Over the past couple of days Australia's first federal minister for Innovation, Senator Kim Carr, has announced a fresh examination of the linkages between Australia's innovation practices and the types of government support provided.
In the first announcement, Senator Carr has initiated a review of Australia's national innovation system to be conducted by an expert panel chaired by Dr Terry Cutler. This announcement contains an interesting and powerful idea:
In today's economy, innovation policy is industry policy.Any regular spectator or analyst of Australian industry policy will see this as a potentially profound commentary on the types of market intervention we are likely to see from this new government. It continues the general push away from supporting industry through other means, such as tariff protections, and into direct market interventions.
Key to many of our clients part of the terms of reference for this review include specifically:
Consider the appropriateness, effectiveness and efficiency of the Research and Development (R&D) Tax Concession Scheme in promoting innovation and make recommendations to improve innovation outcomes.This is going to be an interesting part of the review as the tax concession has made a long and generally well-proven contribution to innovation outcomes in Australia. Importantly, it supports market-led and commercially focussed industrial research and development (classically the applied and experimental developments, rather than the more elusive public interest or pure scientific research (again, classically, the fundamental or strategic research).
MJA has already been invited to participate in the review and co-ordinate preparation of a submission to the review demonstrating our broad experience in some of the principal innovation programs in Australia, such as the R&D tax concession, Commercial Ready, Renewable Energy Development Initiative Grants, COMET and the Industry Cooperative Innovation Program (ICIP) grants.
The second announcement (reported in The Age) suggests that the tone of the review will be more or less conventional economic reasoning, with an emphasis on the funding of research infrastructure and enabling cooperation between the public and private sectors. It appears that that the aim of the review and the government's stated intention is to increase or at least better allocate investment into sectors and activities that a relevant to a future high-tech skills base for Australia.
This article draws reference to the performance of Britain, which has only recently introduced an R&D tax concession as part of the backbone of its industry innovation policy. This is particularly interesting given the recent comments of the Australian Productivity Commission which has found that general, broad-based programs are not effective in incentivising "additionality" in industry R&D.
Addressing this concern will be important in the context of the review, but the clearest piece of reasoning around this concern is that the R&D tax concession has gradually become an important and necessary part of Australia's business environment. This point was overlooked by the Productivity Commission, and will bear out further investigation during the conduct of this review.
