Labor's Beazley Refers to the Gestation of Labor's "Innovation Blueprint". (July 10, 2006)

    The leader of the Federal Labor Party, Kim Beasley, in an address in Brisbane today told his audience of innovators and entrepreneurs at Brisbane Technology Park in another of his policy "Blueprint" speeches the he was considering a number of options regarding how Labor intends to support development and innovation by scrapping the existing 125% tax break for R&D spending, thereby freeing up to $800 million for a selective grants and loans scheme. But alluding to the lack of detail he said, "We have not finalised positions on any of this."

Mr Beazley said that the 150% tax concession introduced by the Hawke Labor Government (it was cut to 125% by the Howard Coalition) would cost over $500 million annually to reinstate and he claimed a grants scheme would benefit small and medium enterprises and start-up companies, which often had tax losses that rendered the offset of little use.

However, that's not the full picture. In addition to the 125% tax concession currently available to smaller companies, a 175% premium is offered for companies that increase their R&D spending above a base level -- calculated at the average of their R&D spending over the previous three years. Over 880 companies claimed the 175% concession in 2004-05 and since the modifications were introduced by the Coalition, there has been a small but significant increase in business expenditure in research and development (BERD) as a percentage of GDP.

The Labor leader made the point that his government would give preference to projects in areas where Australia is already dominant, singling out for mention mining, agriculture, healthcare biotechnology and sustainable energy.

One suggestion that Mr Beazley is considering according to the draft of his speech is the building of a network of 10 innovation centres across the nation to link businesses with researchers and inventors whose work can boost their productivity.  It says the Enterprise Connect centres would cost $5 million a year over four years and be staffed by business advisers, technical experts and scientists who would help businesses solve specific problems or boost their capacity by giving access to emerging research and development.

As has been the case with other of Labor's "Blueprints", details are absent.

In a media release the Chair of the Group of Eight, Melbourne University Vice-Chancellor, Glyn Davis said, "Kim Beazley’s speech today on innovation sends a clear signal that this is an important policy focus for Labor," but Professor Davis warned, "Programs that aim to drive innovation must be accompanied by government support for a strong, world-class research base in our universities; without leading-edge science we cannot hope to compete with developments elsewhere."

And once again the Go8 Chair called for "funding for proof-of-concept activities where a scarcity of support currently restricts the flow of new technology ventures."

The President of the Federation of Australian Scientific and Technological Societies (FASTS), Professor Tom Spurling said, "Labor correctly recognises that innovation policy needs to focus more clearly on the 'demand-side' by building capacity in business to harness and leverage research."

He agrees that reassessing the balance between concessions and grants is overdue but adds that just scrapping the R&D tax concession in favour of grants and loans may do more damage than good, and rather than establishing up to 10 large Enterprise connect centres perhaps a more effective model would be a larger number of smaller, agile and focused centres.

And he emphasised, "There is a growing sense that Australia is frittering away the opportunity to invest in future productivity delivered by the current commodities boom. The ALP innovation blueprint is a timely reminder that a strong national commitment to innovation is fundamental to our future prosperity."

But Federal Industry Minister Ian Macfarlane, as might be expected, was scathing saying the Labor proposal is an ad hoc system of "picking winners. I think the Labor Party lacks any real understanding of what innovation is about and what industry needs in terms of innovation."

Full text of the Innovation Blueprint