Exciting times loom ahead for tech founders, innovators and inventors – new policy settings for Australian innovation stakeholders

Exciting times loom ahead for tech founders, innovators and inventors – new policy settings for Australian innovation stakeholders

Prime Minister’s National Innovation and Science agenda released

Prime Minister Malcolm Turnbull unveiled his much anticipated Innovation agenda in Canberra last week. The purpose of the $1.1 billion package is to establish policy settings that will:
• encourage and reward investment in new ideas and solutions
• foster greater collaboration between the business community, universities and scientific institutions
• facilitate a greater emphasis on STEM skills within our education system
• transform Government so it becomes an exemplar of innovation

As the funding for this package does not commence until 1st July 2016 or later, it is well worth noting that the devil will be in the detail and not until we see the Customer guidelines and Application forms will we know the mechanism and timing relative to each initiative.

Please also keep in mind that a review of the current R&D Tax Incentive is also underway with findings to be released after the new independent body named Innovation and Science Australia (ISA) is formed on the 1st July 2016.

The package includes:

1. Tax Incentives for early stage investors who support innovative start-ups incorporated over the past 3 years which are not listed on the stock exchange with expenditure and income of less than $1m and $200,000 respectively in the previous income year:
• a 20 per cent non-refundable tax offset on investments, capped at $200,000 per investor per year
• a 10 year exemption on capital gains tax, providing investments are held for three years.

2. Tax Incentives to attract more investment in Early Stage Venture Capital Limited partnerships (ELVCLP) – investment partners will receive a 10% non-refundable tax offset on capital invested during the year.

3. Increasing access to company losses by replacing the ‘same business test’ with a more flexible ‘predominantly similar business test’, so that start ups companies will be able to pivot their projects and enter into new business activities and transactions without losing tax losses incurred.

4. Intangible asset depreciation will provide a new option to self-assess the tax effective life of acquired intangible assets that are currently fixed by statute. This will better align the tax effective life with the true life of the assets, meaning the same tax treatment will be available for acquired intangible assets as is available for other types of assets.

5. The new CSIRO Innovation Fund will have two parts:
• an early stage innovation fund of about $200 million to support co-investment in new spin-out/startup companies based on research based products and services created by Australian research institutions
• a $20 million expansion of CSIRO’s accelerator programme to include other publicly funded research organisations to more rapidly prepare their research for commercial purposes.

6. Biomedical Translation Fund, the Government will establish a new $250 million independent body will invest in promising biomedical discoveries and assist in their commercialisation.

7. The new $8 million Incubator support programme will become a new component of the Entreprenuer’s Infrastructure programme and offer competitive matching funding to:
• support development of new incubators and accelerators in regions or sectors with high innovation potential
• boost the effectiveness of high performance incubators, including support to expand their services and engage a Commercialisation Advisor to facilitate access to other government services and programmes

8. In addition to earlier reforms to the taxing point on employee share schemes the Innovation statement also announced limiting the requirement for disclosure statements given to employees to be made available to the public.

9. Building world class national research infrastructure – the government will invest $2.3 billion over the next 10 years in cutting edge national research infrastructure:
• $1.5 billion for the National Collaborative Research infrastructure Strategy (NCRIS)
• $520 million for the Australian Synchrotron
• $294 million for Australia’s commitment to Square Kilometre Array (SKA)

10. Research block grants will provide further support for driving greater collaboration through university- industry collaboration to give more emphasis to success in industry engagement and research quality by replacing the existing six research block grants with 2 streamlined programmes:
Research Support Programme (RSP) will provide $885 million in 2017 to Australian universities as a flexible funding stream to support the systemic costs of research
Research Training Programme (RTP) will provide $948 million in 2017 to support training of the next generation  of researchers and innovators

11. Under Australia’s Global innovation strategy the Government will invest $36 million to improve Australia’s innovation and science collaboration by:
• establishing five “landing pads” in Silicon Valley, Tel Aviv and three other locations to support entrepreneurial Australians with $11m in funding
• providing $22 million seed funding to assist Australian collaborations with international research-industry clusters
• investing $3 million in reducing barriers to regional collaboration and promoting an open market approach

12. Establishing an industry-led Cyber security growth centre with funding of $30 million through to 2019-20 to create business opportunities for Australia’s cyber security industry

13. The new Innovation connections programme will deliver $18 million in funding to expand and relaunch the existing Research Connections scheme to:
• provide additional facilitators so that more businesses can access Australia’s innovation infrastructure, particularly in regional Australia
• make matched grants available to support graduate and postgraduate researchers being placed in businesses
• make matched grants available to support business researchers to be placed in a publicly-funded research organisation
• identify opportunities to access research and development and testing facilities and develop specialised training options by working more closely with the vocational education and training sector

14. $26m to advance quantum computing technology in Australia and fund the development of a silicon quantum integrated circuit, the first step in developing a practical quantum computing system or super computer which will have the potential to solve problems in minutes that would take conventional computers centuries to work out.

15. From 1st July 2016 the Australian Research Councils (ARC) linkage projects scheme will be open to continuous applications and decision making will be fast tracked.

16. Under the inspiring a nation of scientists initiative the Government will invest $48 million over 5 years to encourage all Australians, from pre-schoolers to the broader community to engage with science, technology, engineering and mathematics (STEM) AND under the equipping students to create and use digital technologies initiative the Government will invest $51 million over 5 years to embrace the digital age and better prepare themselves for the jobs of the future.

17. Expanding opportunities for women in science, technology, engineering and mathematics (STEM) – the Government will invest $13 million over 5 years to encourage women to embark on, and remain in, STEM related careers through 3 initiatives.

18. Supporting Innovation through visas – the Government will enhance the visa system to attract the best and brightest entrepreneurial talent and skills to Australia by creating pathways to permanent residency for people with STEM and ICT qualifications and by creating a new Entrepreneur Visa to attract overseas based entrepreneurs with innovative ideas who have financial backing.

19. Data61 – creating Australia’s Digital and Data productivity Network – The government will invest $75 million to merge the National ICT Australia Ltd and the Commonwealth and industrial Research Organisation’s digital research unit to form one of the largest digital research teams in the world to:
• use data analytics to connect disparate government datasets and publicly release them on open data platforms
• improve industry cybersecurity and develop new cybersecurity architectures
• build a Data Research Network to link business with data researchers
• deliver data analytics training to improve data literacy in Australian businesses

20. Transforming procurement – a $19 million Business research and innovation initiative aims to transform Government procurement. The Government will pilot a series of challenges which will operate in 3 stages:
• nominate 5 national policy and service challenges
• invite businesses to submit proposals to address the 5 challenges with the winners receiving $100,000 to test their ideas over a 3 – 6 month development cycle
• provide an additional grant of up to $1m to the most successful applicants to further develop a prototype or proof of concept over the next 18 months.

21. Establish a Digital marketplace for information technology procurement to make it easier for SME’s to do business with Government. Based upon a successful UK model, the online directory will provide a catalogue of modular products and services so that ICT suppliers and government buyers can easily search, identify and procure best value options.

22. Establish a new independent body named Innovation and Science Australia (ISA) to provide strategic advice to the Government on all science, research and innovation matters as currently the Government’s $9.7 billion investment in R&D is fragmented across 15 portfolios.

23. Promoting innovation through publishing and sharing public data –the Government will release more non sensitive public data for private sector innovation and use public data to improve service delivery and inform policy development.

24. Innovation and Science in agriculture – Agricultural researchers will be well placed to take advantage of the sharpened incentives for university engagement with research end users.
• The Global Innovation Strategy will support Australian businesses and researchers to work with international consortia and will provide seed funding for collaborative science workshops with regional economies on shared challenges, such as food and bio-security.
• The Incubator Support Programme will focus on regional areas and sectors with high innovation potential, such as those identified as an industry Growth Centre or a Science and Research Priority.
• This agenda complements existing efforts to build an innovative and profitable agriculture sector as follows:
• The Government and industry are projected to fund around $5.5 billion in collaborative research, development and extension in agriculture through the sector based Rural Research and Development Corporations over the next 10 years.
• The Government has also doubled the scope of the Rural R&D for Profit programme, providing $200 million to improve farm-gate returns, adoption of research outcomes and research collaboration.
• The Food and Agribusiness Growth Centre, food and soil related Science and Research Priorities and our research organisations like CSIRO and Cooperative Research Centres also help to advance our agricultural sector.

25. Innovation in our regions – the Incubator Support Programme will focus on regional areas and sectors with high innovation potential, such as those identified as an industry growth centre or a Science and Research priority. A number of other measures, including further funding for regional universities and funding to inspire students and the community with digital technologies and STEM will all create more opportunities for our regions.
• This agenda complements existing efforts on regional Australia as follows:
• The Government is supporting Indigenous businesses and entrepreneurs through $30 million each year in direct support for enterprises, fostering cutting edge innovation by Indigenous entrepreneurs.
• The Australian Government’s National Stronger Regions Fund will provide funding of $1 billion over five years, commencing in 2015–16, to fund priority infrastructure in regional communities.

26. Making it easier to access crowd-sourced equity funding by introducing new laws that will enable unlisted companies to raise up to $5m a year in equity funds online. It will be available to unlisted Australian public companies with turnover and gross assets of less than $5m and limit the amount of investment per individual to $10,000 per company, per year.

To view the full National Innovation & Science Agenda please click here and to view the Fact sheets with further information on each of the 26 initiatives outlined in this newsletter please click here

If you would like to discuss the Agenda or other forms of Government assistance programs please call Gerry Frittmann, Managing Director of TCF Services on (02) 8219 4900 or visit www.tcf.net.au

The team at TCF Services also wish you a very Merry Christmas and a safe and happy New Year.