The Commission of Audit’s call to abolish the Innovation Investment Fund and Commercialisation Australia, both industry assistance programs, has been slammed by industry experts.
The programs were created to support innovation and entrepreneurship in Australia but the Commission believes the government should adopt a hands-off approach in supporting the start-up sector.
The IIF is a public-private venture which invests in start-ups developing new technologies. The program was behind myriad successful companies such as jobs site Seek.
Commercialisation Australia offers funding and resources to help companies, entrepreneurs, researchers and inventors to commercialise their ideas.
It provides several funding options, including up to $50,000 for specialist advice and services, and up to $2m for early stage commercialisation of products or services.
In its long-awaited report, the Commission said the government should stop providing assistance to such companies as it didn’t benefit the masses.
“The intellectual property, and any profits arising from these new ideas remains with the business, and there are no clear public benefits arising.
“The process of commercialising new products can often be a difficult one.
“However, skills and finance can be acquired from the private sector, and there is no clear reason for the Commonwealth to provide this assistance in competition with private sector providers,” the report said.
The Australian Private Equity & Venture Capital Association said the recommendations were flawed and demonstrated a lack of genuine commitment to fostering a stronger Australian economy in the future.
“The Commission of Audit has got this wrong -- abolishing key support programs such as the Innovation Investment Fund and Commercialisation Australia is not going to help our economy to become more innovative and more competitive into the future,” AVCAL chief executive Yasser El-Ansary said.
“A small open market economy like ours has to focus on assisting businesses to compete on the world stage, and that’s hugely important to bringing about productivity-enhancing reforms that will create more jobs and more economic growth in the years ahead,” Mr El-Ansary said.
He said the recommendations were made “without there being any credible or compelling argument in support of the conclusions”.
AVCAL had hoped to see a comprehensive analysis of how government spending obligations could be reprioritised for greater economic efficiency and better long-term outcomes in the report.
However, the Commission “looks to have fallen into the trap” of taking a short-term view on cutting expenditure that Mr El-Ansary said will have a “potentially devastating impact on our long-term prosperity”.
He said the government should “carefully consider” the recommendations and decide if it can afford to abandon support for the creation of a “more modern and innovative future Australian economy”.
“Given the significant structural change that is taking place right now across key industry sectors such as manufacturing, the government must put in place policies that promote greater private sector investment in new business ventures, which will ultimately play a vitally important role in Australia’s future economic growth,” Mr El-Ansary said.
The start-up industry has urged the Abbott government to urgently ensure a fairer tax regime and resolve equity funding issues to help young businesses prosper.
The not-for-profit group StartupAus says start-ups could contribute about $110 billion in economic benefit if it receives the right support from government.