Prime Minister Malcolm Turnbull has unveiled the Federal Government’s much-awaited Innovation Statement, with almost $1.1 billion allocated over the next four years and $3 billion across a decade to promote innovation, development, and business-based research.
Via the ABC, the package’s major initiatives are as follows:
- $106 million in tax incentives for “angel” investors, who provide seed funding in the early years of a venture’s creation
- $75m to the CSIRO’s data research arm Data 61
- $30m for a “Cyber Security Growth Centre” to create business opportunities in cyber security, which the Government spends $5b on each year
- $15m over four years towards a $200m CSIRO Innovation Fund
- $10m over four years towards a $250m Biomedical Translation Fund, in partnership with the private sector
- Australians wanting to take their ideas internationally will also be supported through a $36m “Global Innovation Strategy”, helping them get started in Silicon Valley, Tel Aviv and three other locations, as well as a $22m funding project with Germany’s Fraunhofer Institute.
- Insolvency laws will also be relaxed for start-ups that fail. The default period for bankruptcy will be reduced from three years to one year.
There’s also new programmes – $48m for Science Technology Engineering and Mathematics (STEM) literacy, $14m to encourage women and girls into the STEM sector, plus $51m to promote digital literacy.
Fresh incentives for start-ups and investors, plus a relaxing of strict bankruptcy laws on start-ups are also on the cards.
Win for start-up investors
The details for start-ups in particular play out by way of example, so follow along here. Take the new tax laws – angel investors will be able to get a 20 per cent tax offset, rather than a deduction, and a capital gains tax exemption.
What that means is if a high-net-wealth individual invests $200,000 and claims the tax offset, they will reduce their income tax by $40,000.
If the investor sells their shares at profit five years later (and here’s hoping that happens), their initial $200,000 will be exempt from capital gains tax.
What to make of it all
Sifting through the new innovation.gov.au site, including 29 separate fact sheets and copious pages of notes released by the government is going to take time. Meanwhile, other publications have been pre-briefed and there’ll be an immediate post-event shouting match to grab attention. What’s being called #ideasboom on Twitter will take awhile to fully digest, and only then fully pass judgment on.
— IdeasBoomAu (@IdeasBoomAu) December 7, 2015
The devil is in those details – governments are known to make fantastical statements with great big top-line numbers. They often play out differently.
As just one further example, while Turnbull is offering $106 million in an investor tax incentive, explained above, if the quality of Australian start-ups isn’t high and relatively few investments are made, the final figure could be tiny.
That’s just one small side-note to the whole thing. It’s good news to see Australia is attempting to make something happen, but some parts of the announcement read more like a thesaurus of buzzwords.
Removing hurdles and obstacles to people turning their ideas into realities should only be applauded, assuming they’re policies designed not just for high-growth unicorns but small quality businesses that turn a small profit, too. Like Macropod.
Of course, the Government’s plans will still need to pass muster through the Senate, where scrutiny will be applied assuming the whole thing isn’t rubberstamped.
A final note – one of Australia’s most savvy (and savage) writers on these issues is Stilgherrian. His long-running commentary on how start-up pop-culture is overtaking every conversation about kickstarting science and engineering is well worth reading when considering these reforms. Reading his thoughts on the finer details in the announcement over the next few days is sure to be insightful.