The Australian Industry Development Corporation (AIDC) was constituted by Act of Parliament in 1970, assented to on 10 June and proclaimed as coming into operation on 1 October 1970. It began operations in April of 1971 following enactment of the 1970 Act. The Board of the AIDC was to consist of an Executive Chairman and not less than five or more than eleven Directors who were to be appointed by the Director-General. The first appointments were:
 
Executive Chairman: Sir Alan Westerman, C.B.E.
Directors: G.M. Bunning
 Sir John Dunlop K.B.E.
 Sir George Fisher C.M.G.
 D.H. Freeman
 W.M. Leonard
 Sir Charles McGrath O.B.E.
 Sir Colin Syme
Secretary: J.W. Wolters
 
Funds provided as statutory capital to the AIDC were $100 million, with $25 million being invested initially to provide a balanced investment portfolio. Income from this portfolio was used for AIDC establishment and operating costs.
 
The Australian Industry Development Corporation was established to provide financial assistance to economically viable Australian Industries, via funds obtained by borrowings, and is aimed at developing Australian Industry and maximising Australian ownership. AIDC's substantial statutory capital has ensured its ability to invest in equity and loan projects, having no investment return requirement. There is a statutory requirement of Capital investment to be four times the total of paid up capital and reserves.
 
In March 1973, the Minister for Overseas Trade and Secondary Industry announced the new Government's plans for expanding the functions and capacities of AIDC with the object of securing greater participation by Australians in the ownership and control of important national enterprises. In addition, the government proposed to widen the scope of AIDC's financial operations, at present confined to the
manufacturing and mining industries, to include activities that were related or ancillary to those industries.(1)
 
However, it was not until 7 March 1975 that amendments to the AIDC Act were passed as legislation.
 
Prior to amendment of the AIDC Act in March 1975, the Corporation was limited to providing finance to companies in the manufacturing, processing and mining industries. Under the new legislation it was able to extend financing to, or invest in, "industries concerned with the manufacture, processing, treatment, transportation or distribution of goods, or the development or use of natural resources (including the recovery of minerals) or of technology", and "activities that are connected with or incidental to those industries". The amended Act also provided for Government funds or guarantees for special projects and it also clarified that the Corporation was able to participate with others in a joint venture, as well as provide finance to, and hold shares in, a company.
 
A separate Act, the Loans (Australian Industry Development
Corporation) Act 1974, authorised the Government, at the request of AIDC, to make advances to the Corporation out of Government borrowing overseas.
 
AIDC was designed to operate as a commercial enterprise, following the business and financial principles of the private sector. Final responsibility for its investment decisions laid with its Board of Directors, except where the Government provided the funds and assumed the investment risks under the "national interest" provisions of the Act.(2)
 
Prior to 1974 regional offices in New South Wales and Victoria were staffed by only a Secretary, but from 1974 these offices were run by a professional officer, a Manager. By 1979 the Regional Manager of the NSW office became responsible for Queensland while the Regional Manager of the Victorian Office became responsible for South Australia and Tasmania. By 1981, AIDC established separate regional offices in Queensland and Western Australia while South Australia operated through a South Australian Development Corporation agent. There was no representative in South Australia by 1982.
 
Parliament amended the AIDC Act with effect from 13 September 1980 to provide for an increase in the maximum permitted ratio of the Corporation's borrowings to its capital and reserves. The change in the Corporation's gearing was made on the recommendation of the Board, the Directors being of the view that the original conservative gearing limit of 5:1 was no longer necessary or appropriate for AIDC.
 
The new AIDC Act provided that the Corporation should not borrow monies (otherwise than for temporary purposes) if, as a result of the borrowing, the total amount borrowed (otherwise than for temporary purposes) and not repaid would exceed eight times the sum of:  
 (a) the amount of the capital of the Corporation; and
 (b) any amount set aside by the Corporation reserves.
The new gearing limit of 8:1 would permit further growth in the Corporation's development financing activities without the need to call up capital.(3)
 
The final report of the Committee of Inquiry into the Australian Financial System chaired by Mr J.K. Campbell CBE (now Sir Keith Campbell) was published in November 1981. The Committee had been appointed by the Treasurer to inquire into and report upon the Australian financial system generally, and also upon a number of specific financial institutions including AIDC.
 
In relation to the financial system generally the Committee said that it started from and held firmly to the view that "the most efficient way to organise economic activity is through a competitive market system which is subject to a minimum of regulation and government intervention".
 
Consistent with this view the Committee made numerous recommendations for deregulation of the financial system. It also concluded that, if these recommendations were all implemented so that a virtually free financial market came into being, there should be no need for continued government ownership (by the governments of the Commonwealth or the States) of banks or other financial institutions such as AIDC. Accordingly the Committee, in accordance with its philosophy, considered that AIDC should be disposed of to the private sector where it could operate in the future under private ownership as an efficient, commercially-orientated financial intermediary. This recommendation depends, of course, on the assumption that the envisaged free market does in fact come to exist.
 
The Committee recognised that even in those circumstances the Government may wish to retain AIDC as a government-owned institution. In that event the Committee recommended that the Corporation should be placed on an equal competitive footing with its private sector counterparts.(4)
 
Most assets of the Corporation were transferred to AIDC Limited on
1 July 1989, after which the company commenced trading on the Stock Exchange. The Corporation held 80.9% of AIDC Ltd at June 1993 following a public share issue in July 1989. In November 1995, the Corporation made a Takeover Offer for all the ordinary shares that it did not hold in its principal subsidiary. The offer closed on 16 January 1996 and AIDC Limited was delisted on 8 February 1996. 
The Department of Industry, Science and Tourism worked with the Office of Asset Sales on the legislation for the sale of AIDC [AIDC Sale Act, No. 67 of 1997], which was passed in May 1997 and given Royal Assent on 5 June 1997. AIDC Limited was sold to Babcock and Brown Pty Ltd in November 1997. The activities of the Corporation are being wound down, including the disposition of residual assets. That process is anticipated to take many years to complete, due to the diverse nature of the activities being wound down. All obligations of the Corporation incurred up to 30 June 1998 are guaranteed by the Commonwealth of Australia.(7) 

References:
1. "AIDC Third Annual Report 1972-73", p. 12; Commonwealth Parliamentary Papers, No. 292 of 1973
 
2. "AIDC Fifth Annual Report 1974-75", pp. 4, 7, 18; Commonwealth    Parliamentary Papers, No. 250 of 1975
 
3. "AIDC Annual Report 1980-81", p. 25; Commonwealth Parliamentary    Papers, No. 245 of 1981
 
4. "AIDC Annual Report 1981-82," p. 27; Commonwealth Parliamentary    Papers, No. 271 of 1982

5. DIST Annual Report, 1996-97

6. AIDC Annual Report, 1996

7. Government Online Directory (2005). "Australian Industry Development Corporation". Retrieved on 16 May 2006 from http://www.gold.gov.au/osearch.php?ou%3DAustralian%20Industry%20Development%20Corporation%2Cou%3DOther%20Portfolio%20Bodies%20-%20Finance%2Co%3DFinance%20and%20Administration%2Co%3DPortfolios%2Co%3DCommonwealth%20of%20Australia%2Cc%3DAU&changebase 

Historical agency address
  1970-1972: Ethos House, 28 Ainslie Avenue, Canberra
  1972-1979: Churchill House, 218 Northbourne Avenue, Canberra
  1979-1989: 2nd Floor, 212 Northbourne Avenue, Braddon ACT
by1989-1989: 24th Floor, Qantas International Centre, 18-30 Jamison
             Street, Sydney
  1989-1997: Level 33, AIDC Tower, 201 Kent Street, Sydney
Legislation administered
Creation: Commonwealth of Australia Acts, No. 15 of 1970, Australian Industry Development Corporation Act 1970
Sale: Commonwealth of Australia Acts, No. 67 of 1997, AIDC Sale Act