Australia 2030: Prosperity through Innovation

Overview

On 30 January 2018, Innovation and Science Australia (“ISA”) released the 2030 Plan with the Chair, Bill Ferris AC, stating:

“The ISA Board is confident Australia can become a top-tier innovation nation by 2030, and retain its record-breaking economic streak. Australia 2030: Prosperity through Innovation (the 2030 Plan) makes 30 recommendations for governments to help achieve this goal, including launching a landmark National Missions program to inspire innovators, progress solutions to big problems, and generate national passion and pride in innovation and science achievements.”

ISA has made 30 recommendations within the 2030 Plan with key theme within the Plan is improvement and expansion of the R&D Tax Incentive.

The Five Imperatives for Action

ISA has identified five urgent imperatives for action across Australia’s innovation system.

These have been framed to accelerate Australia’s performance by 2030 in what is a global innovation race.

These actions are:

1. Education – equipping all Australians with skills relevant to 2030

2. Industry – stimulating high growth firms and raising productivity

3. Government – a catalyst for innovation and global leader in innovative service delivery

4. R&D – increase translation and commercialisation of research

5. Culture & ambition – enhance the national culture of innovation by launching National Missions

R&D “fuels innovation in the wider economy”

A key focus on R&D cannot be underestimated. As noted in the 2030 Plan, Australia lags behind its global peers in gross expenditure on R&D as a percentage of GDP (1.9% in 2015 compared with Israel at 4.3%). With this as a backdrop, the Board of ISA’s vision for Australia’s R&D is to increase the incentives for collaboration and commercialisation.

The strategic opportunities identified for accelerating R&D are:

1. Increased collaboration between the industry and research sectors by introducing a collaboration premium in the R&D Tax Incentive program.

2. Increasing institutional support for commercialisation of R&D by establishing a dedicated stream of funding for translational activities.

3. To maintain Australia’s high quality research will require continued investment in national research infrastructure, commencing with the nations’ high performance computing facilities.

4. Promoting greater diversity in the research and innovation workforce to make the most of available research talent.

5. The growing momentum in Australia’s venture capital would be supported by taking measured and consultative approaches to any intervention.

Recommendation regarding the R&D Tax Incentive

To address Australia’s low rates of industry-research collaboration (by international standards), ISA Recommendation 19 is the introduction of a 20% collaboration premium on the non-refundable tax offset to incentive collaboration (as a key component of the recommendations of the 2016 Review of the R&D Tax Incentive).

These recommendations also include the introduction of a cap of $4 million on the refundable R&D tax offset and a cap on the lifetime expenditure on the R&D project of $40 million.

What Next?

With the Federal Budget less than 2 months away, we may get some further announcement or insight from the Government in relation to their response to recommendations made by ISA in the 2030 Plan, as a flow-on from its National Innovation and Science Agenda announced in 2015.

If implemented, we would expect benefits to flow to both SME companies and those in the middle and larger size from any changes to R&D.

Also please note that Round 4 – Small Business Digital Grants – OPEN NOW UNTIL 11th April. If you have any questions or require assistance throughout the application process, please contact us at news@hlbqld.com.au.