Inquiry into Australia’s Future in Research and Innovation

The report discusses the National Innovation and Science Agenda (NISA) and its four key areas. It examines Australia's innovation system, research collaboration, and commercialisation of ideas. The report recommends identifying emerging industries, reviewing overseas models of university-business collaboration, and reviewing NISA initiatives. It also recommends examining the proposal for a patent box scheme, a Manufacturing Finance Corporation, and an Advanced Manufacturing Tax. The report is relevant to students studying innovation, research, and entrepreneurship.

The Parliament of the Commonwealth of Australia
Inquiry into Australia’s Future in
Research and Innovation
Joint Select Committee on Trade and Investment Growth
May 2016
Canberra

© Commonwealth of Australia 2016
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http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

Contents
Chair’s Foreword ................................................................................................................................. v
Membership of the Committee ........................................................................................................... vii
Terms of Reference .............................................................................................................................. ix
Abbreviations....................................................................................................................................... xi
Recommendations ............................................................................................................................. xv
REPORT
1 Introduction ......................................................................................................... 1
Background ............................................................................................................................... 1
About the Inquiry ...................................................................................................................... 2
Objectives and Scope ................................................................................................................. 2
Role of the Committee ................................................................................................................ 3
Inquiry Conduct ........................................................................................................................... 4
Report Structure .......................................................................................................................... 4
2 The Foundations of Innovation: Education and Research ............................... 5
Australia’s Innovation System ................................................................................................. 5
Performance of Australia’s Innovation System ............................................................................ 7
Role of Innovation and Science Australia .................................................................................. 10
Emerging Opportunities ............................................................................................................ 11
Education — An Innovation Approach to Skills and Training ............................................. 12
Role of Universities and TAFES ................................................................................................ 12
STEM Education ....................................................................................................................... 13
Other Innovation Skills .............................................................................................................. 15
Early Stage Research ............................................................................................................. 16

iv
Funding Public Sector Research ............................................................................................... 16
Basic Research ......................................................................................................................... 20
Research Collaboration .......................................................................................................... 21
Encouraging Public Sector Demand for Collaboration .............................................................. 22
Encouraging Business Demand for Collaboration ..................................................................... 27
Successful Examples of Collaboration ................................................................................. 29
Overseas Examples .................................................................................................................. 29
Australian Examples ................................................................................................................. 29
Public Sector Commercialisation Strategies.............................................................................. 30
Concluding Comments ........................................................................................................... 34
3 Nurturing Innovation ......................................................................................... 37
Introduction ............................................................................................................................. 37
Developing the Start-up Sector .............................................................................................. 38
Co-location ................................................................................................................................ 38
Private Sector Incubators and Accelerators .............................................................................. 39
Attracting Finance ................................................................................................................... 40
Debt Financing .......................................................................................................................... 41
Equity Financing ........................................................................................................................ 42
Government Support for Innovation and Commercialisation ............................................. 48
Innovation Hubs and Incubators ................................................................................................ 48
Direct Business Assistance ....................................................................................................... 50
Encouraging Equity Investment ................................................................................................. 53
Research and Development Tax Incentive ............................................................................... 55
Intellectual Property .................................................................................................................. 59
Concluding Comments ........................................................................................................... 64
APPENDIXES
Appendix A - Submissions ...................................................................................... 69
Appendix B - Exhibits .............................................................................................. 73
Appendix C – Hearings and Witnesses .................................................................. 75

Chair’s Foreword
Australia faces a world of rapid change as technology creates new products, new
processes, and new industries. New innovative companies are expected to
significantly contribute to Australia’s economy and assist in its diversification,
increasing employment and improving its global competitiveness.
Australia has a well-educated population, world-leading universities and research
organisations generating new knowledge and inventions, coupled with a stable
business environment providing opportunities for small and large companies.
The foundations of Australia’s innovation system are strong and yet our record of
building on these foundations has been mixed. Australia’s efficiency in translating
investments in the research sector into outcomes that have tangible social and
economic benefit could be improved.
Australia’s level of research collaboration between universities and business is
amongst the lowest in the OECD. An avenue of opportunity for improvement is
the exchange of knowledge and meaningful information between business and the
research sector.
Increased collaboration could assist businesses develop novel solutions to the real-
world problems they are facing. Collaborative research is also key to developing
the disruptive, new-to-the-world technologies that could form the basis of
significant new companies and industries.
Although growing, Australia’s venture capital market is still small by global
standards. Innovative ideas are the fuel for new and improved goods and services,
but their development requires capital investment. As a venture capitalist
remarked to the Committee, ‘the idea cannot come to fruition without the capital,
and capital, without an idea, is useless.’1
Through this inquiry the Committee has examined Australia’s innovation system
from the creation of ideas through research and innovative thinking, through to
the commercialisation of these ideas.
1 Mr Danny Gilligan, Cofounder and Managing Director, Reinventure, Official Committee
Hansard, Sydney, 9 March 2016, p. 4.

vi
The recently released National Innovation and Science Agenda (NISA) has been
largely welcomed by both the public and private sectors. The NISA contains a
suite of measures aimed at positioning Australia as ‘a leading innovator; open to
adapting and evolving to improve the wellbeing and quality of life for all
Australians.’
The Committee has recommended the identification of potential new innovation
industries, and a review of overseas commercialisation assistance models to
inform additional ways of encouraging the commercialisation of Australian
innovation. The Committee has also recommended a timely review of the NISA
initiatives, and careful examination of the possible measures designed to
encourage the innovation sector.
I would like to thank all the individuals, business organisations and government
agencies who assisted the Committee by providing useful and insightful
information to the inquiry. I would also like to acknowledge the contribution of
Committee members and thank them for their work throughout the 44th
Parliament.
Mr Ken O’Dowd MP
Chair

Membership of the Committee
Chair Mr Kenneth (Ken) O’Dowd MP
Deputy Chair Mr Patrick (Pat) Conroy MP
Members Hon Bruce Billson MP(From 22.02.16) Mr Clive Palmer MP
Senator Joseph (Joe) Bullock(Until
13.04.16)
Mr Antony (Tony) Pasin MP
Ms Terri Butler MP Senator Dean Smith
Senator the Hon Joseph Ludwig
(From 18.04.16)
Senator Zhenya Wang
Senator the Hon Ian Macdonald
Participating Members
Senator Christopher (Chris) Back
Senator Cory Bernadi
Senator Catryna Bilyk
Senator Carol Brown
Senator David Bushby
Senator the Hon Doug Cameron
Senator Matthew Canavan
Senator the Hon Kim Carr
Senator the Hon Jacinta Collins
Senator the Hon Stephen Conroy
Senator Sam Dastyari
Senator Jenny McAllister
Senator Anne McEwen
Senator James McGrath
Senator Bridget McKenzie
Senator Claire Moore
Senator Ricky Muir
Senator Barry O’Sullivan
Senator James Paterson(From 16.03.16)
Senator Nova Peris
Senator Helen Polley
Senator Linda Reynolds

viii
Senator Sean Edwards
Senator David Fawcett
Senator Katy Gallagher
Senator the Hon Bill Heffernan
Senator Sue Lines
Senator the Hon Joseph Ludwig
(Until 18.04.16)
Senator Gavin Marshall
Senator Anne Ruston
Senator Zed Seselja
Senator the Hon Lisa Singh
Senator Glenn Sterle
Senator Anne Urquhart
Senator John Williams
Senator the Hon Penny Wong
Committee Secretariat
Secretary Ms Stephanie Mikac
Inquiry Secretary Dr John Carter
Senior Research Officer Mr Tim Brennan
Administrative Officers Ms Carissa Skinner

Terms of Reference
The Joint Select Committee on Trade and Investment Growth was established to
inquire into and report on any measures to further boost Australia's trade and
investment performance, including, but not limited to: barriers to trade; reduction
of red tape and structural challenges; and opportunities for the Australian
community.
As part of its remit, the Committee will investigate how the research and
innovation sector can better assist in overcoming Australia’s geographic, economic
and labour challenges, with a focus on commercialisation including, how
technology imports and exports could be further facilitated.

x

Abbreviations
AAH Australian Academy of Humanities
AAS Australian Academy of Science
ACCI Australian Chamber of Commerce and Industry
AIG Australian Industry Group
AIMI Australian Innovation and Manufacturing Incentive
AMT Advanced Manufacturing Tax
AMWU Australian Manufacturing Workers’ Union
ANSTO Australian Nuclear Science and Technology Organisation
ARC Australian Research Council
ATN Australian Technology Network
CADET Centre for Advanced Design in Engineering Training
CSEF Crowd-Sourced Equity Funding
CSIRO Commonwealth Scientific and Industrial Research Organisation
DET Department of Education and Training
DFAT Department of Foreign Affairs and Trade
DIIS Department of Industry, Innovation and Science
ECA Export Council of Australia
ERA Excellence in Research for Australia
ESVCLP Early Stage Venture Capital Limited Partnership

xii
GDP Gross Domestic Product
GFC Global Financial Crisis
GII Global Innovation Index
GMC Geelong Manufacturing Council
IIP Industry Innovation Program
IP Intellectual Property
ISA Innovation and Science Australia
MFC Manufacturing Finance Corporation
MP Member of Parliament
NHMRC National Health and Medical Research Council
NISA National Innovation and Science Agenda
OECD Organization for Economic Cooperation and Development
PIV Premium Investor Visa
OPAL Open Pool Australian Lightwater
R&D Research and Development
SIV Significant Investor Visa
SME Small to Medium-Sized Enterprise
STEM Science, Technology, Engineering and Mathematics
TAFE Technical and Further Education
UK United Kingdom of Great Britain
US United States
USA United States of America
UTAS University of Tasmania
UTS University of Technology Sydney

VCPE Venture Capital or Private Equity
VC Venture Capitalist
WIPO World Intellectual Property Organisation
WSU Western Sydney University

xiv

Recommendations
2 The Foundations of Innovation: Education and Research
Recommendation 1
The Committee recommends that Innovation and Science Australia
identify emerging industries where strategic research investment could
enable Australia to become a world leader.
Recommendation 2
The Committee recommends that the Department of Education and
Training review overseas models of university-business collaboration
with a view to identifying strategies which could be introduced in
Australia.
3 Nurturing Innovation
Recommendation 3
The Committee recommends that the initiatives introduced as part of the
National Innovation and Science Agenda be reviewed after three years of
operation to determine their effectiveness and whether the programs
should be expanded.
Recommendation 4
The Committee recommends that the Treasury undertake a close
examination of a patent box scheme. If a patent box is introduced, it
should be subject to a sunset clause after three years of operation. A
review should be undertaken to determine the effectiveness of the patent
box scheme and whether it should be extended and for how long.

xvi
Recommendation 5
The Committee recommends that the Treasury undertake a close
examination of the proposal for a Manufacturing Finance Corporation.
Should such a corporation be established, it should be reviewed after a
period of five years to determine its effectiveness.
Recommendation 6
The Committee recommends that the Treasury undertake a close
examination of the proposal for an Advanced Manufacturing Tax. Should
such a tax be introduced, it should be subject to a sunset clause at which
point a review should be undertaken to determine its effectiveness and
whether it should be continued.

1
Introduction
Background
1.1 On 7 December 2015, the Australian Government released the National
Innovation and Science Agenda (NISA).1 Through the $1.1 billion NISA2,
the Government has aimed to boost the level of innovation and
entrepreneurship nationally and ‘help to create a modern, dynamic, 21st
century economy for Australia.’3
1.2 The NISA package is based on the National Innovation and Science Agenda
Report and structured on the four key areas4 of:
 Culture and capital ‘to help businesses embrace risk and’ provide
incentives for ‘early stage investment in [business] startups’.
 Collaboration ‘to increase the level of engagement between businesses,
universities and the research sector to commercialise ideas and solve
problems.’
 Talent and skills ‘to train Australian students for the jobs of the future
and attract the world’s most innovative talent to Australia’;
 Government as an exemplar ‘to lead by example in the way
Government invests in and uses technology and data to deliver better
quality services.’5
1 Hon Christopher Pyne MP, Minister for Industry, Innovation and Science, ‘Agenda to
Transform the Australian Economy’, Media Release, 7 December 2015.
2 Hon Malcolm Turnbull MP, Prime Minister and the Hon Christopher Pyne MP, Minister for
Industry, Innovation and Science, ‘National Innovation and Science Agenda’, Joint Media
Release, 7 December 2016.
3 Hon Malcolm Turnbull MP, Prime Minister and the Hon Christopher Pyne MP, Minister for
Industry, Innovation and Science, ‘National Innovation and Science Agenda’, Joint Media
Release, 7 December 2016.
4 Each of these areas includes a range of specific initiatives.

2 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
1.3 The NISA is designed to capitalise on Australia’s:
 ‘Unprecedented access to the global economy’ through the new free
trade agreements with China, Japan and Korea; and
 The established and internationally recognised research undertaken by
universities and institutions such as the Commonwealth Scientific and
Research Organisation.6
About the Inquiry
Objectives and Scope
1.4 The purpose of the Inquiry into Australia’s Future in Research and
Innovation was to:
… investigate how the research and innovation sector can better
assist in overcoming Australia’s geographic, economic and labour
challenges, with a focus on commercialisation including how
technology imports and exports could be further facilitated.7
1.5 The Committee’s Inquiry is one of four current Parliamentary Committee
inquiries relating to innovation in Australia. Other Parliamentary
Committee inquiries underway are:
 The House of Representatives Standing Committee on Agriculture and
Industry - inquiring into the role of technology in increasing
agricultural productivity in Australia, including relevant emerging
technology and barriers to its adoption.
 The House of Representatives Standing Committee on Education and
Employment - inquiring into how Australia's tertiary system can meet
the needs of a future labour force, including the extent to which
students are graduating with the skills needed for jobs, and factors that
discourage close partnerships between industry, the research sector and
education providers.
 The Senate Environment and Communications References Committee -
inquiring into the future of Australia's video game development
industry, including how regulatory and taxation frameworks can help
5 Hon Malcolm Turnbull MP, Prime Minister and the Hon Christopher Pyne MP, ‘Minister for
Industry, Innovation and Science, National Innovation and Science Agenda’, Joint Media
Release, 7 December 2016.
6 Hon Malcolm Turnbull MP, Prime Minister and the Hon Christopher Pyne MP, Minister for
Industry, Innovation and Science, ‘National Innovation and Science Agenda’, Joint Media
Release, 7 December 2016.
7 Terms of reference to the Inquiry into Australia’s Future in Research and Innovation.

INTRODUCTION 3
the local industry to grow, and how Australia can attract videogame
companies to establish themselves in Australia.
1.6 While the main terms of reference for each of these inquiries differs, all are
centred on the theme of innovation. The evidence received during the
Committee’s inquiry has commonality with these inquiries and includes:
the role of technology in sustaining innovation, meeting the future needs
of the labour workforce in regard to training and skills development and
encouraging research for the purpose of commercialisation.
1.7 During this inquiry, the Committee received a diverse range of evidence
on how to stimulate and maintain innovation within the Australian
economy. The majority of the issues raised with the Committee which
address the inquiry terms of reference are included in this report.
Role of the Committee
1.8 The Joint Select Committee on Trade and Investment Growth (the
Committee) was appointed8 to:
… inquire into and report on any measures to further boost
Australia’s trade and investment performance, including, but not
limited to: barriers to trade, reduction of red tape and structural
challenges and opportunities for the Australian community.
1.9 Following the receipt of wide ranging evidence9 to its first inquiry, on
30 September 2015, the Committee wrote to the then Minister for Trade
and Investment (the Minister), the Hon Andrew Robb AO MP, seeking to
extend the Committee to enable it to further investigate issues brought
before it during the inquiry. In this vein, the Committee sought, (in line
with its resolution of appointment), to receive Ministerial endorsement for
it to undertake an Inquiry into Australia’s Future in Research and
Innovation.
1.10 On 8 October 2016, the Minister referred the Inquiry into Australia’s
Future in Research and Innovation to the Committee.
8 The Joint Select Committee on Trade and Investment Growth was appointed by the Senate on
4 September 2014 and the House of Representatives on 23 September 2014. Commonwealth of
the Parliament of Australia, Senate Journals No. 52, 4 September 2014, p. 1429; Commonwealth
of the Parliament of Australia, House of Representatives Votes and Proceedings No. 67,
23 September 2014, p. 840.
9 Formal evidence (including submissions, exhibits and transcripts of evidence of public
hearings) received during the Inquiry into Business Utilisation of Australia’s Free Trade
Agreements.

4 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
1.11 On 13 October 2015, the Parliament amended the Committee’s Resolution
of Appointment to enable it to continue its work for the remainder of the
44th parliament.10
1.12 On 3 December 2015, the Committee subsequently adopted the Inquiry
into Australia’s Future in Research and Innovation.
Inquiry Conduct
1.13 Following receipt of a Ministerial reference, the Inquiry was advertised via
media release with submissions to be received by 11 February 2015. The
Committee also invited submissions to the Inquiry from an extensive11
range of organisations, including: the ICT12, medical and bio-technology,
technology, manufacturing, university and research, finance, alternative
energy and finance sectors.
1.14 The Committee received 62 submissions and 23 exhibits to the Inquiry,
which are listed at Appendixes A and B respectively. The Committee also
held six public hearings in Canberra, Melbourne, and Sydney. Witnesses
who appeared before the Committee at these public hearings are listed at
Appendix C.
1.15 Submissions and transcripts of evidence are available
at: http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/
Trade_and_Investment_Growth/Research_and_Innovation/Public_Heari
ngs
Report Structure
1.16 Chapter 2 outlines Australia’s approach to innovation and its application
to the education sector, particularly in the area of fostering and growing
university research.
1.17 Chapter 3 discusses various ways to nurture innovation in Australia
drawing on current global approaches to transform innovation from
concept to commercialisation.
10 Senate Journals No. 120, 13 October 2015, p. 3234, the Parliament of the Commonwealth of
Australia; House of Representatives Votes and Proceedings No. 148, 13 October 2015, p. 1634, th
Parliament of the Commonwealth of Australia.
11 The Committee sent over 200 unsolicited letters inviting submissions.
12 Information and Communications Technology

2
The Foundations of Innovation: Education
and Research
Australia’s Innovation System
2.1 The Department of Industry, Innovation and Science (DIIS) advocated that
‘innovation activities are best optimised in the context of an innovation
system’.1 An innovation system was defined by DIIS as:
… an open network of organisations to produce and use
knowledge and technology to create economic and social value. It
is about the way these organisations interact to generate and
exploit knowledge and ideas.2
2.2 Professor Roy Green also provided a definition of an innovation system
stating that it was comprised of:
… the relationships between knowledge creating organisations
(principally research and education bodies), knowledge adopters
(industry and the businesses that constitute it) and government (in
its policy, funding, market creation and regulatory roles). Financial
institutions, including venture capital investors, innovation
intermediaries, professional advisers and consultants all play an
important financing, enabling and integrating role.3
2.3 The Australian Academy of Science (AAS) highlighted the economic
importance of a ‘well-functioning innovation system with the capacity to
continually produce new and improved goods and services’.4 The AAS
1 Department of Industry, Innovation and Science (DIIS), Submission 31, p. 2.
2 DIIS, Submission 31, p. 2.
3 Professor Roy Green, Exhibit 5: Australia’s Innovation Future: Committee Expert Consultant Repo
for Senate Economics References Committee’s Inquiry into Australia’s Innovation System , p. 3.
4 Australian Academy of Science (AAS), Submission 3, p. 6.

6 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
outlined four components of an innovation system, each of which ‘has
different needs but is vital to the success of the whole’.5 The AAS
described these four components as:
 a strong research sector producing important basic discoveries;
 applied scientists and engineers taking those general, basic
discoveries and using them to solve specific problems in
diverse disciplines;
 innovative investors, entrepreneurs and companies making
connections between the fruits of research and development
and opportunities in the market; and
 larger experience-rich firms providing discipline, infrastructure
and networks to scale prototypes to production.6
2.4 The Government has identified priority areas for business innovation and
development through the Industry Growth Centres and for public sector
research through the National Science and Research Priorities.
2.5 The DIIS stated that the Government was investing $248 million over four
years in six Industry Growth Centres focussed on ‘areas of competitive
strength and strategic priority’. The Growth Centres ‘will work to unlock
commercial opportunities and drive innovation by building links between
businesses and industry organisations and the science and research
sector’.7 The six Industry Growth Centres are:
 Advanced Manufacturing
 Cyber Security
 Food and Agribusiness
 Medical Technologies and Pharmaceuticals
 Mining Equipment, Technology and Services
 Oil, Gas and Energy Resources.8
2.6 The National Science and Research Priorities (Research Priorities) were
developed in consultation with the former Chief Scientist Professor Ian
Chubb AC. A proportion of Australia’s research investment will be
aligned to the Research Priorities to help build ‘critical mass and scale in
areas vital to our future’.9 The nine Research Priorities are:
5 AAS, Submission 3, p. 7.
6 AAS, Submission 3, p. 7.
7 DIIS, Find out about the Industry Growth Centres Initiative,http://www.business.gov.au/advice-
and-support/IndustryGrowthCentres/Documents/IndustryGrowthCentres-Overview.pdf
Accessed 19 April 2016.
8 DIIS, Find out about the Industry Growth Centres Initiative, http://www.business.gov.au/advice-
and-support/IndustryGrowthCentres/Documents/IndustryGrowthCentres-Overview.pdf
Accessed 19 April 2016.
9 The Hon Tony Abbott MP, Prime Minister and the Hon Christopher Pyne MP, Minister for
Education and Training, ‘National Science and Research Priorities’, Joint Media Release, 26 May
2015.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 7
 Food
 Soil and Water
 Transport
 Cybersecurity
 Energy
 Resources
 Advanced Manufacturing
 Environmental Change
 Health.10
2.7 The Australian Government budgeted expenditure on science, research
and innovation was $9.7 billion for 2015-16. This funding was comprised
of:
 $3.2 billion in support for the business sector (predominantly through
the R&D Tax Incentive);
 $2.8 billion in support for the Higher Education sector (primarily
through university block research funding and Australian Research
Council grants);
 $1.9 billion for ‘multi-sector’ funding for large grant schemes such as
the National Health and Medical Research Council (NHMRC) and the
Rural Research and Development Corporations; and
 $1.8 billion for government research activities such as the
Commonwealth Scientific and Industrial Research Organisation
(CSIRO) and the Defence Science and Technology Organisation.11
Performance of Australia’s Innovation System
2.8 The performance and strength of an innovation system is based on the
dynamic interaction of a wide range of separate components. The Global
Innovation Index (GII) is a widely recognised measure that attempts to
‘capture the multi-dimensional facets of innovation’ in order to provide an
overall synthesis of the performance of national innovation systems.12
10 Australian Government, Science and Research Priorities, http://www.science.gov.au/
scienceGov/ScienceAndResearchPriorities/Documents/15-49912%20Fact%20sheet%20for
%20with%20National%20Science%20and%20Research%20Priorities_4.pdf
Accessed 19 April 2016.
11 DIIS, Submission 31, p. 4.
12 Cornell University, INSEAD, and WIPO, The Global Innovation Index 2015: Effective Innovation
Policies for Development, p. 419.

8 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
2.9 Australia ranked 17th in the 2015 GII.13 While Australia ranked relatively
highly the CSIRO highlighted that Australia compares ‘poorly’ with its
12th world ranking ‘for nominal Gross Domestic Product (GDP).’14
2.10 In 2013-14 Australia’s gross spending on research and development (R&D)
(which includes government, business, and university spending) was
$33.5 billion which amounts to 2.12 per cent of Australia’s GDP.15 This
puts Australia’s R&D spending16 above the Organisation for Economic Co-
operation and Development (OECD) average of 2.02 per cent.17 As the
CSIRO highlighted, however, ‘countries with strong international
reputations for innovation… spend a minimum of 3 per cent of GDP on
R&D per annum.18
2.11 Australian business spent $18.8 billion on R&D in 2013-14, which
amounted to 1.19 per cent of Australia’s GDP. In the same period,
Australia’s higher education sector spent $9.6 billion on R&D, which
amounted to 0.63 per cent of Australia’s GDP.19 As a percentage of GDP,
Australia’s R&D spending by business and the higher education sector
ranked 15th and 8th, respectively, amongst the 34 OECD+20 countries
surveyed.21
2.12 In 2015, Australia ranked 10th for Innovation Input22 but 24th for
Innovation Output.23 Australia was ranked 72nd for Innovation Efficiency,
or the ability to translate inputs into outputs.24 The CSIRO stated that
Australia’s low efficiency ranking ‘reflects Australia’s weakness in
commercialising and exporting the innovations Australia creates into new
market-ready products and services’.25
13 Out of 141 countries. Cornell University, INSEAD, and WIPO, The Global Innovation Index 2015:
Effective Innovation Policies for Development, p. 167.
14 CSIRO, Submission 43, p. 4.
15 DIIS, Australian Innovation System Report 2015, p. 123.
16 As a percentage of GDP.
17 This is the average for the OECD+ which includes all the countries of the OECD as well as
China, Taiwan and Singapore.
18 CSIRO, Submission 43, p. 7.
19 DIIS, Australian Innovation System Report 2015, pp 109, 110, and 123.
20 The OECD+ includes all the countries of the OECD as well as China, Taiwan and Singapore.
21 DIIS, Australian Innovation System Report 2015, pp 110, and 123.
22 The GII rating for Innovation Inputs is based on rating a country’s performance across the five
criteria of: institutions, human capital and research, infrastructure, market sophistication, and
business sophistication.
23 The GII rating for Innovation Output is based on rating a country’s performance across the
two criteria of: knowledge and technology outputs, and creative outputs.
24 Cornell University, INSEAD, and WIPO, The Global Innovation Index 2015: Effective Innovation
Policies for Development, p. 167.
25 CSIRO, Submission 43, p. 4.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 9
2.13 The Chief Scientist for Australia (Chief Scientist) highlighted Australia’s
weakness in transforming research into economic benefit and stated:
… the imbalance in the entrepreneurial pipeline from R&D to
economic output is a significant barrier to Australia’s growth as an
innovator, and will need to be addressed if Australia is to develop
its knowledge economy.26
2.14 Sendle conceptualised innovation systems as comprising ‘stocks and
flows’ and contended that Australia had strong stocks but weak flows.
Sendle stated:
… if you look at the innovation system in Australia, there are two
things that matter in it: stocks and flows. Our stocks in the
innovation system are our bodies of knowledge. They are our
people. They are the universities, the CSIROs and others. The
thing about Australia is that we actually have pretty good stocks
for our size on the world stage. Our stocks are good, but the other
[way] you can measure the innovation system is by the flows: how
much knowledge is being transferred between these
organisations—from the public service to the private sector; how
often is knowledge going through; what are our flows like
between Australia and the rest of the world? And, if there is one
area where I think we need to lift our game internationally, it is the
flows within the innovation system.27
2.15 One of the strengths of Australia’s innovation system is its strong research
sector. Australia accounts for 3.71 per cent of the world’s publications and
6.9 per cent of the world’s one per cent most highly cited publications.28
2.16 The Department of Education and Training (DET) stated that human
capital is ‘a critical element in fostering and driving innovation’29.
Australia has a relatively well educated population by OECD standards.
The DIIS stated that in 2013, 39.5 per cent of Australians aged 25 to 64 had
attained tertiary education above the OECD+ average of 33 per cent.30 The
DET also reported that ‘since the early 1990s’ the proportion of ’20 to 64
years olds who hold a bachelor level qualification or higher increased
three-fold, from around 10 per cent to 29 per cent.’31
26 Chief Scientist for Australia (Chief Scientist), Submission 49, p. 2.
27 Dr James Chin Moody, Chief Executive Officer, Sendle, Official Committee Hansard, Sydney,
9 March 2016, p. 15.
28 University of Tasmania (UTAS), Submission 34, p. 1.
29 Department of Education and Training (DET), Submission 40, p. 5.
30 DIIS, Australian Innovation System Report 2015, p. 121.
31 DET, Submission 40, p. 5.

10 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
2.17 Universities Australia described Australia’s cutting edge innovation and
‘levels of research and development in our innovative firms’ as
‘underwhelming’.32 Universities Australia explained that:
The percentage of innovative firms in the manufacturing and
services sectors that undertake R&D, either internally or with a
partner, is the lowest and second lowest respectively in the OECD.
In addition, only 9.3 per cent of large firms in Australia (27 of 28
OECD countries) and 9.2 per cent of SMEs (21 of 28) introduced
products new to the market in the period 2010 to 2012.33
2.18 The University of Tasmania (UTAS) suggested that Australia’s lack of
corporate R&D facilities meant that universities had a greater
responsibility to engage in knowledge diffusion. The UTAS stated:
In considering mechanisms to promote innovation linkages it must
be noted that Australia does not have the large corporate R&D
base present in much of the US, UK , Europe and East Asia. This
lack of technology-receptive avenues (ready to absorb and use
knowledge produced in Australia’s universities) necessitates a
different knowledge diffusion and innovation model for
Australia’s circumstances. An Australian innovation model must
address this difference and recognise that universities must take
on more of the “heavy lifting” in the knowledge diffusion
process.34
Role of Innovation and Science Australia
2.19 As part of the NISA package the Government announced the creation of a
new independent statutory body, Innovation and Science Australia (ISA),
with responsibility for ‘strategic whole of government advice on all
science, research and innovation matters’.35 The Government’s
investments in research and innovation are spread across 15 portfolios and
ISA will assist with ‘coordination of data and advice’ to evaluate these
measures and plan future innovation investments.36
32 Universities Australia, Submission 27, p. 3.
33 Universities Australia, Submission 27, p. 3.
34 UTAS, Submission 34, pp 1–2.
35 Australian Government, National Innovation and Science Agenda: Innovation and Science Austra
http://www.innovation.gov.au/page/innovation-and-science-australia
Accessed 19 April 2016.
36 NISA, Factsheet 25, Innovation and Science Australia.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 11
2.20 The ISA will replace Innovation Australia but will have ‘broader functions
than its predecessor’.37 The ISA’s board will be ‘chaired by the current
Innovation Australia Board Chair Mr Bill Ferris AC and Australia’s Chief
Scientist will serve as Deputy Chair’.38 The ISA is due to commence on
1 July 2016.39
2.21 The incoming Chair of the ISA stated that among the first tasks
undertaken by ISA will be ‘mapping the extant programs, state and
federal—who is doing what’.40 The Chief Scientist reported that following
the assessment of existing programs the ISA will develop a ‘national
strategy plan for science, research and innovation to cover a 15-year
period’.41
Emerging Opportunities
2.22 Several universities believed that Australia had an opportunity to improve
its research and innovation performance by focusing research on areas
where Australia had a strong chance of developing world-leading
research and innovation. The Australian Technology Network stated that
universities should collaborate on ‘genuine areas of excellence’ to address
‘grand challenges for individual industry sectors’ and that this would
‘strengthen Australia’s global competitiveness’.42
2.23 La Trobe University called for ‘prioritising government investment in
industry sectors with high growth potential that align with historic areas
of competitive advantage’.43 La Trobe University added that the Industry
Growth Centres and the National Science and Research Priorities should
form a focus for future investment.44
2.24 Sendle also emphasised the importance of aligning research investment to
Australia’s competitive advantage, stating:
Where does Australia want to make its mark internationally? Where
are we aligning great competitive advantage—national competitive
37 Australian Government, National Innovation and Science Agenda: Innovation and Science Austral
http://www.innovation.gov.au/page/innovation-and-science-australia
Accessed 19 April 2016.
38 DIIS, Innovation and Science Australia, http://www.industry.gov.au/Innovation-and-Science-
Australia/Pages/default.aspx Accessed 19 April 2016.
39 DIIS, Innovation and Science Australia, http://www.industry.gov.au/Innovation-and-Science-
Australia/Pages/default.aspx Accessed 19 April 2016.
40 Mr William Ferris, Chair, Innovation and Science Australia (ISA), DIIS, Official Committee
Hansard, Canberra, 3 March 2016, p. 11.
41 Dr Alan Finkel, Chief Scientist, Official Committee Hansard, Canberra, 3 March 2016, p. 2.
42 Australian Technology Network, Submission 46, p. 1.
43 La Trobe University, Submission 39, p, 2.
44 La Trobe University, Submission 39, p, 2.

12 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
advantage—with global megatrends? … If we can match them up we
can confidentially start to stick some stakes in the ground and say,
‘Yes, this is an area that we actually want to start focusing on as a
country.’45
Education — An Innovation Approach to Skills and
Training
Role of Universities and TAFES
2.25 Universities Australia advised that the economy is estimated in 2025 to
require ‘approximately 2.1 million more university graduates than it
needed in 2015’ which was equal to a 30 per cent demand growth. Skilled
graduates would be required in ‘education and training; healthcare and
social assistance; professional, scientific and technical services; public
administration and safety; and financial and insurance services.’46
2.26 Universities Australia added that international students currently helped
to fill skills gaps in Australia’s workforce. For example, former
international students made up ‘around one third of the skilled migrants
to Australia in 2013–14.’47
2.27 Curtin University advised that the education ‘trade’ was one of Australia’s
top four export industries and was worth $18 billion in 2014–15. In
addition, the direct and indirect revenue from international students was
$140 billion for the same year. Curtin University added that ‘major
changes in policy settings on international education’ in the last decade
had diminished opportunities and allowed offshore competitor
institutions to gain a greater market share. Further, while the market had
recovered in the last three years, more needed to be done.48
2.28 Universities Australia stated that in 2014 university research had
generated knowledge with an estimated value of $160 billion, ‘equivalent
to almost 10 per cent of Australia’s gross domestic product.’49
2.29 The UTAS, however, reported that while Australia ranked well on the
Global Innovation Index for innovation inputs,50 it ranked much lower for
innovation results.51
45 Dr James Chin Moody, Sendle, Official Committee Hansard, Sydney, 9 March 2015, p. 16.
46 Universities Australia, Submission 27, p. 5.
47 Universities Australia, Submission 27, p. 6.
48 Curtin University, Submission 20, p. 2.
49 Universities Australia, Submission 27, p. 1.
50 7th globally on tertiary education, 8th on R&D, 9th on general infrastructure.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 13
2.30 La Trobe University drew attention to the level of funding per student
which had remained flat in real terms over 20 years and had constrained
‘the degree to which universities balance high quality teaching and
research with greater access.’ La Trobe University acknowledged the need
for budget repair, but stated:
… maintaining insufficient rates per student funding undermines
the role of higher education plays in skills development, research
and innovation.52
2.31 TAFE Directors Australia commented that about 3.4 million people were
enrolled in the vocational education sector53 and this was ‘probably three
times larger than the university sector’. TAFEs enrolled about 1.6 million
students a year including about 40 000 Chinese students.54 TAFE Directors
Australia also stated that course completions for TAFE students had
increased in contrast to the overall trend for the vocational education
sector. Ninety per cent of those who completed a TAFE course obtained
employment because job experience was a component of TAFE courses.55
2.32 TAFE Directors Australia drew attention to the links between TAFE
institutions and universities. Universities, particularly in regional areas,
positioned their products or programs as a follow on from TAFE. For
example, ‘up to a third or more’ of Charles Sturt University’s graduate
intake was from TAFE.56
STEM Education
2.33 The Chief Scientist stated that the ability to deliver on the innovation
agenda will always depend on having a highly skilled workforce. ‘Young
people and young adults [needed] to be deeply skilled and have
disciplined knowledge.’ The Chief Scientist, however, had ‘serious
concerns’ about the diminishing capacity to provide the appropriate
training. Not only was this becoming apparent in schools but ‘also
becoming significant in universities’.57
51 26th for knowledge creation, 42nd for innovation linkages, 48th for knowledge absorption, 78th
for knowledge diffusion. UTAS, Submission 34, p. 1.
52 La Trobe University, Submission 39, p. 3.
53 Mr Martin Riordan, Chief Executive Officer, TAFE Directors Australia, Official Committee
Hansard, Sydney, 8 March 2016, p. 36.
54 Mr Martin Riordan, TAFE Directors Australia, Official Committee Hansard, Sydney, 8 March
2016, p. 34.
55 Mr Martin Riordan, TAFE Directors Australia, Official Committee Hansard, Sydney, 8 March
2016, p. 36.
56 Mr Martin Riordan, TAFE Directors Australia, Official Committee Hansard, Sydney, 8 March
2016, p. 37.
57 Dr Alan Finkel, Chief Scientist, Official Committee Hansard, Canberra, 3 March 2016, p. 1.

14 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
2.34 The problem was most apparent in the lower secondary schools where
there were ‘recognised problems, especially in the STEM disciplines’. This
was:
…due to too many teachers teaching out of field. That [was] either
because they did not have a specialty to start with, because they
have done an undergraduate education degree with no actual
emphasis on specialisation, or because the school happens to be
under pressure and is putting teachers into teaching maths in the
lower secondary who are just were not trained at that. The
problem is not very common in the upper secondary. The schools
do tend to get skilled teachers into the upper secondary …58
2.35 A report prepared for the Australian Council of Learned Academies stated
that Australia has high levels of participation in STEM subjects at the year
12 level (72 per cent maths, 52 per cent science).59 At tertiary level,
however, STEM student enrolments are comparatively low, particularly in
engineering and mathematics.60 Tertiary enrolments in information
technology declined by 50 per cent between 2002 and 2010 but have risen
slightly since.61
2.36 This has followed through to Australia’s research capability which, the
CSIRO stated, was very strong in a number of scientific disciplines, but
was ‘well below average’ in a number of STEM disciplines such as
engineering, physics, chemistry, materials science, and mathematics.62
There was also a gender imbalance in the STEM fields.
2.37 The DIIS commented that a cultural change was necessary to achieve
gender balance in STEM disciplines and stated:
… women make up 55 per cent of STEM graduates but only one in
four information technology graduates and less than one in 10
engineering graduates. They occupy fewer than one in five senior
research positions in Australian universities and make up around
a quarter of the STEM workforce overall.63
58 Dr Alan Finkel, Chief Scientist, Official Committee Hansard, Canberra, 3 March 2016, p. 3.
59 Marginson, S, Tytler, R, Freeman, B and Roberts, K, STEM: Country comparisons. Report for the
Australian Council of Learned Academies, 2013, p. 61
60 Marginson, S, Tytler, R, Freeman, B and Roberts, K, STEM: Country comparisons. Report for the
Australian Council of Learned Academies, 2013, p. 61
61 Bell, J, Frater, B, Butterfield, L, Cunningham, S, Dodgson, M, Fox, K, Spurling, T, and Webster,
E, The role of science, research and technology in lifting Australian productivity, Australian Counc
of learned Academies, 2014, p. 94.
62 Mr Craig Rawley, Deputy Chief Executive, CSIRO, Official Committee Hansard, Canberra,
3 March 2016, p. 12.
63 Mrs Jane Urquhart, Head, Science and Commercialisation Policy Division, DIIS, Official
Committee Hansard, Canberra, 25 February 2016, p. 7.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 15
2.38 The NISA includes an initiative aimed at inspiring Australians, ‘from pre-
schoolers to the broader community’ to engage with ‘STEM in society and
participate in further study.’ The measures include:
 expanding the Prime Minister’s Prizes for Science;
 supporting students to participate in international STEM-based
competitions and hosting the 2019 Asian Physics Olympiad;
 developing ‘play-based learning apps and science and mathematics
resources for early childhood educators’; and
 ‘expanding community engagement, including Inspiring Australia and
citizen science projects.’64
2.39 The NISA also includes an initiative to ‘encourage more women to embark
on, and remain in,’ STEM related careers. The initiative includes:
 expanding the Science in Australia Gender Equity pilot;
 establishing a new initiative to focus on STEM-based and
entrepreneurial industries; and
 partnering with the private sector on initiatives to promote female
STEM role models and foster interest in STEM.65
2.40 The University of Technology Sydney stated that expanding a STEM-
skilled workforce was only part of the solution. Other ‘boundary crossing
skills’ were needed such as creativity and problem solving.66 Cloud
Insurance P/L commented that an emphasis on STEM programs and
young people, missed ‘a whole populace of 50-plus who have gone
through maybe different machinations of technology and systems in their
lifetimes that will play a vital role in our economy’s future.’ Encouraging
workers over the age of 50 back into the workforce would bring
experience of due diligence processes and financial services to the FinTech
sector.67
Other Innovation Skills
2.41 The University of South Australia reported that innovative research often
challenges academic discipline boundaries stating ‘disruptive innovation,
which can include transformational technologies, are often derived from
64 NISA, Factsheet 18, Inspiring a Nation of Scientists.
65 NISA, Factsheet 20, Expanding Opportunities for Women in Science, Technology, Engineering and
Mathematics.
66 Professor Roy Green, Dean, UTS Business School, University of Technology Sydney, Official
Committee Hansard, Sydney, 9 March 2016, p. 29.
67 Ms Joanne Cooper, Director, Cloud Insurance P/L, Official Committee Hansard, Sydney,
8 March 2016, p. 41.

16 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
research occurring at the boundaries of individual disciplines’.68 In a
similar vein, the University of Wollongong emphasised the importance of
interdisciplinary research, which it had supported from its ‘very earliest
days’, stating:
This is in recognition of the fact that, in the modern era, we must
be interdisciplinary if we are to find solutions to modern
problems. In the same way that problems tend to occur at the
intersection of disciplines, their solutions can be found there too.69
2.42 The Australian Academy of Humanities (AAH) emphasised that ‘in a
global age, innovation will be underpinned by language proficiency and
inter-cultural competence. These knowledge sets and skills must be
recognised as core competencies of the innovation system.’70 The AAH
also stated that the humanities, arts and social sciences have ‘a massive
contribution to make to an ideas-driven agenda for Australian innovation’
and that Australia’s innovation system will require ‘workforces that
encourage the dynamic interaction of technical and non-technical skills.’71
2.43 The Chief Scientist stated that ‘STEM R&D is necessary but not sufficient
to grow a strong knowledge economy; an entrepreneurial mindset is
required to utilise STEM knowledge for innovation.’72 The Chief Scientist
further stated that ‘entrepreneurship has been part of university education
in the USA for over three decades’ but that, by contrast, ‘Australian
universities do not place a priority on teaching high-impact
entrepreneurship, and there are no funding incentives to engage in
entrepreneurial behaviour or teaching’.73
Early Stage Research
Funding Public Sector Research
2.44 The DET described Australia’s current system of research funding through
the Australian Research Council (ARC). The National Competitive Grants
Program supported both basic research as well as applied research and
sought to balance the research to:
68 University of South Australia, Submission 9, p. 3.
69 Mr Paul Scully, Chief Operating Officer, Australian Institute for Innovative Materials,
University of Wollongong, Official Committee Hansard, Sydney, 9 March 2016, p. 9.
70 Australian Academy of the Humanities, Submission 33, p. 3.
71 Australian Academy of the Humanities, Submission 33, p. 3.
72 Chief Scientist, Submission 49, p. 3.
73 Chief Scientist, Submission 49, p. 3.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 17
… find the big discoveries of today that will help to make our
industries innovative and more competitive now but also research
which will benefit our community, environment and industries in
the years to come.74
2.45 Block grants, which are not tied to specific projects, are provided to
universities allocated on a competitive peer review process. The DET
advised that new arrangements would be introduced for 2017 which
would ‘boost reward for industry and other end-user engagement, giving
it equal emphasis to research quality.’75 The new arrangements are part of
the NISA.76
2.46 The ARC also funds Linkage Projects which are used for solving problems
that ‘help generate more products and services for Australia’s economic,
commercial and social benefit.’77
2.47 The University of Melbourne commented that the block grant funding
scheme would specifically reward collaboration with industry, but
suggested that international experience had shown that a dedicated
funding stream could also act as an effective stimulant for collaboration.
The University of Melbourne recommended that this new third stream of
funding be introduced, but that it should not come at the expense of the
value of current block grants.78
2.48 Curtin University was concerned that the continual changes to programs
designed to assist commercialisation and a low funding commitment to
those programs had limited their effectiveness.79 The University of South
Australia was similarly concerned.80
2.49 The Australian Nuclear Science and Technology Organisation (ANSTO)
reported that it was ‘not eligible to directly apply for linkage grants from
the ARC (and the NHMRC). If this was changed ANSTO could extend and
better support industry’.81
2.50 The increased focus on commercialisation in the NISA was welcomed by
the University of Melbourne. The University, however, advocated for
complementary actions to address the early stages of the translation of
ideas to commercialisation:
74 DET, Submission 40, p. 8.
75 DET, Submission 40, p. 8.
76 NISA, Factsheet 11, Driving Greater Collaboration through University Research Block Grants.
77 DET, Submission 40, p. 9.
78 University of Melbourne, Submission 41, pp 16, 17.
79 Curtin University, Submission 20, p. 6.
80 University of South Australia, Submission 9, p. 3.
81 Australian Nuclear Science and Technology Organisation, Submission 7, p. 6.

18 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
Provision of support at the very early stage is critical to building a
flowing source of potential commercialisation ventures that can go
on to bid for seed and venture capital funding.
The translation gap will not be filled by the market as the nature of
the endeavour means that most of these opportunities will never
make a commercial return.82
2.51 The University of Newcastle stated that while the NHMRC provided
proof-of-concept funding for health and medical research there was no
similar scheme under the ARC. The lack of proof-of-concept funding
made it difficult to progress research outcomes to a commercialisation
stage.83
2.52 Sendle categorised research into Horizon 1, 2, and 3 research and
suggested that Australia was not undertaking enough Horizon 2 research.
Sendle stated:
Horizon 1 is where you have known knowledge and known
application. Horizon 2 is known application but unknown
knowledge—that is where we know the problem and we need to
do research. That is often where a CSIRO or others fit in. Horizon 3
is unknown knowledge and unknown application—that is what is
sometimes called ‘basic research’… I think we probably need a bit
more balance in horizon 2… I think a good innovation system is a
bit of a normal curve around horizon 2… my big questions would
be around ARC [is] ‘are we getting that balance right?’84
2.53 Industry funding for university research totalled $1.59 billion for the three
years 2008 to 2010. Medical and Health Sciences received 44 per cent of
this funding ($700 million), with Engineering ($220 million) and Biological
Sciences also receiving significant shares ($150 million).85 Explaining the
proportion of funding going to Medical research, Professor Roy Green
stated that:
The concentration of funding in the medical and health sciences
reflects the strong and continuous investments over many decades
in basic, or fundamental research through the NHMRC, State
governments, philanthropy and other sources. It has built up a
82 University of Melbourne, Submission 41, p. 13.
83 University of Newcastle, Submission 10, p. 8.
84 Dr James Chin Moody, Sendle, Official Committee Hansard, Sydney, 9 March 2016, p. 16.
85 Professor Roy Green, Exhibit 5: Australia’s Innovation Future: Committee Expert Consultant Repo
for Senate Economics References Committee’s Inquiry into Australia’s Innovation System , p. 25.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 19
world-class capability that is of interest to the health and medical
industry.86
National Health and Medical Research Council Development Grants
2.54 The NHMRC stated that its Development Grants were specifically
designed to support ‘proof-of-principle or pre-seed research to help bring
discoveries to the point where they can attract commercial funding.’87 The
Development Grants scheme:
… supports the commercial development of a product, process,
procedure or service that if applied, would result in improved
health care, disease prevention or provide health cost savings.
Research supported by this scheme must have experimental data
that supports a demonstrated proof of principle or pre-seed
concept and have a detailed feasible commercialisation strategy
that takes into account the regulatory pathway, protectable IP,
commercial barriers and potential routes to market.88
2.55 The NHMRC stated that the grants were attempting to bridge ‘at least the
first part of the so-called ‘valley of death’89 before venture capital funding
and other sources of commercial funding can take over.’90
Biomedical Translation Fund
2.56 The Biomedical Translation Fund will be managed by an ‘independent
body that will invest in promising biomedical discoveries and assist in
their commercialisation.’ The Biomedical Translation Fund will draw on
private sector fund managers who ‘will bring at least matching funding’.
The $250 million fund will be ‘funded by reducing the capital
86 Professor Roy Green, Exhibit 5: Australia’s Innovation Future: Committee Expert Consultant Repo
for Senate Economics References Committee’s Inquiry into Australia’s Innovation System , p. 25.
87 Professor Anne Kelso AO, Chief Executive Officer, National Health and Medical Research
Council (NHMRC) Official Committee Hansard, Canberra, 17 March 2016, p. 1.
88 NHMRC, Development Grants,https://www.nhmrc.gov.au/grants-funding/apply-
funding/development-grants Accessed 12 April 2016
89 The ‘valley of death’ is a period in the development of an innovation where the innovator
faces significant costs but minimal opportunities to earn revenue. The CSIRO explained that
‘the Valley of Death is identified as a phase of commercialisation before ‘success as a business’
where there is little to no income and a large outgoing cash flow. Often this phase is after a
period where there has already been significant investment in R&D and resources may be
depleted.’ CSIRO, Submission 43, p. 6.
90 Professor Anne Kelso AO, Official Committee Hansard, Canberra, 17 March 2016, p. 1.

20 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
contributions to the Medical Research Future Fund’ and will be ‘fully
capitalised by 2019–20.’91
2.57 The ISA observed that having ‘private sector funds managers with
experience and scar tissue in backing medical discoveries and
commercialising them’ will be attractive to small business and their
boards.92
2.58 CSL Ltd supported the Biomedical Translation Fund and advised that it
had formally submitted to the Government that 20 percent of the Medical
Research Future Fund be directed towards such translational research
when the future fund was fully operational because it was ‘a fundamental
economic driver for the country and something that is missing at the
moment.’93
CSIRO Innovation Fund
2.59 The CSIRO Innovation Fund was established under the NISA and will
include a $200 million early stage innovation fund. This fund will ‘support
co-investment in new spin-off and start-up companies, products and
services created by Australian research institutions.’ The CSIRO
Innovation Fund will be funded in part by revenue from licensing
CSIRO’s wireless local area network technology, and investment from the
private sector. The fund will commence in 2016 with oversight from the
CSIRO Board.94
Basic Research
2.60 Several organisations emphasised the importance of basic (also known as
pure or foundational) research in enabling the long-term development of
innovation. The AAS stated that:
Basic research is the genesis of all innovation in that it is the new
discoveries and leaps in understanding that provide the human
and knowledge capital to drive innovative solutions to current and
future challenges. Unless Australia maintains its capacity to
undertake world-class basic research across diverse fields of
science, there will be a diminished capacity to engage in and enjoy
the benefits of innovation in the future.95
91 NISA, Factsheet 6, Biomedical Translation Fund.
92 Mr William Ferris, ISA, Official Committee Hansard, Canberra, 3 March 2016, p. 9.
93 Dr Andrew Cuthbertson, Chief Scientific Officer and R&D Director, CSL Ltd, Official Committee
Hansard, Melbourne, 10 March 2016, p. 8.
94 NISA, Factsheet 5, CSIRO Innovation Fund.
95 AAS, Submission 3, p. 10.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 21
2.61 The AAS further highlighted that future commercial output is only one of
the benefits that basic research provided to society and provided examples
of other benefits such as:
 improvements in public health through new or improved
methods of clinical practice, based on advances in biomedical
knowledge;
 advances in management of land and the environment through
improved knowledge of natural processes; and
 production of graduates trained in research techniques and
methods, who use their skills in the public and private sectors
to solve difficult problems that face the community.96
2.62 The University of Newcastle also supported the value of basic research
and emphasised its critical role in ensuring the long-term health of
Australia’s innovation system, and stated that:
It is vital that the importance of basic research is not ignored or
downplayed. Without the underpinning activities of basic research
the commercialisation processes will very quickly drain the well of
innovation leaving nothing to commercialise.97
Research Collaboration
2.63 One of the key weaknesses in the Australian innovation system is the low
level of collaboration between public sector research organisations and the
private sector. The Australian Innovation System Report 2015 reported that
Australian innovation-active small to medium sized enterprises (SME)
ranked 24th in the OECD98 and innovation-active large businesses, 29th in
the OECD, in relation to collaborating on innovation.99
2.64 The DIIS, emphasised the importance of collaboration between research
and business and stated:
Links between research organisations and businesses are crucial in
order to diffuse knowledge and commercialise research. Research
collaboration is also fundamental to scientific excellence and
technological breakthroughs.100
96 AAS, Submission 3, p. 10.
97 University of Newcastle, Submission 10, p. 8.
98 Of 31 countries measured which included all members of the OECD as well as China, Taiwan
and Singapore.
99 DIIS, Australian Innovation System Report 2015, p. 115.
100 DIIS, Submission 31, p. 2.

22 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
2.65 The DET also highlighted the critical importance of collaboration in
yielding commercial benefits from research and supporting Australia to
meet economic and social challenges, and stated that:
Greater collaboration between the research and innovation sector
and industry is critical if the research and innovation taking place
in Australia are to yield commercial outcomes. This is an essential
step in ensuring that research and innovation support Australia to
meet its current and future geographic, economic and labour
challenges.101
2.66 The University of Newcastle emphasised that in knowledge based
economies successful innovation systems required collaboration. The
University of Newcastle stated:
In the context of a knowledge-based economy, however, the
research sector cannot operate effectively in isolation. The best
innovation systems are those where new industries and
opportunities are delivered through collaboration across research,
industry and government. Each of the key stakeholders has an
important role to play in maximising Australia’s strengths and
driving innovation.102
Encouraging Public Sector Demand for Collaboration
Incentives for Universities and Academics
2.67 One of the most significant barriers to greater collaboration between
universities and industry are the metrics used to evaluate the performance
of universities and their staff.
2.68 Victoria University explained how the Excellence in Research for Australia
(ERA) program created a barrier to universities engaging with industry
Victoria University explained:
… the Commonwealth’s ERA initiative ‘rewards’ research
excellence by measuring it according to traditional academic
metrics, including publication in top-ranking academic journals.
On the other hand, activities that have a direct impact on industry,
government and community clients, especially those that provide
a commercial return, do not achieve results in terms of ERA
recognition. As a consequence, in the pursuit of ERA recognition,
101 DET, Submission 40, p. 4.
102 University of Newcastle, Submission 10, p. 2.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 23
researchers avoid many forms of industry collaboration,
presenting implications for and coming at a cost to innovation.103
2.69 Australia’s Chief Scientist explained that in addition to the ERA rankings,
international university ranking systems also place pressure on
universities and academics to prioritise publications, stating that these
ranking systems are all:
… based on research excellence through publications and citations.
Because Australian universities absolutely depend on
international students, and because international students in
coming here depend in turn on how well Australian universities
are ranked internationally, there is this drive towards publications
and citations. That means for an average academic that, if you take
six months working with a company—even if it is well funded—
you do not get any publications during those six months. That is a
problem for you personally and it is a problem for your
department.104
2.70 Macquarie University stated that publications are ‘really paramount in
getting people promoted’.105 Macquarie University also highlighted the
‘structural promotion of publication over patenting’, suggesting this was
‘counterintuitive’, and that there should be ‘equality in recognition and
reward for these activities.’106
2.71 The NISA package includes two important measures which are: the
changes to university research block grants, and the introduction of an
impact and engagement measure. Both aim to reform financial and
reputational incentives for universities and academics.107
2.72 The reforms to the university research block grants will introduce new
‘funding arrangements for universities that will give equal emphasis to
success in industry and other end-user engagement and to research
quality’.108 The DET explained the significance of this change and stated:
… changes to the research block grant system have given greater
weight to what we call category 2 and category 3 research income,
103 Victoria University, Submission 19, p. 3.
104 Dr Alan Finkel, Chief Scientist, Official Committee Hansard, Canberra,
3 March 2016, p. 5.
105 Professor Lesley Hughes, Pro-Vice Chancellor, Research Integrity and Development, and
Distinguished Professor of Biological Sciences, Macquarie University, Official Committee
Hansard, Sydney, 9 March 2016, p. 48.
106 Macquarie University, Submission 18, p. 4.
107 Ms Jessie Borthwick, Acting Deputy Secretary, Higher Education, Research and International
Cluster, DET, Official Committee Hansard, Canberra, 25 February 2016, p. 10.
108 NISA, Factsheet 11, Driving Greater Collaboration through University Research Block Grants.

24 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
which is income that universities earn from other sources outside of
the competitive grants system—industry-commissioned work, work
for state governments and their instrumentalities and that sort of
activity. The weight of that in the formulas has been evened up with
the competitive funding sources, so the weighting now is fifty-fifty
between those two types of money that drive the research support
program, which is the main research block grant for enabling the
universities to create research capacity in their institutions.109
2.73 The Government is developing a measure of ‘non-academic impact and
industry and end-user engagement’ for university research.110 The ARC
and the DET are co-chairing two working groups developing the impact
and engagement indicators.111 The indicators will be developed, in
consultation with universities, during 2016. A pilot assessment will take
place in 2017 and full national assessment and reporting will begin in
2018.112
2.74 The DET stated that at this stage the impact and engagement
measurements would be a reputational rather than financial incentive. The
DET explained the rationale for not yet linking funding decisions to these
measurements. The DET stated:
At this point it is just reputational. The funding side is quite potent
already. When the new impact of engagement measure was
developed we foreshadowed in the innovation statement
announcements that we would reconsider the funding formulas to
see whether or not the new measure should be brought in. But, I
have to say, it would be pretty cavalier of us to announce a new
measure coming into the funding system without actually having
seen that measure and how it performs over time. So, we do need
to do some work to prove the measure up before attaching
funding to it.113
2.75 The need to reform incentives so that engaging in collaborative projects
with industry was not detrimental to academics’ career progression was
widely supported across the university sector. For example, the University
of Wollongong stated that ‘improved incentives for university researchers
109 Mr Dominic English, Group Manager, Research and Economic Group, DET, Official Committee
Hansard, Canberra, 25 February 2016, p. 10.
110 NISA, Factsheet 16, Measuring Impact and Engagement in University Research.
111 Australian Research Council, Research Engagement and Impact Working Groups Announced,
Media Release,http://www.arc.gov.au/news-media/media-releases/research-engagement-
and-impact-working-groups-announced Accessed 19 April 2016.
112 NISA, Factsheet 16, Measuring Impact and Engagement in University Research .
113 Mr English, DET, Official Committee Hansard, Canberra, 25 February 2016, p. 11.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 25
to engage with industry would greatly boost collaboration’.114 The
University of Melbourne recommended Government ‘support universities
to create stronger internal incentives and rewards structures for academic
researchers to build engagement with end-users and strengthen impact.’115
2.76 The AAS, however, was concerned that the development of metrics to
measure research impact outlined in the NISA could result in a ‘bias
against basic research’. While noting that the impact metrics were yet to be
developed, the AAS stated:
… it is likely to be based on existing work which uses research
income as a proxy for engagement, so that engagement is only
considered where money changes hands. This cannot take into
account those situations where academic researchers work with
other organisations collaboratively to solve problems which may
not have an immediate commercial aspect. In addition, should the
research engagement metric be tied to incentives, it is likely that
non-commercial but publicly beneficial research would be
discouraged.116
2.77 The AAS supported the current method of evaluating research based on
the ERA framework, and stated:
The most appropriate assessment of university research is its
quality. The ERA process remains the most suitable way to
evaluate Australian research effort, and policy decisions should be
based on these data. Importantly, the ERA is an appropriate way
to assess both basic and applied research.117
Researcher Mobility
2.78 The CSIRO highlighted that only 30 per cent of Australia’s research
workforce is employed by industry, ‘which is very low by OECD
standards, and compares particularly poorly with innovation
powerhouses US and Japan who have almost 80 per cent of their R&D
workforce in industry’.118 The small proportion of researchers employed
by industry constrains the ability of Australian business to undertake
research and also limits the opportunities for business to collaborate with
research organisations to commercialise research outcomes.119
114 University of Wollongong, Submission 5, p. 5.
115 University of Melbourne, Submission 41, p. 5.
116 AAS, Submission 3, p. 10.
117 AAS, Submission 3, p. 11.
118 CSIRO, Submission 43, p. 4.
119 CSIRO, Submission 43, p. 4.

26 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
2.79 The limitations created by the small proportion of researchers working in
industry are exacerbated by the barriers that researchers face when
considering moving between academia and industry during the course of
their career.
2.80 The Chief Scientist compared the opportunities for academics in Australia
and in the United States who spend a period of their career working in
industry, the Chief Scientist stated:
If you are a researcher at Stanford University and you want to go
and spend three years with a start-up or an established company
and you do well, you are welcomed back into the academic
community at Stanford University three or five years later.
Whereas a typical academic who does that from an Australian
university would struggle to get back because they would have a
gap in their publication record, which is considered to put at risk
their ability to get the next grant.120
2.81 Western Sydney University (WSU) supported greater mobility for
researchers to move between industry and the university sector stating
‘industry and university interactions should be fluid, involving not just
commercial transfer but the regular exchange of people and the creation of
knowledge spill-overs.’121 The WSU also provided a number of examples
of measures that could increase mobility that included work integrated
learning programs for undergraduates, ‘industry-based sabbaticals for
academics, university research placements for those working in industry,
and industry co-supervision of PhD students.’122
2.82 The concept of industry sabbaticals was also supported by the University
of Wollongong which suggested the sabbaticals could involve a
half-year placement with industry funded through a competitive grants
process.123 The University of Melbourne reported that it was in the process
of implementing an industry sabbaticals program.124
2.83 A number of universities supported greater engagement of PhD students
with industry, either through placements or industry supervision. For
example, the University of Melbourne saw potential for ‘embedding PhD
candidates within new and innovating enterprises as a means to facilitate
access to high-quality research while providing industry relevant skills to
researchers.’125 The University of South Australia reported that it had
120 Dr Alan Finkel, Chief Scientist, Official Committee Hansard, Canberra, 3 March 2016, p. 5.
121 Western Sydney University (WSU), Submission 23, p. 7.
122 WSU, Submission 23, p. 7.
123 University of Wollongong, Submission 5, p. 4.
124 University of Melbourne, Submission 41, p. 9.
125 University of Melbourne, Submission 41, p. 16.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 27
identified the need for a ‘transformed’ PhD that would be ‘centred on
increasing graduate researchers’ capabilities to work collaboratively and
productively with end-users, and in multidisciplinary and multi-sectoral
research ventures.’126
2.84 The Regional Universities Network recommended the establishment of a
programme of industry PhD scholarships, ‘focussing on SMEs and non-
commercial partners, to be jointly funded by universities and partner
organisations’. The Regional Universities Network also suggested that
‘favourable taxation treatment’ could be available to industry as an
incentive to fund the scholarships.127
2.85 The University of South Australia recommended that the limited
opportunities for researchers to move between the university sector and
industry during the course of their career should be addressed by the
development of a national initiative ‘to encourage greater fluidity of
employment between industry and academia’.128
Encouraging Business Demand for Collaboration
2.86 The ISA was pleased that many universities were actively promoting their
business development activities. The ISA was less confident about the
level of movement from business to engage with universities in research
collaborations.129
2.87 Western Sydney University highlighted the low demand for university
research by Australian with only ‘3.1 per cent of Australian businesses
[identifying] universities as a source of ideas or information about their
business.’130
2.88 The AAS suggested that limited desire for business-university
partnerships was a key barrier to improving industry-university
collaboration in Australia. The AAS stated:
Engagement between industry and universities is most likely
where a business wishes to innovate… It is likely that the main
factors impeding greater overall levels of collaboration between
universities and industry are a lack of desire among business
126 University of South Australia, Submission 9, p. 5.
127 Regional Universities Network, Submission 11, p. 5.
128 University of South Australia, Submission 9, p. 1.
129 Mr William Ferris, ISA, Official Committee Hansard, Canberra, 3 March 2016, p. 7.
130 Western Sydney University, Submission 23, p. 3.

28 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
owners to engage innovative expertise available in Australian
universities, or a lack of means and incentives for them to do so.131
2.89 The AAS further stated that amongst Australian businesses ‘between 75
and 92 per cent of innovations were new-to-firm only’.132 The AAS
suggested that ‘low demand from Australian innovators for new
knowledge to drive new-to-world products and services’ was a root cause
of low levels of collaboration and commercial benefits from research and
that ‘it is important to stimulate demand amongst Australian business for
research expertise’.133
2.90 Universities Australia stated that ‘despite considerable investment by the
Australian Government…Australian businesses tend not to pursue
innovation as a priority’.134 Latrobe University suggested that business
demand for collaboration was not increasing despite government support
for business R&D stating ‘the massive increase in government outlays
associated with the R&D tax incentive are not translating to an increase in
university income, so something is happening there which needs to be
fixed’.135
2.91 Victoria University suggested many government programs to foster
collaboration may be ‘considered beyond reach by many small to medium
sized enterprises (SMEs), assuming they are aware of the programs
existence in the first place.’136
2.92 The University of South Australia supported the development of
collaboration models that were more appropriate for SMEs, and stated:
Additional funding schemes that support exploratory pilot
projects, fast start, short review timelines, would be beneficial to
SMEs that are looking to work with research institutions to
develop disruptive technologies and solve pressing problems.137
131 AAS, Submission 3, p. 7.
132 AAS, Submission 3, p. 8.
133 AAS, Submission 3, p. 8.
134 Universities Australia, Submission 27, p. 3.
135 Mr Matthew Brett, Senior Manager, Higher Education Policy, La Trobe University, Official
Committee Hansard, Melbourne, 10 March 2016, p. 37.
136 Victoria University, Submission 19, p. 5.
137 University of South Australia, Submission 9, p. 4.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 29
Successful Examples of Collaboration
Overseas Examples
2.93 Examples of university-business collaboration in overseas countries
include:
 The Dutch Top Sectors Policy—includes a platform where industry and
academia meet and negotiate co-investment in targeted research
areas;138
 The UK Knowledge Transfer Partnerships—facilitates industry
employing research graduates and allows access to the expertise of a
graduate’s supervisor;139
 SPARK Stanford—a partnership between university, health care
services and industry aimed at: advancing promising research
discoveries to the clinic and commercial sector; innovating efficient and
cost-effective approaches to drug discovery and development;
providing access to specialised knowledge and technical expertise; and
supporting translational efforts to deliver products and services for
unmet health needs;140 and
 Canada’s Waterloo University community-based research and
technology park—a partnership including the University, local, State
and Federal governments which provides an innovation hub focused
on connecting university and researchers.141
2.94 Australia’s Chief Scientist compared the work of Israel’s Chief Scientist in
supporting innovation and explained that their roles were different. In
Israel, the Chief Scientist advanced economic translation through
allocating competitive grants to early-stage businesses. In Australia, the
Chief Scientist’s role was to promote underlying science research through
providing advice to government and to forums across the breadth of
science research endeavour.142
Australian Examples
2.95 Examples of collaboration between universities and business in Australia
includes:
138 University of Wollongong, Submission 5, p. 7.
139 University of South Australia, Submission 9, p. 3.
140 Medical Technology Association of Australia, Submission 32, p. 3.
141 University of Newcastle, Submission 10, p. 3.
142 Dr Alan Finkel, Chief Scientist, Official Committee Hansard, Canberra, 3 March 2016, p. 4.

30 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
 The Newcastle Institute for Energy and Resources—the collaboration of
industry and academia which provides access to large-scale test bed
and pilot plant operations in the area of energy and resources;143 and
 The Southern Manufacturing Innovation Group—comprises the
University of Wollongong and 13 Illawarra based manufacturers where
industry discussed their innovation processes and challenges, and the
University presented information on its research and advanced
materials and robotics.144
2.96 The Australian Nuclear Science and Technology Organisation (ANSTO)
manages a number of Australia’s major research infrastructure facilities.
These facilities are made available to academic and industry researchers
and ANSTO reported that ‘in the last financial year alone, the OPAL
research reactor, the Australian Synchrotron and the Australian Centre for
Accelerator Science attracted approximately 5000 Australian and
international researcher and industry visits and supported 1500
experiments.’145
Public Sector Commercialisation Strategies
Development of In-house Innovations
2.97 The CSIRO described how it recently selected potential commercial
opportunities from its research. The CSIRO sought ideas from its staff
which resulted in the generation of 200 ideas. These were assessed by a
panel of CSIRO people and successful entrepreneurs and reduced down to
80 ideas. The number was shortlisted to 20 which were subjected to two to
three days of testing. Nine teams resulted and the CSIRO ‘took them off-
line through a program for the order of about 12 weeks to rigorously road-
test the ideas … and whether they could be new business opportunities.’146
2.98 The University of Melbourne has a similar process—a venture catalyst
model—for commercialisation of its research. The University’s business
and development people would identify the most prospective
143 University of Newcastle, Submission 10, p. 3; Newcastle Institute for Energy and Resources,
About Us, https://www.newcastle.edu.au/research-and-innovation/centre/nier/about-us
Accessed 19 April 2016.
144 University of Wollongong, Submission 5, p. 2.
145 Dr Adrian Paterson, Chief Executive Officer, Australian Nuclear Science and Technology
Organisation, Official Committee Hansard, Sydney, 8 March 2016, p, 52.
146 Mr Craig Roy, Deputy Chief Executive, CSIRO, Official Committee Hansard, Canberra, 3 March
2016, p. 14.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 31
opportunities and put together a founding management team.147 The
University added:
Initially you would put relatively modest funds in—it might be
$200 000 or $300 000—designed around a proof of concept, proof
of principle, and depending on the nature of the invention
prototyping. Essentially what you are trying to do is put in enough
money to enable the catalyst management to start to prove out and
package that opportunity.148
2.99 Depending on its contribution, the university would own 10 or 20 per cent
of the company of which the inventor would own 30 per cent.149
Collaboration with Business
2.100 The University of Melbourne has a second avenue to commercialise its
research through collaboration with CSL Ltd. CSL Ltd stated that it was
‘doubling the size of [its] commitment to the University of Melbourne and
the Parkville medical research institutes and hospitals’ by increasing the
number of scientists in the Bio21 Institute from 70 to 150. The Bio21
Institute would become CSL Ltd’s ‘global centre for research and
translational medicine.’150
2.101 Deakin University also has a strong relationship with an industry sector.
While motor car manufacturing by the Ford Motor Company is closing,
Ford’s R&D activities remain in Geelong. Currently, Deakin University
has seven projects funded by Ford and is attracting overseas funds
through this relationship.151
2.102 Deakin University’s Geelong Innovation Precinct comprises research
facilities, co-located industry partners including ‘a number of early-stage
spinouts … located adjacent to fibre processing and laboratory facilities.’152
2.103 One of the businesses is Carbon Revolution which ‘started as a student
project with a lecturer.’ The company makes one-piece carbon fibre wheels
147 Mr Doron Ben-Meir, Executive Director Research, Innovation and Commercialisation,
University of Melbourne, Official Committee Hansard, Melbourne, 10 March 2016, p. 55.
148 Mr Doron Ben-Meir, University of Melbourne, Official Committee Hansard, Melbourne, 10
March 2016, p. 56.
149 Mr Doron Ben-Meir, University of Melbourne and Professor James McCluskey, Deputy Vice-
Chancellor, Research, University of Melbourne, Official Committee Hansard, Melbourne,
10 March 2016, p. 56.
150 Dr Andrew Cuthbertson, Chief Scientific Officer and R&D Director, CSL Ltd, Official Committee
Hansard, Melbourne, 10 March 2016, pp 9, 10.
151 Professor Peter Hodgson, Deputy Vice-Chancellor Research Interim, Deakin University,
Official Committee Hansard, Melbourne, 10 March 2016, p. 50.
152 Deakin University, Submission 35, p. 2.

32 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
and employs 200 people.153 Carbon fibre composite manufacturer
Quickstep Holdings has recently decided to establish its Automotive
Division and global research and development centre at the Geelong
Innovation Precinct.154
2.104 The Geelong Innovation Precinct is also the site of the Centre for
Advanced Design in Engineering Training (CADET). Deakin University
stated that CADET was:
… a fulcrum for small to medium enterprise (SME) engagement
via the Industry Innovation Program (IIP) managed by the
Geelong Manufacturing Council (GMC). The IIP is a vehicle to
identify specific research and development projects of relevance to
GMC members and match these two engineering research groups,
including students, building small-scale innovation into the SME
community.155
2.105 Final year CADET students will be encouraged through ‘innovation and
entrepreneurship programs’ to start ‘their own companies as well as
taking their ideas to market.’156
Incubators and Accelerators
2.106 Deakin University is also building a manufacturing incubator and
accelerator to support the increased industry involvement. This will
support 150 innovation and entrepreneurial positions.157
2.107 Both Macquarie University158 and La Trobe University159 advised they too
were moving towards establishing incubator and accelerator frameworks.
2.108 Curtin University drew attention to its Curtin Accelerate program which
provides 10 week structured mentoring to students, staff and alumni who
have an innovative business idea. Selection was ‘extremely competitive’
and successful applicants received a $5000 equity free grant, access to co-
153 Professor Peter Hodgson, Official Committee Hansard, Melbourne, 10 March 2016, p. 48.
154 Deakin University, Quickstep brings global R&D to Geelong—Deakin’s ‘carbon cluster’ will gain a
major boost with Quickstep’s high tech centre.
https://www.deakin.edu.au/research/story?story_id=2015/08/10/quickstep-brings-global-
rd-to-geelong Accessed 11 April 2016.
155 Deakin University, Submission 35, p. 2.
156 Professor Peter Hodgson, Official Committee Hansard, Melbourne, 10 March 2016, p. 48.
157 Deakin University, Submission 35, p. 2.
158 Professor Lesley Hughes, Pro-Vice-Chancellor, Research Integrity and Development,
Macquarie University, Official Committee Hansard, Sydney, 9 March 2016, p. 50.
159 Mr Matthew Brett, La Trobe University Official Committee Hansard, Melbourne, 10 March 2016,
p. 38.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 33
working space and facilities, and networks including commercialisation
experts, investors and potential partners.160
2.109 The University of Wollongong advised that it had 29 start-ups on its
innovation campus. In late 2016 the university will open its iAccelerate
building which will provide ‘space for up to 280 start-ups.’ The start-ups
will be provided with advice on business planning, legal and financial
matters, and on marketing from ‘local entrepreneurs and experts’. The
university has also established an early-stage venture capital fund which
will invest in iAccelerate start-ups. Start-ups which received funding will
have to commit to maintaining a presence in the Illawarra region when
they leave the iAccelerate incubator.161
2.110 The University of Melbourne also has a well-established start up incubator
program, the Melbourne Accelerator Program. University of Melbourne
stated:
… in 2012 we provided four companies with $20 000, office space
and mentoring. The whole idea there was to give young
entrepreneurs an opportunity to test out a business idea in a fail-
safe environment. …
… our program has evolved to include a range of pre-accelerator
activities designed to help upskill and, really importantly, connect
aspiring entrepreneurs. Last year alone we had over 5000 people
attend those events. We have also continued to increase the intake
size of our accelerator program. This year we will have 10 start-
ups come through …162
2.111 Potential start-ups were selected by a panel of ‘venture capitalists and
successful angel investors’ from the university’s ‘mentor and advisory
board network.’ The criteria used included whether the proposal involved
groundbreaking technology, whether the proponents could ‘execute upon
their vision’,163 and whether they could explain the business to the
selection panel:
If you are judging an entrepreneur in building a business … and
they cannot explain it to you, they have a problem, not you. …
Part of them running a business is the capacity to explain it to
people who are not necessarily deep in their domain.164
160 Curtin University, Submission 20, p. 4.
161 Mr Paul Scully, Chief Operating Officer, Australian Institute for Innovative Materials,
University of Wollongong, Official Committee Hansard, Sydney, 9 March 2016, p. 9.
162 Mr Rohan Workman, Official Committee Hansard, Melbourne, 10 March 2016, p. 54.
163 Mr Rohan Workman, Official Committee Hansard, Melbourne, 10 March 2016, pp 57, 58.
164 Mr Doran Ben-Meir, University of Melbourne, Official Committee Hansard, Melbourne,
10 March 2016, p. 58.

34 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
2.112 Being able to fully explain the business was also fundamental to venture
capital company, Reinventure’s start-up selection process:
… if as an entrepreneur you cannot hustle your own cash, if you
cannot front an investor directly, then you probably cannot do all
the other things that are necessary to build a great company. … If
you cannot convince them of your dream, you get nowhere.165
Concluding Comments
2.113 In comparison with other OECD countries Australia has a strong research
sector and performs well during the initial stages of the innovation
system. Australia performs relatively poorly, however, in university-
business collaboration and in commercialising research and innovation.
2.114 The Committee welcomes the creation of Innovation and Science Australia
and the development of a strategic plan for science research and
innovation for the next 15 years.
2.115 Focusing on Australia’s existing strengths and competitive advantages, as
suggested by some universities, should not have the effect of excluding
other emerging areas of strength where, if Australia moves quickly, it
could become a world leader.
2.116 To prosper, Australia’s innovation sector must have a continuous supply
of skilled people who are willing to drive research and innovation and in
so doing create a competitive workforce. The Committee welcomes the
NISA initiatives which aim to increase STEM skills and also encourage the
participation of women, but considers that the effectiveness of these
initiatives needs to be monitored, evaluated and continuously improved.
2.117 Further, Australia should focus on other skills in addition to STEM such as
creativity, problem solving, and capitalising on the experience of workers
over the age of 50.
2.118 Representatives of the university sector largely welcomed the changes to
funding arrangements announced in NISA. The new funding
arrangements should provide an incentive for universities to place a
greater focus on undertaking research in collaboration with industry.
Once implemented it is important that there is a period of policy stability
in this area to enable universities to adjust to the new arrangements and
make long-term investments in research capacity.
165 Mr Danny Gilligan, Co-Founder and Managing Director, Reinventure, Official Committee
Hansard, Sydney, 9 March 2016, p. 8.

THE FOUNDATIONS OF INNOVATION: EDUCATION AND RESEARCH 35
2.119 The Committee recognises that SMEs can experience difficulties in finding
suitable research partners and financing collaborations with universities.
2.120 The introduction of metrics to take into account university-business
collaboration should encourage a change in research culture with a move
away from the publish-or-perish approach to a concept/research to
commercialisation approach.
2.121 The Committee has identified a number of overseas models which are
designed to facilitate university-business collaboration. These and other
models could provide important insights into strategies which could be
introduced to nurture innovation in Australia.
2.122 More universities are introducing education courses, incubators and
accelerators to foster entrepreneurial talent. The Committee welcomes this
change, recognising that it indicates universities are adopting a greater
focus on innovation and commercialisation.
Recommendation 1
2.123 The Committee recommends that Innovation and Science Australia
identify emerging industries where strategic research investment co
enable Australia to become a world leader.
Recommendation 2
2.124 The Committee recommends that the Department of Education and
Training review overseas models of university-business collaboratio
with a view to identifying strategies which could be introduced in
Australia.

3
Nurturing Innovation
Introduction
3.1 The Department of Foreign Affairs and Trade (DFAT) stated that start-up
companies are often Australia’s ‘fastest growing’ and ‘most innovative’
companies.1 Three quarters of start-ups fail, but the DFAT added:
It is quite important to make the right economic settings so that
they can form and then disband, because a lot of the innovators
and entrepreneurs actually go on and start up another business.2
3.2 The University of Melbourne provided an example of the failure and
rebirth of start-up companies by relating the history of one of its four 2012
start-up companies—where a company had failed and then created
another start-up, which then also failed, but was followed by a third start-
up which was ‘looking good.’3
3.3 Innovative ideas created by existing companies are also subject to a culling
process. CSL Ltd stated that it reviewed ‘over 100 new product
opportunities each year’ and only chose ‘5 to10 per cent for full evaluation
and then fewer still for licensing.’ CSL Ltd commented that some ideas
which were not pursued might have resulted in significant economic
benefits to Australia had they been further developed, but they were not
sound candidates for commercial development by CSL Ltd, or were not
sufficiently advanced to transition to commercial development.4
1 Mr Robert Owen-Jones, Assistant Secretary, Economic Advocacy and Analysis Branch,
Department of Foreign Affairs and Trade (DFAT), Official Committee Hansard, Canberra,
25 February 2016, p. 15.
2 Mr Robert Owen-Jones, DFAT Official Committee Hansard, Canberra, 25 February 2016, p. 15.
3 Mr Rohan Workman, Director, Melbourne Accelerator Program, University of Melbourne,
Official Committee Hansard, Melbourne, 10 March 2016, p. 57.
4 CSL Ltd, Submission 37, p. 9.

38 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
Developing the Start-up Sector
3.4 The Export Council of Australia (ECA) observed there was often limited
awareness about how to commercialise a product. The innovator had not
developed the original idea with a view as to how it could be progressed
through to commercialisation. The ECA emphasised that even at the
earliest stages the right processes needed to be in place.5
3.5 La Trobe University acknowledged that while universities conducted
high-quality research they had ‘not as yet been able to translate that into
commercial products and services.’ La Trobe University added that
universities were increasingly becoming aware that this was an issue and
were changing their efforts and priorities to address the problem.6
Co-location
3.6 The Commonwealth Scientific and Industrial Research Organisation
(CSIRO) considered it ‘fundamentally important’ to bring people together
so that ideas could be workshopped to spawn new innovations. This could
be achieved through ‘smart digital platforms’ which could facilitate the
input of information, new ideas, and insights from a wider geographic
area.7
3.7 Cochlear Ltd commented that it was very difficult to move things from
Research and Development (R&D) into manufacturing, but it had co-
located its R&D and manufacturing activities:
3.8 You bump into something in your manufacturing process, you walk down
the corridor and you talk to the engineer who has developed it. Yes, it is
becoming easier with technologies, but we find that link very important,
so we co-locate our manufacturing and R&D.8
3.9 Eighteen04, which runs a co-working space based at CSIRO Energy Centre
in Newcastle,9 agreed that collaboration between co-located start-ups
maintained the commercialisation momentum:
We are all the same: if a problem is too hard, the first thing we do
is try to push it aside. It gets into the too-hard basket. You cannot
5 Mr Andrew Hudson, Director, Export Council of Australia (ECA), Official Committee Hansard,
Sydney, 8 March 2016, p. 5.
6 Mr Matthew Brett, Senior Manager, Higher Education Policy, La Trobe University, Official
Committee Hansard, Melbourne, 10 March 2016, p. 36.
7 Mr Craig Roy, Deputy Chief Executive, Commonwealth Scientific and Industrial Research
Organisation (CSIRO), Official Committee Hansard, Canberra, 3 March 2016, p. 13.
8 Mr Neville Mitchell, Chief Financial Officer, Cochlear Ltd, Official Committee Hansard, Sydney,
8 March 2016, p. 24.
9 Eighteen04, Submission 38, p. 1.

NURTURING INNOVATION 39
allow that to happen in a start-up. They have no time to waste,
because every day they are burning cash, usually. So every
moment counts for start-ups and scale-ups.
… those of us who have got involved with trying to set [the
working space] up are offering our time to support the
entrepreneurs and provide experience and support where we can.
Collaboration is absolutely critical both within a space and then
connecting outwards …10
Private Sector Incubators and Accelerators
3.10 Stone & Chalk was established in August 2015 with the aim of becoming
‘the fintech hub of Asia’. The hub provides start-ups with a physical
location, ‘a high quality fintech peer group, access to capital, extensive
education and mentorship’. There was also ‘opportunity to partner with
and co-create’ with Stone & Chalk’s local and international partners.11 The
hub houses ‘some 65-odd start-ups in the City of Sydney.’12
3.11 Cloud Insurance P/L, a member of Stone & Chalk, described the
incubator:
[It] has been beyond my expectations as a runway into
government conduits and in ensuring that I have the right
sponsors giving advice on legal issues and a range of matters—
cyber security, you name it. …
The incubator is an environment. I have a desk as a resident.
Rather than me having one desk somewhere else in the world, I
get to be in an environment where I am surrounded by change
agents and people who are also trying to build solutions for the
future. For me, that is a very positive thing because it inspires me13
3.12 Eighteen04 is another incubator, located in Newcastle and is focusing on
early-stage start-ups in the clean-tech and smart-city technology area. The
incubator has 10 seats and has attracted six start-ups from Canberra and
Sydney.14 Eighteen04 is seeking to expand by moving to a larger location
in Newcastle.15
10 Dr Gunilla Burrowes, Chair, Eighteen04, Official Committee Hansard, Sydney, 8 March 2016,
p. 33.
11 Stone & Chalk, Submission 30, p. 1.
12 Mr Danny Gilligan, Cofounder and Managing Director, Reinventure, Official Committee
Hansard, Sydney, 9 March 2016, p. 1.
13 Ms Joanne Cooper, Director, Cloud Insurance P/L, Official Committee Hansard, Sydney,
8 March 2016, pp 39, 41.
14 Dr Gunilla Burrowes, Eighteen04, Official Committee Hansard, Sydney, 8 March 2016, p. 28.
15 Dr Gunilla Burrowes, Eighteen04, Official Committee Hansard, Sydney, 8 March 2016, p. 31.

40 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
Attracting Finance
3.13 Reinventure described the four stages in financing a typical start-up
company, from building a product through to establishing a global
company:
[The] first phase of building a product is generally what we call
‘family, friends and fools’. … That is generally a couple of
hundred thousand dollars that you need to pull together your
initial technical team and build your first version of a product.
[They are] people who put money in because they like you and
they want to see you try something and be successful. They only
put in an amount that they are happy to lose. … The fail rate
around that is incredibly high. …
The next stage is what we generally call seed funding or angel
funding, and it might be around half a million dollars. … the best
source of that capital is angel investors—high net worth
individuals, professional angel investors, who might invest across
10 or 15 different ideas. … They have surplus cash … Each
individual might cut a $25 000 to $50 000 cheque.
Then you qualify for what we call ‘series A’ capital … your first
institutional capital. … Series A is between $2 million and
$6 million. At that stage you have built a product, you have
customers, you have revenues and you have traction. … You build
a more significant team and you start to gain scale. …
And then you move into big institutional capital—series B and
series C—which tends to be $10 million to $20 million cheques. …
That is really about scaling your company to a very large scale
globally.16
3.14 The Department of Industry, Innovation and Science (DIIS) commented
that:
… almost a third of innovative Australian businesses have
identified a lack of access to additional funds as their biggest
barrier to innovation. Innovation-active small and medium sized
enterprises are also much more likely to seek debt or equity
finance compared to their non-innovation-active counterparts.17
3.15 The DFAT also identified ‘access to finance [as] a key constraint to
business-led innovation,’ particularly for small to medium sized
enterprises (SMEs). Unfortunately, SMEs often had poor or no credit
16 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, pp 6–7.
17 Department of Industry, Innovation and Science (DIIS), Submission 31, p. 25.

NURTURING INNOVATION 41
ratings and was often without ‘the resilience that diversification affords
larger enterprises and… the depth of resources to withstand a
downturn.’18
3.16 The DFAT added that traditional sources of finance such as bank lending
would continue to be the majority of finance available to SMEs, but there
were also ‘a number of non-traditional’ finance sources such as
‘alternative debt (corporate bonds), crowd funding, hybrid finance
instruments and equity finance (venture capital and business angels).’19
Debt Financing
3.17 In seeking out options for attaining start-up capital, Eighteen04
commented that ‘banks are not the first place start-ups tend to go to look
for finance’. Eighteen04 added:
Part of the reason why banks cannot become involved at that stage
is that often you are giving away equity in the start-up itself.
Banks are not usually at that place, because all the start-up has to
offer is equity in this potential company. When you start growing
and employing critical people within the start-up, there may be a
little salary or wage, but you are also generally offering some
equity in your company.20
3.18 The Australian Chamber of Commerce and Industry (ACCI) explained
that there are many different problems with access to finance and that
there are different types of finance in different industries. The ACCI
stated:
For a knowledge based industry, the big problem is lack of
collateral. You do not have anything you can give to the bank
which says, ‘If we go belly up, you can sell this off.’ That is the
problem they face.
For manufacturing, because you generally have plant and
equipment, the problem is more one of cash flow. When you are
growing really fast, you have to make the investment in building
the product and buying the inputs before you get the money from
selling it. The question then is whether the government can do
anything to make it better. In a perfect world a bank would make a
decision based on which business proposition sounded the best,
that had the most potential. But they have to think about their loss
18 DFAT, Submission 44, p. 10.
19 DFAT, Submission 44, p. 10.
20 Dr Gunilla Burrowes, Chair, Eighteen04 Inc., Official Committee Hansard, Sydney, 8 March 2016,
p. 29.

42 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
if their borrower defaults. If the choice is between a really amazing
business with no collateral or an average business with collateral,
they are going to pick the one that has the collateral. If government
were to guarantee that, maybe the banks would be more even-
handed, but there is also the risk that that guarantee would
encourage them to undertake riskier investments without taking
into account the potential for loss. So it is not a simple issue to
solve. But there is that role for improved intermediation, improved
expertise. Often the businesses we talk to just have problems with
the application process. It is very long, it can be very complicated
and it is different from what they do day to day.21
Equity Financing
3.19 The Australian Innovation System Report 2015 confirmed that ‘innovation
active start-ups are particularly reliant on equity finance’, but that the
‘limited scale and scope of venture capital, in particular, may be hindering
these start-ups in reaching their full potential.’22
3.20 The DIIS reported that unlike ‘in the United States, Israel and many other
countries’ Australian venture capital investment had not recovered since
the global financial crisis (GFC):
In 2014 such investment was 40 per cent of its level in 2007, with a
substantial decrease in the amount being put into new companies.
The success rate of firms applying for venture capital investment
has fallen from three per cent in 2005–06 to just over one per cent
in 2013–14 even though the number of proposals has recovered to
pre-GFC levels.23
3.21 The DIIS added that Australia has the ‘lowest proportion of venture
capital invested in high-risk, early-stage venture capital (ie seed, start-up
and other early-stage investment) compared with other OECD countries.’
While investments are most numerous in start-up and early expansion
stages, the bulk of investment is in late expansion and turnaround24
stages.25
21 Mr Tim Hicks, Acting Director, Economics and Industry Policy, Australian Chamber of
Commerce and Industry (ACCI), Official Committee Hansard, Sydney, 8 March 2016, p. 22.
22 DIIS, Office of the Chief Economist, Australian Innovation System Report 2015, p. 12.
23 DIIS, Submission 31, p. 25.
24 Turnaround investment enables the financial recovery of a company that has been performing
poorly for an extended time. Investopedia, Turnaround,
http://www.investopedia.com/terms/t/turnaround.aspAccessed 6 April 2016.
25 DIIS, Submission 31, p. 26.

NURTURING INNOVATION 43
3.22 The CSIRO stated that, in contrast to the ‘approximately $30 billion
expended on R&D and over $2 trillion in capital investment for
established businesses’, there was ‘only $0.3 billion in venture capital
funds available and $1.96 billion in private equity.’ The CSIRO added that
just 0.1 per cent of the capital invested in established businesses would
provide an approximate tenfold increase in available venture capital and
private equity.26
Crowd-Sourced Equity Funding
3.23 The DIIS advised that the National Innovation and Science Agenda (NISA)
included the introduction of a new regulatory regime which would allow
companies to access crowd-sourced equity funding (CSEF).27
3.24 On 3 December 2015, a bill to amend the Corporations Act 2001 was
introduced to Parliament28 to enable ‘entrepreneurs to raise funds online
(up to $5 million per year) from a large number of individuals in return for
equity in their company.’ Individuals could use CSEF to contribute up to
$10 000 per company per year across multiple companies, provided that
the companies were public companies. Concessions provided to
companies which became public in order to access CSEF included ‘up to a
five year exemption from obligations to hold Annual General Meetings,
produce audited financial statements and provide an annual report to
shareholders.’29
3.25 The Corporations Amendment (Crowd-Sourced Funding) Bill 2015 was
passed by the House of Representatives on 10 February 2016,30 and was
introduced into the Senate on 22 February 2016.31 The Bill lapsed due to
the prorogation of the Parliament on 15 April 2016.
3.26 Reinventure cautioned those who might wish to respond to crowd
funding requests and stated:
… one of the risks I see around crowd funding is that the kinds of
ventures that pursue crowd funding are the ones that could not
attract institutional capital and, therefore, is there a risk of
negative selection bias[?] … I personally think crowd funding is
better directed to … the good businesses that would deliver a two
26 CSIRO, Submission 43, p. 6.
27 DIIS, Submission 31, p. 27.
28 House of Representatives, Votes and Proceedings No. 166, 3 December 2015, p. 1806.
29 National Innovation and Science Agenda (NISA), Factsheet 29, Making it easier to access crowd-
sourced equity funding.
30 House of Representatives, Votes and Proceedings No. 172, 10 February 2016, p. 1895.
31 Senate, Journals of the Senate, No. 138, 22 February 2016, p. 3758.

44 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
to three times return. There is a much lower risk of failure, but a
much lower likelihood of a major outcome.32
Angel Investment
3.27 Angel investors are less risk-averse than venture capitalists and are now
beginning to deal with the risk associated with early stage start-up
companies. Eighteen04 observed that once these start-up ventures have
‘emptied their pockets, and the pockets of the family members who are
willing to put some cash up, they then move towards angel investors.’
Such investors are ‘a very important part of the [innovation] ecosystem
that is only really beginning to develop in Australia.’33
3.28 Eighteen04 stated that individual angel investors often operate as a group
because this ‘not only helps de-risk the decision process a little it also
allows an angel investor to spread their investments across more start-ups
(to help de-risk their portfolio).’ Eighteen04 added that:
 Individual angels invest from $10k to $100k which are often
incorporated with other angel investors to obtain the typically
investments of up to $500k.
 Angel investors take an equity stake in the company—generally
less than 30%.
 Typical agreements take the form of an ordinary share
structure.
 Angel investors tend to become an active part of the company,
either as a director, advisor and will provide networks,
expertise and skills needed in the company.
 Angel investors typically make two new investments a year.34
Venture Capital Funding
3.29 Like angel investments, venture capital fund investments are usually high
risk. Reinventure explained:
Within the VC community, only one or two VCs will make all the
returns in industry and the rest will probably lose capital. Within
the portfolios of those VCs, only one or two companies will return
all the returns of the fund. … generally two or three or five great
companies emerge each year. If you are not an investor in those
great companies, you are almost guaranteed to lose money across
your portfolio.35
32 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 3.
33 Dr Gunilla Burrowes, Eighteen04, Official Committee Hansard, Sydney, 8 March 2016, pp 28–29.
34 Eighteen04, Submission 38.1, p. 1.
35 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 3.

NURTURING INNOVATION 45
3.30 Reinventure recounted two adages concerning the difficulty of becoming a
successful venture capitalist:
One is: ‘This is the last job you’ll ever have, not the first,’ as in you
need to accumulate a lot of different life skills to gain the pattern
of recognition and the scar tissue that you need to be able to advise
companies through this generally very emotionally challenging
journey. The second one is: ‘It takes $50 million to train a VC,’ as in
you need to make $50 million of mistakes and to have learnt from
those mistakes before you can start being a good VC. …
Generally, it is other people’s money, but if you lose $50 million of
other people’s money you often do not get another shot at it.36
3.31 Reinventure funded about four companies each year from about 200
applicants.37 Selection was based on negotiation between the entrepreneur
and the venture capital Reinventure stated:
They sell you the dream and you try and pop the bubble. You land
at a point in the middle. Once you have made that investment, you
are both trying to sell the dream.38
3.32 Many people, Reinventure observed, are unaware about where their idea
or product fits in the commercialisation pathway and also whether they
are candidates for venture capital fund investment. Reinventure
explained:
A lot of people have ideas for companies. That is not the same as a
company. So a lot of people who seek funding seek it too early,
and they are just not fit to be funded in any capacity, whether it be
by a bank, a VC, angel investors et cetera. … even if people do
build a product or an idea, it might be a good business but it does
not mean it is venture capital backable. … we tend to work at the
high-risk end of the start-up spectrum, which means we are
looking for things that are going to be true game changers. We
take a lot of risk in our portfolio, and about half of the things that
we invest in will fail completely. To make the economics of that
fund work, the other half have to make absolutely stellar returns.
… just backing a good business that is going to give you two or
three times your return is not suitable for venture economics. …
There are other forms of finance, particularly from high-net-
36 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 3.
37 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 2.
38 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 8.

46 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
worths, family offices or angel investors, who are better suited to
funding those kinds of businesses.39
3.33 Reinventure added that it aimed to make an internal rate of return of
‘somewhere between 25 and 35 per cent over five to seven years [or rather]
turn $50 million into $200 million.’40
3.34 Start-up financial services technology (fintech) company, LOKE Digital
P/L commented that ‘a lot of the venture funds in Australia either do not
have any funds available right now or are investing a lot overseas.’ LOKE
Digital suggested that about 30 per cent of Australian venture capital
funds are investing overseas, and that overseas companies ‘are scared to
invest into Australia’ because of its isolation and small sized market.41
3.35 Reinventure, agreed that ‘generally speaking there is a shortage of venture
capital in this market’,42 but there was ‘absolutely no lack of funding for
great companies’. In fact, a number of companies within its portfolio were
raising money and there was ‘an oversupply of capital trying to get into
those companies’.43 Reinventure observed that more overseas investors are
focusing on the Australian market and visiting Australia, and that global
investors are needed for businesses with global aspirations.44
3.36 The ANZ Bank agreed, stating that to realise the full potential of
Australia’s technology and innovation capabilities requires Australian
companies to invest in and grow businesses offshore45 The ANZ Bank
Stated:
Ninety-eight per cent of the world economy is outside Australia’s
shores. So if you have an innovative technology-based Australian
company, it has got to operate offshore. … Born global, die local.46
3.37 LOKE Digital P/L agreed that it was very important to ‘make your
product global from day one.’47
39 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 2.
40 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 8.
41 Mr Thomas Booth, Managing Director, LOKE Digital P/L, Official Committee Hansard,
Melbourne, 10 March 2016, p. 42.
42 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 5.
43 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 4.
44 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 7.
45 Mr Rob Lomdahl, Head of Government and Regulatory Affairs, ANZ Bank, Official Committee
Hansard, Melbourne, 10 March 2016, p. 2.
46 Mr Rob Lomdahl, ANZ Bank, Official Committee Hansard, Melbourne, 10 March 2016, p. 6.
47 Mr Matthew Khoury, Managing Director, LOKE Digital P/L, Official Committee Hansard,
Melbourne, 10 March 2016, p. 46.

NURTURING INNOVATION 47
3.38 The ANZ Bank were of the view that offshore companies that bring their
profits back to Australia should not pay taxes twice. The ANZ Bank
explained:
We are talking about where you go out and establish a real,
legitimate business, earn profits and pay tax, and bring the profits
home and give them to Australian shareholders. The profits
should not be taxed again because they have already been taxed.48
Involvement of Superannuation Funds
3.39 Reinventure suggested one of the challenges to obtaining the growth
capital needed to drive innovation was the need to provide dividends,
especially to superannuation funds:
… this is one of the core problems with super funds, particularly
with the concentration of our superannuation industry. … We are
an economy that invests for the short term so that we can get our
dividends, so that we can pay them back to super funds, because
that is how they get their incentive. In the dividend imputation
scheme, combined with the company tax rate, we have created a
culture of addiction to dividends. What you need to drive
innovation is growth capital, not yield capital.49
3.40 The Australian Industry Group stated the problem was not ‘unwilling
capital’. For example Australian Super had close to $100 billion in assets,
but the amounts of investment needed by the start-up sector was ‘a couple
of million dollars here and there.’ These amounts were too small. There
was an opportunity, however, ‘for intermediaries to jump in and
aggregate many small potential businesses’.50
3.41 The Australian Manufacturing Workers’ Union (AMWU) agreed there
was merit in the involvement of intermediaries to bundle projects into
investment grade products. A problem, identified by the AMWU was the
high management overheads arising from a portfolio of ‘a lot of little SME
investments’.51
48 Mr Jim Nemeth, Group General Manager, Taxation, ANZ Bank, Official Committee Hansard,
Melbourne, 10 March 2016, p. 3.
49 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 5.
50 Dr Peter Burn, Head of Influence and Policy, Australian Industry Group, Official Committee
Hansard, Sydney, 8 March 2016, p. 21.
51 Mr Tom Skladzien, National Economist, Australian Manufacturing Workers’ Union (AMWU),
Official Committee Hansard, Sydney, 8 March 2016, p. 16.

48 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
3.42 Reinventure stated that superannuation funds were beginning to consider
participating in the venture capital market as they saw ‘emerging new
managers who they think are worth backing.’52
3.43 An example is the $200 million biotech venture capital fund recently
established by Brandon Capital Partners with four superannuation funds
as investors. The fund is different from other venture capital funds
because:
… the superannuation funds will be able to participate directly, in
addition to their initial commitment, into later stage companies
that [the fund] has invested, where the commercialisation risk has
been significantly diminished.53
3.44 Brandon Capital Partners stated that its fund was ‘a transformative and
unique investment model for the superannuation funds where private
companies will get access to this type of funding.’54
3.45 The fund had ‘a first right to invest in discoveries’ from approximately
fifty Australian medical research institutes and hospitals which were
collaborative partners of the fund. All partners would ‘get a small share of
the profits when one of the other partners earns a windfall’ which would
provide an incentive for collaboration.55
Government Support for Innovation and
Commercialisation
Innovation Hubs and Incubators
3.46 Professor Roy Green stated that Australia, when compared to other
countries, had ‘paid very little attention’ to local innovation ecosystems.
Professor Green stated:
We see many very successful local innovation systems around the
world—the most obvious and public example is Silicon Valley, but
also in large cities like New York with its Cornell Tech initiative
and London with Tech City UK. We are seeing the growth of
interesting clusters and technology hubs in our cities as well,
52 Mr Danny Gilligan, Reinventure, Official Committee Hansard, Sydney, 9 March 2016, p. 5.
53 Blake Industry & Market Analysis P/L, Bioshares Edition 597, April 2015, Why the Fibrotech
Acquisition Was a Pivotal Event for Australian Biotech, p. 1.
54 Blake Industry & Market Analysis P/L, Bioshares Edition 597, April 2015, Why the Fibrotech
Acquisition Was a Pivotal Event for Australian Biotech, p. 1.
55 The Sydney Morning Herald, Brandon Capital raises $200 million from four industry funds for
medical VC, 20 April 2015,http://www.smh.com.au/business/brandon-capital-raises-200m-
from-four-industry-funds-for-medical-vc-20150417-1mn3vl.html Accessed 7 April 2016.

NURTURING INNOVATION 49
around the University of Melbourne in Carlton and around my
university, UTS, with our creative digital precinct. These are
important developments. They are partly spontaneous but require
nurturing from universities, but also from policies and programs.56
3.47 Eighteen04 stated that there was a ‘recognised need to support incubators
for start-ups’ and that angel investing groups should be able to ‘access
grants and government support programs.’ Such support could be in the
form of administrative support and office rental, and the encouragement
of academics and researchers to take secondments to support start-ups.57
3.48 The Australian National University stated there was a case for the
‘establishment of Research Translation Centres similar in nature to the UK
Catapult Centres. These centres have long-term funding allowing new
technologies, methods and processes to be developed.’58 The eleven
Catapult Centres have been established and managed by Innovate UK.59
3.49 The University of Newcastle supported regional innovation hubs stating it
would help fill the gap between the ideas generated by researchers and
local capital providers. This would enable the creation of new products
and services.60
3.50 The University of Tasmania stated that its innovation agenda included
‘building student entrepreneurs’ and ‘nurturing a ”high through put”
commercialisation culture to ensure rapid exploitation of [intellectual
property].’ The university advised that it was intending to have a key role
in partnering with the Tasmanian Government to establishing:
… Entrepreneurship and Innovation Hubs in Hobart and
Launceston to develop a pipeline of would-be entrepreneurs who
may continue progressing spin-out enterprises supported at these
hubs.61
3.51 The NISA has recognised the importance of incubators and included an
Incubator Support Programe which was a new component of the
Entrepreneurs’ Programe.62 The DIIIS stated that the Entrepreneur’s
Programe:
56 Professor Roy Green, Dean, UTS Business School, University of Technology Sydney, (UTS)
Official Committee Hansard, Sydney, 9 March 2016, pp 28–29.
57 Eighteen04, Submission 38.1, p. 2.
58 Australian National University, Submission 2, p. 2.
59 Innovate UK, How Catapults can help your business innovate
https://www.gov.uk/government/publications/innovate-uk-how-catapults-can-help-your-
business-innovate Accessed 11 April 2016.
60 University of Newcastle, Submission 10, p. 4.
61 University of Tasmania, Submission 34, p. 3.
62 NISA, Factsheet 7, The Incubator Support Programme.

50 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
… will be able to support development of new incubators and
accelerators in regions or sectors of high potential, boost the
effectiveness of existing high-performing incubators, including
support to expand their services and engage with
commercialisation advisers to facilitate access through to other
government services and programs. … the measure will provide
access to top quality research and technical talent through three to
12 months secondments …63
Direct Business Assistance
3.52 Eighteen04 suggested there are various possible ways to support start-ups:
 government guarantees enabling start-ups to borrow money from
banks;
 a scheme where borrowed money is returned as part of profits made in
future years;
 government co-investment with angel investors;
 a centre link payment to entrepreneurs in their first year to provide a
minimum salary; and
 more workplace flexibility as start-ups begin to build their staff.64
Manufacturing Finance Corporation
3.53 The AMWU advocated for the creation of a Manufacturing Finance
Corporation (MFC)65 and drew parallels with the Clean Energy Finance
Corporation:
Advanced manufacturing technologies are also new and their
potential and functioning is also little understood by the finance
industry. Whether they be additive manufacturing, new forms of
computation, design and censoring, new materials and their
applications or advanced applications of biological breakthroughs,
a large raft of new technological fields are revolutionising
manufacturing globally, but Australian financial institutions are
understandably reluctant to invest in these technologies …66
3.54 The AMWU added that a MFC would constitute an equity injection by
government and stated that ‘similar loan programs/corporations exist in
63 Mrs Jane Urquhart, Head, Science and Commercialisation Policy Division, DIIS, Official
Committee Hansard, Canberra, 25 February 2016, p. 8.
64 Eighteen04, Submission 38.1, p. 2.
65 AMWU, Submission 24, pp 17–20.
66 AMWU, Submission 24, pp 17–18.

NURTURING INNOVATION 51
the UK, targeting SME businesses’. An example of this is the UK’s Capital
for Enterprise program.67
3.55 The AMWU added that a MFC could also ensure that each firm receiving
support entered a network of supportive institutions, businesses and
researchers by providing a link to ‘the relevant Industry Innovation
Precinct, Enterprise Connect and the CSIRO industry liaison division.’68
3.56 The AMWU recommended that the Government establish a MFC ‘with an
equity injection from government of at least $5 billion.’69
Entrepreneurs’ Programe
3.57 Innovation and Science Australia commented that the Entrepreneurs’
Programe ‘is targeted at SMEs that are established, have prospects, and
are interested and engaged in wanting to take their business to the next
level.’ A private sector adviser could be engaged to assess the business
and whether it wanted to invest in having a researcher in the business.
The adviser might also help with ‘supply chain facilitation, or capital
raising.’70
3.58 The Entrepreneurs’ Programe also provides access to Accelerating
Commercialisation grants. To be eligible for a grant, a business had to
have a ‘combined annual turnover of less than $20 million for each of the
three years prior’ to lodgement and have ‘a novel product or service that
[they are] looking to commercialise and trade to customers outside of the
state or territory of [their] principal place of business.’ Grants could be ‘up
to 50 per cent of eligible project costs.’71
3.59 LOKE Digital P/L was of the view that assistance with grant applications
would have been useful and stated:
We do not have enough time to sit there and put 30 or 40 hours
into applying for a grant that could potentially help us grow and
not need funding from a VC firm. We are trying to run our
business; every day, we have to try to sell our product. If we knew
67 AMWU, Submission 24, p. 18. In 2013, Capital for Enterprise became part of the British
Business Bank, which states that it works through more than 80 finance partners, to unlock up
to £10 billion of new finance’ to provide greater ‘choice and information on finance options to
smaller businesses.’ British Business Bank, What We Do, http://british-business-
bank.co.uk/what-the-british-business-bank-does/ Accessed 12 April 2016.
68 AMWU, Submission 24, p. 18.
69 AMWU, Submission 24, p. 20.
70 Mr William Ferris, Chair, Innovation and Science Australia, DIIS, Official Committee Hansard,
Canberra, 3 March 2016, p. 10.
71 DIIS, Factsheet, Entrepreneur’s Program: Accelerating Commercialisation,
http://www.business.gov.au/advice-and-support/EIP/Accelerating-
Commercialisation/Documents/AC-Factsheet.pdf Accessed 12 April 2016.

52 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
a contact within the right accounting firm who could help us put a
grant application together, we would have applied for it many
years ago.72
3.60 The Incubator Support Programe (a part of the Entrepreneurs’ Programe
which is due to commence on 1 July 2016) will provide an online portal to
‘help entrepreneurs access information on start-up support opportunities,
activities and events across Australia.’73
3.61 LOKE Digital P/L supported an online portal but was unsure how
comprehensive it would be. LOKE Digital P/L suggested the portal would
be useful if, when it provided information on:
… the type of business we are or filled out some sort of assessment
sheet, it then provided a plan for the support that you can get.
That would be not only grants or employee subsidies etc but also
links to incubators, accountancy firms, lawyers or patent
attorneys. People who come into this industry, even if they are
fresh out of uni, do not understand how to commercialise their
idea. So we need that basic step-by-step guide of who the partners
are and how to build a business from the ground up.74
Landing Pads Program
3.62 The Landing Pads Program is an initiative under the NISA which
provides access for selected market ready start-ups ‘to a workspace for up
to 90 days within an established start-up accelerator located overseas.’75
There will be up to five landing pads which will be supported by
Austrade ‘in conjunction with existing non-government programmes in
that location’. The program is due to commence on 1 July 2016.76
3.63 LOKE Digital P/L drew attention to internet payments infrastructure
company, Stripe77 which has released Stripe Atlas which assists companies
who want to access the United States market. Businesses can use Stripe
Atlas to incorporate in Delaware, open a business bank account, obtain tax
and legal advice, and accept payments through Stripe.78 LOKE Digital P/L
72 Mr Matthew Khoury, LOKE P/L, Official Committee Hansard, Melbourne, 10 March 2016, p. 46.
73 NISA, Factsheet 7, The Incubator Support Programme.
74 Mr Matthew Khoury, LOKE P/L, Official Committee Hansard, Melbourne, 10 March 2016, p. 46.
75 Australian Government Business, Landing Pads Program,http://www.business.gov.au/grants-
and-assistance/grant-finder/Pages/landing-pads-program.aspx Accessed 12 April 2016.
76 NISA, Factsheet 12, Australia’s Global Innovation Strategy.
77 Stripe, Payments infrastructure for the internet, https://stripe.com/#Accessed 12 April 2016.
78 Stripe,Introducing Stripe Atlas. A new way to start an internet business anywhere,
https://stripe.com/atlas Accessed 12 April 2016.

NURTURING INNOVATION 53
suggested that the Australian government should provide similar support
to Australian companies wishing to go overseas.79
Encouraging Equity Investment
3.64 Eighteen04 suggested they needed to be new approaches to provide
incentives for those investing and supporting start-ups, such as:
 income tax relief for investment losses;
 a restructure of the capital gains tax so that angel investors could
‘obtain good returns from good investments to make up for other failed
investments’;
 variations to the regulation of directors of start-ups because they were
dealing with different risks than those in the corporate sector; and
 ‘tax relief for angel investors taking on directorships of start-ups’ to
recognise the voluntary and risky nature of the position.80
3.65 The DIIS drew attention to new initiatives in the NISA which provide tax
incentives for early-stage investors, and new arrangements for early stage
venture capital limited partnerships (ESVCLPs).81
3.66 Tax incentives for early-stage investors include:
 a 20 per cent non-refundable tax offset on investments, capped
at $200 000 per investor per year
 a ten-year exemption on capital gains tax, provided investments
are held for three years82
3.67 The tax incentive applied to companies that:
 were incorporated for less than the three previous years;
 were not listed on any stock exchange;
 had expended less than $1 million in the previous income year; and
 had income of less than $200 000 in the previous income year.83
3.68 The new arrangements for ESVCLPs stipulated that:
 partners in a new ESVCLP will receive a 10 per cent non-
refundable tax offset on capital invested during the year
 the maximum fund size for new ESVCLPs will be increased
from $100 million to $200 million
 ESVCLPs will no longer be required to divest a company when
its value exceeds $250 million84
79 Mr Matthew Khoury, LOKE P/L, Official Committee Hansard, Melbourne, 10 March 2016, p. 46.
80 Eighteen04, Submission 38.1, p. 2.
81 DIIS, Submission 31, p. 27.
82 NISA, Factsheet 1, Tax incentive for early-stage investors.
83 NISA, Factsheet 1, Tax incentive for early-stage investors.

54 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
3.69 The NISA also included other measures to assist start-ups and encourage
start-up investment:
 Relaxation of the ‘same business test’ which would allow a businesses
to access losses from previous years when they have entered into new
transactions or businesses, where the business ‘while not the same, uses
similar assets and generates income from similar sources.’85
 Providing a ‘new option to self-assess the tax effective life of acquired
intangible assets that are currently fixed by statute’ to ‘better align tax
treatment of the asset with the actual number of years the asset
provides an economic benefit.’ Faster depreciation enabled a start-up’s
intellectual property and other intangible assets to become a more
attractive investment option.86
 Changing insolvency laws to reduce ‘the current default bankruptcy
period from three years to one year’. Protecting directors ‘from personal
liability for insolvent trading if they appoint a restructuring adviser to
develop a turnaround plan for the company’, and preventing contracts
being terminated because of insolvency, provided the company is
undertaking a restructure.87
 Establishing ‘five “landing pads” (in Silicon Valley, Tel Aviv and three
other locations)’ to provide a location where ‘entrepreneurial
Australians and market-ready start-ups’ can ‘access the talent, mentors,
investors and a wider connected network of innovation hubs in those
locations.’88
3.70 The DFAT highlighted the introduction of the Significant Investor Visa
(SIV) and the Premium Investor Visa (PIV) which are intended to ‘offer
accelerated pathways to Australian residency in return for significant
investments in Australia.’ Applicants for a SIV would be:
… required to invest at least $5 million over four years in
complying investments, which must now include at least $500 000
in eligible Australian venture capital or private equity (VCPE)
fund(s) investing in start-ups and small private companies.89
3.71 The PIV was an Australian Government invitation-only visa, designed ‘to
attract a small number of highly talented and entrepreneurial individuals
who can translate those skills and talents into areas which deliver a long-
84 NISA, Factsheet 2, New arrangements for Venture Capital Limited Partnerships.
85 NISA, Factsheet 3, Increasing access to company losses.
86 NISA, Factsheet 4, Intangible asset depreciation.
87 NISA, Factsheet 8, Insolvency reform.
88 DIIS, Submission 31, p. 20.
89 DFAT, Submission 44, p. 18.

NURTURING INNOVATION 55
term economic benefit to Australia.’ The program would initially involve
Australia’s top two-way investment market, the United States, but would
then expand to ‘other top two-way investment markets.’90
Research and Development Tax Incentive
3.72 In considering the mix of public and private sector investment in
commercialising research, the National Health and Medical Research
Council (NHMRC) commented:
… the tax system is the way for the Australian people to benefit
from profitable companies. So what is needed is to support
companies to develop and be profitable. Of course, that is the
purpose behind the R&D tax incentive as well, that there is a tax
incentive for companies to invest in their own R&D and become
profitable. I think one of the negative aspects of taking a slice [of
the equity of a new company] is that, the more you carve out of a
business, the less attractive it is to other investors. At the earlier
stages, with clear ownership of IP and clear dilution of equity as
new investors come in, there has to be a good financial argument
for the investor. If you slice out too much by returning to
government too early then I think you potentially get in the way of
an attractive investment to people, whether they are shareholders
in a public company or private investors in a private company.91
3.73 The NHMRC considered that the tax system is the appropriate way for
Australia to benefit from profitable companies, and the R&D tax incentive
is a way to encourage companies to invest in their R&D and become
profitable.92
3.74 The R&D tax incentive is designed to encourage companies to undertake
R&D, and comprises:
 a 45 per cent refundable tax offset for eligible entities with an
annual aggregated turnover of less than $20 million, (not
controlled by income-tax exempt entities) for expenditure on
eligible R&D activities in Australia; and
 a 40 percent non-refundable93 tax offset for all other eligible
entities for eligible R&D expenditure.94
90 DFAT, Submission 44, p. 18.
91 Professor Anne Kelso AO, Chief Executive Officer, National Health and Medical Research
Council (NHMRC) Official Committee Hansard, Canberra, 17 March 2016, p. 5.
92 Professor Anne Kelso AO, NHMRC, Official Committee Hansard, Canberra, 17 March 2016, p. 5.
93 A non-refundable tax offset can be carried forward to a later year if it meets the standard tax
offset carry-forward rules. Australian Taxation Office, Research and development tax incentive –
refundable and non-refundable tax offsets,https://www.ato.gov.au/business/research-and-

56 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
3.75 The incentive applies to R&D expenditure of up to $100 million. Beyond
this, companies can claim a tax offset at the company tax rate.95
3.76 In 2015–16, the Australian Government spent $9.7 billion on science,
research and innovation. Of this, the R&D tax incentive measures
amounted to $3.2 billion.96 Professor Roy Green stated that the R&D tax
concession had ‘increased from about 15 percent to about 30 percent’ of
the overall research and innovation spend.97
3.77 The Chief Scientist for Australia (Chief Scientist) commented that
Australia was ‘unusual amongst OECD countries in the predominance of
indirect—that is, tax-based—support for business R&D.’ The provision of
tax incentives liberated businesses from grant funding cycles enabling
them to undertake research at any time. Tax credits, however, were
generally untargeted so reduced the government’s capacity to strategically
focus R&D investment on priority areas and specific players.98
3.78 Innovation and Science Australia, however, approved the fact that the
scheme was ‘agnostic to sector and is entitlement based.’ If someone was
spending money on legitimate R&D it was a great incentive.99
3.79 CSL Ltd supported the tax concession as ‘a very significant incentive for
commercial operations like CSL Ltd to conduct R&D onshore and
maximise this investment.’100 Sendle also commented that for start-ups
like Sendle, the incentive was ‘a really excellent thing.’101
3.80 The Australian Industry Group (AIG) highlighted the value of the
incentive, but called for stability:
The incentive plays an important role for many of our members
and other businesses in enabling a higher level of R&D investment
than might otherwise occur. While there are always areas for
improving the incentive or targeting it more effectively, the policy
development-tax-incentive/in-detail/fact-sheets--ato/research-and-development-tax-
incentive---refundable-and-non-refundable-tax-offsets/ Accessed 13 April 2016.
94 DFAT, Submission 44, p. 14.
95 DFAT, Submission 44, p. 14.
96 DIIS, Submission 31, Figure 1, p. 4.
97 Professor Roy Green, UTS, Official Committee Hansard, Sydney, 9 March 2016, p. 32.
98 Chief Scientist for Australia (Chief Scientist), Submission 49, pp 2, 3.
99 Mr William Ferris, DIIS, Official Committee Hansard, Canberra, 3 March 2016, p. 8.
100 CSL Ltd, Submission 37, p. 8.
101 Dr James Chin Moody, Chief Executive Officer, Sendle, Official Committee Hansard, Sydney, 9
March 2016, p. 16.

NURTURING INNOVATION 57
has been through a lot of changes in recent years and stability is
badly needed.102
3.81 Connexion P/L drew attention to the changes in the requirements of R&D
applications and the demands of writing applications especially for small
companies:
We go for R&D every year. The R&D application five years ago
and the terms in the R&D application today are so vastly different
that you really do need an expert in research and development
writing to be able to help you put that together. … it is becoming
more and more challenging to be able to present that what you
have does constitute research and development. … It is a real
challenge to try and write those things. The big companies are
okay. They have good lawyers to do it. Yes, we pay for lawyers to
prepare ours, but that again comes back to the small business side
of it, where your focus is on providing jobs for a number of people
and your focus is not [solely] about making money. When you
have to take that money away, shareholders and board members
look at you quizzically as to why you keep investing in those
things. …
This will probably be the last year we do it because, if they change
the rules again, it becomes more and more difficult.103
3.82 La Trobe University suggested that the R&D tax incentive rates are quite
important for the ‘make or break’ points for small businesses. Small
changes in the rate are less of an issue for large multinational
companies.104
3.83 The Australian Academy of Science stated that the tax incentive does not
favour small start-up companies. Instead the incentive encourages
companies with ‘sufficient existing capital to establish or undertake new
research and development activities.’ Small start-ups or spin out
companies do not have access to such capital. As well, the incentive ‘can
be of limited use unless there is a strong expectation that the company will
incur a tax liability from concurrent or future profit.’105
3.84 Cochlear Ltd was concerned about the $100 million cap on eligibility for
the R&D tax incentive:
102 Dr Peter Byrne, Head of Influence and Policy, Australian Industry Group (AIG), Official
Committee Hansard, Sydney, 8 March 2016, p. 17.
103 Mr Graeme Harrison-Brown, Chief Executive Officer, Connexion P/L, Official Committee
Hansard, Sydney, 9 March 2016, p. 44.
104 Mr Matthew Brett, La Trobe University, Official Committee Hansard, Melbourne, 10 March 2016,
p. 40.
105 Australian Academy of Science, Submission 3, p. 9.

58 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
We spend about $130 million a year, of which about $100 million
qualifies for the R&D tax concession. We want to continue to
invest; but, obviously, if you have a look at somewhere like the
UK, they have concessions which would kick in for that
incremental amount. … The issue with that is long-term. Your new
R&D starts getting done outside of Australia and over time—
10 years or so—the value is attributed to somewhere else.106
3.85 The ECA considered there should be a continuum in tax arrangements
from the research phase, through development, to the commercialisation
phase:
… if a particular program has met those first two elements of the
taxation R&D program and is an approved project, the
commercialisation of that project should be an as-of-right,
automatic roll on and have access to the same taxation benefits as
the research and the development currently have, rather than
phasing into a completely new competitive grant application.107
3.86 La Trobe University commented that the eligibility rules for the tax
incentive excluded not-for-profit enterprises or those that are majority
owned by not-for-profits. The exclusion limited the ability for the tax
system to drive start-up businesses that were collaborations between a
student and the university. There was the opportunity to design better
ways to support graduates or PhD students who wanted to take cutting
edge ideas into spin out companies.108
3.87 The R&D tax incentive eligibility rules also exclude research in the
humanities and social science. The Australasian Council of Deans of Arts,
Social Services and Humanities,109 and the Australian Academy of the
Humanities did not support this exclusion. The Australian Academy of
the Humanities stated that the efficacy of these provisions should be
reviewed:
… to ensure that cultural industries, digital R&D, design for social
innovation, and future service oriented industries embracing
social enterprises are not disadvantaged by these tax
arrangements.110
106 Mr Neville Mitchell, Cochlear Ltd, Official Committee Hansard, Sydney, 8 March 2016, p. 23.
107 Mr Paul Cooper, Deputy Chair, ECA, Official Committee Hansard, Sydney, 8 March 2016, p. 5.
108 Mr Matthew Brett, La Trobe University, Official Committee Hansard, Melbourne, 10 March 2016,
p. 38.
109 Australasian Council of Deans of Arts, Social Services and Humanities, Submission 22, p. 2.
110 Australian Academy of the Humanities, Submission 33, p. 3.

NURTURING INNOVATION 59
3.88 Several universities supported modifying the R&D tax incentive scheme to
encourage collaboration between businesses and universities.111
3.89 The Australian Technology Network (ATN) suggested that
university/business links would be enhanced ‘if businesses were able to
claim the R&D tax incentive for work undertaken by a PhD graduate for a
period of three years post-graduation’. The ATN acknowledged that this
‘would be a significant shift for the Australian government to take’.112
3.90 The University of Melbourne suggested that:
The R&D tax incentive could be modified to:
 Make it easier for SMEs to benefit from the tax incentive,
especially where they utilise established research providers to
solve their problems.
 Encourage and leverage collaboration with public research
providers and public research infrastructure.
 Direct skills, resources and other supports for research in the
catalytic phase of commercialisation, including in public
research institutions.113
3.91 The Australian Government is currently undertaking a review of the R&D
tax incentive scheme. The review panel comprises the Chair of Innovation
and Science Australia, the Chief Scientist, and the Secretary of the
Treasury.114
Intellectual Property
3.92 IP Australia stated that a ‘well-functioning and effective intellectual
property (IP) system is important to underpin Australia’s innovation,
trade and investment efforts’ and the NISA.115 To this end, IP Australia
provided the following online services:
 the Patent Analytics Hub containing over ‘80 million patent records’,
providing the information ‘in a form that allows for an understanding
of relationships and trends to inform business strategy’;
111 Australian Technology Network, Official Committee Hansard, Sydney, 8 March 2016, p. 59;
Curtin University, Submission 20, p. 1; La Trobe University, Submission 39, pp 4–5;
Regional Universities Network, Submission 11, p. 2. University of Adelaide, Submission 39, p. 3;
University of Melbourne, Submission 41, p. 19; University of Tasmania, Submission 34, p. 3;
Western Sydney University, Submission 23, p. 3.
112 Ms Renee Hindmarsh, Executive Director, Australian Technology Network (ATN), Official
Committee Hansard, Sydney, 8 March 2016, p. 59.
113 University of Melbourne, Submission 41, p. 19.
114 Australian Government Business, R&D Tax Incentive Review,
http://www.business.gov.au/grants-and-assistance/innovation-rd/RD-
TaxIncentive/Pages/randd-tax-incentive-review.aspx Accessed 13 April 2016.
115 IP Australia, Submission 15, p. 1.

60 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
 Source IP, a ‘portal for information sharing, licensing preferences and
facilitating contact in relation to IP rights generated by Australia’s
public research sector’; and
 the IP Toolkit for Collaboration which ‘provides tools and guidance to
simplify discussions relating to the use and management of IP in
collaborative ventures.’116
3.93 IP Australia also participated in the global patent prosecution highway
initiative which:
… provides fast-track patent examination in 20 countries, on the
basis of a decision taken in any of those countries, allowing
Australian inventors the option to quickly acquire rights across the
major global markets such as Japan, Germany, the UK and the
USA.’117
3.94 Australia is also a signatory to the Patent Cooperation Treaty which
allows the filing of an international patent and subsequent protection in
148 countries.118
3.95 IP Australia commented that a patent did not inhibit innovation. The
patent granted a monopoly, but in return ‘must disclose the invention,
how it operates and the best method of operating it.’ This was ‘partly to
ensure that follow-on innovation can occur.’119 The ability to use patented
material and goods for research was confirmed in the Intellectual Property
Laws Amendment (Raising the Bar) Act 2012. Once researchers started
commercialisation, however, they had to look at obtaining a licence.120
3.96 In comparison to the cost of filing, the substantial cost of obtaining a
patent lay in writing the specification which had to describe the invention
and ‘the part that is novel, inventive and useful that you will claim
exclusive right for.’ IP Australia summarised the costs:
It costs you a couple of hundred dollars to file, it costs you a
couple of hundred dollars to get it examined but the total cost, and
these are rough estimates … is between $8000 to $12 000 to get a
116 IP Australia, Submission 15, pp 2, 3.
117 IP Australia, Submission 15, p. 3.
118 IP Australia, Submission 15, p. 3; World Intellectual Property Organisation, PCT—The
International Patent System, http://www.wipo.int/pct/en/Accessed 14 April 2016.
119 Dr Andrew Wilkinson, Director, Domestic Policy, IP Australia, Official Committee Hansard,
Canberra, 17 March 2016, p. 17.
120 Dr Frances Rowden, Acting General Manager, IP Australia, Official Committee Hansard,
Canberra, 17 March 2016, p. 17.

NURTURING INNOVATION 61
patent through the system in Australia. We will make up maybe
five to six per cent of that cost.121
3.97 Once a patent was granted in Australia, the global patent prosecution
highway could be used to fast track patenting in other jurisdictions.122 The
market where patent protection was needed determined where the patent
was lodged. For example, IP Australia noted that there were Australian
universities choosing to patent abroad because they considered that would
be their major market.123 A further example was provided by CSL Ltd
which commented that when it decided to manufacture products in
Switzerland it had transferred the IP for those products to that country.124
3.98 In sectors where Australia comprised an important market, for example in
mining, pharmaceutical, chemical, and heavy machinery, overseas
companies were filing patents in Australia.125
3.99 IP Australia commented that ‘90 percent of the patent applications in
Australia are filed by non-residents’—companies were importing their
technology for use in Australia.126 In the Australian start-up sector, about
50 companies patented in a year.127
3.100 LOKE Digital P/L commented that it was difficult to patent software and
its strategy was to be a first-mover into the market, ‘strengthening our
core technology through integrations with other businesses and becoming
a backbone of their technology and/or business as well.’128 Sendle agreed
that speed was important for success:
… it used to be that the big eat the small; now it is that the fast eat
the slow. The key thing for a lot of businesses is: how fast can you
move?129
121 Dr Benjamin Mitra-Khan, Acting General Manager, Chief Economist, IP Australia, Official
Committee Hansard, Canberra, 17 March 2016, p. 13.
122 Dr Benjamin Mitra-Khan, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 13.
123 Dr Benjamin Mitra-Khan, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 14.
124 Ms Sharon McHale, Head of Public Affairs, CSL Ltd, Official Committee Hansard, Melbourne,
10 March 2016, p. 13.
125 Dr Benjamin Mitra-Khan, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 15.
126 Dr Benjamin Mitra-Khan, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 15.
127 Dr Benjamin Mitra-Khan, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 13.
128 Mr Matthew Khoury, LOKE P/L, Official Committee Hansard, Melbourne, 10 March 2016, p. 45.
129 Dr James Chin-Moody, Sendle, Official Committee Hansard, Sydney, 9 March 2016, p. 18.

62 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
Patent Boxes
3.101 Patent boxes are policies which apply to the ‘income generated from
certain types of qualifying intellectual property, particularly patents.’ The
policy targets the final stage of the innovation pathway, namely
commercialisation. ‘Tax relief can be given either as a reduced tax rate or a
tax break for a portion of the patent box income.’130
3.102 The DFAT stated that 11 European countries and China had introduced
patent boxes while other countries including the United States were
considering their introduction.131
3.103 The Australian Innovation and Manufacturing Incentive (AIMI) proposed
‘a system based on the UK’s patent box, but tailored for Australia.’ The
AIMI stated that recently there had been an ‘international focus on patent
box regimes to ensure they are not contributing to “base erosion and profit
shifting.” Consequently a number of jurisdictions have committed to
ensuring any patent box tax benefits are directly related to R&D activity
carried out in the host country. The AIMI stated that its policy is consistent
with these developments.132
3.104 The proposal would:
… provide an offset against the tax payable on profits derived
from the innovation and manufacture in Australia of qualifying
patented/licensed products. The patents/licenses would have to
[have] a connection to Australia to qualify. …
… qualifying IP profit would be taxed at the lower rate (10%) with
the standard corporate tax rate to be applied to other income.133
3.105 Cochlear Ltd supported the patent box approach, but cautioned that it
needed ‘to be part of a broad, holistic approach to incentives. It [is] not a
panacea on its own’. Cochlear Ltd added that under the UK patent box
model, the benefit to business has to be linked to providing extra
employment.134
3.106 The AIG considered patent boxes to have some merit but it needed
‘careful examination and design.’ The AIG added:
Something that is well designed, that works simply and
effectively, and that takes the best from the experiences of the UK
130 DFAT, Submission 44, p. 15.
131 DFAT, Submission 44, p. 15.
132 Australian Innovation and Manufacturing Incentive (AIMI), Submission 25, pp 1, 2.
133 Australian Innovation and Manufacturing Incentive, The AIM Incentive,
http://www.aimincentive.com.au/learn-more/the-aim-incentive/Accessed 14 April 2016.
134 Mr Neville Mitchell, Cochlear Ltd, Official Committee Hansard, Sydney, 8 March 2016, p. 24.

NURTURING INNOVATION 63
and other European countries is well worth having a go at. I do
not think it is a magic cure; it is a part of a bigger story.135
3.107 The ACCI considered the concept was worth exploring, but it was a
matter of priority. A patent box system would create ‘an artificial measure
to counteract some of the other disincentives to locate in Australia.’ The
ACCI preferred to instead focus on those framework issues.136
3.108 IP Australia stated that research has not shown that patent boxes have
increased the overall level of innovation:
In the last 2½ years we have seen about 10 big academic studies
come out on the effect of patent boxes. The latest one is from the
European Commission. They all seem to say roughly the same
thing. … you are incentivising people to maintain the patent
monopoly … because you are giving them a tax break, unlike R&D
tax credits … there is no good evidence to show that [a] patent box
increases innovation or innovative activity in a country. There is
decent evidence that says that a small group, mainly of large
companies, gain a tax benefit. Within Europe … there is decent
evidence to show that people who can move their taxable IP will
do so as a response to it, but they will not necessarily move their
R&D.137
3.109 IP Australia added that a patent box has been in place in the UK since 2013
and ‘more than 10 years’ in parts of Europe. The patent box has been an
expensive policy for the UK, being costed ‘at something like £1.1 billion
when they first did impact assessments … about $2 billion a year’. The UK
has decided to close its current patent box for new entries in July 2016 and
redesign the system. IP Australia was unsure as to whether the UK would
abolish its patent box system.138
Advanced Manufacturing Tax
3.110 CSL Ltd provided a detailed proposal139 for an Advanced Manufacturing
Tax ‘of not more than 10 per cent on new advanced manufacturing
undertaken in Australia’.140 CSL Ltd stated that, unlike a patent box the
‘proposal would not diminish existing tax revenues, would only apply to
135 Dr Peter Burn, AIG, Official Committee Hansard, Sydney, 8 March 2016, p. 21.
136 Mr Tim Hicks, ACCI, Official Committee Hansard, Sydney, 8 March 2016, p. 21.
137 Dr Benjamin Mitra-Kahn, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 12.
138 Dr Benjamin Mitra-Kahn, IP Australia, Official Committee Hansard, Canberra, 17 March 2016,
p. 13.
139 CSL Ltd, Submission 37, pp 13–15.
140 CSL Ltd, Submission 37, p. 14.

64 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
investment that would not otherwise take place in Australia, and requires
IP to be tied to advanced manufacturing.’141
3.111 To qualify as advanced manufacturing for the purposes of the new tax,
CSL Ltd suggested:
 There must be new investment in a manufacturing facility.
 The manufacturing facility should generate substantial
entrepreneurial value such that the value of its products should
be much greater than the costs (including capital costs).
 The value-add must arise from identifiable and valuable IP …
 The relevant IP should be either developed in Australia or
acquired and then significantly enhanced through further
development while under Australian ownership.
 The Australian owner must have taken risks in the
development of the IP.
 The preferential tax rate would not apply to profits earned on
royalties, licence fees or sales of Australian owned IP, as these
do not arise from advanced manufacturing in Australia.142
3.112 CSL Ltd identified a number of safeguards in its proposal:
 there was no need for government funding or to ‘cannibalise existing
tax revenues’;
 there was the requirement to manufacture in Australia;
 the exclusion of ‘most investment in other industries’ reduced the
likelihood that investment would have occurred in Australia anyway—
such as in resource extraction;
 the requirement for substantial value adding in Australia;
 the proposal would not distort business behaviour—a criticism of some
types of patent boxes was that IP ownership was transferred from one
jurisdiction to another without creating new economic activity; and
 it would be limited to those enterprises which had generated valuable
IP and invested in manufacturing in Australia.143
Concluding Comments
3.113 The Committee recognises the difficulties and risks of commercialising
innovation. The Committee was impressed by the calibre of the start-up
141 CSL Ltd, Submission 37, p. 13.
142 CSL Ltd, Submission 37, p. 14.
143 CSL Ltd, Submission 37, pp 14–15.

NURTURING INNOVATION 65
and spin-out companies and those in the venture capital sector who
contributed to the inquiry.
3.114 The Committee agrees that being involved in a start-up or spin-out
company is challenging because of the commonly high rates of failure for
such entities. Starting a business from scratch, seeing it fail, and
relaunching another can be a challenging learning experience and only
those who persist will be successful. Similar challenges are experienced by
angel investors and venture capitalists.
3.115 The Committee acknowledges the move by the superannuation industry
towards investing in start-up portfolios created by intermediaries. The
Committee anticipates that market forces will determine whether this
form of finance will increase and broaden.
3.116 The Committee recognises that the Government, through the NISA
initiatives is providing support measures for incubators, start-up
businesses, and capital providers, with the broader aim of modernising
the Australian economy to make it more globally competitive.
3.117 The Incubator Support Program is intended to provide information to
assist entrepreneurs and prospective entrepreneurs. The Committee
acknowledges the comments of LOKE Digital P/L concerning what such a
portal might provide and suggests the Government’s portal should
provide such information.
3.118 Taking into consideration the issues raised around NISA such as its
adequacy and robustness, the Committee believes the NISA initiatives
should be reviewed after an appropriate period to determine their
effectiveness and adequacy.
3.119 The Committee is attracted to the use of a patent box as a way to
encourage R&D and believes that such a measure warrants close
examination. The patent box is an expensive measure which can be
manipulated, however, the increased innovation outcome is uncertain.
The Committee understands that the UK’s patent box, introduced in 2013,
closed after three years in operation and is currently being reviewed.
3.120 If a patent box measure were to be introduced in Australia, it should be subje
sunset clause followed by a review of its effectiveness and whether it
should be extended and for how long.
3.121 The Committee has received two separate proposals aimed at encouraging
advanced manufacturing in Australia. A Manufacturing Finance
Corporation (MFC) which has been proposed by the AMWU could be
modelled on the Clean Energy Finance Corporation, but would
concentrate on investing in advanced manufacturing.

66 AUSTRALIA’S FUTURE IN RESEARCH AND INNOVATION
3.122 The Advanced Manufacturing Tax (AMT), which can be seen as a taxation
variant of the patent box, (as proposed by CSL Ltd) attempts to link tax
breaks for advanced manufacturing companies to activity in Australia.
3.123 The Committee has received insufficient evidence, however, to thoroughly
test the concept of a MFC or an AMT but considers both options warrant
close examination by the Treasury. If either option is introduced it should
be reviewed after a suitable period to ascertain effectiveness. If an AMT
were to be introduced it could have a sunset clause with a review before
renewal.
Recommendation 3
3.124 The Committee recommends that the initiatives introduced as part o
the National Innovation and Science Agenda be reviewed after three
years of operation to determine their effectiveness and whether the
programs should be expanded.
Recommendation 4
3.125 The Committee recommends that the Treasury undertake a close
examination of a patent box scheme. If a patent box is introduced, i
should be subject to a sunset clause after three years of operation.
review should be undertaken to determine the effectiveness of the
patent box scheme and whether it should be extended and for how l
Recommendation 5
3.126 The Committee recommends that the Treasury undertake a close
examination of the proposal for a Manufacturing Finance Corporatio
Should such a corporation be established, it should be reviewed afte
period of five years to determine its effectiveness.
Recommendation 6
3.127 The Committee recommends that the Treasury undertake a close
examination of the proposal for an Advanced Manufacturing Tax.
Should such a tax be introduced, it should be subject to a sunset cla
at which point a review should be undertaken to determine its
effectiveness and whether it should be continued.

NURTURING INNOVATION 67
Mr Ken O’Dowd MP
Chair
2 May 2016

A
Appendix A - Submissions
1 Associate Professor Stuart Pearson
2 Australian National University
3 Australian Academy of Science
4 The Australasian Centre for Rail Innovation
5 University of Wollongong
6 The Australian Road Research Board Group Ltd
7 Australian Nuclear Science and Technology Organisation
8 Ausveg
9 University of South Australia
10 University of Newcastle
11 Regional Universities Network
12 Professor James Guthrie
13 Charles Sturt University
14 Confidential
15 IP Australia
15.1 IP Australia
16 Australia and New Zealand Banking Group Limited
16.1 Australia and New Zealand Banking Group Limited
16.2 Australia and New Zealand Banking Group Limited
17 Australian Centre for International Agricultural Research
18 Macquarie University
19 Victoria University
20 Curtin University

70
21 Optus
22 Australasian Council of Deans of Arts, Social Sciences and Humanities
23 Western Sydney University
24 The Australian Manufacturing Workers’ Union
25 Australian Innovation and Manufacturing Incentive Group
26 Australian Business Deans Council
27 Universities Australia
28 Association of Australian Convention Bureaux
29 Australian Pork Ltd
30 Stone and Chalk
31 Department of Industry, Innovation and Science
31.1 Department of Industry, Innovation and Science
32 Medical Technology Association of Australia (SPARK)
33 Australian Academy of the Humanities
34 University of Tasmania
35 Deakin University
36 Department of Immigration and Border Protection
37 CSL Limited
38 Eighteen04 Inc.
38.1 Eighteen04 Inc.
39 La Trobe University
40 Department of Education and Training
41 University of Melbourne
42 Standards Australia
43 Commonwealth Scientific and Industrial Research Organisation
43.1 Commonwealth Scientific and Industrial Research Organisation
44 Department of Foreign Affairs and Trade and Austrade
45 Name Withheld
46 Australian Technology Network
47 Cochlear Ltd
48 Export Council of Australia
48.1 Export Council of Australia
49 Chief Scientist for Australia

APPENDIX A - SUBMISSIONS 71
50 Swinburne University of Technology
51 Dr Barrie Pittock
52 National Health and Medical Research Council
53 EMC Australia and New Zealand
54 Australian Prudential Regulation Authority
55 Dr Michael MacCracken

B
Appendix B - Exhibits
1. Australian Research Council
Review of Research Policy and Funding Arrangements, Report, November 201
a) The National Innovation and Science Agenda.
b) State of Australian University Research 2015-16: Volume 1 ERA National
Report
2. Export Council of Australia
2015/16 Trade Policy Recommendations: Building capability and capacity for
global expansion.
3. Medical Technology Association of Australia
SPARK Australia: Transforming ideas and research from bench to bedside and
…why we need to do something now.
4. Australasian Centre for Rail Innovation
UK RSSB Level Crossing Safety Report Listing for ACRI Participants, prepared
by the UK Rail Safety and Standards Board
a) List of ACRI Board Members
b) List of ACRI Participants
c) List of ACRI International and Domestic Partnerships
d) ACRI’s Collaborative Working Arrangements
e) ACRI Research Summaries – March 2016.
5. Professor Roy Green, Dean, UTS Business School, University of
Technology, Sydney
Australia’s Innovation Future—A Report on the Structure and Performance of
Australia's National Innovation System in Senate Economics References
Committee, Australia’s Innovation System, Canberra 2015, pp. 41–74

74
a) Article: How Australia got left behind in manufacturing and innovation, Roy
Green, 23 February 2015
b) Report to the President Accelerating U.S. Advanced Manufacturing, Executi
Office of the President President’s Council of Advisors on Science and
Technology, October 2014
6. NSW Business Chamber
Report: Thinking Business: Industry-Research Collaboration
7. Australian Centre for International Agricultural Research
Impact Assessment Program Strategy
a) ACIAR Impact Assessment Series 71: The economic impact in Indonesia and
Australia of investment in plantation forestry research, 1987–2009
b) ACIAR Impact Assessment Series 86: Returns to ACIAR’s investment in
bilateral agricultural research
c) ACIAR Impact Assessment Series 67: The biology, socioeconomics and
management of the barramundi fishery in Papua New Guinea’s Western Provin
d) ACIAR Impact Assessment Series 80: Oil palm pathways: an analysis of
ACIAR’s oil palm projects in Papua New Guinea.
e) Adoption of ACIAR project outputs 2015
8. Australia and New Zealand Banking Group Limited
ANZ insight - Winning the away game: Australia-based Global Companies and
the Economy, Issue 7 August 2015
a) Independent Economics: Taxation of Offshore Dividends, prepared for ANZ
Banking Group Limited, April 2015
b) Asialink-ANZ-PWC report, Australia’s Jobs Future: The rise of Asia and the
services opportunity

C
Appendix C – Hearings and Witnesses
Thursday, 25 February 2016 – Canberra
Department of Industry, Innovation and Science
Mr Mark Cully, Chief Economist
Mrs Jane Urquhart, Head of Science and Commercialisation Policy Division
Dr Antonio Balaguer, Assistant Manager
Department of Education and Training
Ms Jessie Borthwick, A/g Deputy Secretary, Higher Education, Research
and International Cluster
Mr Dominic English, Group Manager, Research and Economic Group
Ms Ditta Zizi, Branch Manager, Research Education and Higher Education
Infrastructure
Dr Terry Bowditch, Director, Research Funding and Data
Mr Timothy Kane, Senior Economic Adviser, Economic and Market
Analysis Branch
Department of Foreign Affairs and Trade
Mr David Holly, Assistant Secretary, Intellectual Property, Aid for Trade
and Other Issues Branch, Office of Trade Negotiations
Mr Robert Owen-Jones, Assistant Secretary, Economic Advocacy Analysis
Branch

76
Thursday, 3 March 2016 – Canberra
Chief Scientist
Dr Alan Finkel, Chief Scientist for Australia
Dr William Howard, Deputy Director, Office of the Chief Scientist
Innovation and Science Australia and Department of Industry, Innovation a
Science
Mr William Ferris, Chair, Innovation and Science Australia
Mr David Hazlehurst, A/g Deputy Secretary, Department of Industry,
Innovation and Science
Ms Ann Bray, Interim Chief Executive Officer, Innovation and Science
Australia, Department of Industry, Innovation and Science
CSIRO
Mr Craig Roy, Deputy Chief Executive
Dr Jack Steele, General Manager, Science and Government
Tuesday, 8 March 2016 – Sydney
Export Council of Australia
Mr Paul Cooper, Deputy Chair
Mr Andrew Hudson, Director
Australian Manufacturing Workers’ Union
Mr Mike Nicolaides, Assistant National Secretary
Dr Tom Skladzien, National Economist
Australian Chamber of Commerce and Industry / Australian Industry Group
Mr Tim Hicks, A/g Director, Economics and Industry Policy, Australian
Chamber of Commerce and Industry
Mr Hamish Li, Policy Advisor, NSW Business Chamber
Dr Peter Burn, Head of Influence & Policy, Australian Industry Group
Mr Tennant Reed, Principal National Adviser, Public Policy, Australian
Industry Group

APPENDIX C – HEARINGS AND WITNESSES 77
Cochlear Ltd
Mr Neville Mitchell, Chief Financial Officer
Eighteen04 Inc.
Dr Gunilla Burrowes, Chair
TAFE Directors Australia
Mr Martin Riordan, Chief Executive Officer
Cloud Insurance Pty Ltd
Ms Joanne Cooper, Director
Medical Technology Association of Australia
Ms Susi Tegen, Chief Executive
Ms Roslyn Mitchelson, Industry Policy Manager
Professor Jonathon Morris, Director, Kolling Institute
Australian Nuclear Science and Technology Organisation
Dr Adrian Paterson, Chief Executive Officer
Dr Simone Richter, Group Executive, Nuclear Science and Technology, and
Landmark Infrastructure
Dr Jamie Schulz, Operations Manager, Bragg Institute
Australian Technology Network
Ms Renee Hindmarsh, Executive Director
Tuesday, 9 March 2016 – Sydney
Reinventure
Mr Danny Gillian, Co-Founder and Managing Director
University of Wollongong
Mr Paul Scully, Chief Operating Officer, Australian Institute for Innovative
Materials
Sendle
Dr James Chin-Moody, Chief Executive Officer

78
Australian Centre for International Agricultural Research
Dr Nicholas Austin, Chief Executive Officer
Professor Roy Green, Dean UTS Business School, University of Technology,
Sydney
SwitchDin Pty Ltd
Dr Andrew Mears, Chief Executive Officer
Connexxion Pty Ltd
Mr Graeme Harrison-Brown, Chief Executive Officer
Mr Mitchell Westra, Management Systems Advisor
Macquarie University
Professor Lesley Hughes, Pro Vice Chancellor, Research Integrity and
Development and Distinguished Professor of Biological Sciences
Tuesday, 10 March 2016 – Melbourne
ANZ Banking Group
Mr Rob Lomdahl, Head of Government and Regulatory Affairs
Mr Jim Nemeth, Group General Manager, Taxation
CSL Ltd
Dr Andrew Cuthbertson, Chief Scientific Officer and R&D Director
Ms Sharon McHale, Head of Public Affairs
Australasian Centre for Rail Innovation
Mrs Vicki Brown, Chief Executive Officer
Mr Tristan Hogg, Manager – Projects
Australian Road Research Board Ltd
Mr Gerald Waldron, Managing Director
Ausveg
Mr Richard Mulcahy, Chief Executive Officer
Mr Andrew White, Deputy Chief Executive

APPENDIX C – HEARINGS AND WITNESSES 79
La Trobe University
Mr Matt Brett, Senior Manager, Higher Education Policy
Loke Digital Pty Ltd
Mr Matthey Khoury, Managing Director
Mr Tom Booth, Managing Director
Mr Benjamin Colley, Chief Product Officer
Deakin University
Professor Peter Hodgson, Deputy Vice-Chancellor Research (Interim)
Dr Ben Spincer, Director Deakin Research Commercial
University of Melbourne
Professor James McCluskey, Deputy Vice Chancellor, Research
Mr Doron Ben-Meir, Executive Director Research, Innovation &
Commercialisation
Mr Rohan Workman, Director, Melbourne Accelerator Program
Thursday, 17 March 2016 – Canberra
National Health and Medical Research Council
Professor Anne Kelso AO, Chief Executive Officer
Universities Australia and Regional Universities Network
Ms Sarah Brown, Policy Director Research and Innovation, Universities
Australia
Professor Jan Thomas, Chair, Regional Universities Network
Dr Caroline Perkins, Executive Director, Regional Universities Network
IP Australia
Dr Frances Roden, Acting General Manager
Dr Benjamin Mitra-Kahn, Acting Assistant General Manager, Chief
Economist
Dr Andrew Wilkinson, Director, Domestic Policy