The Turnbull government has announced a $1.1 billion innovation plan to encourage risk taking activity that fosters a more entrepreneurial culture, supports early stage startups, promotes science and computing, and drives innovative research.
Prime Minister Malcolm Turnbull, and Minister for Industry, Innovation and Science, Christopher Pyne, announced the innovation plan on Monday. Funding is to be spread across 11 government portfolios.
The government earmarked $106 million in tax incentives for investors in early stage startup companies, including new arrangements for venture capital limited partnerships to alter the tax treatment of Early Stage Venture Capital Limited Partnerships (ESVCLPs).
The changes mean a 10 per cent tax offset for new early stage angel investors and venture capital partnerships (worth less than $50 million). Larger investors can attain a 20 per cent tax offset capped at $20,000 with a 10-year offset on capital gains tax if the investment is held for three years.
Turnbull said he hoped the introduction of startup investment tax offsets sends a signal of confidence in the early stage startup sector and will drive substantial new investment.
Insolvency laws have also been relaxed, based on recommendations by the Productivity Commission, to encourage entrepreneurship by reducing the current default bankruptcy period from three years to one year, ensuring directors are not liable for insolvent trading if restructuring adviser is appointed. The new laws also make ‘Ipso Facto’ clauses unenforceable if a company is undertaking a restructure.
“If you start a new venture and it doesn’t succeed, you may have lost some money and investors lost some money, but overall the economy massively benefits because you are all wiser, and the ecosystem benefits,” said Pyne.
“This cultural change is so important because we have to be prepared to embrace risk and innovation.”
SMBs will also benefit from a new $15 million digital marketplace for IT procurement, developed by the Digital Transformation Office (DTO), to make it easier for smaller digital and ICT companies to do business with government.
Benefits to CSIRO and new tech
After suffering $100 million of government cuts in the last two Budgets, the CSIRO will see funding returned with $15 million being put towards an Innovation Fund for the commercialisation of research, along with $75 million committed to the CSIRO’s data research arm, data61, to support the emerging data-driven economy.
Over the last couple of years, CSIRO has had to cut 140 jobs as a result of budget cuts by the Coalition government, while cuts were also made to other science and research institutions such as the Cooperative Research Centres, the Research Training Scheme, Geoscience Australia and the Bureau of Meteorology.
To further support the data boom, the government will also release a Public Data Policy Statement, which will require agencies to make appropriate data openly available by default in machine readable and anonymised form through data.gov.au.
The government is also establishing a new $250 million Biomedical Translation Fund over four years, to invest in promising biomedical innovation and commercialisation.
A further $30 million was promised to establish an industry-led Cyber Security Growth Centre to create business opportunities for Australia’s cyber security industry. The government will invest $26 million over five years to support the development of silicon quantum computing technology in Australia.
Innovative research boost
Pyne said the government aims to elevate innovation and science into the future by creating a new cabinet committee, chaired by the Prime Minister, to co-ordinate all research and science spending across government – set to reach $10 billion per year by 2020.
A new independent body will also be formed, known as Innovation and Science Australia (ISA), to provide strategic whole-of-government advice on all science, research and innovation matters.
Turnbull said the government will invest $36 million over five years through a Global Innovation Strategy to improve Australia’s international innovation and science collaboration in the Silicon Valley, Tel Aviv and Germany. Visa systems will be simplified for entrepreneurs, to attract the ‘best and brightest’ talent and skills to Australia.
The government will invest $127 million into university research block grants to help drive greater research-industry collaboration, and $18 million will be used to expand and relaunch the existing Research Connections scheme as part of a wider initiative to stimulate collaboration between universities and businesses.
$8 million will be used to form an Incubator Support Program over the next 10 years, plus a further $2.3 billion will be invested in developing new national research infrastructure across the country.
To encourage more gender diversity, Turnbull said the government will invest more than $13 million over five years to encourage women to take up careers in science, technology, engineering and mathematics (STEM), in addition to $51 million to help all Australian students to embrace the digital age and better prepare for the jobs of the future.
Opposition Leader Bill Shorten shared Labor’s Innovation Statement on Friday morning, which also featured proposed changes to research funding, tax offsets and support of entrepreneurs across regional Australia and internationally.
A new style of government
The economic statement was in stark contrast to some policies put in place by the former Abbott government, supporting Turnbull’s claims to lead a different government agenda with a strong focus on science and innovation.
Turnbull said the government’s new Innovation Agenda will help create the modern dynamic 21st century economy that Australia needs.
“These new measures are designed to bring together all those in Australia who recognise that the future of our economy is in high tech, advanced manufacturing and the way we use data,” he said.
“Innovation and science are critical for Australia to deliver new sources of growth, maintain high-wage jobs and seize the next wave of economic prosperity.”
It was noted that Australia has been consistently ranking last or second last among OECD countries for business-research collaboration, and our appetite for risk is lower than in comparable countries, which means Australian startups and early stage businesses often fail to attract capital to grow.
Turnbull said this was “not the first and last word” on innovation from the coalition, as government too must be more willing to take risks, and be willing to adjust policies if necessary in pursuit of greater success.
“One of the aspects of the political paradigm I’m seeking to change is… where politicians felt they had to guarantee every policy will work, and water everything down to remove any element of risk,” he said.
“I am not guaranteeing these policies will be as successful as they could be – I’m very confident about it and we’ve worked hard on it – but if some are not as successful as we like, we will change them and we will learn from them, because that’s what a 21st government needs to be – as agile as the startup businesses it seeks to inspire.”