Denham Sadler
May 23, 2017

Incubator funds: Confusion reigns

StartupLand

Incubator funds: Confusion reigns

The People's House: Where the people are confused about incubator funding

A war of words has broken out between the government and opposition over planned changes to the Incubator Support initiative, as confusion reigns over the program’s future.

A small line in this year’s budget indicated the government would be “refocusing” the $23 million program, which offers grants of up to $500,000 to new and existing incubators and of up to $25,000 to support ‘experts-in-residence’.

“The Incubator Support initiative is being refocused to better reflect the importance the Australian government places on regional development. The changes will support regional startups by improving the capabilities of regional incubators and accelerators and will build on the current program,” an Industry department spokesperson told InnovationAus.com.

But the Opposition has accused the government of preparing to do a “cut and run” and to strip the program of funding.

“During the program pause the Opposition believes the Turnbull Government will be thinking of ways to deliver a future funding cut, robbing regional Australia,” Labor’s digital economy spokesman Ed Husic said in a statement.

“In a few short paragraphs on page 130 of Budget Paper No. 2 they’ve crept away from supporting incubators by cutting the program under the guise of ‘refocusing’ it,” he said. "This cut means it’s far from an exciting time to be a university or business that wants to innovate in regional Australia – they’ve been left out by this government.

“Australia’s innovation community, particularly in regional areas, deserves consistent policy and support from the Turnbull Government, not a stealthy attempt to cut and run.”

But the government has hit back, saying that the program will retain its $23 million in funding.

“Contrary to recent claims, the Incubator Support initiative remains a $23 million commitment and there have been no changes to the program’s total budget,” an industry department spokesman said.

“In addition to being still available in capital cities and metropolitan areas, the incubator support initiative is being refocused to ensure it reflects the importance the Australian government places on regional development.”

The incubator program was first announced in the government’s Innovation Statement in December 2015, with $8 million funding. It received a further $15 million in the lead-up to last year’s election.

But in the year since, the program has only dished out about $590,000 in funding. It gave a grant of $500,000 to the Darwin Innovation Hub earlier this year, along with smaller grants of less than $30,000 to four existing incubators to support an ‘expert in residence’.

Mr Husic said this is an indication the program has been poorly advertised to the startup community.

“Because of non-existent promotion of the incubator program by the Turnbull Government the funding take-up has been woeful – with only one regional innovation hub supported in Darwin,” he said.

But according to the government, interest in the program has been “strong” since applications opened in September last year, and it would remain open for applications before the changes are implemented.

“Incubator Support is a competitive program and applications for new and existing incubators are continually assessed by a committee of Innovation and Science Australia. There is strong interest in the initiative including a number of grant applications currently under consideration,” the spokesperson said.

Regardless, there is confusion in the startup community over what the changes actually entail, given that regional incubators were always eligible to apply. According to the government, the changes are to be revealed later this year.

“The changes are still being designed and will provide greater support to regional startups by improving the capabilities of regional incubators and accelerators and build on the current initiative,” a spokesperson said.

Industry Minister Arthur Sinodinos has defended the changes, and refuted the claims made by the opposition in a statement titled ‘The facts on regional incubators’.

“The 2017 budget announcement will provide an additional focus to ensure it reflects the importance the Australian government places on regional development,” Mr Sinodinos said.

“The changes provide greater support to regional startups by improving the capabilities of regional incubators and accelerators and build on the current initiative,” he said.

StartupAUS CEO Alex McCauley said making changes to the existing program so early into its life is “perplexing”.

“To not be able to find that money in the rest of the budget, to have to reallocate that from an existing program that is by all accounts working well, seems perplexing. It seems odd that this money has to be taken out of a successful program,” Mr McCauley told InnovationAus.com.

“It’s a shame that the funding has to come from funding that’s already been allocated for other incubator support measures given this is supposed to be one of the central pillars of the government’s agenda.”

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