|Focus:||The Federal Government's National Innovation & Science Agenda|
|Services:||Competition & Consumer Law, Corporate & Commercial, Financial Services, Insurance, Intellectual Property & Technology, People & Workplace, Property & Projects|
|Industry Focus:||Agribusiness, Energy & Infrastructure, Financial Services, Insurance, Life Sciences & Healthcare, Property|
The Federal Government has just unveiled its highly-anticipated 'National Innovation & Science Agenda'. It appears to have been well received by many who have long considered that the promotion and prioritisation of science and innovation are critical to Australia's economic and social prosperity.
The Agenda has a stated aim of "transforming Australia's economy" through encouraging private investment in early stage companies, increasing collaboration between research institutions and industry, and the funding of new initiatives. It is broad in scope, and reflects many of the changes that have been suggested for some time by those involved in the creation and commercialisation of technology.
Below, we highlight some key aspects of the agenda with particular relevance for those with an interest in research, commercialisation and investment.
- University funding: From 2017, university block funding arrangements will encourage researchers to work with industry to produce outcomes with commercial and community benefit. These new arrangements will mean that commercial success, as well as other end-user engagement, will be given the same degree of recognition as research quality and publication counts.
- Research infrastructure: The National Collaborative Research Infrastructure Strategy (NCRIS) enables industry, as well as researchers, to access cutting edge equipment for affordable research. It will be funded to the tune of $1.5 billion, to continue world-class research infrastructure in areas of nanofabrication, food production, health, environment and sustainable cities.
- ARC Linkage Projects: The Australian Research Council's (ARC) Linkage Projects scheme is a long-running, competitive funding scheme supporting university and industry collaborations. From 1 July 2016, grant applications will be considered more frequently, enabling successful applicants to better seize opportunities for collaboration.
- Innovation Connections: In recognition that sharing lab space encourages the transfer of knowledge and skills, the Research Connections scheme will be expanded to include matching grants that will see researchers placed in business, and business researchers placed in research organisations. The scheme helps small and medium businesses develop their ideas, with assistance from Australia's world-class researchers.
- Biomedical Translation Fund: This new fund will be established in 2016 to administer a $250 million fund for investment in the commercialisation of biomedical discoveries. Managers of the fund will be selected competitively, and will be required to bring in matching private sector funding. The fund will focus on bridging the 'valley of death' between promising research and later-stage product development.
- CSIRO Innovation Fund: The Commonwealth Scientific and Industrial Research Organisation will receive:
- a $200 million fund to support co-investment in commercial spin-off companies, to commercialise products and services created by Australian research institutions (funded in part through revenue from one of CSIRO's commercialisation successes - its wireless networks technology)
- $20 million, to expand its accelerator program to other publicly funded research organisations.
- Government procurement: The Government will seek solutions to key challenges it faces, with grant funding of up to $1 million available for the development and testing of solutions. Funding recipients will be free to commercialise their ideas in other markets and outside Australia. Small businesses supplying innovative information and technology solutions will also be given the opportunities to supply directly to Government, through an online procurement 'marketplace'.
- Tax incentives: Generous tax incentives for investors in early-stage companies are expected from 1 July 2016 following consultation on eligibility criteria. These include a 20% non-refundable tax offset on investments (capped at $200,000 per investor per year) and a 10 year exemption on capital gains tax, if investments are held for at least 3 years. The incentive will be available for investments in unlisted companies less than 3 years old, with expenses under $1 million and less than $200,000 income per year.
- Intangible asset depreciation: Intellectual property assets acquired by companies will be able to depreciate over a shorter period, making many start-up companies a more attractive investment option.
- Crowd-sourced equity funding: Unlisted public companies will be able to access crowd-sourced equity funding (CSEF), if legislation currently before the Australian parliament is passed. Individuals will be able to invest up to $10,000 per company per year using CSEF. A 5 year exemption from some reporting and audit obligations to which public companies otherwise need to comply is also proposed for those companies converting status in order to access CSEF.
- Insolvency reform: Calls to improve Australia's insolvency laws have been heeded by the Government. To encourage entrepreneurship and reduce the stigma associated with failed businesses, proposed reforms (addressed in greater detail in the Productivity Commission's Final Report on Business Set-up, Transfer and Closure, released on the same day) include:
- reducing the bankruptcy period to one year (from three)
- introducing 'safe harbours' for directors from personal liability to insolvent trading, subject to the appointment of a restructuring advisor to aid the company in turning its prospects around
- making clauses in contracts allowing termination for insolvency unenforceable, if the company is restructuring.
But wait, there's more!
- Data and cyber-security: The value and impact of data and cyber-security have been recognised with significant investments, as well as greater access to Government data for researchers and industry.
- Innovation and Science Australia: Development of a long-term, coordinated plan for the Government's investment in science and innovation will be a key objective for Innovation and Science Australia, an independent advisory body. Another key task will be undertaking a review of Australia's R&D Tax Incentive scheme, with the aim of improving its 'effectiveness and integrity'.
- Talent: Another key focus of the Agenda is investment in people and talent. The Government proposes to invest significant amounts to encourage women to embark on, and remain in, careers in science, technology, engineering and mathematics (STEM), inspiring Australians of all ages to engage in STEM and participate in further study.
The attraction of overseas-born researchers will be encouraged via a new 'entrepreneur' visa, and facilitating permanent residency for postgraduate researchers with STEM and information technology qualifications. Additional support will also be made available for Australians based in Silicon Valley and other overseas innovation hubs.
- A number of other proposals were also included as part of the Innovation and Science Agenda. For more information, visit http://innovation.gov.au.
Many of the initiatives and programmes outlined above are subject to implementing legislation, with varying expected dates of commencement. In the meantime:
- research institutions should start reviewing their industry engagement processes and template documentation, and focus on training both academic and administrative staff now, to be best placed to capitalise on the changes
- early-stage companies that may benefit from proposed investment funds should start preparing early, to ensure their intellectual property and legal arrangements are in order well before fund managers start their 'due diligence' on potential investment targets
- businesses should investigate opportunities to collaborate with research organisations
- investors should seek expert assistance when assessing the intellectual property assets of their targets.
This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories