Alannah Mactiernan (Perth, Australian Labor Party) Share this | Hansard source

I could not disagree more with the member for Banks. In fact, he epitomises the problem of the current government and their misunderstanding of the role that government does need to play in the development of a knowledge economy and an innovative community.

We strongly support this legislation, the Tax and Superannuation Laws Amendment (Employee Share Schemes) Bill 2015, and we recognise that the very important amendments that we introduced in 2009 to protect the integrity of the taxation system had an unintended consequence when it came to start-ups. So we are acknowledging that this correction does need to take place. I just want to put it on record that these very important integrity measures—which were designed to ensure that the granting of share options to employees was not used as a rort in a more general sense—have indeed been kept by this government, but we have acknowledged there was an unintended consequence which was having an impact on start-ups, and we are prepared to acknowledge that and to support this legislation.

I want to reflect on the fundamental concepts that we heard from the member for Banks and that we have heard over and over again. These concepts really bring to the fore the very important questions of whether or not, in the 21st century, a government does enough by ensuring that we have a macro-economic environment and a legal and physical infrastructure that supports private-sector funding, and whether or not that is indeed enough for us to advance to a true 21st-century innovative economy. The fundamental view of our conservative friends is: 'Yes, that is what we do—we provide the macro-economics, we provide the physical infrastructure, we provide that legal framework, and,' as they love to say, 'we just get out of the way.' But really that has proven to be an intellectually very primitive point of view and not one that is going to see Australia becoming a technology maker rather than a technology taker. So if we are going to truly leverage off the intellectual and temperamental assets of Australians—and, when I talk about the temperamental assets, I mean the nature of Australians, of being a bit iconoclastic, of not being hidebound by tradition or traditional ways of thinking but being a community where people are encouraged to think for themselves, be different, create their own ideas and follow their own dreams—then government actually has to do more, and that is what international experience tells us.

Recently, even the Minister for Industry and Science—who probably is a little bit more ahead of the pack than the rest of the coalition—acknowledged at a recent forum that Australia had come 81st out of 143 in the global innovation efficiency rates. That is an index which records the comparative ability of nations to convert innovation inputs—that is education and research—into innovation outputs. He described that performance as average, but I have to say that I think it is considerably worse than average. Let us look at some of the countries that rated more highly than Australia. They include Saudi Arabia, Pakistan, Bulgaria, Thailand and Costa Rica. They are all perfectly fine countries, I would imagine, in many ways, but not ones that necessarily spring to mind as the leaders in innovation, and yet each of these countries rated more highly than we did in their ability to convert these fundamental inputs into real, live, operating business innovation. I think that, with all of the economic and cultural advantages that we have here in this country, we should be seeing ranking 81st in the world as being something of a crisis and demanding urgent action, rather than there just being a few bland exhortations that we must do better accompanied by budget settings that are in fact going to take us backwards rather than forwards.

There has been an unpacking of this data by Dr Paul Jackson of the Edith Cowan University in collaboration with the Humboldt-Institut in Berlin and Cambridge University. They have shown that, while we do relatively well in education, R&D and institutional infrastructure, we do poorly in high-business innovation performance. They have done some analysis of why this might be. They have looked at whether or not we perhaps favour tax concessions over direct funding—indeed, in other countries this whole role of direct funding has a more central role in R&D than it has in Australia. They also reflected upon the reduction of a local level of high-tech procurement in defence spending—another way in which countries are able to drive the innovation within their local economies. They also noted that in Australia we have a high degree of foreign ownership and that companies that are foreign owned within Australia invest very little in R&D. They also looked at the other structural problem that Australian business had very low levels of business collaboration. So, whether or not you were looking at the interbusiness collaboration, collaboration with suppliers and customers, or collaboration with universities and other institutes, our rate of business collaboration was one of the lowest in the OECD.

What has been the response of the current government to this?

It has been a response that has cut back the level of scientists in the CSIRO. There have been 800 scientists' jobs cut—those important collaboration scientists embedded within industry have been cut back. In this last budget we had another round of cuts to the CRCs, the Cooperative Research Centres. These centres are one of the ways that we foster interbusiness collaboration, and collaboration between those networks of businesses with scientists and universities. They are the very instruments we should be beefing up—but they are reducing funding there too.

The response seems to be just a 'get out of the way' mantra accompanied by the idea that if we cut wages, penalty rates, for baristas and waitresses somehow or other that will lead to the fluorescence of our economy. I cannot see that. Tradies tax incentives were introduced. Whilst we are supporting that, we do recognise that under the current settings of government the economy has tanked and we do need a bit of a sugar hit to generate a bit more economic activity. Getting people to buy utes, coffee machines and ovens will provide a short-term economic boost. None of us should think this will be, in any way, a response that will produce a long-term sustainable 21st century industry. It is a very short-sighted perspective from a government that does not understand, cannot come to grips with, what the true role of government is, in the 21st century, in creating industry engagement and industry policy. I note there has been some very powerful analysis in Bloomberg Business about what the impact will be on Australia of our focus on a barista-led recovery.

The member for Banks picked up on the conventional wisdom of the government in this area and said that this is not about picking winners, that we cannot get into this business of picking winners. In fact, I would say that the debate has to be a little more sophisticated than that. I want to reference the work of Dr Mariana Mazzucato, a very important writer in this area. She talks about the need to see the state as a catalyst, a leading investor, as having a role of sparking that initial reaction in a network that will cause knowledge to spread. We need to get to an understanding of the true nature of innovation and how we can foster that. And we need to dispel some of the myths that it is all about venture capital, getting together with these small start-ups and that this will make everything happen.

In reality, over and over again, we can see that strategic government intervention has been absolutely critical. Take for example the Google algorithm. That algorithm, which enabled Google and its search engine to go out there and attract this massive private-sector funding, was initially funded under a National Science Foundation grant in the US. Likewise, most of the molecular antibodies that are fuelling the biotech industry were initially funded through processes like the UK Medical Research Council—well before venture capitalists ever got involved. Many of the most innovative young companies, in the USA, were funded first not by private capital but by public venture-capital organisations, such as the Small Business Innovation Research centre.

The US came to realise this after the Russians beat them with Sputnik and the first man in space. They became very concerned that the industrial military complex was not producing the degree of innovation that they needed. So they changed tack. They said, 'We are going to start funding, now, a lot more blue sky. We are going to go out there and fund people to come up with ideas. We are not going to have a success with each one.' That is critical to this—understanding that not all of these will be a success. They said, 'If we do not do this, we are not going to get anywhere.'

Where do we have a structure like this in the Australian arena? It is the Australian Renewable Energy Agency. This is a fantastic example of a government organisation, with a highly experienced commercial board, that has been able to make strategic interventions, funding a little pure research but mostly funding that early commercialisation phase—where you take it from a laboratory concept to something that is nearing the ability to attract private-sector funding and provide some of that funding for implementation.

This is a perfect example of what has been done in other countries. Those countries that are successful, those countries that come within the top 10 of the innovation conversion states, have governments that do it. It is done in the 'home of the free'. In the United States they are aggressively funding—through their defence agencies, energy agencies and small-business agencies—this early stage of research and capitalisation.

We are completely naive if we think embracing a 'let's get out of the way' small-government approach, in this area, will 'bring home the bacon' for Australia in the 21st century. We have all of the talent and ability out there to do this. What we need is a government that is able to move beyond its narrow neocon ideology and actually understand why countries are doing well, why countries that are ranking other than 81st are there.

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