Output 2.3 Innovation Program Implementation and Management
Contribution
to Outcome 2
Priorities
Performance
information
Priorities
Implementing Backing Australia’s Ability and other Budget initiatives
A major emphasis in 2001–02 was given to the implementation of
Backing Australia’s Ability initiatives
(see also Output 2.1). These
included additional and ongoing funding for the Cooperative Research Centres
program, Major National Research Facilities and science elements of the
Innovation Access Program, which were transferred to the Department of
Education, Science and Training (DEST) following administrative changes
after the 2001 Federal election. Information on those programs can be
found in the DEST annual report.
Other significant elements implemented by AusIndustry were the Biotechnology
Innovation Fund, Commercialising Emerging Technologies Program, Innovation
Access Program – Industry, R&D Start Grants and Loans, R&D
Tax Concession and the Pre-Seed Fund. Specific information, including
performance information, on these programs is discussed below.
Delivering programs and services
Innovation programs
The aim of innovation programs is to enhance innovation and research
and development (R&D) performance in Australian business. The Industry
Research and Development Board (the IR&D Board) administers the following
innovation programs, with the exception of the Innovation Access Program
and the Shipbuilding Innovation Scheme. More details of the IR&D Board’s
programs are given in its annual report.
Biotechnology Innovation Fund
The Biotechnology Innovation Fund (BIF) is a key initiative arising from
the Commonwealth Government’s National Biotechnology Strategy
(refer to Output
1.1), under which $20 million was provided for the program from
1 July 2001 to 30 June 2004. Funding was doubled to $40 million
under the Prime Minister’s Innovation Statement, Backing Australia’s
Ability. BIF is a merit based competitive grants program, conducted
in funding rounds and designed to support biotechnology projects
at the proof-of-concept stage.
The IR&D Board makes BIF funding decisions. Rounds one and two were
assessed during 2001–02, with 136 applications for assistance considered,
and funding of about $12.2 million approved for 55 successful applicants.
Round three closed in June 2002; 82 applications had been received and
were expected to be considered in August 2002.
The large number of applications for the first three rounds demonstrated
strong industry demand for this program, with application levels well
above expectations and a good proportion of applications from start-up
companies.
Commercialising Emerging Technologies
The Commercialising Emerging Technologies (COMET) program aims to increase
the commercialisation of innovative products, processes and services.
It provides individuals, early-growth firms and spin-off companies with
support to improve their potential for successful commercialisation.
The program commenced in November 1999 with funding of $30 million, receiving
additional funding of $40 million, under Backing Australia’s Ability,
from 1 July 2001 to 30 June 2005. A national network of private sector
contractors made up of business advisers and two national managers deliver
the program. Decisions to provide assistance to customers are made by
the COMET Review Panel, which comprises national managers and a departmental
official as a delegate of the IR&D Board. During 2001–02, 247
applications for COMET assistance were approved, and $12.1 million provided
in support to 409 new and existing customers.
Innovation Access Program
The Innovation Access Program was announced in Backing
Australia’s Ability, and replaced the Technology Diffusion
Program. The program’s goal is to promote innovation and competitiveness
by increasing Australian access to global research and technologies and
facilitate their uptake by Australian researchers and firms, particularly
small- and medium-sized enterprises.
During the year the program undertook a range of strategic activities
and implemented the International Research and Development and Technology
Access grants. As well, transitional arrangements were implemented for
Technology Diffusion Program customers. Grant funding of $11.3 million
was provided to 291 customers as a contribution to their projects.
As a result of the transfer of the science elements to DEST new program
documentation was developed for Innovation Access Program – Industry
grants, and customers were assisted with the transfer of activities.
In addition, a number of strategic activities, collectively funded with
$331,000 during the year, were funded under the program as discussed under
Output 2.2.
R&D Start Grants and Loans
R&D Start Grants and Loans is a competitive, merit based grants and
loans allocation program that supports businesses to undertake R&D
and commercialisation.
The R&D Start Program has been a great success over the past five
years in supporting industry R&D. About one thousand companies have
received support through the program. During the past two years, interest
in the program rose significantly – 374 grants were approved, to
the total value of about $357.5 million, during the 2000–01 and
2001–02 financial years.
This financial year AusIndustry experienced an unprecedented surge in
demand for program funds. To meet that unexpectedly large call on funds,
the Government allocated an additional $40 million from uncommitted R&D
Start funds from future years and in April 2002 new approvals were suspended
until further funding becomes available. The program is funded until 2005–06.
Existing R&D Start commitments were not affected by the suspension
of the program and 604 companies with R&D Start contracts continued
to receive their payments. AusIndustry will monitor expenditure by grant
holders closely with a view to resuming approvals for new grants as soon
as possible in 2002–03.
R&D Tax Concession
The R&D Tax Concession provides an incentive for Australian companies
to undertake R&D. It is designed to increase investment in R&D,
with a view to fostering innovation and enhancing international competitiveness.
Eligible companies can claim tax deductions for the 125 per cent R&D
Tax Concession when lodging their annual tax returns. A priority in 2001–02
was the implementation of new administrative arrangements for the R&D
Tax Concession’s 175 per cent Premium (Incremental) Tax Concession
and an R&D Tax Offset – a cash rebate for small companies.
As of 30 June 2002, 3,565 companies were registered for the 2000–01
financial year with reported R&D expenditure totalling a record level
of $5.266 billion. That represented about 95 per cent of the expected
number of applications for registration for that financial year. The number
of companies registered for 2000–01 is expected to be around 3,750.
R&D tax syndication
The IR&D Board continued its commitment to a detailed scrutiny of
individual syndicates under the R&D Tax Concession. Syndication was
closed to new entrants in 1996. From a portfolio of 246 registered syndicates,
29 were wound up in 2001–02 leaving a balance of 31 active syndicates
at 30 June 2002.
Shipbuilding Innovation Scheme
The Shipbuilding Innovation Scheme aims to encourage a strengthened focus
on product R&D and design innovation in the Australian shipbuilding
industry. The scheme provides registered shipbuilders with assistance
equivalent to 50 per cent of eligible innovation expenditure incurred,
up to a total of 2 per cent of eligible costs in the construction or modification
of a bountiable vessel completed on or before 30 June 2004. Funding of
about $4 million was provided in 2001-02.
Venture capital programs
Venture capital programs are aimed at enhancing the availability of venture
capital for early-stage and patient equity capital for investment in small
innovative firms. The IR&D Board administers these programs, with
the exception of the Pooled Development Funds (PDF) program which is administered
by the PDF Registration Board. The PDF Registration Board’s annual
report provides more information.
Innovation Investment Fund
The Innovation Investment Fund (IIF) is a venture capital program that
invests in nine private sector venture capital funds to assist small companies
in the early stages of development to commercialise the outcomes of Australia’s
strong research and development capability.
With the last two of the IIF’s second round fund managers (Foundation
Management and Newport CDIB Funds Management) becoming operational during
2001–02, nine managers are now licensed under the IIF program. Fourteen
new IIF investee companies received funding under the program during 2001–02.
A total of $27.3 million of Commonwealth funds was invested under the
program in 2001–02. This figure includes management fees.
Pooled Development Funds
PDFs are designed to support small- to medium-sized enterprises in increasing
the supply of equity capital for growing Australian small- and medium-sized
enterprises.
During 2001–02, PDFs provided more than $90 million to assist the
growth of Australian companies. Since the program began in July 1992 PDFs
have invested more than $550 million in Australian companies. As at 30
June 2002, there were 121 registered PDFs.
Pre-Seed Fund
The Commonwealth is providing $72.7 million under the Pre-Seed Fund to
assist the commercialisation of R&D undertaken by universities and
public sector research agencies. With the addition of private sector capital,
more than $100 million will be available under the program for investment
in eligible projects and companies. Following an extensive assessment
process conducted during 2001–02, four private sector fund managers
were selected to make the investments. These fund managers (Allen and
Buckeridge Asset Management, Rothschild Genesis Fund, SciVentures and
Starfish Ventures) are expected to become operational during the first
quarter of the 2002–03 financial year.
Renewable Energy Equity Fund
The Renewable Energy Equity Fund (REEF) is a specialist venture capital
program that has invested in one private sector venture capital fund.
It provides venture capital to assist companies to commercialise R&D
in renewable energy technologies.
By 30 June 2002, the fund manager for REEF, CVC REEF Limited, had invested
about $6 million in five companies since commencing operations in November
2000.
Developing AusIndustry’s organisational capability
AusIndustry is the Department’s innovation and industry program
delivery Division. In 2001–02 it delivered around 25 programs (included
in Outputs 1.3
and 2.3), worth about $1.9 billion, through
a wide range of delivery channels including by face-to-face contact, online
via the AusIndustry Hotline (telephone number 13 28 46), and through consultants
and business advisers. The organisation further strengthened its capabilities
during 2001–02. Key initiatives (under both Outputs
1.3 and 2.3) included:
- establishment of regional offices in 14 regional areas of Australia
in December 2001 – the regional offices are an extension of the
AusIndustry capital city network, and will improve the support measures
in place to increase Australia’s innovative capability and make
companies more competitive in the marketplace
- implementation of a comprehensive risk and compliance framework for
AusIndustry products and services
- promulgation of conflict of interest guidelines for AusIndustry staff
and promotion of the processes outlined in the guidelines
- implementation of additional functionality for management information
systems servicing a number of programs, including the continued development
of online capability (such as the electronic lodgment of applications),
development of a generic data model for programs, and improvements to
systems for a number of specific programs, such as COMET, BIF, Textiles,
Clothing and Footwear Corporate Wear Register and Petroleum Products
Freight Subsidy Scheme
- enhancement of staff skills and knowledge through a comprehensive
induction package, greater use of intranet learning tools and new financial
and legal training modules
- redesign of the AusIndustry
website and successful retendering for the delivery of an
AusIndustry Hotline service
- application of consistent standards for the content and language
of all AusIndustry documentation.
Improving service to customers and stakeholders
In order to improve customer service, a customer satisfaction survey
for the BIF was undertaken. The survey completed the benchmark surveys
of customers of AusIndustry’s key programs for Output 2.3. Results
and analysis were provided to program managers to enable them to undertake
improvements to service delivery.
Initiatives to enhance awareness and access to programs by customers
included:
- the expansion of the COMET network of consultant Business Advisers
from 10 to 17 – the additional Business Advisers enabled the program
to extend to regional areas including Northern Australia (served from
Townsville), the Gold Coast and Tasmania
- information and awareness roadshows on Backing
Australia’s Ability initiatives
- an extensive program of customer visits, the development of information
bulletins, and the distribution of a kit containing the 2001–02
R&D Tax Concession registration application form and application
notes to 5,000 customers
- the increased use of online services and information – for example,
electronic lodgment of applications was made available to R&D Tax
Concession customers.
During 2001–02, AusIndustry completed a survey into the views and
needs of key stakeholders. In particular, AusIndustry sought feedback
from the IR&D Board, its committees and other expert panels to which
it provides services. The survey revealed a very high level of satisfaction
with the service provided by AusIndustry. Respondents (94 per cent) were
satisfied with the quality of information and advice provided by AusIndustry
to assist in making decisions or recommendations.
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