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Govt hits back after damning survey

Govt hits back after damning survey

Directing IT policy is like steering a houseboat and has the grace of "a pig on skates," the Federal Government said last week.

The frustrated comments from Senator Alston's office were issued in response to further criticism of its innovation policy, this time from consulting giant Deloitte Touche Tohmatsu, which says the initiative requires further refinement for technology companies to realise their full potential.

Released in January, the policy is in the process of being reworked. The Government recently released new outsourcing guidelines, including plans to restructure research and development and increase support for local business. However, the industry is sceptical the changes will impact the right areas.

Difficulty accessing tax incentives and more assistance with global commercialisation are two key concerns outlined in Deloitte's Technology Fast 50 survey of CEOs and managing directors in the technology, biotechnology and telecommunications sectors. In addition, 41 per cent of respondents believe the changes fail to deliver substantial improvements to the industry.

While a majority of respondents have utilised government funding or tax concessions in the last three years, 69 per cent say incentives are too restrictive and difficult to access.

"One of the biggest tax changes affecting technology businesses was the streamlining of the definition of eligible R&D activities that has raised the eligibility bar," said Ian Thatcher, Deloitte technology and communications industry group leader.

"One of the major eligibility tests now requires both innovation and a high level of technical risk, whereas previously only one of these was necessary."

Expenditure on supporting activities like market research, quality control, tooling up and pre-production trials, which are generally major components of R&D, are also deemed ineligible.

"The premium R&D concession rate of 175 per cent looks attractive on the surface, but stricter eligibility requirements make but access to the premium rate extremely difficult," explains Thatcher.

The survey revealed that the industry expects the level of research activity to increase. However, 68 per cent do not think the commercialisation of technological developments will increase. The blame is aimed directly at the Government, with 91 per cent of respondents saying it hasn't built sufficient infrastructure to adequately support the real growth potential.

"While the industry appears to be looking to internationalise, 83 per cent indicated that there were not enough incentives to keep existing development within Australia," said Thatcher.

"Furthermore, 88 per cent do not believe that there are sufficient incentives to attract overseas research and development to our shores."

Sasha Grebe, Senator Alston's press secretary, fielded the accusations, saying that prior to Government intervention "less than 0.1 per cent of R&D was commercialised."

His valiant stance is dented somewhat by crushing results, with 88 per cent of respondents saying that industry fails to see a role for Government in providing research and development.

"This is despite the fact that the Government has traditionally provided research and development through universities and Government research institutions," adds Thatcher.

"Australia's technology industry is in a position to make its mark globally. With some refinements to the tax regime, including rewarding innovation, Australia's technology industry can become more internationally competitive."

While Grebe agrees that local companies deserve to be nurtured, he feels the answer is more complicated than making dramatic changes to existing policy. The Government can't go around propping up local companies under the pretext of them being Australian, he said.


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