Government supports ISA’s 2030 innovation strategy – more to be done
The Federal Government has unveiled a raft of initiatives in response to the Innovation and Science Australia’s (ISA) 2030 strategy, acknowledging that more needs to be done to allow Australia to make up ground in the global innovation race.
The Government’s response follows several key innovation initiatives announced in the Federal Budget, including a more-targeted R&D Tax Incentive and a long-term $1.9 billion commitment to national research infrastructure funding.
The government has fully supported 17 of the 30 recommendations made in the ISA report, with ‘in principle’ support for a further 10. However, a central proposal to put in place further initiatives to reverse the current decline in business R&D expenditure was only ‘noted’ by the Government, rather than comprehensively supported.
The ISA, chaired by CHAMP Private Equity Co-Founder and Co-Chairman Bill Ferris, recommended part implementation of the 2016 Review of the R&D Tax Incentive and for greater direct investment in business R&D programs such as Cooperative Research Centres.
While the government overhauled the R&D Tax Incentive – which will cut $2.4 billion from the scheme over four years by introducing a $4m annual cap on the refundable component of the scheme and targeting it towards larger firms conducting higher intensity R&D – this was not matched by a significant expansion of non-tax-based incentives.
The government also rejected the ISA’s call for a ‘collaboration premium’ of up to 20 per cent for the non-refundable tax offset to boost industry-research partnerships, noting that the incentive wasn’t the right mechanism to improve collaborative R&D. A proposal to peg government support for science, research and innovation investment to at least 0.63 per cent of GDP also went unheeded.
Creating conditions to boost business investment in R&D remains a crucial goal for the Australian economy – one which many AVCAL members will help drive in the coming years by providing capital to early stage companies engaging in critical R&D activities, as well as their expertise and knowledge. Australian business expenditure on R&D is just 1 per cent of GDP, well below top countries such as Israel and the United States which are two to four times that level.
The government’s new $1.9 billion commitment over 12 years to ensure that researchers and businesses have tools to develop and commercialise innovative products and services is a key positive that will go some way towards closing that gap. It brings total investment through the National Collaborative Research Infrastructure Strategy to $4.1 billion over 12 years.
This support will flow through to growing Australia’s artificial intelligence and machine learning capabilities, developing Australia’s space industry, and improving the accuracy of GPS. Funding will also be used to upgrade two supercomputers to help advance medical research, nanotechnology, mining, construction and urban planning with high‑speed calculations.
The ISA recommended the government establish a National Mission to help make Australia the healthiest nation on Earth, prompting the government to commit $500 million over the next decade to the Genomics Health Futures Mission (funded from the Medical Research Future Fund). It will spur new research to help find cures for currently untreatable and deadly diseases.
Other ISA recommendations supported by the Government included ensuring that overseas talent through skilled migration reforms, increasing Australia’s commercialisation capability through more funding for translational activity, and that the ISA should be tasked to monitor and report on adequate supply of risk capital to emerging sectors of high growth in the economy.
The ISA also recommended the Government become a catalyst for innovation through creating a greater level of flexibility within the regulatory environment and a more collaborative approach towards regulatory reform. The government’s overall approach to supporting innovation emphasises specific, targeted initiatives under a broader structure.
AVCAL will continue to work closely over coming months with its members to advocate for the timely implementation of the changes agreed to by the Government in their response. More information about AVCAL’s work with Government in this area can be directed to Kosta Sinelnikov (Policy & Research Manager) or Yasser El-Ansary (CEO).