[check against delivery]
Thank you for having me here and thanks to Michelle for the invitation.
Michelle Gallaher is the latest in a long line of distinguished CEOs at the BioMelbourne Network – or so Tim Murphy tells me.
Biotechnology is an important sector in its own right.
It performs the kind of alchemy we want to see the whole economy engaged in – translating ideas and research into jobs, wealth and innovations that improve people’s lives.
It is also increasingly important to other industries, helping us build the new value chains based on bio processes and bio-products that will be so critical to our future prosperity.
We can already thank biotechnology for everything from better medicines to cleaner manufacturing processes, and that indebtedness will increase in the years to come.
Nowhere will this be more apparent than in our response to climate change.
It is heartening to see organisations like the World Wide Fund for Nature – organisations that aren’t always enthusiastic about new technologies – recognising the potential of industrial biotechnology to dramatically reduce our carbon-dependency.
A report released by the fund this month suggests that industrial biotechnology, while still in its infancy, is already saving us from emitting 33 million tonnes of carbon-dioxide globally each year – and that’s without taking ethanol use into account.
It estimates that this could reach 2.5 billion tonnes a year by 2030. (Industrial Biotechnology: More than Green Fuel in a Dirty Economy?)
Global recession
So, the promise is great.
Biotechnology will continue to generate new economic opportunities and make the world a better place, whether it is:
- by developing the next Gardasil
- by using enzymes to remediate contaminated soil and water
- by inventing new drugs like Acrux’s treatment for testosterone deficiency, which we learned today has successfully completed phase-3 clinical trials, or
- by creating higher yielding crops and more nutritious foods.
But first we have to get through the global recession.
Thanks to swift and bold action by the Commonwealth, Australia is coming through the crisis better than any other developed nation.
That doesn’t mean we can relax our efforts and it certainly doesn’t mean that no one has been hurt.
We have blue-collar workers losing their jobs or struggling to make ends meet on short time.
We have a steel industry that is only now picking itself up off the mat after suffering the sharpest deterioration in demand anyone can remember.
And we have biotechnology firms being denied access to critical capital through no fault of their own, putting jobs and research capacity at risk.
The urgent action we took last October to stabilise the banking system was one response to that particular problem.
The new $83 million Innovation Investment Follow-on Fund was another.
The Government’s focus since the crisis began has been on shielding the Australian economy as a whole from the worst of the downturn, and positioning the country for success as the world recovers.
We have invested $77 billion in a carefully phased stimulus strategy, 70 per cent of which has gone into infrastructure.
We have also released Powering Ideas: An Innovation Agenda for the 21st Century, outlining our innovation objectives for the next decade and beyond.
We have backed that agenda with series of landmark reforms and an additional $3.1 billion over four years for research and innovation.
The total Commonwealth budget for research and innovation in 2009-10 will be around $8.6 billion – 25 per cent more than last year.
This is the biggest increase and the biggest commitment on record.
Powering Ideas is a long-term agenda, but our massively increased investment in innovation is also intended to complement the stimulus strategy.
Investing in innovation is one of the most effective ways we can cushion Australia against the effects of the global downturn and accelerate recovery.
As we say in Powering Ideas: “The world will emerge from the present crisis more competitive, more connected, and hungrier than ever for new ideas and technologies.”
By building Australia’s capacity to meet that demand, we are creating immediate opportunities and opening new pathways to long-term prosperity.
People often say that you should never waste a good crisis, and it is essential that we use this one to hasten the renewal of the Australian economy and take it in new directions.
The downturn offers the biotech sector new opportunities to integrate with and add value to other industries, both within Australia and internationally.
As global firms think about their position in the post-recession marketplace, they are looking for new products to make, new ways to make them, and new markets to sell them in.
In many cases this will involve increasing their reliance on bio-based products, processes and feedstocks.
Biotechnology is the key to bringing these capabilities together.
Other frontier technologies will play a similar role.
Business innovation
That’s why Powering Ideas and the investments we are making to support it are so important.
We have embarked on an ambitious agenda that touches on private sector innovation, public sector research, innovation in government, and more.
Let me focus here on the business side.
Powering Ideas identifies two aims:
- one is to increase the proportion of businesses engaging in innovation by 25 per cent over the next decade, and
- the other is to increase the number of businesses investing in R&D over time.
The National Innovation Priorities identified by Powering Ideas include improving:
- the commercialisation of research
- the dissemination of new ideas
- the innovation performance of smaller firms, and
- collaboration between researchers and industry.
R&D Tax Credit
The most important reform to business innovation support in the Budget – indeed the most important reform in this field for at least a decade – is the new R&D Tax Credit.
The R&D Tax Credit will be worth about $1.4 billion a year to business.
There will be:
- a 45 per cent refundable tax credit for firms with a turnover up to $20 million, and
- a 40 per cent non refundable tax credit for all other firms.
This doubles the base rate of support for smaller firms – restoring it to pre-1996 levels.
It increases the base rate for larger firms by a third.
The new scheme is more generous, simpler and more predictable.
It decouples R&D tax incentives from the corporate tax rate.
It is also consistent with world’s-best practice, and will be familiar to overseas investors – remembering that international firms will be able to claim the new credit, regardless of where the intellectual property is owned.
Naturally, it will only apply to R&D performed in Australia.
The R&D Tax Credit comes in next financial year.
As an interim measure, the Government is raising the R&D expenditure cap for the R&D Tax Offset from $1 million to $2 million for 2009-10.
This is the maximum amount a firm can spend on R&D and be eligible for the offset.
This will help small, high-tech firms keep innovating during the global downturn.
Legislation giving effect to this measure was passed earlier this month.
The details of the R&D Tax Credit are being refined in close consultation with stakeholders.
Treasurer Wayne Swan and I have released a discussion paper to get the conversation started.
The paper poses a range of questions about how the Government might approach aspects of the scheme’s design, and we are urging all stakeholders – especially those from the business community – to make their voices heard.
Submissions close on the 26th of October.
We are also holding public forums, and there will be another opportunity to comment when draft legislation is released later this year.
Commonwealth Commercialisation Institute
Consultations have also been taking place on the new Commonwealth Commercialisation Institute.
It will receive $196 million over the next four years and $82 million a year thereafter to deliver a radically new approach to commercialising the best Australian research.
As well as supporting the commercialisation of promising public sector research, the institute will assist innovative firms with strong growth potential, helping them take their ideas and technologies to market.
It will deliver hands-on support tailored to individual needs, including by providing access to experienced business mentors, specialist commercialisation services, and funding for proof-of-concept and early-stage commercialisation activities.
It will make it easier for public sector researchers and private sector innovators to access the knowledge, skills and capital they need to cross the so-called valley of death.
The Commonwealth Commercialisation Institute will combine with other Australian Government initiatives to ensure that we make the most of Australian inventions and discoveries.
We expect the institute to open for business progressively from early next year.
Super Science
The Future Industries component of the Super Science Initiative also has significant implications for the biotechnology sector.
This component is worth $504 million – or nearly half of the $1.1 billion we are putting into Super Science overall.
It is funding infrastructure to support cutting-edge biotechnology, not least in the areas of disease prevention and food security.
This includes:
- facilities for the manufacture of biotechnology products
- $18 million for a European Molecular Biology Laboratory Partner Laboratory
- facilities for the study of genes, proteins and cell products
- an integrated online biodiversity knowledge base, and
- a National Enabling Technologies Strategy.
National Enabling Technologies Strategy
This strategy – to which we are devoting $38.2 million over four years – will provide a framework for the responsible development and use of new technology platforms, including biotechnology and nanotechnology.
It will strike the right balance between our desire to apply these technologies in ways that will make Australia a more equitable and productive nation, and legitimate community and worker concerns about what these new technologies may mean for them.
Synthetic biology is a good example.
The field is developing rapidly, with the first living synthetic organisms reported by the journal Science last month, and with commercial applications expected to reach the marketplace over the next few years. (Science Express [online], 20 August 2009; Science, 25 September 2009)
Are governments, regulators and consumers prepared for this technology?
Does Australian industry understand its implications?
These are the kind of questions the National Enabling Technologies Strategy will help us address.
The future
There are many more things I could touch on here:
- like the Researchers in Business program
- like our continuing support for stem cell research through the Australian Stem Cell Centre, the National Health and Medical Research Council, and the Australian Research Council, or
- like our Industrial Biotechnology Strategy.
Beyond my own portfolio, the Government is acting on many fronts to increase Australia’s innovation capacity and performance.
The Education Revolution, the National Broadband Network, and the Carbon Pollution Reduction Scheme are all critical in this respect.
Each of these initiatives will unlock creativity in every corner of the Australian economy and Australian society.
Powering Ideas provides a framework for harnessing that creativity.
It is unusual for politicians to boast, but I think Powering Ideas – and the extra money we are providing to back it up – reflects tremendous credit on this Government.
I went to my colleagues at a time of great uncertainty with a message of hope about research and innovation – a message about how it will generate the jobs and industries of the future.
They heard that message and they responded – magnificently, in my view.
We got an extra $3.1 billion.
We got the R&D Tax Credit.
We got the Commonwealth Commercialisation Institute.
We got the Super Science Initiative.
We got the Innovation Investment Follow-on Fund.
We got an extra $703 million for university research over the next four years, and that figure will keep growing with indexation in the years ahead.
Now my colleagues are hearing a different message – at least from some quarters.
They are hearing that our high-tech industries are dead in the water.
That it was all too little, too late.
The next time I’m talking to my colleagues about the allocation of resources to innovation, I expect to face some pretty tough questions about this.
That is the reality of politics.
There is never any shortage of things to spend money on.
There isn’t a group in the country that doesn’t think its needs are paramount.
There isn’t an industry that doesn’t think it has a unique entitlement to support.
It is the Government’s job to sift these claims and allocate resources in the national interest.
That will inevitably mean that nobody gets everything they want.
But it should also mean that public funds go where they will have the best effect and yield the highest returns – not just to this company or that industry, but to the economy and the community as a whole.
You should be in no doubt about where I stand.
I am unapologetically pro-biotech, pro-nanotech, pro-space research – in fact, pro all forms of knowledge that can increase our capacity to satisfy human needs and aspirations.
That’s why I have worked so hard to get research and innovation as close to the front of the queue as I possibly can – and why I am counting on you to help me keep them there.
So by all means share your ideas.
By all means tell us what you want.
But don’t lose sight of what we have achieved.
Focus on what’s there, not on what isn’t.
Let’s make a success of what we’ve got.
That’s always the best argument for getting more.