The Victorian budget marks a “fundamental shift” in the state government’s support for technology and innovation, with billions of dollars in funding coming in the form of research translation and venture growth funds.
Victorian Treasurer Tim Pallas handed down the budget on Tuesday after it was delayed due to the COVID-19 pandemic. It places innovation at the forefront of the state’s economic recovery from the pandemic and hands the government a significant role in funding local companies and assisting with the commercialisation of research.
The flagship announcement for the sector is the $2 billion Breakthrough Victoria Fund which will provide cash to local businesses for research and development, adoption and commercialisation, with a focus on the medical research, health and life sciences, advanced manufacturing and digital technologies sectors.
The fund will run for 10 years with an aim to position Victoria as an international leader in research and technology, with about $200 million provided annually.
Mr Pallas said the fund “typifies the government’s optimism” and the importance of technology in the economic recovery.
“An Australian-first, it will drive investment in research, innovation and commercial outcomes. We know Victoria has some of the best scientists and institutes in the world, producing some of the most advanced research. We’ll leverage this to supercharge growth in new innovations, new companies and new jobs,” Mr Pallas said.
“It will attract the best and brightest from around the world.”
The Victorian government will also establish a $50 million fund to provide low-interest loans for companies eligible for the federal government’s research and development tax incentive, providing for up to 80 per cent of their forecast refundable tax offset.
Further to this, two venture growth funds are set to be launched to support early and later stage tech firms in the state.
The Victorian Startup Capital Fund will get $61 million over three years to “unlock capital” to support early-stage startups in the state, and to leverage private capital. In the current financial year, $500,000 will be provided for the creation of the fund, with $20 million dished out in the following year, followed by $40 million in 2022-23.
Working in tandem with this fund will be the $25 million Venture Growth Fund, which will see the state government co-investing into a venture debt facility along with a private investor into the scale-up sector, supporting companies that cannot access traditional loans.
This fund will provide short-to-medium term venture debt to “complement” the startup growth fund. Nearly all of the fund’s capital will be deployed this financial year, with just $100,000 provided to it over the following three years.
LaunchVic, established in 2016 to deploy the state’s $60 million innovation fund, has been provided funding assurance, with $10 million annually over the forward estimates. The independent government body will be focusing on supporting the local angel and early-stage investor communities, and startups in the government’s priority sectors.
“This will help to re-establish the growth momentum in Victoria’s startup ecosystem and promote entrepreneurship in regional Victoria, which will support job creation, innovation and productivity growth,” the budget papers said.
LaunchVic’s initial funding came to an end last year, and the agency was provided a one-off $10 million cash injection for 2019-20. Due to the delayed budget, LaunchVic was handed about $5 million to continue operating to the end of the calendar year.
The government will provide $10 million over three years for a Women’s Founder Angel Sidecar initiative which will increase access to capital for women founders in the startup sector and will be run by LaunchVic.
Outside of the startup space, $60 million has been allocated for the Manufacturing and Industry Development Fund to focus on essential and sovereign manufacturing capability in Victoria, and $80 million for a package of targeted incentives to attract international business investment.
Internally, $7.5 million will be provided in this financial year to improve cybersecurity in the Victorian public sector, with “world-class tech and software tools” to be procured and deployed to protect from malicious attacks.
Digital Victoria will be established to drive the state’s digital transformation in the public sector, with $150 million allocated over the next four years, including $30 million in 2020-21.
Service Victoria will get $19.9 million in 2020-21, which will then drop to $2.5 million in the following year then $3.2 million.
The Victorian government will continue to utilise technology in the ongoing fight against COVID-19, with $4.5 million provided for the establishment of a contact tracing system for venues, and $4.6 million for the creation of a single digital solution for COVID-19 reporting of whole-of-government data.