Yes, it's politics, but this is fascinating

In response to the relative silence from the industry department as part of the economic stimulus packages, Senator Abetz has penned a fairly detailed criticism of the federal government's approach and its impact on business. (In case the political pointscoring about Pacific Brands and Qantas stops you from getting to his planned action points, I have presented them below).

Apparently the industry department was not included in the stimulus planning

Surely, if you wanted to protect or create jobs, like in the manufacturing sector which has been worst hit with more than 44,000 jobs lost since Labor was elected (a 4.2 per cent decline), you would talk to the Industry and Small Business Department for their ideas?

But no. As revealed in a recent answer I received from Senate Estimates, the first the Industry Department knew of the detail of the $42 billion stimulus was when it was publicly announced - which might help explain why Australia is the only country in the developed world not to include incentives for business to invest in new research and development in its stimulus packages.

Senator Abetz's recommended action plan

So what should the Government be doing to try and minimise job losses in the face of the Rudd Recession?

Well firstly, it should adopt Mr Turnbull's six-point small business action plan, which will provide real immediate assistance for minimum cost - and genuinely protect jobs.

Secondly, the Government needs to take responsibility for the job cuts - as a Prime Minster once famously said, "the buck stops with me".

Thirdly, the Government needs to invest not in articificially propping up GDP, but in supporting the productive capacity of business - especially small business - through things like encouraging investment in R&D, even at this tough time.

And fourthly - and most importantly - the Government needs to facilitate the right economic conditions for business to prosper and employ people; which means, not talking down the economy in order to try and trash the economic legacy of your predecessors.

Yes, it's politics. Yes there's pointscoring. But, if this is the reality of the situation it is very sad to me. Putting on my pessimist's hat, if the industry and small business departments have not had an impact thus far, what hope do we have that this will change?

Wearing my Optimist's hat, the stimulus activity to date has been largely about consumption rather than investment, and that the next round of activity will be about encouraging productivity and knowledge jobs in the economy.

The realist in me says that the ALP positions itself as the party for Working Families and the Liberal Party as the "party" for Business, so unless you can join the dots and show how lower investment in R&D and knowledge jobs affects Working Families you don't have much chance of getting on the radar. Well, unless you're about to go broke.

Just another reason why party politics can be so hollow.

Let me know what you anticipate in the budget by posting a comment on this article.

Exellent Progress on US National Innovation System...our turn soon!

Professor Joshua Gans has written an excellent piece on President Obama's announcements about the US National Innovation System (which includes making their R&D tax credits a permanent feature) over on the economics.com.au site.

I am curious as to what signals the Australian Innovation System Review process, now formally a part of the budget, will take from this lead in terms of targets and priorities. I suspect that the environmental and sustainability challenge will be taken up in earnest by other parts of government, but the tenor of Venturous Australia was change, enunciating priorities, and goals and investment for the future.

This is the time for counter-cyclical stimulus and innovation (as an economic public and private system) is one of the best places to invest.

Green Car Innovation Fund Open for Applications

As promised, the government has opened the Green Car Innovation Fund in April. From today, applications can be made by motor vehicle producers for grants of $5 million or more and other applicants will be able to apply for grants of $100,000 or more. Funding will flow from 1 July 2009.

Despite receiving feedback that argued this approach, the grants will be on the basis of one government dollar to three applicant dollars.

Information sessions will be held in May to brief applicants, and Application Forms, guidelines and further details are available on the AusIndustry website.

Climate Ready: Second Round not so positive

The results of the second round of Climate Ready have been filtering through. It looks as though less than 10% of companies that applied got funded, and no total amount has yet been announced.

This is a big difference from the first round, which had a 65% success rate and gave away $27.7m of the $75m budget allocation, as described in this article.

Such a low success rate could point to tightening government spending, higher average project funding, poor quality candidates, or a very large number of candidates (or a combination of all of these). It may or may not reveal a flaw in rounds based grant programs.

We'll keep you posted on Climate Ready news as it comes to hand.

R&D tax concession deadline soon

30 April 2009 is the deadline for R&D tax concession registrations for the year ended 30 June 2008.

Companies that were incorporated, do not trade as a trust, had over $20,000 in expenditure and good quality R&D planning documentation should be eligible for the 125% tax concession or offset (if they have not yet lodged their tax return).

Yes, there are more rules and regulations to be aware of, that's why you might like to review our R&D tax concession services and get in touch with MJA here: http://mjassociates.com.au/rd-tax-concession-services/.