Federal Labor will offer businesses an R&D tax offset premium for collaborating with universities and science-based agencies like the CSIRO to bring new knowledge and innovations to market.
The $170 million scheme includes a re-write of the R&D Tax Incentive legislation to specifically change the object of the Act to include collaboration, and is designed to lift Australia’s business investment in R&D to 3 per cent of GDP by 2030.
“Businesses can add an additional 10 per cent to the value of their calculated R&D tax offset when they are spending with a public research institution, whether it’s a university or an organisation like the CSIRO,” shadow industry minister Kim Carr told InnovationAus.com.
That means for a large firm where the rate is currently at 38.5 per cent, this would lift the value of the offset to 48.5 per cent.
The collaboration premium would apply to a variety of activities in addition to cooperating with a university or the CSIRO to develop an innovative new product.
These include embedding industry researchers within a university facility, employing recent PhD graduates in their first three years of employment, hiring PhD students to do industrial research with a company.
Senator Carr said the R&D Tax Incentive would be a tool that should foster an alliance between industry and research in building industrial capabilities in Australia.
The scheme does not prescribe industry targets – picking winners – but Senator Carr told InnovationAus.com advanced manufacturing, renewables technologies – including battery tech – and the food and fibre industries would be beneficiaries.
To reach the 3 per cent BERD target, Labor wants to double the number of companies registered for the R&D Tax Incentive.
The collaboration premium would be available to large global companies, and that Labor encouraged multinational firms to conduct advanced research and development in Australia.
The collaboration premium was a recommendation of the Bill Ferris-led review of the R&D Tax Incentive three years ago which had proposed a premium offset of up to 20 per cent for companies engaged in R&D with public research agencies.
The policy aims to unlock the value of quality local research, a perennial problem for the industry portfolio over successive governments and several governments.
Australia produces 3.9 per cent of world scientific research papers – making the nation the ninth most prolific in the world – but its business-research collaboration numbers are among the worst in the developed world.
Only 2.7 per cent of SMEs and about 6 per cent of large firms have collaborated with a university or a research agency.
“We want to change the culture,” Senator Carr said. “We want for people to better understand what’s available at our universities and our science agencies, and in turn for our scientists and engineers to have a better understanding of what industry needs.”
“We are about building capability. We want to strengthen the capability of Australian industry, particularly in manufacturing and science and research to translate new knowledge into quality jobs in Australia – in Australia.
“The whole point is that this cannot be a race to the bottom, it has got to be a race to the top. We have got to focus on our innovative industries. That is how we sustain economic growth, how we sustain productivity, and how we sustain social justice,” Senator Carr said.
“This is how we secure prosperity for the country – by concentrating on our innovative capacity, particularly around our science and research,” he said.
Senator Carr also recommitted Labor to reassessing the treatment of startups under the R&D Tax Incentive, but offered no further detail on how this would be done. He said it was important that the scheme did not discriminate against the information technology innovations.
“We want to protect the integrity of the scheme, but we also need to make sure that people have not been badly treated. So we have already said we would look at the way the scheme is being administered.
“What we don’t want is to discriminate against IT or smaller firms.”
As well as reforming the R&D Tax Incentive, a Shorten Government would undertake a root and branch review of Australia’s research sector under the leadership of the former chief scientist Professor Ian Chubb.
The review would guide the government in setting priorities, including the strategy for collaboration.
Labor also plans to establish tripartite innovation councils in key industries such as food and fibre, electric vehicles, steel, and the built environment with the aim to bring industry, unions and researchers together and to develop innovation missions that stimulate business investment in R&D.