E.I.P. spells R.I.P. for innovation support

The Abbott Government’s Entrepreneurs’ Infrastructure Programme (EIP) unveiled today is a feeble substitute for the highly successful Labor programs it axed in the Budget.

If Australian business innovators and entrepreneurs had been hoping the Government’s EIP would be a credible replacement for culled innovation programs, they will be sorely disappointed.

The program offers only some limited online business advisory services, but nothing by way of commercialisation support until later this year, leaving hi-tech firms and start-ups with a potential six-month gap without support to bring new products or services to market.

Given the speed at which these sectors move, for example in ICT, this hiatus could be a death sentence for new ventures.

A rudimentary outline of the EIP was published on business.gov.au website today and reveals the extent of the Abbott Government’s cuts to business services and innovation support programs.

Despite the Government’s protestations that the new program would be up and running from 1 July 2014, only the “Business Evaluations” and “Business Growth Grants” are listed as being available on the website. These are, in fact, nothing more than meagre replacements for the highly successful Enterprise Connect program.

The undercooked program guidelines also expose an alarming development, which is that the 21,000 small-to-medium businesses previously assisted by the axed Enterprise Connect program will not be eligible for further advice and that to apply for services business must be operating in particular sectors.

Why is the Abbott Government automatically ruling out tens of thousands of SMEs from government services?

The half-baked nature of EIP makes it clear the Government has failed to address the widespread criticism over its decision to scrap eight government innovation and research programs, including the venture capital body Commercialisation Australia and the Innovation Investment Fund, and to slash Labor’s $1 billion investment in innovation to only $342million.

Contrary to Industry Minister Ian Macfarlane’s opinion that “You don’t need a government program to encourage people to use their initiative” (AFR, 20 May 2014), many in the business community warn that government involvement is essential for the development and success of new ventures.

  • Professor Roy Green, Dean of UTS Business School at University of Technology, Sydney, described the cuts as “vindictive and ideological destruction.” “While other countries are stepping up their commitment to the creation of knowledge-based products and services, Australia will be closing down Commercialisation Australia, the Innovation Investment Fund and Clean Energy Finance Corporation, which have already repaid the taxpayer many times over with new venture creation in areas of home-grown expertise and ingenuity.”
  • Telstra Corp chief executive David Thodey, in a recent keynote speech to the Committee for Economic Development of Australia, criticised the lack of government incentives aimed at nurturing and retaining local talent, and said governments, businesses and institutions need to be more innovative to improve Australia’s growth. (AFR, 4 June 2014)
  • Microsoft Australia managing director Pip Marlow said “the government absolutely has an important role to play in this ecosystem” and expressed disappointment at the suspension of Commercialisation Australia. (AFR, 15 April 2014)
  • Chief executive of the Australian Information Industry Association Suzanne Campbell said the government’s suspension and review of grants from Commercialisation Australia put business confidence in the start-up sector at serious risk. (AFR, 10 April 2014)
  • Two of Australia’s most successful internet entrepreneurs, Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar, said the government was doing little to encourage a successful tech environment. (AFR, 14 June 2014)
  • Mick Liubinskas, from Telstra’s start-up incubator Muru D, said the program did not appear to provide the support needed to boost the country’s technology sector. “It’s just weak. It’s a great time to be an adviser but I don’t know if that’s going to be nearly enough to spark significant growth in the ecosystem.“ (AFR, 10 June 2014)
  • Distribution Central chief executive Nick Verykios said, “This government has no clue when it comes to the outcomes of investment. They have taken away all the incentives left to invest in this country.” (Australian Reseller News, 28 May 2014)

The Government has put thousands of jobs in the sector at risk by cutting its support for innovation, SMEs and start-ups, and abandoning advanced technology companies and emerging industries.

The programs slated for closure are Commercialisation Australia, Enterprise Connect, the Enterprise Solution Program, Industry Innovation Precincts, the Innovation Investment Fund, Australian Industry Participation Plans, and Textile, Clothing and Footwear co-investment.

With less than half the funding and a pale shadow of the previous programs, EIP has no hope of achieving even half the success of the innovative programs it is replacing.

What a short-sighted approach to long-term innovation and industry assistance from a government that harps on about “jobs of the future” but has absolutely no idea of how to create them.


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