SEB725: Engineering Entrepreneurship - Research & Innovation Report

This report details the Australian Parliament's inquiry into Australia's future in research and innovation, conducted by the Joint Select Committee on Trade and Investment Growth. It covers the foundations of innovation, including education, research, and collaboration between universities and businesses. The report addresses nurturing innovation through start-up development, finance, government support, and intellectual property considerations. Key recommendations focus on identifying emerging industries, reviewing university-business collaboration models, evaluating the National Innovation and Science Agenda (NISA), and examining potential schemes like a patent box and a Manufacturing Finance Corporation. The inquiry aims to improve Australia's innovation system and its ability to translate research investments into tangible social and economic benefits.

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
ISBN 978-1-74366-482-7 (Printed version)
ISBN 978-1-74366-483-4 (HTML version)
This work is licensed under the Creative Commons Attribution-NonCommercial-
NoDerivs 3.0 Australia License.
The details of this licence are available on the Creative Commons website:
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