Ted O'Brien (Fairfax, Liberal Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) recognises the important work being carried out in Australian businesses to research and commercialise new ideas;

(2) acknowledges that the Government has supported those efforts in many ongoing ways, including:

(a) fostering business collaboration with the CSIRO;

(b) the research and development tax incentive; and

(c) Accelerating Commercialisation grants under the Entrepreneurs Programme; and

(3) congratulates Australian companies that are developing and commercialising new ideas, including Naturo Pty Ltd, which has developed a way to extend the shelf life of fresh milk up to 60 days and is creating a pilot manufacturing facility as a result of its recent Accelerating Commercialisation grant.

I think the Australian people are very clear when it comes to this government's response to the COVID-19 pandemic that it has been a pragmatic one, not an ideological one. It has been pragmatic and it has been successful. The Australian people are very accustomed now to hearing the key principles upon which government measures have been based, principles that include the need for measures to be targeted, to be temporary and to be commensurate or proportionate.

What has been less accentuated are some of the ideals that have underpinned the government's response. One such ideal is the importance of the business sector: the importance of private enterprise and the Australian workers who are part of the private system. Such is the strength of the faith that we have in business that the key measures to ensure that the Australian economy and its supply chain are maintained throughout the pandemic have relied principally on the business sector. Of course, people are familiar with the JobKeeper program. It was a program that was not established as some shiny new mechanism creating something completely afresh with new IT systems. It was not a system that sought to ensure that government was at the centre of what was fundamentally a welfare program. Rather, this government adopted a job keeper program that ensured that existing systems, from the tax office through to the payroll systems of individual businesses, were leveraged. We introduced a system that ensured that the relationship between employer and employees remained. This really goes to the ideal of ensuring that businesses are put at the centre. So too does the motion on which we are speaking now recognise the importance of the Australian business community, in particular its work in research and development and the commercialisation of new ideas.

As somebody who spent much of his 20-plus years before politics in business overseas in foreign markets, I can assure members that there is something truly pioneering and entrepreneurial in the Australian DNA. In many cross-cultural workgroups it will often be the Australian who is able to work through problems, working collaboratively with people from different cultures and different markets. There is something fundamental in our DNA as a nation, which is why we as a government need to continue to support businesses with their own research and development to unleash their entrepreneurial spirit, and with that enhance the productivity of our nation and also the jobs that come with it.

In this budget we have seen $475 million to drive industry growth and scientific development, in particular focusing on an increase in workforce skills when it comes to cybersecurity; a boost for university scholarships, particularly to assist women enter the research realm around STEM; and a new global science and technology diplomacy fund. We also introduced a patent box with competitive tax rates for commercialisation.

These new measures build on existing schemes and programs through the CSIRO, the R&D Tax Incentive scheme, the Entrepreneurs' Program, the Business Research and Innovation Initiative, and the CRCs—the Cooperative Research Centres. Today I want to emphasise the entrepreneurship program in particular, because it has helped over 20,000 businesses receive customised advice and support, and 531 businesses have received Accelerating Commercialisation Grants. Those grants are critical to ensuring world-class technology continues to be led from Australia. I want acknowledge in particular Naturo, a company based out of my electorate in Coolum, which received a $1 million Accelerating Commercialisation Grant. Naturo are building a pilot manufacturing plant that will allow a world-first patented technology for processing milk that not only is superior from a nutritional point of view but has the capacity for 60-days shelf life. That's innovation, that's Australia and that's what this government supports.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Julian Leeser (Berowra, Liberal Party) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Anne Aly (Cowan, Australian Labor Party) Share this | Link to this | Hansard source

I appreciate the member for Fairfax's intent in bringing this motion, I really do. But I do believe the member needs to acknowledge that it his government that has presided over successive cuts to the CSIRO that have—and that continue to—impact on its capacity to foster innovation and research. Under former Prime Minister Abbott, this Liberal-National government cut $111 million from CSIRO in 2014, leading to the loss of 11 per cent of its research staff and an overall loss of 12 per cent of its total workforce. In the five years or so since then, the CSIRO now has 215 fewer research staff than when this LNP government first took office. The 2015 staffing cap on the Public Service has left the CSIRO, the institution responsible for the invention of technologies like washing liquid, Aerogard and wi-fi, unable to keep up with the demands of its own scientific capacity.

The member also needs to acknowledge that most research and commercialisation happens at universities, and this government has brought universities to their knees, with funding cuts of around 10 per cent in last week's budget alone. The Vice-Chancellor of the ANU, Professor Brian Schmidt, said universities had been 'left to bleed' in one of history's biggest spending budgets for other parts of society. He said:

There is nothing of note for our universities, except for $1.1m to support industry PhDs and additional flexibility for student visa holders when it comes to working hours. This is not only a real shame but a missed opportunity; universities are vital to our future prosperity.

I want to illustrate the real impact of this government's decimation of research capacity in Australia with a WA example—ClearVue technologies. ClearVue originally developed their technology with Edith Cowan University, my alma mater. They developed a prototype of clear glass solar panels that can be applied across a range of sectors—in building, agriculture and renewable energy. They are now trialling it with another university in Western Australia, Murdoch University, and last month launched the world's first clear solar greenhouse, located at the university and constructed with their patented, innovative, energy efficient and energy generating photovoltaic glazing panels. It's a mouthful! The greenhouse will be used to conduct agricultural research aimed at addressing the current drive for renewable energy and global food security. The Treasurer said in his budget speech last week that this government wants to see more innovation commercialised in Australia. To me, those words are empty. They are completely empty when their new patent box announcement excludes the clean energy sector and innovations like those of ClearVue. You cannot say you support research and innovation and exclude an entire sector in which Australia has the potential to lead the world.

Our country lags well behind the rest of the developed world when it comes to investing in research and development. As a result, Australia ranks 22nd in the world on the Global Innovation Index, and we're going backwards. It's a real shame and a real kick in the teeth to all of those smart, inventive researchers in Australia who are having to look elsewhere for ways to commercialise their innovations.

This government likes to talk about innovation. It likes to use words like commercialisation, but they've failed over eight long years to ensure adequate funding for fundamental research that is essential for applied research and commercialisation. It is simply the case that this government's talk about research and commercialisation is just that—talk. Empty words, announcements and media opportunities are all shadowed by a long history, an eight year history, of successive cuts to the institutions that generate research and commercialisation. While I respect the members putting forward this motion, they really need to understand exactly what they are doing to decimate research and commercialisation in Australia.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

It's always a privilege to follow the member for Cowan, because it's always the opportunity to hear directly of the talking points from the Labor Party and their latest grievance. But, of course, as we know with this motion that's being moved that it's all talk and no actual substance from the opposition in comparison to the practical action this government is delivering.

I agree with the spirit. We do talk about commercialisation a lot and we do talk about innovation a lot, because the focus of this government is how do we build the Australian economy of the future. When it comes to not just innovation but making sure that innovation is utilised in a practical way to deliver outcomes for people, you do need things like development and you do need things like commercialisation to take it through the full life cycle to make sure that we create products and innovations and services that improve the lives of not just of Australians but people all around the world. That's something we should be proud of, because—I'm afraid I'm going to have to go back to basic economics—when you create goods and services that are innovative and in demand that improve people's lives, you actually improve people's economic, social and human welfare, So we're are very proud of that.

That is the focus of this government: How do we do it to make people's lives better? How do we make sure the future is going to be awesome? There are practical measures we take at every step, including in this budget where there is significant investment in scientific research and development. In fact, there was $475 million to drive industry growth and scientific development. But the practical reality is that we as a government don't focus solely on what the government can do to drive innovation, because, politely, Deputy Speaker, as you may know I'm not a particularly big believer that government is the answer to all of our societal or economic woes but actually it's how do we mobilise private capital to invest in the future of building and the sustainable development of this country and develop research and development. We have a very proud record in that space. That's why we focus so much on what it is we need to do to drive innovation and mobilise private capital to be able to invest in new products and new innovations. That was what the focus of the patent box announced in this budget did. It's a trial mechanism, which the member for Cowan has outlined, limited to what we need to do in the medical research space. But, let's face it: what it could do is provide an innovative regulatory framework and tax framework which might then be able to be replicated elsewhere. Do you know why, Deputy Speaker? It's because we're cutting taxes for those companies. If we cut taxes for companies, you get more innovation, more capital, more commercialisation and more outcomes.

We know the members of the opposition oppose tax cuts to drive growth, whereas this government is very proud of the fact that, if you want to have patents based in Australia, if you want innovation and research in Australia, we'll cut your taxes so we can grow jobs, so we can employ scientists, so we can employ people who develop products and commercialise them to get to them to the market. That's because a simple understanding of the life cycle of what drives economic behaviour and job creation is at the heart of the government's budget to deliver improvement.

So we're immensely proud of out patent box. We talk about it all the time. We're so proud of our patent box and we hope, and I as the member for Goldstein certainly hope, that we can cut more taxes for more businesses into the future, and I make no apologies for that. It's good to finally hear the member for Cowan arguing for massive tax cuts for companies that want to invest in the future of this country, because the basis of her complaint is that it the patent box isn't broad enough. Well, I kind of agree with that. I'd like to see it go bigger and broader to create an environment that fosters jobs and growth.

Of course, there is also huge support for other agencies within the government, like the CSIRO and cooperative research centres, with R&D tax incentives across the board because we know that innovation does not come from monopoly government. We know it doesn't come from one institution harbouring all the wealth and knowledge of the country to drive innovation. We understand that it's through a decentralised model, to make sure that we have a thousand different innovative projects because some will succeed and some will fail, and the more you create and foster an environment for growth the more likely you are to have an innovative future Australia.

Ed Husic (Chifley, Australian Labor Party, Shadow Minister for Industry and Innovation) Share this | Link to this | Hansard source

This issue we're debating is not something that has just popped up out of the blue. The nation has been focused on this for years, for decades—countless reports, one after the other. In fact, this government has not had just one report done on commercialisation, under its minister Alan Tudge; it had another one done under the former industry minister. They've had two reports in the same government. This is like children playing together in parallel. They are doing the work and not talking and they're not able to find a way to get this issue sorted out.

The issue itself is big. Australia keeps lagging in, falling down, the Global Innovation Index. Why? We have tremendous talent in this country—the human capital side, fantastic; the translation side, terrible. This has been going on for years. Remember that thing they used to call NISA, the National Innovation and Science Agenda—or, as I like to call it, NISA one-point-only, because it never ever came back. It disappeared.

So this is a big issue. It needs dedicated thought. It needs effort. It needs an ability to coordinate portfolios to make it happen, it needs coordination in the broader community to make it happen and it needs an industry minister that is actually focused on it. Where's the industry minister? Even that side is asking where he is. Where's the industry minister in terms of focusing on this? He is not focused on this. This is not his day job. Industry is not his day job. His day job is a legal defence. That's what he's focused on. But he's not focused on the stuff that matters. Hello, Christian! Where are you, Christian? Because he's nowhere—

Trent Zimmerman (North Sydney, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Chifley refer members by their proper titles.

Ed Husic (Chifley, Australian Labor Party, Shadow Minister for Industry and Innovation) Share this | Link to this | Hansard source

Well, he's got the title, he accepts the salary but he doesn't do the job. Last year alone, 50,000 manufacturing workers—50,000—lost their jobs, and he's only focused on his defence. That's the only thing he's focused on. So we will not see—I bet you any money, because the shelf life of industry ministers under a coalition government is less than a year. This guy's just mailing it in. The industry minister's just mailing it in. He's not serious about coming up with ways in which to deal with these hard issues of commercialisation. He's not interested in protecting manufacturing workers' jobs—always slow to the party because he ain't fixed on the job.

I'll give you another example. Whyalla steelworkers were under pressure because they were wondering what was going to happen to Sanjeev Gupta's empire because Greensill collapsed—Greensill, which soaked up all these spivs from the Liberal side; any time they wanted a job or a donation, they were right next to Lex Greensill. There was a concern he'd cause a collapse in the steelworks. I write to the industry minister. I say to the industry minister, 'What's plan B for the steelworkers? What's plan B? What is your government going to do to make sure that, if this falls over, people are going to be protected?' I hear nothing from him—nothing at all. Then, just to let you know, Sanjeev Gupta, to the massive relief of steelworkers everywhere, got the refinancing. Guess when Christian Porter writes to me? The same day—he comes back to me then. You're not doing the day job, Christian—I mean industry minister; apologies, Deputy Speaker. If he is focused on that, I'll actually concede. I get it's a big issue for him personally, but he should do the right thing, step back and let someone else focus on protecting the jobs of Australian workers instead of taking the money and not being there when Australians need him.

The government have all these programs. They've just announced this patent box. We'll see if it stacks up. I'm not convinced yet. Let's see if it stacks up, because the thing about the government is that they move on to the next shiny thing to distract you from the last thing that didn't work. If you go through the litany of different things these people were doing in this space, claiming it was innovation, nothing actually came out of them. But they thought, 'Got to distract them with a new idea!' Josh Frydenberg, the Treasurer, goes to the UK a few years ago, sees a patent box and says, 'We're going to do this.' We wait. Years later, they announce it in the budget. Let's see if it stacks up. Call me a cynic; I reckon it won't. But that's just me. I'm happy to see if the gurus on the other side make it work or if it's just another example of a flash announcement waiting for a poor delivery.

Dave Sharma (Wentworth, Liberal Party) Share this | Link to this | Hansard source

It's a pleasure to speak to this motion about something that's incredibly important to the economic future and prosperity of Australia. This is really about innovation and making sure Australia remains competitive in a world that is increasingly driven by ideas rather than physical goods. This is because the nature of value creation in a modern economy is changing.

Increasingly value resides in data produced rather than in physical goods, increasingly services rather than products dominate economic and commercial activity in our countries and increasingly spaces, often virtual spaces rather than physical places, are the marketplace for a huge amount of economic activity in this country and, indeed, around the world. If you look at the biggest companies by market capitalisation in the world these days, they're all companies that basically deal in information and data. They're quite light on physical infrastructure but very heavy on the use of data.

In 1967 in the United States, the largest companies by market capitalisation were General Motors, Standard Oil, Kodak, AT&T and IBM. If you look at the United States today, a little over 50 years later, none of those companies would feature in the top 20 companies by market capitalisation in the United States. Instead it's companies like Apple; companies like Alphabet, which owns Google; companies like Microsoft; companies like Facebook; and companies like Amazon. In our own region, we've got companies like Tencent in China and also technology related companies in Japan and Korea. I think that tells us something: if we in Australia want to remain a high-skill, high-wage economy that's able to provide a generous social safety net, we need to make sure that we're at the edge of that value creation too. You'd have to say that, at this point, we're not. If you look at the ASX 20, the only genuine technology company that I think you could highlight is CSL, which is a genuinely competitive, world-class Australian company. But most of the rest of the ASX 20 is still dominated by quite traditional industries—banking, telecommunications and insurance as well as natural resources.

Australia have a lot of the ingredients, I think, to be a very competitive, knowledge-intensive economy. We have a highly skilled workforce, we have great research institutions and universities, and we have deep and sophisticated capital markets. But up until this point—and it's true—we haven't been great succeeders at commercialising some of these ideas and turning what is an incredible raw product into a marketable product that can drive economic activity.

If you look at our universities, for instance—and I think this is really one of the missing pieces in Australia's commercialisation challenge—we've got some of the greatest minds in our country in our large research institutes. We've got 80,000 research staff employed altogether in Australia. Twelve years ago our universities spent $2.8 billion on research and we produced 23,000 publications. Today, 12 years later, the corresponding figures are $12.2 billion being spent on research, almost a fourfold increase, and over 100,000 publications, so the output, if you like, of research in our universities has grown fourfold in the last 12 years. But has that had an impact on our universities? Have we seen more commercialisable ideas come out of our universities? Have we seen new businesses, new companies, new enterprises come out of our universities in the last 12 years? I wouldn't say that there's been a quantum leap anywhere commensurate with the research activity inputs that have gone into producing our research. I think in part—and I know the minister has touched upon this—it's because the focus of the universities has been on international rankings, which has led to a drive for international students to fund the larger research volumes and publications that allow universities to drive up the rankings, and neglecting a bit the production of ideas, which can not only improve society and better our economy but lead to commercial outcomes as well.

I believe we've taken important first steps in the budget to begin to address this. We already spend significantly on the R & D tax incentive in Australia, and that is one of the largest single items we do to support R & D. We've also announced, of course, the patent box in this budget, which will initially focus on biomedical and biotech industries and over time, I hope, will grow to other areas. We've also assembled a task force of some of the best minds in our country to provide advice. The task force's consultation paper, which is about raising our level of research commercialisation, has now been released. This is an important challenge for Australia, and it's important we get it right for our economic future and the prosperity of our children and their children.

Peta Murphy (Dunkley, Australian Labor Party) Share this | Link to this | Hansard source

It's great to see that members of the government are allowed to use the word 'innovation' again because, for quite some time, it was clearly banned on that side of the parliament. But it's a shame, really, that the debate about innovation seems to be held in a vacuum of understanding what it really is, and against a backdrop of, according to the Global Innovation Index, Australia having fallen three places since 2018, from 20 to 23. That's because the government doesn't understand innovation. Much of the debate about commercialisation that we see coming from the government falls back on some sort of linear model of innovation and doesn't appreciate what the evidence says. It would be worthwhile, members of this chamber, looking to innovation economists like Keith Smith and Jonathan West who make the point that perhaps the most important result of modern innovation research is the rejection of the so-called linear model of innovation—namely, the idea that the innovation process is essentially based on processes of scientific or technological discovery and that the innovation process consists of translating research into new products.

We have a government that is now trying to talk about research commercialisation, but doing so against a backdrop of the massive economic impact on our universities of not just COVID but this government's ongoing attack on higher education: its failure to support universities through COVID; its so-called 'reforms', which will actually lead to fewer students studying the sorts of subjects that are needed to be innovative researchers and scientists and, most importantly, innovative thinkers. So, no matter how many times this government and members of the government start to use the word 'innovation', we know that universities are really going to struggle to provide graduates with the skills relevant to today's and tomorrow's labour market under the conditions that this government sets.

This government, as the member for Chifley pointed out, has had a number of reviews of the R & D tax incentive—in addition to trying to get rid of the entire thing, mind you—including the Industry Innovation and Science Australia review and the review by John Fraser, Alan Finkel and Bill Ferris. These reviews pointed to what, really, the world has been arguing for some time: Australia has an imbalance between its direct funding for innovation and indirect tax incentives. The independent reviews that the government itself asked for proposed a new agenda that was rejected, which is really modus operandi for this government, isn't it? 'Got a problem, got an area you don't know what to do with?', which is most areas. 'Ask for an independent review and then ignore the recommendations.' The government now has chopped and changed all over the place, when it comes to innovation policy, and pretended it didn't exist for a while post Turnbull. And it's now possibly even going in the opposite direction. There should be more collaboration between research and industry, but this government hasn't done anything to make that happen.

Since the cuts to the innovation programs in the 2014 budget—when the industry innovation precincts were cut and rebranded 'Industry Growth Centres', when successful commercialisation programs were cut and rebranded 'Accelerating Commercialisation', when Enterprise Connect, which supported the mass of SMEs to innovate and adopt, was abolished—there has been a total absence of a coherent industry and innovation policy for this country. Whilst I admire the intent of the member who put this motion forward, to include this government's support for CSIRO is, quite frankly, mind-boggling. This is a government that sought to destroy the credibility of our national science agency not just with budget cuts but with longstanding denial of the important work of mitigating climate change. To suggest that this government is a friend of the CSIRO is unbelievable. Other countries invest serious resources in industry and innovation ecosystems, but we aren't doing it properly in Australia. The government is not dealing with the big structural economic shifts to skills and technology, to the clean economy, to the caring economy. We need to do this in order to have an economy that is innovative, sustainable and inclusive. That's the economy that will provide Australians with opportunities in the years ahead, not the economy that this government is working on.

I want to end my contribution with a shout-out to a local innovator and entrepreneur, Nat Stratos, whose jewellery I am wearing today, who uses 3D patterning, zero-waste design, compostable and upgradable materials and a closed-loop program to ensure artefacts, beautiful jewellery, can be reinvented, recycled and regenerated. Her mission is to create circular, responsible and ethical design by innovative technique and a commitment to renewable products—and it's beautiful jewellery as well. That's what manufacturing locally looks like in my community.

Trent Zimmerman (North Sydney, Liberal Party) Share this | Link to this | Hansard source

Order! The honourable member's time has expired—and I hope you're not getting a commission, although you deserve one after that!

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is with great pleasure that I rise to speak on the motion by the member for Fairfax recognising the importance of innovation but, more importantly, the ecosystem that this government has put around supporting business right across our economy. Australia's broad based R&D tax incentive seeks to encourage industries to undertake research and development in Australia. We have a tremendous track record in this country of research, development and innovation. There are any number of inventions over the past 100 years that we could point to, such as the black box flight recorder, various vaccines and a whole range of things. We know our country does very, very well in solving problems.

One of the problems we have had traditionally, though, is commercialising many of those things. But, importantly, the ecosystem is there in the first instance, through supports such as the R&D tax incentive, to support businesses to research and innovate. In 2021, it's estimated, some $2.6 billion of support will be provided through that. This comes on the back of the government's $2 billion investment in R&D in the 2021 budget to enhance the R&D tax incentive and another $1.2 billion which we've invested through the Digital Economy Strategy, which seeks to build digital skills and capabilities, encourage business investment and transform government services.

But I'd like to take this opportunity to recognise and congratulate some of those businesses in my electorate of Forde who are doing tremendous work in developing new ideas and bringing them to market. It is these businesses who drive our economy and who will be a key part of securing our economic recovery as we come out of the COVID-19 pandemic. I had the fortune recently to visit a number of these businesses and see firsthand what innovation and product development look like. The first business was Lithium Battery Systems at Loganholme, who have benefited from the R&D tax incentives over many years. I had the honour of opening their new factory. They have done research into the development of battery management systems for lithium batteries, known as BMS, and a unique design developing an aluminium enclosure or a heat sink. Fifty-five per cent of the aluminium procured is from recycled sources and is sourced from within Australia. Using that recycled material provides flow-on benefits to the economy. The incentive has encouraged them to continue to develop their ideas, build their business and take on new market opportunities.

I was also fortunate recently to visit Frosty Boy in my electorate. Their slogan for their ice creams is: 'Often licked, never beaten!' and they've demonstrated that through COVID-19. They rose to the challenge. When they saw their market disappear, as people stopped eating soft-serve ice creams because they couldn't visit their local shops, they went on and developed their new slow-melt ice creams and an enriched protein-shake product range. The beauty of the slow-melt ice creams is that you can order them through home delivery businesses like Uber Eats and they can be delivered to your home without melting all over the place. Frosty Boy also have a strong export market for their products, which now accounts for 75 per cent of their business as they export to over 65 countries.

In addition to this, all of these businesses that I've spoken about have seen the benefit of a range of other supports that this government has provided, such as JobKeeper or the extended instant asset write-off, all of which, in conjunction with the R&D tax incentive, go to support business to continue to grow and prosper. Whether it's Frosty Boy, or Lithium Battery Systems, or Holmwood Highgate and their new defence product range and their constant innovation with their range of road fuel tankers and liquid tankers, we continue to see, right across my electorate of Forde, the use of the R&D tax incentive by many, many businesses to grow their business, take opportunities and continue to build our economy.

Matt Keogh (Burt, Australian Labor Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

I'm so glad to see that the member for Fairfax, who moved this motion, is back in the chamber, because, when I saw this motion arrive on the Notice Paper, I didn't know whether to laugh or cry, and part of me was just a little bit angry. But what I've settled on is that I think the crux of what is being done here is in paragraph 3: the support for Naturo and their research and development. What's important about this business is that I think the government might have finally settled upon a route to helping new homebuyers in Australia, because one of the prime technologies that has been developed by this business is one to keep avocados fresh for longer, which no doubt will bring down the price of avocado on toast for all of those inner-city millennials looking to save for their first home deposit in these increasing home-price environments! That is, indeed, a genuine innovation when it comes to research and development in this country—one that spreads much further than just the keeping fresh of fruit in this country. So I commend the member for Fairfax for bringing this to the attention of all of us.

But, when we turn to the real focus of this motion, which is the support for research and development in this country, that is where I really am concerned about whether I should laugh or cry. The second point that the member makes about how this government supports research and innovation is the research and development tax incentive. Despite the fact that Australia has record low levels of investment in research and development compared to our OECD comparator nations, despite the fact that we're not very good at actually commercialising any of this and despite the fact that we need to increase investment in research and development in this country, this is the government that wanted to reduce the investment in research and development by changing that very tax incentive to make it less available to support innovation in the Australian economy. In fact, they wanted to change it to such an extent that—for businesses in Australia doing research and development, employing Australians and growing our manufacturing industry, which has been in terminal decline under this government—it was driving those businesses offshore because it would've been uncompetitive to remain, with the government's changes to that tax incentive.

We're glad that the government decided to pull that idea. The government finally saw the sense in what was being said to it, not just by Labor but by every other industry and every stakeholder in this area, and pulled it. Now they're even trumpeting that they've kept something they were trying to abolish. So congratulations to the government for investing in research and development. But it is important, as the first paragraph of this motion mentions, that we recognise the great work being done by Australian businesses in research and in commercialising new ideas.

It is serendipitous that the Minister for Defence Industry is at the table right now, because some of the best areas in which we can commercialise and bring to fruition the great research and development work being done by Australian businesses here in Australia, using Australian IP, is in the area of defence industry. Yet time and time again I am told by so many of these businesses that they find it too difficult to get access to defence industry work here in Australia—their technologies are put forward, and they hit the roadblock that is the CDIC. This is a government agency that has now had to move departments; it is a government agency that, as was found in the review, didn't actually know the full extent of our capability for defence industry here in Australia. Businesses would love to be able to share with our Australian defence forces the new capability that they have developed but are cut out at the ground level because decisions were made by a prime contractor about the nature of the capability that should be offered to our defence forces, capability that doesn't include the innovations being made right here in Australia.

The loss that comes from that is that we in Australia don't own, as a sovereign capability, the IP. We don't have the development of the know-how here in Australia to present new technology and new capability, to innovate beyond that which is offered to us by foreign defence primes. That is something we need to do more of. We need to make sure we invest in those businesses, not just through tax credits and not just through accelerating commercialisation grants but by giving these businesses actual business opportunity in the biggest budget area that the government spends money on—defence.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

This is an important contribution today from both sides, and I commend the member for bringing this motion forward. We know how incredibly important it is for the rapidly transitioning Australian economy, but it's also important to acknowledge where Australia has come from. I think, over the last 10 years, we've been very tough on ourselves about the degree of commercialisation in Australia. It's quite frequently quoted as being among the bottom two in the OECD, which I think is quite an unfair measure, to be honest. If you look at exactly how commercialisation is calculated by the OECD, in many cases there is some consistency lacking. But you also need to remember that, for many decades, Australia has been an agrarian and commodity driven economy. It does mean that some of those sectors, particularly in agriculture and in the heavy trades in outer-metro Australia, didn't have CEOs and business leaders who were absolutely committed to commercialisation in the way that northern European and American businesses in medium- to high-tech manufacture almost automatically are. We have a different economic profile, and that probably explains why we're slightly lower than many other economies in the OECD on that commercialisation rate. It's not a lot lower and it's not a hurdle that can't be cleared over time. And over the last three years, as there has been recognition of that lower rate of commercialisation, a whole lot of programs that are in place now have been delivering results.

Let's be honest: anyone placed in the quite invidious position of trying to pick a winner in areas of commercialisation would realise just how fraught it is. I remember talking to an engineer in this space, who said: we can't even work out how many engineers we'll need in two years, let alone expect a government entity like CSIRO to be getting a 100 per cent strike rate with who it commercialises and who it doesn't. We have always said this is taxpayers' money and we want it to be spent responsibly.

As Daniel Kahneman points out in Thinking, fast and slow, there is a combination of the founder effect and the optimism bias, which means that in many cases across this sector there is a belief that we can be successful in commercialisation or getting a new entity going, when in reality we know that those numbers are actually far lower. There is often a complete dissonance between the views and the optimism of founders and the reality that they're moving into a space where they tend to overestimate their own skills, downplay the likelihood of luck and other factors, and not fully understand that there is not a consistent environment upon which you can pin how well you're performing. You simply don't know if rival technology is evolving, in some other part of the world, which makes what you're doing potentially obsolete. It is very challenging then for taxpayer dollars to be appropriately directed. All we can do is look at the money that is invested, particularly through CSIRO, and see what measures of success they can show. That may well be in market cap. It could be in jobs created. In all of those measures, Australia is doing very well.

In today's motion, I have some sympathy for the other side, who are absolutely right to demand the best possible results for Australia's commercialisation. It must feel for them today, after the weekend's election results, a bit like we are halfway through the movie Hangover, so to haul themselves back into this chamber to give it a mighty red-hot crack at Australia's commercialisation risk is, indeed, quite bold of them. They have done their level best but are not overly convincing as they delivered those concerns.

Australia is doing very well. There is no better than AstraZeneca's work, CSL's work. Even as recently as this week, there has been an announcement that we will be looking at manufacturing onshore a second vaccine candidate. While that, again, will be accelerated, it is not likely to start until the end of the year. As we look at all of these timelines, they are proving way faster than anyone could have thought of five years ago. Australia is agile enough to be able to meet those timelines and to be able to respond. That is really all you can ask from a commercialisation process.

Very briefly, because I know some of them have not been mentioned, there is nearly half a billion dollars in this year's budget for a range of innovation funds. The R&D tax incentive is obviously the backbone of what Australia does to make it as attractive as possible for businesses and entities to invest in commercialisation. Of course, every corner of this country has really good examples of it. Linda Paterson of Gutbiome Synbiotics, has a small operation but is a mum who has had a successful Boosting Female Founders Initiative grant out of the current government that will see her propel, we believe, into her next level with her very important work out of Birkdale Queensland. There is a range of those businesses around Australia. Australia's Modern Manufacturing Strategy as part of the recognition that, while we have always thought that manufacturing was on its last legs, we can absolutely see that, as a proportion of the economy, it may have declined slightly but its net size is still holding firm in a nation where our wages make it particularly hard to manufacture efficiently and competitively.

Trent Zimmerman (North Sydney, Liberal Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The resumption of the debate will be made an order of the day for the next sitting.