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The Clever Country – if only

Posted on by Stephen from BAM

The Clever Country – if only!
© Roger La Salle 2011
www.matrixthinking.com

Australians are indeed clever

Australian engineers and scientists are indeed world class, much like New Zealanders we “punch much above our weight”. Numerous examples could be cited including the Interscan Microwave aircraft landing system of the 1970’s that beat all comers, including the USA and Germany in demonstrating the best technology. Cochlear and Resmed are other examples and it is pretty well accepted that we excel in the biomedical sciences.

Australians are great technologists but still our economy relies on the resources sector and with the decline in our manufacturing base, a growing emphasis on tourism and services in general.

The Governments part

In an endeavour to inspire innovation and investment in the sciences and “brain work” the Government over many years has provided accelerated investment allowance in the form of tax claims as R&D incentives. One may well ask if this is working as a real research incentive? Further, one may well ask just how easily it can be rorted by unscrupulous would be entrepreneurs?

The problem with the present system is that it comes at a great cost to Government whether successes are generated or not. Further, if you do happen to succeed with a new endeavour, you get punished.

Yes, in Australia we pump money in to the front end at great risk, then if you do succeed you get punished with a tax on your profits.

A Better Alternative

The search for an alternative should be made with the mindset of SME’s, not that of big businesses that should not need incentives to research and innovate.

The system embraced should strike at the very heart of business by rewarding success and encouraging profit.

Thus a better system may include the following attributes:

• No cost to government
• Ultimate reward to Government with taxes on wages if the innovation is an export success that creates employment
• Clearly focuses innovation at export markets
• Can be readily audited

Such a system may seem like “snake oil”, but perhaps could be implemented with the following guidelines:

• No government money is used in seeding new initiatives and there are no accelerated investment write offs
• A tax holiday will be provided for a period, (suggested 3 years) for all income generated from exports where sales have been made to places where patents or formal IP protection is claimed (This could include registered designs, copyright and plant breeders rights)

If such a system were to be introduced I believe the shift in the mindset of SME’s and entrepreneurs would be almost instantaneous, focused and profound.

In short entrepreneurs would be saying – “Find me an export opportunity that I can protect with IPR and let me at it”.

The Naysayers

Doubtless there will be an endless stream of critics to the above suggestion, but one may question if the present system really works? Is it achieving its aim, what is the cost to Government and for what return and finally, how easy is it to rort?

Where to from here?

Let’s start the debate!

This entry was posted on Monday, February 13th, 2012 at 5:46 am and is filed under Australian Manufacturing, Imports and Exports, Uncategorized. You can follow any responses to this entry through the RSS feed. Responses are currently closed, but you can trackback from your own site.

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