Budget 2008: Commercial Ready Closed

Well, even with our speculation about the ongoing National Innovation System Review and its interaction with tonight's Federal Budget we didn't see this coming:

The Howard Government's Commercial Ready program, including the Renewable Energy Development Initiative, closed to new grants from 28 April 2008, allowing $160 million to be used to offset the cost of the Federal Labor Government's Clean Business Australia initiatives, and providing savings of $547 million over four years. This will provide the Government with the opportunity to build better support for business research and development, pending the outcomes of the National Innovation System Review (from here, emphasis added).

This is a stunning development as many people have taken it as given that a discretionary grants program is a vital part of the innovation system, and that most aspects of the National Innovation System would be preserved given the ongoing consultation. It is extremely disappointing that the government's intentions on this point have not formed part of the Cutler Review's consultations, nor was Commercial Ready identified as a program at risk as part of the submission process that closed on 30 April 2008.

It will be very interesting to see the way this news is received in the innovation community. The decision takes $700m from what was the Commercial Ready program, reallocates $160m to the Clean Business Australia initiatives. Aspects of those initiatives are detailed here, and include:

Australian small and medium-sized manufacturers will be able to apply for grants from $10,000 to $500,000 to support initiatives such as improving the energy-efficiency of their operations; investing in energy-efficient manufacturing tools; improving insulation and recovering waste heat; investing in small-scale cogeneration plants that capture waste energy and use it to produce electricity on site; and cutting water wastage, including through stormwater capture and improving water recycling.

The AusIndustry product page for Commercial Ready has already been updated for this change:

The Government has decided to close the program. From 14 May 2008, the Commercial Ready program (including Commercial Ready Plus) is closed for applications.

The decision to close the program does not impact on those customers that have an existing funding agreement under the Commercial Ready program.

It's also a very interesting change, particularly for companies (of which I expect there are literally hundreds) part-way through Commercial Ready grant enquiry, application or decision processes, although companies with executed grants already will be OK. Obviously funding has been added for new grants programs, but at a significant cost to the Innovation System and to the process of consultation.

Of course, if there are companies in the renewable energy space they are going to be OK as they would appear to be eligible under Climate Ready:

Innovation supported by the Climate Ready program could include new technologies for water recycling, waste recovery or small-scale renewable energy; the development of green building materials to make homes more energy-efficient and more comfortable; and innovations to reduce the energy used by appliances, cutting emissions and household power bills.

Grants will be provided on a dollar-for-dollar basis, matching company spending on research and development, proof-of-concept and pre-commercialisation activities to develop solutions to climate change challenges. Funding will commence for the program in July 2008.

But this does leave companies that would have been applying for biotechnology, information technology and other industrial R&D in the dark.

It will be interesting to see what the press makes of this...