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Govt isn't helping us, says IT industry

Govt isn't helping us, says IT industry

The Federal Government's innovation policy, released in January, is sustaining further criticism, this time from consulting giant Deloitte Touche Tohmatsu which says the initiative requires further refinement for technology companies to realise their full potential.

Difficulty accessing tax incentives and more assistance with global commercialisation are two key concerns which emerged from a Deloitte Technology Fast 50 survey of CEO's and managing directors in the technology, biotechnology and telecommunications sectors. In addition, 41 per cent believe the policy fails to deliver substantial change for 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 research and development (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, that are generally major components of R&D are also deemed ineligible.

"The premium R&D concession rate of 175 per cent announced, on the surface looks attractive, however more strict eligibility requirements makes 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 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 there were not enough incentives to keep existing development within Australia," said Thatcher.

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

The good news is that government has every intention of refining its IT policies, releasing changes to the outsourcing scheme just last week, including restructuring of R&D and increased support for local companies.

Sasha Grebe, Federal Minister for Communications, Information Technology and the Arts, Senator Richard Alston's press secretary fielded Deloitte's 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 (88 per cent) showing that industry fails to see a role for government in providing R&D.

"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 targeting commercialisation and also rewarding innovation, Australia's technology industry can become more internationally competitive."

The situation is not that easy, according to Grebe who likens the restructuring of IT policies to the ungainly task of steering a house-boat. "It's like a pig on skates," he said.

Deloitte's Technology Fast 50 incorporates a range of small, large, public and private Australian companies.


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