Australian PM Unveils "Innovation Statement"

In early December 2015, Australian prime minister Malcolm Turnbull unveiled his Innovation Statement in Canberra, saying he wanted to drive a so-called “ideas boom” in the country. Turnbull announced this plan at the Commonwealth Scientific and Industrial Research Organization (CSIRO, a leading national science research organization) headquarters. The statement included 24 policies costing A$1.1 billion (US$770 million) over four years and covering 11 portfolios.

An A$30 million (US$21 million) centre for developing Australia’s cyber security industry and an A$15 million (US$10.5 million) digital marketplace to enable smaller companies to work with government are among the key measures in the statement. According to Australian media sources, other key measures involve driving more risky capital into startups, trying to attract entrepreneurial talent to Australia and getting university researchers and industry to work more closely together.

The statement further says that the government will unveil plans in the areas of tax, research infrastructure and education in the STEM subjects – science, technology, engineering and math – in a bid to “kick start an innovation culture.” The innovation statement also aims to address two big failures of the Australian startup sector: collaboration and commercialization.

“There are various strands to the statement, including tax reforms to encourage investment in Australian start-up businesses and also to allow start-up businesses to account for intangible asset depreciation, regulatory reforms around bankruptcy and employee share schemes that are designed to make life easier for startup businesses. It also includes funding and measures to increase collaboration between universities and industry, increased funding and emphasis on education in science, engineering and digital subjects and funding to CSIRO,” says Andrea Ruhrmann, a principal and patent attorney at Spruson & Ferguson in Sydney.

In terms of how start-up businesses would benefit from the scheme, Ruhrmann says the forthcoming change in employee share scheme regulations should result in businesses being able to allocate equity more readily with a lower disclosure burden in addition to the recent introduction of tax concessions for start-ups offering employee share schemes.

“[Businesses] should also benefit from the new regulations allowing selfassessment of the value of intangible assets such as intellectual property, making the asset more attractive to investors in the initial stages of a business. Increased funding to incubators, which provide mentoring, office space, professional services and other resources to new start-up businesses is also a positive measure,” she says.

Ruhrmann says many start-up business owners reach the point, fairly early on, at which they can no longer self-fund the business and have to stake their house, apartment or other asset on the success of the business as security against a bank loan. In other words, operational costs in the early stages often outweigh available funding. Sydney, for instance, is an entrepreneurial hub and is the home of many start-up businesses. But since the cost of living, renting office space and hiring talented staff can be a significant outlay for start-ups in the initial stages when cash flow can be uncertain at best, it is also an expensive city in which to operate a new business. Therefore, measures to help further mitigate the financial burden would be welcomed by the start-up community.

“The Innovation Statement is a great step forward in government policy in favor of innovation and recognizing its hugely important place in the Australian economy” she says, adding that further steps may follow in the future.