Legislation - National Benefits

Policy Number 1

When dealing with applications and agreements for projects, Innovation Australia (the Board) is required to have regard to national benefits, 'benefit to Australia', and 'exploitation to the benefit of the Australian economy'.

This policy sets out features to which the Board will give consideration when assessing these benefits under the R&D Start Program Ministerial Directions and the Commercial Ready Program Ministerial Directions, including applications to vary commercialisation plans. This policy should be read in conjunction with Evaluating National Benefit – A Guide for R&D Start Applicants and Guide to Evaluating National Benefits – Commercial Ready, which provides further advice to applicants about developing their case on national benefit.

1. Each case is considered on its merits and the onus is on applicants to substantiate their claims regarding National Benefit. Set out below (in order of relative importance) is a list of the sorts of matters which the Board can have regard to in assessing applications here:
   1. National productivity and economic growth

      The potential of the project R&D and its commercialisation to:

      • contribute to the development of strategic industry clusters.
      • improve the efficiency, competitiveness and productivity of Australian industry (for example, through the development or adoption of new technologies or processes).
      • create or sustain, in a timely fashion, a competitive advantage to Australia that will be hard to replicate elsewhere.
      • lead to the establishment of new Australian industries, or generate significant new value adding operations, with associated significant new employment opportunities.
   2. Diffusion of knowledge, skills and know-how to other parts of the Australian economy.

      The potential of the project R&D and its commercialisation to result in:

      • development and release for the use of other firms and research organisations of a platform technology (such as a technology which can be used as the basis for the operation of other applications or technologies).
      • development of Australia's skills base in areas of comparative and competitive advantage.
      • national and international collaboration with research institutions, customers, suppliers and/or competitors; and strong linkages, including internationally, between those doing the project and others with complementary skills.
      • development of a field or area of research not currently well represented in Australia, but which will enhance, through complementarity, Australia's overall indigenous innovation capacity (for example, emerging technologies).
   3. Societal, community and ecological benefits

      The potential of the project R&D and its commercialisation to:

      • address a social, health or environmental issue prevalent in Australia.
      • directly enhance national and/or resource security.
   4. "Flow on" economic benefits

      The potential of the product, process or service resulting from the project to:

      • benefit final consumers (for example, produce finished products of higher performance, higher quality and/or lesser expense).
      • improve a supply chain by, for example, producing higher performance, higher quality and/or cheaper inputs for industries which constitute a large proportion of the Australian economy.
   5. Any other matters which the Board finds relevant
2. Although the Board also has regard to whether or not the commercialisation of the project will take place in Australia, it is conscious of the fact that benefits to Australia can be derived from research and development work which is commercialised overseas. Set out below (in order of relative importance) is a list of the sorts of matters which the Board can have regard to in considering the extent to which Australia would benefit from a project where commercialisation takes place overseas:
   
   1. Benefits of overseas commercialisation of project R&D.

      As reflected in the project commercialisation plan, overseas commercialisation is reasonable when it will result in:

      • the maintenance of Australia as the home base for future R&D, manufacture or product development.
      • an increase in the number of the company's Australian-based employees.
      • Australian residents receiving commercial compensation through royalties, licence fees, equity, dividends or outright sale.
      • ongoing development of the commercial outcomes arising from R&D activities involving domestic and/or international collaboration with other firms and/or research organisations.
   2. Benefits of overseas production of products, processes and services resulting from the commercialisation of project R&D

      As reflected in the project commercialisation plan, overseas production is reasonable in two circumstances:

      1. in cases where local production is demonstrably uneconomic on grounds of cost, the Board will consider:
         • the level of commitment to retaining or enhancing the company's R&D facilities in Australia.
         • the degree of globalisation of the relevant industry sector.
         • the relative input costs to production as identified by the company.
         • the relative transport costs as identified by the company.
         • the relative costs of skilled labour as identified by the company.
         • legal barriers to entry to foreign markets.
         • any other factors it finds relevant.
      2. in cases where production or commercialisation demonstrably requires close physical interaction with overseas companies, customers, suppliers and competitors, the Board will consider:
         • the level of commitment to retaining or enhancing the company's R&D facilities in Australia.
         • the mechanisms established to disseminate knowledge and market intelligence from overseas to the company's Australian operations.
         • the industry norms in terms of proximity.
         • the level of competition in the industry sector and the need to innovate quickly.
         • the nature of inputs which require close contact (for example, perishables or knowledge).
         • any other factors it finds relevant.
3. Projects are audited and progress against the claims set out in the case for National Benefit will be monitored regularly. The onus is on applicants to substantiate any new claims regarding National Benefit and the extent to which forecast National Benefit has been achieved. If the National Benefit objectives are not achieved, the Board may terminate the project agreement and require the company to repay the grant or loan received.

Policy last reviewed: September 2004

Document last reviewed: October 2007—document updated for merger of former IR&D Board into Innovation Australia.