Malcolm Turnbull’s bright idea: $1bn to drive innovation

Malcolm Turnbull’s $1bn innovation package will deliver about $100m more to the CSIRO.

Malcolm Turnbull will announce his innovation and science package today at the Canberra headquarters of the nation’s flagship science agency, the CSIRO. Picture: Britta Campion

Malcolm Turnbull’s $1 billion innovation and science package to be unveiled today will deliver about $100 million in extra funding for the CSIRO and provide capital gains tax holidays for ­investing in start-up enterprises.

The Prime Minister’s first signature policy announcement since seizing power from Tony ­Abbott 12 weeks ago will also ­include a push to protect the ­nation’s commercial and strategic secrets from cyber attack.

Mr Turnbull will elevate innovation and science to the heart of the government by creating and chairing a special cabinet committee in a deliberate move to set a ­different priority to the Abbott government.

It will co-ordinate all research and science spending across government, which is set to reach $10bn a year by 2020.

More than 20 individual measures running across 11 ministerial portfolios will be part of the ­national innovation and science agenda that focuses on four themes: commercialising research; raising capital and ­enabling risk; making the government a model example for innovation; and boosting talent and skills.

The package is expected to relax Australia’s insolvency laws as part of a suite of measures to create greater incentive for investors to take risks, while industry ­insiders expect it to include tax breaks for research and development.

University research funding will be tweaked to encourage more interaction between institutions and business to commercialise new ideas, while there is expected to be a program to increase the take-up of science, technology, ­engineering and mathematics in schools and at universities.

Mr Turnbull will announce the package at the Canberra headquarters of the nation’s flagship science agency, the CSIRO, and promise a funding boost of about $100m to coincide with its centenary next year.

It will reverse some of the cuts suffered by the CSIRO in recent years, with the bulk of the money going to Data61, the organisation created from the merger in August of the CSIRIO’s digital productivity arm and National ICT Australia.

As part of a push to create a new culture to encourage investors to support entrepreneurs and risk, particularly start-up ventures, the government will introduce a full capital gains tax exemption for ­investors who keep their cash in such projects for at least three years.

Despite the deep budget deficit, the innovation and science agenda will be another hit to the budget, with Mr Turnbull instructing ­Industry, Innovation and Science Minister Christopher Pyne to ­unleash his “inner revolutionary” to come up with ideas.

It will be unclear whether the extra spending will be fully offset from cuts to other portfolios until the mid-year update of the budget is released next week.

Mr Turnbull, who built part of his personal fortune before entering politics by turning a $500,000 investment in internet start-up OzEmail into more than $50m, wants innovation, creativity and agility to be the hallmarks of his government. He will chair a new cabinet committee on innovation and science that will work with the revamped Innovation Australia board under the direction of venture capitalist Bill Ferris and incoming chief scientist Alan Finkel.

A key element of the ­announcement will be a strong emphasis on finding innovative ways to protect the nation’s economy, strategic infrastructure and defence facilities from cyber ­attack. That is likely to mean more resources for the existing cyber ­security agencies or the creation of a new research body.

Last week it emerged that ­Chinese hackers were believed to be behind ­attempts to penetrate sensitive public service computer networks by going through the relatively easier “back door” of the Bureau of Meteorology.

Bill Shorten last week stepped-up Labor’s innovation push, promising incentives for investors to support risk-takers. Investors in very early stage start-ups that have the most trouble getting access to finance would get “significant tax relief” through an upfront 50 per cent deduction on investments up to a maximum $200,000 a year. The move would cost the budget about $14m.

“Australia punts more on the Melbourne Cup each year than it invests all year in innovative new start-up businesses,” the Opposition Leader said.

Mr Shorten said Labor would support innovation hubs in the ­regions, at a cost of $16m, to provide up to $500,000 a year for three years in matching funds to consortiums supported by a ­regional university or TAFE, a local government and a local business chamber.

Mr Shorten used his budget-reply speech in May to pledge $500m for a co-investment fund, 100,000 HECS-free university places for students to study science and said by 2020 Labor would have every primary and secondary school student learning computer coding.

Opposition innovation and industry spokesman Kim Carr claimed the Coalition had cut $3bn from innovation and research since coming to power. “We have a situation where the government has talked up innovation very, very recently but has acted to destroy so many of the innovative capacities in this country with their $3bn of cuts,” Senator Carr said.

Business Council chief executive Jennifer Westacott called for a bipartisan approach to provide continuity and consistency. “For too long Australian has suffered from the constant chopping and changing of platforms that underpin innovation in this country,” she said.

She called for both sides of politics to agree on “fundamental frameworks to drive innovation”.

Science and Technology Australia chief executive Catriona Jackson said scientists were buoyed by the political focus. “It’s great to see science and innovation as a contested space,” she said.

As he yesterday dodged questions about anger in Liberal ranks over former minister Ian Macfarlane’s defection to the Nationals, Mr Turnbull said voters wanted the focus to be on them and their families, which would be answered by the innovation statement.

“They want to know where are the jobs going to come in the 21st century, how do we prosper after the mining boom is over? And that is what we will be talking about ­tomorrow,” Mr Turnbull said.