Fran Bailey (McEwen, Liberal Party) Share this | Hansard source

Prior to November last year, the Australian Labor Party went to the Australian public and portrayed themselves as the party of the new, the party of fresh ideas and the way of the future—and I have to say that the majority of the Australian people bought that rhetoric. The first opportunity that a government has to put its stamp on its forward plans is the budget. In presenting the budget, which of course was brought down a few weeks ago, the Treasurer stood in our parliament and his opening words were:

This Budget is designed to meet the big challenges of the future.

Members of the Australian public who had bought that rhetoric prior to November last year were probably encouraged to hear that first sentence. But let us think about what a nation needs to meet the big challenges of the future. I would say to the House that any country needs innovation. It does need those fresh ideas and research and development. Without them a nation cannot thrive and move ahead. Let us look at the issues that face Australia in the 21st century. Where is our manufacturing industry going? Where is medical technology heading? Where are the new scientific advances? What about climate change? Where are the answers to meet these problems of the future coming from? They will come from our small- and medium-sized enterprises—the SMEs of this country—who invest their capital, their labour and their expertise.

I have to say that the government has failed its first test. It has failed to clear the very first hurdle in delivering this budget. The Treasurer said that this budget is designed to meet the real challenges, the big challenges of the future, and I want to draw the attention of the House to the travesty that has happened. The government, without any consultation with industry and without any proposal that there be a transition program, axed the Commercial Ready program—a $750 million program. I am going to spend some time detailing the sorts of successes that this program has bred, but I also want to highlight that we now know that 16 days before the government announced that they were axing this program—which is absolutely vital for Australia’s research and development sector and the ability to commercialise research—the committee charged with the responsibility of assessing applications was still meeting.

This is deception of terrible proportions. Seventy-one businesses had their applications in. These are companies, SMEs, who have spent thousands and thousands of dollars getting the applications to a stage where they were ready to put them to AusIndustry—a very hardworking and dynamic bunch of bureaucrats who are very in tune with industry. I think this is an absolute travesty. I have gone out to industry and I want, tonight, to spend some time detailing what industry’s reaction is to this, because it proves beyond a shadow of a doubt that the first line of the budget—kaput!—is gone.

Mr Dennis Alemis is a man who has been involved in the Commercial Ready program, its predecessor and other government assistance programs and initiatives, for 19 years. He has worked with the Public Service administering the Commercial Ready program and other programs like it for 11 years, plus he has worked in the private sector as a business consultant assisting organisations which are getting their applications ready to submit to the government. Within the time that this man has worked with these companies, he has advised approximately 200 companies on undertaking research and commercialising the results. Out of those companies, over 100 have received some form of government assistance to help them undertake this research. He says:

I believe the government’s decision was probably due to a lack of consultation and understanding of the program and the impact of its decision.

That was borne out by the minister in the other place in what he said in answer to a question at question time. He told an opposition senator that this program really went to millionaire businesses. How out of touch and ignorant can a minister for industry be? Mr Alemis goes on to say:

An estimated 100 applicants wasting up to 6 months of work costing their businesses anywhere from $50,000 to over $100,000 in direct costs, in addition to the opportunity costs of directing resources into something that has been a waste of time. This does not consider the time and effort of external consultants and other participants in the supply chain.

He goes on:

It is an unjust result for up to 50 applicants already in the system that had their cases decided upon in April and early May with decisions pending announcement.

These are cases where officials within AusIndustry had rigorously assessed these projects and had passed them as ready to be funded. To call this an unjust result is, I think, an understatement.

Organisations are now considering moving their projects and their technologies offshore or accessing offshore equity to enable them to continue as Australian equity. The opportunities for this are very limited. Organisations are delaying and they are not proceeding with the employment of skilled employees to undertake their projects. There is a negative financial flow-on effect to other businesses that were involved in the projects from a technical and a commercial perspective, including of course the very skilled consultants. There is now a distrust amongst the business community about the government’s actions, and a significant funding gap has been created for the Australian innovation sector. This makes a nonsense of the Treasurer standing up in this place and saying that the budget was all about finding the answers for the future, for the big challenges.

Let me go on to detail the benefits of the Commercial Ready program. I draw honourable member’s attention to data covering at least 75 projects undertaken by companies across Australia. Mr Alemis was associated, over an eight-year period, with many of these projects. Let us look at some of the advantages—and this is just from 75 projects. There was direct employment of 363 new staff, plus of course external contractors required to work on the projects. The most important aspect was the successful commercialisation of the new technologies, and with that commercialisation came a further 401 new staff. Export revenue of $1,893 million was forecast to be generated from successful commercialisation within the first five years of project completion.

This is really what underpins Australia for the future. How do we compete in those fiercely competitive global markets? We cannot do that unless we are using the best and the brightest, the latest technology, what is going to give us an edge in that global competitive environment.

I want to detail a couple of companies who have lost out in this government decision. One is Sienna Cancer Diagnostics Ltd. Sienna is developing highly novel diagnostic tests for the assessment of cancer and the effectiveness of treatment. Sienna’s technology, developed in collaboration with the world’s largest cancer research organisation, the Ludwig Institute for Cancer Research, is expected to be a world first and has attracted the interest of a number of global partners, including clinicians, other research institutions and global giants in sales, distribution and manufactures.

Sienna is a small public unlisted company established in 2002 which is heavily reliant on the backing of its shareholders. Sienna’s technology would have led to the early detection and monitoring of cancer, with significant health benefits to all Australians and a reduction on the stress on the public health system. For example, a recent evaluation by the American Cancer Society estimates that, when cancer is detected early, treatment costs are some 10 per cent of the expected costs in treating the late-stage disease. Further, Sienna’s test kit was expected to cost in the vicinity of US$100 to US$500 compared to US$2,000 to US$3,000 for the gold standard in cystoscopy.

Sienna was forecast to receive, cumulatively, $49 million by 2015, and royalties would also have been ongoing and weighted to global markets. It was going to employ new staff. This was placing Australia at the forefront. It was going to provide much needed assistance within our own public health system. This is now a project that has gone by the bye.

There are many other projects, but time prevents me from listing all of them. I just want to refer to another man who has contacted me—again, an expert in this field, a Mr Gil Polglase, who has personally worked with more than 100 companies over the past seven years and has successfully accessed funding under the Commercial Ready program. He says that the need for federal government funding assistance for SMEs, especially at the early and expansion stages, is so vital and integral to building Australia’s reputation as a country focused on innovation and fostering technical excellence. I endorse these comments that have been made.

I want to give you just one other quote, from Mr Russell Smith, who says:

Now that this program—

Commercial Ready—

has been abolished, we have no other choice but to consider selling the technology offshore for someone else to develop and commercialise, as we are unable to obtain any other finance and cannot complete the project in an expedient time frame to grasp the market opportunity that is now available.

What a tragedy. The tragedy, of course, is that we have hard evidence that shows that in private equity sector, for every dollar contributed by federal government grants, between $8 and $11 is contributed by private equity sources. When the government turns its back on this, what it is effectively doing is turning its back on innovation. It is turning its back on a sector of our economy which is absolutely vital to the growth of the economy.

I also want to turn to the budget speech, and I want to refer to another matter. It is so easy for governments to say—and how many times have we all heard it: ‘Small business is the engine room of the Australian economy; it is the driving force of our economy.’ The Treasurer says:

… the government supports the aspirations of Australian business …

Well, I will tell you what: by axing Commercial Ready, it does not. He goes on:

… including small business, for a simpler tax system and less regulation.

How easy. It is a mantra for this government to talk about less regulation.

Let me just say, in the brief time that I have left, that there are two programs that were running and that were of the most magnificent assistance to small business. One was the Regulation Reduction Incentive Fund, which had $50 million in it that went directly into local government to enable local government to reduce and harmonise regulation and the costs of compliance. Mr Deputy Speaker, I can tell you that, for that $50 million investment by the previous government, AusIndustry can tangibly demonstrate $450 million worth of savings in compliance costs for small business. Wouldn’t you think that a government that claims, out in the public arena, to stand up for small business and to be doing everything to assist the environment in which small business works would continue such a successful program as that?

The other program that they have axed is the Small Business Field Officers program—68 of these people, who are absolutely vital. When we look at the small business sector in Australia, the fastest growing sector is the home based business sector. These are people who are time pressured—they really have great difficulty finding what the latest in marketing is or what the latest in IT is that they can use to grow their business. These small business field officers would work one on one with small business people in regional areas. One of the first things that the Rudd government did was to axe probably the most successful program that assisted small business. And the Minister for Small Business, Independent Contractors and the Service Economy had the absolute audacity to say, ‘Oh, but we’re going to have the business enterprise centres.’ Hey, get out there in regional Australia, where you have such a growth of small business! The business enterprise centres are not out there in regional Australia; they are in the metropolitan areas, or there may be a few in the very large regional centres. But the massive change that has happened with small business because of technology, of course, is that small businesses are distributed all through regional Australia.

I think that it is a great shame that the government has simply failed to clear this hurdle. It is a travesty that the Commercial Ready program has been axed. It is a travesty in the way that the government secretly went about it. It is a travesty that so many really bright, vital Australian businesses are not going to get the opportunity to develop and commercialise their innovation. It is a sad day for Australia that a government which proclaims that it stands for meeting the big challenges of the 21st century, that it is the government with the fresh ideas, is in reality the government that snuffs out all of these fresh ideas by denying these innovative, clever SMEs the ability to commercialise their innovation. It denies them the opportunity to pursue the research and development that we need not just to sustain a domestic workforce but to actually develop our export industries and to grow the Australian economy. It is a travesty, and this government should hang its head in shame for what it has done to the Australian SME sector.

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