The federal government’s industry growth program has opened applications for SMEs and startups to seek commercialisation advice, but firms seeking a share of almost $290 million in new grants must wait until early 2024.
The support for smaller businesses comes as the government’s innovation advisory group warns that innovation policy discourse focuses to heavily on treating universities and research institutions as the source and supply of innovation, and should be re-orientated to helping bolder, export focused businesses to scale.
The Industry Growth Program (IGP) is designed to target early-stage SMEs and startups in the same industry priority areas as the National Reconstruction Fund to help them scale towards profitability. It will award matched grants of up to $5 million.
Industry and Science minister Ed Husic told the industry body Cooperative Research Australia’s National Innovation Policy Forum on Monday that the IGP will complement the upcoming $15 billion National Reconstruction Fund, which is supporting businesses that are already able to deliver a rate of return to the government.
“There are a lot of businesses that are pre-revenue, that won’t be able to meet that criteria, and we need to get them over the valley of death. The IGP in many respects is that bridge and we deliberately designed it so ‘click, click’ these things join in and can help businesses to scale up,” Mr Husic said.
Industry Growth Program Advisers will develop recommendations as well as commercialisation and growth plans for applicants. This may include advice on business model validation, capital raising, establishing collaborative partnerships, and commercialisation of intellectual property.
There will be about $287.5 million available for grant funding and $52 million for departmental costs such as staffing and maintaining the systems needed to administer the program.
Early-stage commercialisation projects can receive up to $250,000 whereas commercialisation and growth projects can receive up to $5 million.
About $53 million of the $392.4 million program is dedicated to “advisers, industry partner organisations and the independent assessment committee” that will provide expert advice to startups and small to medium sized businesses and assess grants, a Department of Industry, Science, and Resources spokesperson told InnovationAus.com in mid-November.
In July, the government put out a call to recruit around 20 contractors to deliver advice and help assess grants, and has tapped former head of the Innovative Manufacturing Cooperative Research Centre David Chuter to mange the program.
Outgoing Science and Technology Australia (STA) chief executive Misha Schubert welcomed the the new IGP intent “to help more of our country’s remarkable small businesses to become medium-sized businesses”.
“We think it can turn more great Australian ideas and innovations into the products, services, and jobs of tomorrow – adding complexity to the economy and securing tomorrow’s prosperity,” Ms Schubert said.
Tech Council of Australia chief executive Kate Pounder also welcomed the new support for companies in Australia where the industry group says it is harder to scale, particularly in capital-intensive sectors like quantum, AI and robotics. She called for urgency in its implementation.
“We encourage the government to move with urgency in the implementation of these important initiatives, particularly given the challenging funding and economic environment facing tech companies compared to recent years,” Ms Pounder said.
Shadow industry minister Sussan Ley was highly critical of the government’s claim that its Industry Growth Program is ‘open for business’, particularly as they continue to face inflationary pressures.
A briefing prepared for Treasury officials ahead of the most recent round of Senate Estimates released under freedom of information laws states that “SME conditions have fallen further below the conditions for all businesses than at any other time recorded (since June 2006)”.
“Industry Minister Ed Husic has taken a break from freelancing on foreign policy to team up with Small Business Minister Julie Collins, to declare this new government initiative will ‘turbocharge innovation’, ‘back small business’ and that ‘the Albanese Government is supporting businesses to grow’,” Ms Ley said.
“It can be revealed that this rosy assessment made by two of Labor’s worst performers does not accord with the assessments made by their public servants behind the scenes…Irrespective of the spin in press releases from Labor Ministers, Australian small businesses are suffering in a ‘cost-of-doing-business-crisis’ and the Albanese Government is simply not doing the work to relieve the pressure.”
The opening of the IGP comes as the government’s innovation advisory body Industry Innovation and Science Australia releases new research showing the government’s major investments may be being misdirected, adding to challenges for Australia’s mostly small businesses. It recommends shifting policies toward helping bold, export focused businesses to scale, after the traditional research focus has struggled to move the needle overall.
Australia’s chief scientist Dr Cathy Foley highlighted the IISA report’s finding that “SMEs, not the universities and research institutions, are the engine room of innovation, taking ideas into money”.
She reiterated that “many government programs are assuming businesses have motivation, innovation, risk appetite, capability, and capacity, and what they’re finding is that is not the case”. As a result, scaling of innovation and the realisation of commercial benefits based on Australian research “either fails or is taken offshore”.
Australia’s industry structure is composed mostly of small businesses, which make up 93 per cent of Australian businesses. These firms have low levels of free cash flow and human resourcing, limiting the capacity to adopt and scale innovation, according to the IISA.
Mr Husic said the report would “guide our government’s actions in the years to come”. Among the four focus areas of the report is an emphasis on boosting the efficiency of innovation processes.
This includes a recommendation to “de-couple” requirements that industry engage with publicly funded research organisations as a condition of access to government innovation support programs.
“This will not exclude universities and research institutions but will effectively filter those aligned to address relevant questions for industry to advance innovation and commercialisation outcomes,” the report notes.
There is currently a friction between research entities which are “inclined to control IP” and private markets that feel disinclined to invest in businesses “that do not wholly own or control their IP”, the report said.
The IISA is calling for reform to research-industry IP and patenting arrangements, flagging “very low or no licencing fees, in preference for equity to entrepreneurial researchers and students spinning out IP in partnership with industry” as an option. This is already occurring in Singapore and United States universities.
IISA chair Andrew Stevens said in a statement that more Australian businesses need to be scaled if they are to be globally competitive.
“While we outperform in the creation of start-ups and small businesses against other OECD countries, our industry structure is overly skewed to small businesses with less than 20 employees. It’s hard to compete when you are small,” Mr Stevens said.
“The outcome we need right now is the scaling of small businesses into medium sized businesses. This will build sovereign capability and economic complexity in Australia.”
