Report of the Task Force on the Commercialisation of Research
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47.7.1 [25] B RINGING THE MARKET TO BEAR ON RESEARCH Task Force on Commercialisation of Research Department of Industry, Technology and Commerce BRINGING THE MARKET TO BEAR ON RESEARCH Report of the Task Force on the Commercialisation of Research November 1991 i·-·~,•. ,-~--,~F" ----~-·-· ------ 1Vitlorian GovernmJ._.ntl / Library Service ~ ··------ I.ea - ------ ,--,.---- -~...... Australian Government Publishing Service=-= -· rf Canberra © Commonwealth of Australia 1991 ISBN O 644 22361 8 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Australian Government Publishing Service. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Commonwealth Information Services, Australian Government Publishing Service, GPO Box 84, Canberra ACT 2601. Printed for AGPS by Pirie Printers Sales Pty Ltd Fyshwick, ACT 2609. CONTENTS Letter of Transmittal V Acknowledgments vi Task Force Members vii Recommendations viii 1 Introduction 1 The Task Force Approach 2 Enhancing the Innovative Capabilities of Firms 4 Private Sector Research and Development Activities Factors Influencing the Development of Business Innovation Capabilities Government Programs Policy Implications and Recommendations 3 Capital Availability 17 Difficulties in Obtaining Capital Other Barriers 4 Aligning Public Sector Research to the Needs of Industry 22 Government Research Organisations Higher Education Cross Sectoral Funding Mechanisms Public Sector Technology Transfer Priority Setting and Long Term Strategic Research Appendices 31 A Terms of Reference B List of People Consulted C Finance Survey D References iii Sydney SBC Dominguez Barry Limited Level 6 Grosvenor Place A.C,N. 008 582 705 225 George Street Sydney PO Box N100 Grosvenor Place Sydney Australia 2000 DX 10423 Sydney Stock Exchange A subsidiary of Swiss Bank Corporation Telephone (02) 258 2555 Telex AA22553 Fax (02) 2582556 The Hon Ross Free, MP Minister for Science and Technology Parliament House CANBERRA ACT 2600 Dear Minister I was pleased to accept your invitation to examine the issues involved in the commercialisation of research in Australia. It is in the long term interest of the economy to improve our performance in capturing in Australia the benefits of our world class research. I commend the contribution of those in business and government who gave their views, time and information to the Task Force. I would like to thank the members of the Task Force for their valuable assistance and the Secretariat for their work. Thank you for the opportunity to present this report. Yours sincerely Chair Commercialisation of Research Task Force 18 November 1991 ACKNOWLEDGMENTS Many individuals and organisations put considerable time, effort and expertise into assisting the Task Force with its deliberations. It would be inappropriate to make particular mention of any person or body, as all contributed to building a detailed picture of the issues facing the commercialisation of research in Australia. We would like to thank all those who contributed to the work of the Task Force, often producing information or making themselves available at very short notice. A list of those who assisted the Task Force is set out at Appendix B. vii TASK FORCE MEMBERS Mr Ray Block {Chair) Strategist and Director SBC Dominguez Barry Limited Mr Peter Fritz Managing Director TCGLtd Mr John Gram Managing Director Hambro-Grantham: td Professor Brian Johns Deputy Chair Trade Practices Commission Dr John Parrott Director, Technology Development Division BHP Dr John Stocker Chief Executive CSIRO viii RECOMMENDATIONS MAJOR RECOMMENDATIONS should be restricted to companies participating in government or industry sponsored networks. 1 The research and development (R&D) tax conces sion should remain at 150 per cent. 9 By the end of 1996,each higher education institution should be required to find an amount equivalent to 5 2 Market analysis and the development of market per cent of its total Commonwealth funding for entry strategies should be allowed as eligible "sup research from industry. In addition, at least 10 per porting activities" under the 150 percent tax conces cent of Australian Research Council expenditure and sion up to a limit of 10 per cent of total eligible 10 per cent of National Health and Medical Re research and development expenditure on the rel search Council expenditure should be set aside for evant R&D project. projects that have demonstrated commercial com mitment by industry. 3 The National Procurement and Development Pro gram (NPDP) should be extended to include private 10 A technology transfer and development company sector companies as purchasers. Commonwealth should be established to buy and sell intellectual and state government funding should be doubled to property and invest in and develop Australian tech meet current demand and cover the extension of the nology. Program to the private sector. 11 Australian superannuation funds should be encour 4 Where an Australian bid for Government purchasing aged by the Commonwealth to invest one per cent of is not the most competitive, but is the second orthird their notional assets in approved Australian venture best bid, the top three contenders should be advised anddevelopmentcapital projects. However, should of each bid and be invited to submit a revised bid. the superannuation funds be unwilling to commit Government purchases above SlOm generally and funds to industry development in Australia, those above $2m in strategic industries should be subject with more than 10 per cent of their assets overseas to a detailed industry impact statement before a should be required to invest one per cent of their contract is let. assets in venture and development capital. Where these investments are made through intermediaries, 5 A performance bond guarantee facility should be the IR&D Board should approve those intermediar established by the Government to assist companies ies. to achieve sales of technology within Australia. The Government should set aside $25m as an asset base for the guarantee facility. The performance bond OTHER RECOMMENDATIONS could take a similar form to the Export Performance Bond facility operated by the Export Finance and Industry Research and Development Board (IR&D Insurance Corporation. Board) 6 All state and Commonwealth organisations respon 12.l The IR&D Board should: sible for research should follow the lead of CSIRO and assess their research priorities in the light of continue to critically evaluate the management, national benefits and industry capability to commer technical and financial capabilities of applicants; cialise the results. rigorously monitor and assist the progress of suc 7 The Government should fund and establish demon cessful applicants through commercialisation; and stration networks specifically focused on addressing marketaccessimpediments. TheGovemmentshould provide formal advice to the government on com allocate an amount of S5m over the next three years mercialisation in Australia on an ongoing basis. to fund such demonstration networks and their bro kerage needs. 12.2 Firms receiving grants from the Industry Research and Development Board should be required, at the 8 The Government should underwrite in the National discretion of the Board, to use an adviser drawn from Interest the re-establishment of a pre-shipment ex the ranks of recently retired managers, directors or port finance facility through the Export Finance and engineers, selected by the Board because of their Insurance Corporation to assist companies to fund knowledge and experience. Such an adviser would the production of goods for export. The facility provide high level management advice, which might ix involve financial management, advice on overseas government business enterprises. To achieve this, marketing or technical assistance. Advisers would 80 per cent of all Centres awarded in round three and, be required to regularly report to the Board. Funding as far as possible in round two, should be in areas for the adviser would be part of the grant. intended for economic development. 12.3 R&D syndicates should be allowed to continue These should have a minimum private sector funding claiming the 150 per cent tax concession, provided level of 25 per cent of the total Centre budget that all funds eligible at the relevant premium deduc (including all participant and CRC program funds) tion are used to undertake or support new R&D either as initial core funding or with a strong expec having genuine commercial purposes. Firms capa tation that this would be achieved by the time of their ble of, and with the intention of,commercialising the first major review. Centres intended for economic R&D should play a significant role in project man development failing to meet this requirement should agement. The IR&D Board should critically review have the continuance or level of their CRC funding the proportion invested in core technology (as de reconsidered at their first major review. fined in the legislation), acceptable organisational structure and level of guaranteed returns. The Board 14.2 The Government should enact legislation to ensure should be given discretionary power to set criteria that the clawback provisions of sections 73C and and approve syndicates. 73D of the Income Tax Assessment Act do not apply to CRCs so that industry contributions to CRCs are eligible for the full tax concession.