Action needed to boost business innovation
Friday, May 2, 2008/
Increased support for commercialisation and research and development have emerged as core themes in a flood of submissions to the Rudd Government’s innovation review.
The review, chaired by CSIRO director Terry Cutler, has received 325 submissions from a range of innovation experts and organisations from across the country.
Although diverse in their views, a common message in the submissions is while Australian business owners are natural-born innovators, a lack of Government support is holding them back.
One area identified as having potential for a modest Government investment to yield a significant innovative dividend is in helping start-ups and small businesses commercialise innovative ideas.
Not-for-profit innovation incubator Innovic argues public funding for a targeted micro-loan program or commercialisation fund could help many start-ups get over the commercialisation hurdle.
“Often at the very early stages people aren’t eligible for most grants because they don’t have the experience or track record. They are forced to try and bootstrap their businesses, and that is a long lonely path, and sometimes the time and money just isn’t there,” Innovic chief executive Joss Evans says.
Evans says funds for increased business skill training for early stage entrepreneurs would also pay dividends.
“Most innovators are not business people, so while they have creative ideas they often don’t have the skills to take it to market,” she says.
Improvements to Australia’s R&D policy framework is also nominated as a priority reform area by in several submissions.
John Bell, an associate director of Allen Consulting Group and former head of the OECD’s science, technology and innovation policy division, says increasing the Federal Government’s R&D tax concession regime could provide a big boost to innovation.
The shift in the R&D tax concession from 150% to 125% has retarded research levels in Australia, Bell says.
“We saw significant growth in R&D by business when the 150% tax concession was introduced, but as soon as it went to 125% it started to fall away and we are only now, after many years of a strong economy, returning to those levels as a percentage of GDP,” Bell says.
He argues that a bold Government move to implement an R&D tax concession closer to 200% is now needed to kickstart business innovation.
“You need to go above that 150% mark to get the same effect because changes to franking dividends and the corporate tax rate have reduced the benefit in tax concessions,” he says.
And, like Evans, Bell says any increase in funding to business should be matched by a skills boost.
“We need more of the scientists, engineers and skilled people across the board that make innovation happen. We are just not producing enough of these people,” he says.