Chain of events: a blog of Food Chain Intelligence

For primary industry research, the budget did not bring any particular new support. Land and Water Australia will wind down its operations in the coming months. Cuts to the Rural Industries Research and Development Corporation and the Sugar Research and Development Corporation are also evident: the portfolio of agricultural research in general is shown in the figure below.

The largest increases in the non-levy component (i.e. funding coming from the Government) are going to grains and climate change initiatives. Horticulture, for example, will have a decrease of $0.9 m. However, industry contributions are projected to increase in about half a million in this same area of the agriculture portfolio.

Disappointment on the lack of support for rural industries has been voiced already:

-Kate Carnell, CEO of the Australian Food and Grocery Council , is pleased about spending in national infrastructure:a $3.4 billion expenditure will benefit road freight in the Hume, Pacific and Bruce highways which form the corridor between Melbourne and Cairns. However, the AFGC is concerned “about the lack of investment in Australia’s rural sector”.

-The National Farmers Federation vicepresident Charles Burke also expressed concern, saying that the cuts to rural R&D were “really disappointing” and “counter intuitive”, contradicting some of the Government’s policy platforms.

However, there are some encouraging developments in this budget:

-The Government will invest $464.3 million over four years, with $38.7 million in 2009‑10, to support increases in food production globally and strengthen the ability of countries in the Asia-Pacific region and Africa to address food insecurity.
-CSIRO will increase research into food production and food security. In paper, it looks like they will be able to do so with an improved budget with respect to the previous year. CSIRO’s budget increased from $675.8 m in 08-09 to $715.7 m in 09-10.

-Biotechnology and nanotechnology received some coverage in the budget, through a new National Enabling Technologies Strategy, which aims to create a bridge between regulators, firms working in these spaces and the community. The initiative will fund biotech and nanotech laboratories and research focused to develop measurements and standards for industry regulation. Also, the new Super Science Initiative (worth $1.1 billion) will fund infrastructure in biotechnology, nanotechnology and ICT.

The continuation of the note about influenza will have to wait as the innovation strategy for 2020 has been unveiled and I am keen in addressing this important development now.

POWERING IDEAS: THE GOVERNMENT’S RESPONSE TO VENTUROUS AUSTRALIA

“Powering Ideas: An Innovation Agenda for the 21st Century” responds to the Venturous Australia report by Cutler et al (2008).

Unlike Venturous Australia, Powering Ideas does not “choose winners” on the National Innovation Priorities. As you will remember, the former stated agricultural and food safety, climate change, health, tropical solutions and broadband applications as key research priorities. Instead, the priorities were written as aspirations to be reached by 2020. The goals are:

Priority 1: Public research funding supports high-quality research that addresses national challenges and opens up new opportunities.

Priority 2: Australia has a strong base of skilled researchers to support the national research effort in both the public and private sectors.

Priority 3: The innovation system fosters industries of the future, securing value from the commercialisation of Australian research and development.

Priority 4: More effective dissemination of new technologies, processes, and ideas increases innovation across the economy, with a particular focus on small and medium-sized enterprises.

Priority 5: The innovation system encourages a culture of collaboration within the research sector and between researchers and industry.

Priority 6: Australian researchers and businesses are involved in more international collaborations on research and development.

Priority 7: The public and community sectors work with others in the innovation system to improve policy development and service delivery.

For universities, the implementation of funding mechanisms will use a mission-based approach, aiming to promote collaboration in a “hubs and spokes” manner between universities and industry. A new Sustainable Research Excellence in Universities initiative and a Collaborative Research Network Scheme are expected to address the funding gap for indirect research costs.

For businesses, this budget did not see a return of the Commercial Ready grants. Instead, the Government will implement the R&D Tax Credit Scheme, proposed by Cutler et al, although to a smaller extent. Venturous Australia proposed a tax credit of 50%; the response of the Government is that firms with an annual turnover of less than $20m will receive a tax refund of 45% of their R&D spending when they file their tax return. Businesses with an annual turnover of more than $20 m and foreign firms will be eligible to claim a 40 % tax credit , even if the intellectual property is owned overseas (as long a the R&D is performed in Australia). However, the Tax Credit will commence in 2010-11.This will make business difficult for companies that are in dear need of incentives to survive on the current financial situation.

In the meantime, businesses wanting to access Government funding will have to do so through initiatives such as Enterprise Connect, Clean Business Australia and the range of climate change initiatives including the new Clean Energy Strategy. Of course, these initiatives may help some, but not all innovative firms. The type of support that companies operating in the food supply chain areas were looking for has not been addressed in the response. More to come on this.