A member who has issues or concerns about potential conflict of interest matters may wish, prior to a relevant meeting, to discuss them with the departmental officer who is nominated to assist the Board in these respects.
To assist in maintaining a close focus on conflict of interest issues, an early agenda item at each Board and committee meeting should involve formal enquiry in relation to the disclosed interests of members and the determination of any potential conflicts.
Disclosure of Member Interests
Where a Board or committee member is aware of an actual or potential conflict of interest, pecuniary or otherwise, the member must advise the meeting prior to that item being discussed. Where the interests of a member of his/her immediate family are involved, the member should disclose those interests, to the extent they are known to them. The member must then leave the room and this must be recorded in the minutes.
Members are required to refrain from discussing any aspects of applications with customers unless the application has been prepared by colleagues and the member has previously disclosed their interest to the Board.
The Board or committee has an ability to decide, in the absence of the member, that where a conflict situation exists, the member concerned may nonetheless be present during discussion of the matter (and take part in the discussion) or even take part in the decision making. The decision on this could turn on whether the nature of the interest is determined to be material or immaterial (insignificant).
If the nature of the member's disclosed interest is judged as immaterial, the member may be invited back in to take part in the discussions and, if appropriate, the decision-making. If the nature of the member's disclosed interest is judged as material, there should be no further involvement of the member.
An occasion may arise where a member having a material conflict has some technical knowledge, not available elsewhere, that could warrant an invitation back into the room simply to answer specific pre-determined question(s) in relation to the technology. (This would be an exceptional circumstance.) Upon providing comments to the questions, the member would again leave the room and take no part in the discussion or decision-making in relation to the item.