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Prime Minister

29 January 2001

TRANSCRIPT OF THE PRIME MINISTER
THE HON JOHN HOWARD MP
FEDERATION ADDRESS AND LAUNCH OF

'BACKING AUSTRALIA'S ABILITY'
AUSTRALIAN TECHNOLOGY PARK CENTRE, SYDNEY

E&OE………………………………………………

In this centenary year of Australia’s Federation it is my great pleasure to present this year’s Federation Address and, in so doing, launch the Government’s Innovation Action Plan for the Future, Backing Australia’s Ability.

In last year’s Federation Address, I looked ahead to the year 2010 and expressed my firm belief that Australia could not only consolidate but entrench our current economic strength through the tangible benefits generated by technological change, software revolutions, scientific innovation and the expanding frontiers of the knowledge economy.

My optimism that this can occur is now higher than ever.

More and more people are coming to understand that innovation, as a concept, is not the preserve of just a small group of Australians, but the means by which all of us, in small business, as employees in larger companies, as primary producers, as parents wanting better opportunities for our children, will succeed.

A compelling reason for my optimism stems from our tremendous progress over a century of nationhood. In that time Australians have revealed themselves as an innovative and resourceful people – a people willing to have a go.

Australian invention and innovation has taken many forms, from the most humble practical changes to great nation building projects. And although sometimes not given the public recognition deserved, we have had particular success in the area of scientific endeavour.

This success has not only changed the lives of Australians, it has improved the welfare of people around the world – the estimation that the lives of 200 million people have been saved by the development of penicillin, in great part by Howard Florey, remains a startling figure. Of all our Nobel Prize winners, all but one, have been recognised for outstanding achievement in the fields of science and medicine.

Yet, as fine as our achievements have been, the fruits of our ingenuity and inventiveness must be realised here in Australia. In an extremely competitive world of highly mobile capital and labour, it is all the more important that Australia has the right incentives and opportunities to translate Australian ideas into income and jobs at home for Australians.

In launching Backing Australia's Ability today, the largest group of measures ever put together by an Australian Government to foster innovation, and in calling upon those in the scientific, education and business communities to take up the opportunities offered by it, I am confident that, together, we can create a climate to harness the talents of our best and brightest and effectively compete in the world of which I’ve just spoken.

By providing significant additional resources and the means by which talented Australians can have a go in the field of science and technology, we are seeking today to nurture a new generation of young scientific minds capable of achieving great things for their country.

SETTING THE RIGHT CLIMATE

Innovation, as a concept, can’t flourish in isolation. People, no matter how talented or entrepreneurial, can’t be expected to have a go if they lack confidence in the environment that surrounds them.

For this reason, the success of the initiatives being announced today will be very much underpinned by the Government’s record in providing an economic climate in which innovation can thrive.

Our tax reforms have provided Australia with an efficient and internationally competitive tax system including, from the first of July, one of the lowest company tax rates in the region.

The new capital gains tax system rewards entrepreneurial behaviour and offers incentives for the provision and management of capital. It’s encouraging to note that in the year following the introduction of these reforms, nearly twice as much venture capital was invested in Australian companies.

Australia now has a more flexible labour market better suited to the needs of emerging industries while also I
improving the efficiency of more established industries.

These and other fundamental economic reforms of recent years have created a vibrant and competitive economic environment with high growth and productivity and, as was confirmed last week, low inflation. An environment in which Australians can have confidence and can be innovative.


PAST PROGRAMMES / BACKGROUND TO BACKING AUSTRALIA’S ABILITY

The group of initiatives I am delighted to announce today is the fulfilment of a major Coalition election promise and the next step in a series of wide ranging programs undertaken by my Government over recent years to stimulate and encourage innovation.

The Investing for Growth statement in 1997, the new policy and funding framework for higher education research and research training announced in Knowledge and Innovation and the government’s decision in 1999 to double base funding for health and medical research by an additional $614 million over five years are all examples of our past commitment to innovation.
In 2000/2001 alone, my Government will have provided approximately four and a half billion dollars funding for innovation including a record $2.7 billion for science, research and industry innovation programs, $1.8 billion for higher education research and research training and additional funds for specialised programmes such as those targeted at the ICT sector.

But, notwithstanding all the good work done to date, Backing Australia's Ability takes that commitment to a new level.

In putting this group of measures together, we have been extremely fortunate to receive astute and expert advice from a great number of people, many of whom are in this room today.

To the Chief Scientist, to all the members of my Science Council, to David Miles and the members of the Innovation Summit implementation Group, to the BCA for their role in hosting that Summit, to all who participated in it and the many others who provided their views through other forums, we owe a great debt of gratitude.

I also wish to acknowledge the great effort and enthusiasm of the three Ministers who shared responsibility for the development of this strategy and the often difficult task of achieving an appropriate balance between often competing and compelling priorities - Nick Minchin, Minister for Industry, Science and Resources, David Kemp, Minister for Education, Training and Youth Affairs, and Richard Alston, Minister for Communications, Information Technology and the Arts.

Backing Australia’s Ability supports the essential ingredients for a dynamic, productive and innovative economy identified by so many of those whose advice we sought -

The strengthening of our ability to generate ideas and undertake research; accelerating the commercial application of these ideas; and developing and retaining Australian skills.

Backing Australia’s Ability will provide $2.9 billion of additional funding over 5 years for these purposes, as I’ve said the largest commitment to innovation ever made by an Australian Government, and I’d like now to take you through some of the key initiatives within each of those three elements.


STRENGTHENING OUR ABILITY TO GENERATE IDEAS AND UNDERTAKE RESEARCH

A main aim of the strategy is to ensure that our research base, the backbone of any nation’s innovative capacity, remains strong and internationally competitive. For that reason, substantial support will be provided to foster research in both the public and private sectors.

To support internationally competitive research, the Government will double funding over the next 5 years for national competitive research grants administered by the Australian Research Council.

These grants cover an enormously broad range of research and the additional $736 million will provide the type of boost for general research as that received by medical research two years ago. This funding will directly support ground breaking research in areas in which Australia enjoys, or wants to build, a competitive advantage.

We have recognised though, that creative minds often require specialised equipment in order to take their ideas forward. For that reason, more than $337 million will be provided towards increased project-specific infrastructure over the next five years.

This will support not only ARC research but also that undertaken through the National Health and Medical Research Council grants scheme.

Moreover, we will provide $246 million over the next five years to fund the best infrastructure proposals from universities to upgrade their scientific and research equipment, libraries and laboratories.

Over the next five years, we intend to establish world class Centres of Excellence in ICT and biotechnology at a cost of $176 million to ensure that Australia continues to play a leading part in these key technologies. With strong industry participation, these centres will undertake cutting edge R&D, focussing on commercialisation and encouraging spin-off companies.

In respect to encouraging biotechnology more generally, $20 million has been earmarked to double the Biotechnology Innovation Fund.

The Government will also provide significant funds towards establishing collaborative Major National Research Facilities.

The Government will introduce incentives to stimulate increased business investment in R&D. Initiatives include new tax concessions to encourage companies to increase R&D efforts, a rebate to assist small companies to undertake R&D and continued direct grant assistance.

Specifically, the Government will enhance the R&D tax concession arrangements. In addition to the existing 125 per cent R&D tax concession, companies that undertake additional R&D will be able to access a premium rate of 175 per cent on the additional investment. This premium targets the labour-related components of R&D expenditure and so will help develop Australian skills and expertise.

In accordance with the approach taken to business tax reform, effective-life write off will apply to the Government’s existing R&D tax concession scheme, simplifying it and providing a consistent treatment between R&D plant and other capital items in the tax system.

The reform of the existing R & D concession scheme will ensure that the commercial realities surrounding the conduct of these activities are dealt with more adequately and collectively, the changes being made will provide Australia with one of the best tax based R&D support mechanisms in the OECD.

We’ve also recognised that often the most exciting developments may emerge from smaller companies and the Government will introduce a tax rebate for the R&D tax concession to help the cash flow of these type of organisations. Over five years, it’s estimated up to 1300 small companies that are in tax loss will get early access to $30 million at a net cost of $13 million.

Finally our absolute commitment to the small and medium enterprise sector will see $535 million over five years used to maintain the highly successful START program into the future - it becoming an ongoing mechanism to help the hundreds of companies where grant assistance is most appropriate.


ACCELERATING THE COMMERCIAL APPLICATION OF IDEAS

At the very heart of our plan is to turn Australian ideas into incomes and jobs for Australians. That’s been a common concern in the past – we don’t intend for it to be in the future.

It’s a complex issue that requires several different approaches – better flow of finance into business innovation, encouraging start ups directly out of research institutions and strengthening intellectual property management processes.

It’s also vital to bring together the skills of those in business, universities and governments to pull together ensuring the best Australian ideas can be transformed into products and jobs. Backing Australia’s Ability will assist the greater commercial application of research from universities and public sector research agencies, like the CSIRO, by encouraging the commercial linkages with industry and removing impediments for promising research to go forward to the stage of commercial viability.

The Cooperative Research Centre concept has tremendous potential to further the spin-off opportunities from industry research collaboration. The Government will boost the CRC Program by 80 per cent over the next five years at a cost of $227 million.

Greater flexibility will also be incorporated to allow for larger CRCs to be established and small and medium enterprises provided with greater access to the program.

And, once again, with an eye to improving opportunities for the SME sector, an extra $40 million over four years will more than double in value the highly successful Commercialising Emerging Technologies, or COMET Program as its known, to provide early assistance to firms by improving their commercialisation skills.

Also of significance to this sector, funding of $100 million will be provided for an Innovation Access Program to ensure Australian access to the best overseas technology and science and develop international bilateral agreements for this purpose.

Assistance of $79 million will be given to help commercialise public sector research in the form of pre-seed funding, allowing universities and public sector research agencies to take proposals to a venture capital ready stage.

To accelerate efforts to improve Australia’s performance in the development and commercialisation of new agribusiness products, services and technologies, an additional $22 million over five years will be committed to the New Industries Development Program.

And, finally, we’re conscious Australian ideas need to be protected.   The Government will set out to further increase awareness and understanding of Intellectual Property issues by a number of educational and legislative and other measures including acceding to the Madrid agreement regarding international registration of trade marks.


DEVELOPING AND RETAINING AUSTRALIAN SKILLS

The last key element in our drive to foster innovation on a wide and sustainable scale is to equip our own people to be world competitive.

Education and skills development is an essential prerequisite in any serious attempt to strengthen the long term research base of this country and encourage further collaboration with the world’s best.

As I said in my introduction, history is with us and present day Australians are well-educated, highly familiar with new technologies and, through being culturally diverse and export focussed, used to dealing with the world.

However, our skills base does need to be strengthened in key disciplines such as science, mathematics and technology. Students need to be excited by the possibilities open to them in these fields.

Rewards and incentives are needed to attract and retain leading researchers.

I am particularly pleased to announce that over the next five years, each year, an additional 2,000 new university places will be created with priority given to ICT, mathematics and science.

Over that period, this will result in 21,000 equivalent full time student places at a cost of $151 million.

To encourage lifelong learning and to help Australians upgrade and acquire new skills, we will also establish an income-contingent loan scheme for postgraduate fee-paying students.

To attract and retain leading researchers in key positions, part of the new funds to be provided for national competitive research grants will be used to introduce 25 new Federation Fellowships worth $225,000 a year for five years. In addition, the number of Australian Postdoctoral Fellowships will be doubled from 55 to 110 and remuneration of these positions will be improved.

We must be realistic, often the skills we need may not necessarily be available in Australia to meet short term needs. The Government will streamline immigration arrangements to retain ICT qualified overseas students in Australia to work alongside our brightest talent.

In the future, ICT specialists will make up an even larger proportion of the skilled workers entering Australia through the permanent migration and temporary entry programs.

As indicated last week, an additional $130 million over four years will go to government schools in those States where the Enrolment Benchmark Adjustment (EBA) is triggered. These funds will be exclusively and strictly applied to raise the standards of science, maths and technology.

Whilst the bulk of funding responsibility for government schools has historically been one for the states, the Federal Government provides substantial additional funds for these schools.

Indeed, last year in a number of states including Queensland and New South Wales, Federal funding for public schools rose at a faster rate than did state funding.

With this new initiative designed exclusively to improve science and maths education, the Federal Government will be further increasing its already high level of commitment.

And finally, in a meaningful and practical move to enhance student access to quality learning opportunities and provide experience of ICT as a learning tool, $34 million over five years will be provided to help develop online curriculum content in schools.


NEXT STEPS

Ladies and Gentlemen, all of you have the full detail of the programme before you so I won’t linger further on specific detail. However I do want to stress three important things.

Firstly, the entire program will be subject to a comprehensive and rigorous implementation plan, overseen by a high level Ministerial Committee that I will personally chair. I have taken great pleasure in my involvement with the Prime Ministers Science Engineering and Innovation Council.

I’ve learnt many things and through that involvement, I’ve become convinced that the issues being addressed through this group of initiatives are absolutely vital for the future of this country.

Backing Australia’s Ability will be delivered and defined, tangible outcomes will be achieved as a result of the significant funding we are putting forward. Strict accountability for all programs will apply.

Secondly, I wish all to understand this is an important step for Australia but we acknowledge that it is a single milestone in a long and unending journey. This government recognises that more must be done, on a continuous basis, to build our national capacity for innovation.

We’ve achieved a lot. The economic basics have been vastly improved, significant programs have been implemented over recent years, record funding applied to key areas.

This latest initiative Backing Australia’s Ability addresses some fundamental shortcomings and it offers some real opportunities.

This statement further illustrates the government’s continuing policy energy and our determination to be active in policy reform and development. In the highly competitive global environment in which we all live, no government can afford to be policy lazy or idle.

Over future months, we’ll be closely examining other areas affecting the capacity and willingness of individuals and organisations to engage in serious innovative and entrepreneurial activity. Employee share ownership, the attractiveness of teaching as a profession and the ways to enhance it, the remaining barriers to commercialisation, philanthropic encouragement of innovation are just some of the areas where Australia could benefit government review and action.

That brings me to my last point. The Government can play an important role, a strategic role but equally, it is and indeed should be limited in its reach.

The people within this room represent key elements of those sectors who really can drive Australian innovation and prosperity. Through your involvement advising us in the preparation of these initiatives through your presence here today, you’ve indicated both an understanding of the importance of these matters and a willingness to take up the challenge.

That augurs well for the future. The greatest challenge before all of us, and those we represent, is to pull together - to make this happen.

I’ve got no doubts we can. Just as we have a proud heritage in inventiveness and innovation, as we’ve been reminded so often in recent months, we can draw upon a past rich in examples of unity and shared endeavour.

 

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