On 9 September 2008, Senator Kim Carr released venturousaustralia - building strength in innovation, a 204-page review of Australia’s National Innovation System. The report was commissioned by Senator Carr on 22 January 2008.
What has been recommended?
Centralised co-ordination of innovation
The report proposes a new ‘National Innovation Council’ to provide ‘strategic leadership’. It would be chaired by the Prime Minister and provide a forum for centralised decision making relating to innovation. The body would work to co-ordinate the activities of public sector research agencies such as the CSIRO, the DSTO, ANSTO and AIMS. Innovation Australia would take on responsibility for delivering innovation program support for firms. The programs themselves would be delivered through the existing AusIndustry network.
Patent protection
The review panel states:
Arguably, the current threshold of inventiveness for existing patents is also too low. The inventive steps required to qualify for patents should be considerable, and resulting patents must be well defined, so as to minimise litigation and maximise scope for subsequent innovators.
In proposing the reform, the review panel appears to aim to restrict the grant of patents to those which overcome a considerable barrier of inventiveness. However, the report leaves unclear what, if any, effect might be had on Australia’s existing innovation patent system. Australian Innovation Patents are a form of patent that require an applicant to demonstrate a lesser ‘innovative step’ compared with standard patents. The adoption of a more stringent test of inventiveness may be at odds with the continued existence of Australia’s innovation patent system.
Tax
The review panel recommends a reduction in the company tax rate to stimulate economic growth. It further recommends changing of the existing R&D Tax Concession from a system of tax deduction to a tax credit. It is proposed that a 40 per cent tax credit should be made available across the board for R&D activities passing certain tests, with a 50 per cent credit available for small organisations having a turnover of less than $50 million. The proposal would remove the current emphasis on local IP ownership and encourage domestic R&D activity by a tax credit irrespective of IP being foreign-owned. In the current proposal, the tax credit would not be refundable to foreign companies. The credit would be applied on a quarterly basis, or more frequently, rather than in later tax years as is currently the case.
The report earmarks innovative open-source software as a particular target for positive tax treatment.
Increased funding for innovation
The review panel recommended a $150 million allocation to 200 innovative firms. In practical terms, this would amount to an average grant of around $750,000 per year per firm. The review also recommends a linkage voucher scheme to foster links between industry and public research agencies. Each voucher would have a value up to $15,000. The review panel recommends the introduction of income contingent loans for entrepreneurs seeking to fund innovative projects.
Increased innovation within government
The report suggests this mechanism to increase the degree of innovation occurring within government. It recommends schemes directed to challenging existing practices, experimentation within agencies, dissemination of knowledge between agencies, and rewarding of individuals and agencies that innovate. One aspect of the proposal is directed to encouraging innovation in the private section through certain changes to government procurement practices.
What is the next step?
The Federal Government intends to make a formal response before the end of the year. Comments are invited on the report until 23 September 2008.
This article was written by Clinton East, Patent Engineer, Melbourne.
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