Consultations on Automotive Innnovation Fund

Senator Carr's office has issued a release asking for feedback on the Green Car Innovation Fun and other elements of the Automotive Innovation package.

There is such a large sum of money being invested in this area, it's probably worth taking the time to provide some commentary. The link to the Minister's press release is here.

What are the topical issues that you see?
What should be improved?
What needs reviewing?

Answers in the comments, please.

Here's to the Australian Risk-Takers, Doers and Makers of Things

It seems horribly unfair to take one line out of context from Barack Obama's inauguration speech as the forty-fourth President of the United States of America. This one phrase, though, should resonate with anyone and everyone concerned with innovation, business, R&D and entrepreneurship.

Our journey has never been one of shortcuts or settling for less. It has not been the path for the fainthearted -- for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path toward prosperity and freedom.

You can read the transcript here or watch a video here.

Although Australians are not the dominant audience for the inaugruation speech, that should not stop us for looking for the gems of wisdom that are universal.

As the economy continues to cool, we would do well to remember these words and drive the mantra in our businesses. Instead of heading down a cautious path, look for the risk, if only to find what your competitors are not doing. Instead of procrastinating, look for the opportunity that lies in action - failure is a possibility, but without action all you have is the false certainty of the present. Instead of looking at how structures and financial products can offer you protection, look to the process and outcomes of making things that make the world a better, greener, safer place.

I'll get off my soapbox now.

Automotive Innovation: Green Car Innovation Fund

Late last year (on 19 December 2008), Senator Carr announced developments in the $6.2 billion New Car Plan for a Greener Future, namely:

• A framework paper outlining the proposed operation of the $1.3 billion Green Car Innovation Fund and inviting feedback
• Ministerial guidelines for the Automotive Industry Structural Adjustment Program (AISAP) (PDF) supporting consolidation of companies through merger and acquisition
• Appointments to the Automotive Industry Innovation Council.

Green Car Innovation Fund Framework
As a proposed grants program, the framework for delivery is going to be very important in terms of access to funding, quality of arguments and advice and overall costs/risks. This framework is available here (as a Word document).

The Green Innovation Fund will provide grants on a competitive, merit based basis on a 1:3 funding ratio. Apparently this can be varied if risk profiles or the proposed project makes a significant contribution to the international competitiveness of the Australian industry. It will support R&D and the commercialisation of Australian technologies that significantly reduce fuel consumption or greenhouse gas emissions of passenger motor vehicles.

It will operate in two streams to support projects of up to three years' duration (although a six month extension may subsequently be considered):

• Stream A will support Motor Vehicle Producers registered under the current ACIS program or the new Automotive Transformation Scheme (ATS) and will be for a grant of $10m or more (though less than $300m in total support under the program for that applicant); and
• Stream B will support companies (including companies formed in order to complete projects) other than Motor Vehicle Producers, although they may participate as consortia members. Grants under Stream B must be for at least $100,000.

Activities supported will be for R&D, proof-of-concept, early-stage commercialisation and pre-production activities carried out in Australia, which makes this very similar in definition to the existing Climate Ready program, and the previous Commercial Ready and R&D Start programs.

Merit Criteria
Grants will be assessed according to the following merit criteria:

• The extent of the reduction in passenger motor vehicle fuel consumption and/or greenhouse gas (ie carbon dioxide equivalent) emissions arising from the proposed project
• The technical merit and extent and calibre of innovation generated in Australia by the proposed project
• The capacity and capability of the applicant to undertake the project, including management capability
• The commercialisation potential of the proposed project to the benefit of Australia
• The contribution of the proposed project to a sustainable and internationally competitive Australian automotive industry, and the benefits to the broader Australian economy

Eligible Expenditure
It is proposed that expenditure under the following headings be eligible to attract grant funding if it is directly related to eligible project activities (R&D, proof of concept, early-stage commercialisation):

• labour (including salaries, special bonus for employing recent graduates);
• contractors;
• plant and equipment;
• tooling;
• prototype;
• IP protection;
• collaboration;
• acquisition (for adaptation in the project) of new leading-edge technologies.

Only expenditure incurred on or after the approved start date of the project will be supported and that cannot be on a date before the program delegate accepts the application for assessment.

Applications
Applications can be lodged at any time and will be assessed continuously. Decisions will be made by a committee of Innovation Australia, except where grants exceed $10m where applications will be will be referred to Cabinet for approval.
On the current timetable the Fund will be launched and first applications called for in April 2009.

Finns Plan Innovation Investment as Economic Stimulus

We're waiting for the Rudd government's 10 year innovation White Paper which will be delivered in early 2009. Although there is speculation that it will be provided in final form, we are hopeful that there will be a concrete foundation for innovation investment that addresses systemic failings that exist at the moment.

By way of parallel, Finland also completed an innovation review last year. The result, released in December 2008, is a bold plan to stimulate the economy, and an increase in funding to help take the country's R&D funding to 4% of GDP by 2011. In other words, the current economic crisis has actually triggered an increase in innovation investment as an economic stimulus.

This is something Australia needs to consider carefully as the terms of trade change, workforce productivity slows and the air coming out of the consumption-driven balloon spins the economy all over the place.

What do you think?