Prime Minister Malcolm Turnbull and Minister for Industry, Innovation and Science Christopher Pyne yesterday unveiled the Federal Government’s highly-anticipated Innovation Statement with the comment, “welcome to the ideas boom”.
As the Turnbull government's first major policy document, it is expected to involve the investment of $1.1b over four years across a range of industries. Mr Turnbull believes the plan will drive innovation in government, promote a culture of entrepreneurship and place innovation at the heart of everything we do in Australia.
Australian businesses, particularly start-up companies and those in the technology sector are set to benefit from the initiatives. We have highlighted our top 10 opportunities below.
1. Innovation and Science Australia
The Prime Minister announced that Innovation and Science Australia will be the new national innovation agency responsible for the long-term direction of the innovation plan, headed by Australia’s newly appointed Chief Scientist, Alan Finkle. StartupAUS has been campaigning for this for some time and believe it demonstrates the government’s genuine commitment to developing a ‘comprehensive national innovation and entrepreneurship policy’.
2. Fear of failure
Steps will be taken to encourage reasonable risk-taking and address Australians’ ‘fear of failure’ by reducing the default bankruptcy period from three years to one, bringing in new laws to encourage crowd-funding and introducing new tax offsets for early-stage investments. There will also be a ban on contractual clauses that allow an agreement to be terminated solely due to insolvency if a company is being restructured.
3. Relax the same business test
There are plans to replace the ‘same business test’ with a more flexible ‘predominantly similar business test’, allowing businesses to change their business model more easily by writing their previous operations off as an R&D cost. This will reduce the tax exposure of start-ups that wish to change their strategy after learning more about their market (i.e. ‘pivoting’).
4. Incentives for investment
The government will introduce new incentives for investors including a 20% tax offset on investments in start-ups (capped at $200,000 per investor per year), and a 10 year capital gains tax exemption if the investment is held for three years. Further, Early Stage Venture Capital Limited Partnerships (ESVCLP) may now have a maximum fund size of $200,000 (up from $100,000) and may receive a 10% non-refundable tax offset on capital invested in start-up companies. The government has also designated $106m in tax incentives for ‘angel’ investors, who provide seed funding in the early years of a venture's creation.
A $200m CSIRO Innovation Fund will be created to support investments in spin-off and start-up companies. The CSIRO will also get an extra $20m to help commercialise research outcomes.
6. Commercialising research
The government will put $10m towards a $250m Biomedical Translation Fund which is aimed at getting ideas from the laboratory to market.
7. Talent and Skill
$51m will be invested in coding programs in schools over the next five years to introduce online computing challenges, ICT summer schools, and an annual ‘Cracking the Code’ national competition, as well as providing the necessary support for teachers. A further $13m will be invested in supporting greater participation of girls and women in research and STEM (science, technology, engineering and mathematics) industries and $48m in encouraging students to participate in science and maths.
8. Entrepreneur Visa
The innovation statement outlines plans to create an ‘Entrepreneur Visa’ giving pathways to permanent residency to migrants who start a successful business or who are postgraduate researchers with qualifications in STEM and information technology. This visa, which will be available in November next year, is aimed at encouraging innovative talent from all over the world to move to Australia and entice exchange students to stay in Australia after graduating.
9. Cyber Security
The government plans to spend $30m establishing the Cyber Security Growth Centre to create business opportunities for cyber security agencies to enter the rapidly-growing market estimated to be worth more than $97b. The industry-lead body will also develop a national cyber security strategy which will be released next year.
10. Research infrastructure
The prime minister also announced that $2.3b will be invested into research infrastructure, including $1.5b for the National Collaborative Research Infrastructure Strategy, $520m for the Australia Synchrotron and $294m for the Square Kilometre Array.