Turnbull to spend more than $1 billion to promote an innovative Australia

Prime Minister Malcolm Turnbull will announce incentives in the form of tax offsets for investments in startups. Lukas Coch/AAP

The government’s innovation statement on Monday will pledge more than $1 billion in new spending over four years on measures to foster an innovative, risk-taking culture in Australia.

In Malcolm Turnbull’s first major policy initiative, 24 measures will cover four priority areas: culture and capital, skills and talent, business and research collaboration, and the role of government as an exemplar.

Full relief from capital gains tax will be given for investments in startups that are held for three years or more.

There will also be incentives in the form of tax offsets for investments in startups. A broad definition will be given for what startups would be eligible, but the detail would be settled after consultations with the startup sector and investors early next year.

The plan is modelled on the United Kingdom’s Seed Enterprise Investment Scheme (SEIS) which offers tax benefits to investors in small and early stage startup businesses. SEIS was started several years ago with the aim of boosting economic growth by promoting new enterprises and entrepreneurship.

The focus on improving collaboration between business and academia is against a background of Australia sitting for many years at last or second last among OECD countries in this area.

In a stick and carrot approach, the government will use as a lever altering the incentives that fund academic research. Currently, the prime emphasis for attracting funds is on publishing research that is cited in academic journals. There is not a funding incentive to commercialise the academic work or engage with business.

The changed emphasis in funding will be accompanied by a modest amount of extra money for universities that were short term losers from the new arrangement.

On the business side, existing programs will be ramped up to get business to engage more with academia.

As part of promoting talent and improving skills, there will be more funds for schools and students in the crucial areas of science, technology, engineering and mathematics (STEM) and computing.

A new entrepreneur visa will be introduced to help attract talent from overseas, and initiatives will encourage more of the thousands of foreign students graduating at masters-by-research and doctorate level in STEM and computing areas to stay in Australia.

The need to encourage risk taking and to accept that some failures are an inevitable part of an innovative culture are core to the statement’s approach. Israel is seen as one example of a country that is a success story in fostering ideas and startups. The Assistant Minister for Innovation, Wyatt Roy, has just returned from a fact-finding trip there.