Saturday 2 July 2016 will mark the day when the seemingly endless battle between the Coalition and Labour finally draws to an end.
Perhaps the most fundamental issue of this campaign has been that of the economy. Both parties have been asked important questions about Australia’s future; how will we get back to surplus? What will fill the void of the diminishing mining boom?
The Coalitions air-tight proposal has been the ‘Ideas Boom,’ aiming to polarise Australian electorates to the Coalition’s sound economic agenda. Plastered on billboards, pervasive on social media and incessantly advertised on radio, the ‘Ideas Boom’ purports to help lead to a “culture of ideas and innovation” and guide the Australian economy into a fiscal stronghold of opportunism.
When Treasurer Scott Morrison delivered his 2016 Budget, he sternly proclaimed “this cannot just be another budget: because these are extraordinary times.” Indeed, they are. The decline of the mining boom has left a gaping hole in our economy. The Australian economy needs to innovate. Why then, are the budget and pre-election policies so lacklustre, non-committal and boring?
The $1.1 billion ‘National Innovation and Science Agenda’ announced in the budget aims to provide the necessary impetus for the Ideas Boom. It does so through three main mechanisms: making it easier to obtain capital, collaborating with researchers and attracting talent domestically and overseas. This will, undoubtedly, provide assistance to the recently neglected CSIRO. Over $200 million has been set aside for the ‘CSIRO Innovation Fund,’ which supports “the early stage commercialisations of innovations from CSIRO, universities and other publicly funded research bodies.” It includes a two part strategy: where $200 million to support co-investment in new start-up company’s products created by Australian research institution and another $20 million to ‘CSIRO’s Accelerator Programme, which includes other publicly funded research organisations. There is sound economic logic here. Researchers innovate, and innovation creates jobs and economic growth. This is a step in the right direction: but a small, tentative step at best. Indeed, out of that $200 million only $70 million is new government funding.
Tax reform is another item on the agenda that is always a sexy, election friendly policy. Concessional tax treatments are being made for investors who support these start-ups; including a 20% non-refundable tax offset on investments (capped at $200,000 per investor, per year) and a 10 year capital gains tax exemption for investments held for three years. This theoretically creates an investor friendly climate of spending and sets the train of innovation on track for a resilient and thriving economy.
However these tax reforms, and the innovation budget in general, have been met with some criticsm. The government has relentlessly permeated the idea of the ‘Ideas Boom’ without properly (and ironically) committing to the idea. If the Government really wants to pivot Australia towards a new era of economic successs, “we need much more targeted measures for industry transformation than just tax cuts,” argues Professor Roy Green, dean of the University of Technology Sydney’s Business School. He logically contends that the budget needs to “include measures that boost R&D performance, and our non-tech performance,” because there’s no “long term value added” with failing start-ups. If the government truly wanted ‘innovation’ in our economy, perhaps it could do so by leading the way: innovating in its economic policy and setting the right tone.
On the other end, the Labor Party’s innovation policies try to do much of the same. The ‘Smart Investment Fund’ sets aside $500 million for early-stage and high potential companies. Furthermore, they seek to improve access to finance via a partial guarantee scheme named ‘Start Up Finance.’ These measures fundamentally follow the same logic and strategy of the Coalition, hence share the same shortcoming: a lack of long term measures that sustain Australia’s economy for years to come. Nonetheless, the ALP has committed to ‘Student Funding Guarantees’ and measures to boost the numbers of Australians in STEM courses- making education a key part of any “Ideas Boom.” This is logic that appears to have been overlooked by the Coalition through their cuts to education spending, and may prove a boon to Labor’s election hopes.
Sure, this is an election fought around small targets; both parties had to play it safe. But how can our politicians purport an ‘Ideas Boom’ as all-embracing mantra for superior economic management ability when they don’t innovate themselves? Both parties appear to have solid innovation plans; viable, rational and most importantly achievable for a prosperous state like Australia. Indeed, it’s great to see both major parties offering up detailed innovation policy, but there’s nothing here that’s targeted towards R & D in a big way- just fairly common sense, low-hanging fruit. None of the policies here are truly innovative in and of themselves. Perhaps the application of the Ideas Boom will prosper more than the premise one day, but that’ll be an election and another budget away at best.