With the Coalition returning to power, it looks likely that the National Innovation and Science Agenda is a mandate that will remain in force. However, with the Assistant Minister for Innovation, Wyatt Roy, losing his seat, questions arise as to what direction the innovation policy will take and what agenda items are still to go ahead?
Increasing Access to Company Losses
A key piece and nearly fully developed piece of legislation drafted under the impetus of the National Innovation and Science Agenda was the superannuation and tax amendment on increasing access to company losses. If implemented, the measure will allow for small business that have changed ownership to deduct past year tax losses provided they satisfy a “similar business test”.
Introduced as an addition to the “same business test” whereby small business were not permitted to factor in past year losses, the proposed laws around a “similar business test” do allow for them to taken into account. This is on the condition that the current business is the same as it was before new ownership.
This measure is anticipated to incentivise entrepreneurship by allowing loss-making businesses to devise strategies based on this information, to return to profitability. The consultation period on the proposed legislation closed in April and it remains to be seen when and if it will be put forward when the new parliament is formed.
Employee Share Schemes
Expected to have been phased in over the first half of 2016, discussions around Employee Share Schemes should resume with then new parliament is in session.
Employee Share Schemes (ESS) are a structured way in which employers, usually founders, can allocate stock options or shares for employees to purchase in the company. This can either be in the stead of or supplementary to other forms of remuneration.
Its primary benefits are that it serves as an incentive for employees performance, given that their work outcomes are more directly linked to profits of the company and by virtue the value of their shares. They also offer a sizeable advantage for businesses which are cash poor and cannot provide for salaries.
Nonetheless, the present system is unfavourable for ESS schemes because it entails the release of classified commercial information and that implementing such a scheme does incur high costs in document production.
New Research Funding Arrangements for Universities
Consolidating and simplifying the present day University funding arrangements, the proposed Research Support Program (RSP) and Research Training Program (RTP. The former of these programs serves to provide innovators and researchers with a steady flow of capital while the latter aims for training delivery. Current commitments to this end involve an additional $50 million to be set aside annually to higher education providers (indexed from 2017) and improving the transparency of funding outcomes.
Coming into force from January 2017, the current objectives of the programs are to target issues which are stifling innovation within universities.
In regards to the RSP, it serves to foster world-class research in Australia through promoting collaboration with industry and other end users. More specifically, it set outs to redefine what is allowable expenditure, that is, what research grants and funding can and should be spent on to encourage innovation.
Complementing this, the RTP focuses on providing graduates with the skills needed to develop versatile careers across multiple sectors and assisting overseas Higher Degree Research (HDR) students studying in Australia. One interesting proposed measure is to standardise the length of support offered to various HDR program, as based on current indications the varying durations of support eligibility are particularly problematic.
The Federal Government still has several carry-over measures from its last term to implement as part of the National Innovation and Science Agenda. With these in place, it can cement the solid foundations already laid to date. However, there is still much potential for reform, particularly in regards to access to talent, director liabilities and open government.