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James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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Innovation statement a solid, if familiar, debate starter

Published 18 February 2013 07:20, Updated 18 February 2013 13:23

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Innovation statement a solid, if familiar, debate starter

High visibility ... Prime Minister Julia Gillard talks to workers at Port Melbourne’s Boeing factory. Photo: Wayne Taylor

Prime Minister Julia Gillard has been at pains to say that the country is not in the middle of an election campaign and that her naming of the September 14 poll date was just to give everyone time to plan their lives.

Yeah right.

Over the last two weekends we’ve had major policy reveals that sound a lot like campaign announcements to me.

Two weekends ago it was a details-light announcement about a boost to workplace flexibility for parents and carers.

And last weekend it was the government’s long-promised innovation statement, Labor’s big pitch to business.

And while some of the details of this $1 billion package are a little hazy, and some of the initiatives questionable in their motivation, overall it’s a solid set of ideas that should push the debate about industry policy forward and give the Coalition something to respond to.

Make no mistake, this innovation statement is as much about Gillard shoring up the support of the unions and blue-collar voters. Just take a look at the document itself, with pictures of people in high-visibility clothing on every second page.

The policy Labor focused on during the announcement – the requirement of big projects to consider using Australian labour, goods and services – is in some ways the most uninteresting part of the whole package.

It’s a nice idea that unions and manufacturers will absolutely love, but it remains to be seen just how well it will all work. Will a requirement to “embed” government officials into project procurement teams really thrill the companies behind these projects? 

What size stick will the government wield over companies to make sure Australian goods and services are used? Let’s wait and see on this one.

The proposal to create 10 new innovation precincts is much more interesting. The idea heavily echoes the collaborative research centres created by the Howard government in that it seeks to connect researchers, industry and eventually customers, particularly those overseas.

Labor plans to pump some $238.4 million into these centres, the first two of which will cover food (based in Melbourne) and manufacturing (based in Adelaide). The other eight will be put out to competitive tender in 2013 with plans to start in 2014. Three will focus on existing Australian industries, five will focus on new sectors.

Again, these centres sound like a reasonable if familiar idea: get industry, academia, the government and customers to work together in a more collaborative, focused way.

But their true value will be in the execution. No-one would argue that the current Cooperative Research Centres have changed Australian industry, particularly in the area of manufacturing.

The other issue is that the limited number of precincts will leave the government open to accusations it is picking winners in terms of backing some industries and ignoring others. Many experts will hate this idea and there is clearly some danger of getting the choices wrong.

The ideas that the innovation package offers that are most interesting are in the area of assistance to small business. One of the big numbers in this package is $378 million for a package called Venture Australia, which will include $350 million towards venture capital through the existing Innovation Investment Fund program  and a further $28.6 million in costs (which I’m yet to identify).

It’s an awfully big amount – until you read the fine print and see that the money is over 14 years. Yes, 14 years!

One interesting idea in the Venture Australia package is improved tax treatment for angel investors. There doesn’t appear to be much information about this, but anything that makes it easier for angels and VCs to pump money into early-stage businesses would be welcome.

Just a quick word on how Labor intends to pay for all of this – by cutting R&D subsidies for companies with $20 billion or more in revenue. There are only 20 or so companies that fit the bill – banks, miners and big retailers – and certainly they are best placed to afford to pay for their own R&D. However, it does seem a little strange to pay for an innovation package by cutting back on innovation in another area.

The ideas in this package aren’t necessarily revolutionary and they aren’t perfect. But Labor deserves some credit for a set of policies that should spark debate in what Australia needs to see in its industry policy.

Let’s hope Labor is prepared to listen to feedback from the business community and let’s hope the Coalition is working on a fitting response.

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