SECTION 2
OUR PROGRAMS
OVERVIEW
Innovation Australia aims to promote the development and improve the
efficiency and international competitiveness of Australian industry by
encouraging research and development, innovation and venture capital
activities. Innovation Australia is involved in the administration of
Australian Government programs designed to stimulate investment,
innovation through research and development (R&D) and commercialisation.
These programs are:

R&D Tax Concession

Green Car Innovation Fund (GCIF)

Innovation Investment Fund (IIF)

Innovation Investment Follow-on Fund (IIFF)

Commercialisation Australia (CA)

Climate Ready

Re-tooling for Climate Change

Commercialising Emerging Technologies (COMET)

Early Stage Venture Capital Limited Partnerships (ESVCLP)

Venture Capital Limited Partnerships (VCLP)

Pooled Development Funds (PDFs)

Renewable Energy Equity Fund (REEF)

Pre-Seed Fund (PSF)

(ACIS Stage 2) Motor Vehicle Producer (MVP) R&D Scheme

Commercial Ready

Renewable Energy Development Initiative (REDI)

Industry Cooperative Innovation Program (ICIP)

R&D Start
Together these programs form a suite of initiatives designed to encourage
Australian industrial R&D and innovation efforts, to assist in the successful
commercialisation of R&D outcomes.
Page 1 of 89
A committee structure is used to help Innovation Australia administer its
programs.
Information on agreements entered into for programs subject to the
Industry Research and Development Act 1986 is contained in the appendices
to the Innovation Australia Annual Report. This information is also available
at www.innovation.gov.au.
Page 2 of 89
R&D TAX CONCESSION
ESTABLISHMENT
The R&D Tax Concession was introduced in 1985 to encourage Australian
industry to undertake increased levels of eligible Research & Development
(R&D). It is an entitlement program that assists and encourages business
R&D activities undertaken in Australia.
The program is based on the legislative framework contained in Part IIIA of
the Industry Research and Development Act 1986 (IR&D Act) and sections
73B to 73Z of the Income Tax Assessment Act 1936. In addition, the Income
Tax Assessment Act 1997 is relevant to calculating deductions for plant and
other assets for use in R&D. The R&D Tax Offset and the R&D Incremental
(175 per cent Premium) Tax Concession were introduced following the
Australian Government’s Backing Australia’s Ability statement in January
2001.
Further changes to the R&D Tax Concession were made in May 2007,
including changes to the beneficial ownership provisions extending access to
the 175 per cent Premium to Australian companies in a multi-national
enterprise group who undertake their R&D in Australia, but hold the
intellectual property overseas.
For income years commencing 1 July 2009 the grouped expenditure
threshold for the R&D Tax Offset was increased from $1 million to $2
million.
OBJECTIVES
Through the R&D Tax Concession, the Australian Government aims to
achieve its broader objective of developing internationally competitive
industries in Australia by:

encouraging the development by eligible companies of innovative
products, processes and services

increasing investment by eligible companies in defined R&D
activities

promoting the technological advancement of eligible companies
through a focus on innovation or high technical risk in defined R&D
activities

encouraging the use by eligible companies of strategic R&D
planning

creating an environment that is conducive to increased
commercialisation of new processes and product technologies
development by eligible companies.
Page 3 of 89
PROGRAM PERFORMANCE AND OUTCOMES IN 2009-10
REGISTRATIONS
Beneficiaries of the R&D Tax Concession must apply annually to Innovation
Australia (via AusIndustry) for registration of activities undertaken in the
previous income year. Eligible companies may lodge registration
applications during the 10 months after the end of their income year, and
then claim the tax concession for R&D in their annual tax returns filed with
the Australian Taxation Office.
Data shown in this report on registrations for the 2009-10 income year as at
30 June 2011 are incomplete; further applications for the 2009-10 income
year will continue to be received up to 31 October 2011 from companies
with non-standard income period balance dates.
Figure 2.1 Summary of registration data from 1985-86 to 2009-10 as at 30 June 2011
(incomplete data for 2009-10)
Figure 2.1 data set
As at 30 June 2011, there were 8,614 companies registered for the 2009-10
income year, with reported R&D expenditure totalling $16.55 billion
(Figure 2.1).
A service delivery performance of 98 per cent of applications registered
within the target of 30 days was achieved during 2010-11, with 90 per cent
Page 4 of 89
of electronically submitted applications registered within the target of 10
days.
Page 5 of 89
Figure 2.2 Registration by R&D expenditure (%) for 2009-10, as at 30 June 2011
(incomplete year)
Figure 2.2 data set
Note: As at 30 June 2011, 8,614 companies were registered for the 2009-10 income year,
with reported expenditure of $16.55 billion.
The distribution of company registrations by reported R&D expenditure for
the 2009-10 income year is shown in Figure 2.2
The majority of companies (58 per cent) reported R&D expenditure of less
than $500,000, representing approximately six per cent of total reported
R&D expenditure. R&D activities valued at greater than $10 million were
undertaken by around three per cent of registrants, representing
approximately 58 per cent of the total reported R&D expenditure.
Page 6 of 89
Figure 2.3 R&D expenditure ($m) by field of research (Australian Standard Research
Classification) for 2009-10, as at 30 June 2011 (incomplete year)
Figure 2.3 data set
(a)
A company’s R&D activities may relate to more than one Australian Standard Research
Classification (ASRC).
Figure 2.3 shows that the top three areas of research conducted by users of
the R&D Tax Concession for the 2009-10 income year, measured as reported
R&D expenditure against Australian Standard Research Classification (ASRC),
are Engineering and Technology, Information Computing and Communication
Sciences, and Medical and Health Sciences.
PROGRAM ELEMENTS
The R&D Tax Concession allows eligible Australian companies undertaking
defined R&D activities to claim a tax deduction of up to 125 per cent of
eligible R&D expenditure when lodging their annual tax returns. Companies
Page 7 of 89
determine the eligibility of their R&D activities under self-assessment, with
compliance monitored by AusIndustry on behalf of Innovation Australia.
The R&D Tax Offset is available to eligible Australian companies with an
annual group turnover of less than $5 million and annual group R&D
expenditure of up to $2 million. Smaller companies in tax loss that would
otherwise carry forward R&D related tax losses can realise these losses as a
cash equivalent payment when their tax return for the relevant year is
processed. This provides assistance to these smaller companies at the time
they need it most, in their growth stages.
The R&D Incremental (175 per cent Premium) Tax Concession encourages
additional investment in R&D. The 175 per cent Premium is available to
eligible Australian companies on the part of their eligible labour-related
R&D expenditure that is greater than a base level determined by their
average R&D expenditure over the previous three years. Companies must
provide evidence of three prior years of eligible expenditure on R&D.
Grouping rules apply, as well as certain expenditure rules and antiavoidance mechanisms.
In addition, changes to the beneficial ownership provisions were announced
in May 2007 that provided access to a R&D Incremental (175 per cent
International Premium) Tax Concession to subsidiaries of multi-national
enterprises, effective from 1 July 2007.
Page 8 of 89
Table 2.1 Registrants for 2008-09 and 2009-10 as at 30 June 2011a
Registrants as at 30 June 2011
2008-09
2008-09
Reported
Number of
R&D
Companie
Expenditur
s
e ($m)
2009-10
2009-10
Reported
Number of
R&D
Companie
Expenditur
s
e ($m)
Total registrants
8,567
18,076.23
8,614
16,546.60
125% R&D Tax Concession
3,307
5,248.31
3,185
6,504.60
R&D Tax Offset
(A)
2,900
933.35
3,161
1,053.90
175% Premium
(B)
1,651
10,806.28
1,508
7,750.70
International Premium
(C)
54
517.60
43
675.40
Tax Offset and 175% Premium (D)
633
322.16
706
417.70
Tax Offset and Internat. Premium
(E)
4
1.30
3
2.00
175% Premium and Internat.
Premium
18
247.23
8
142.30
0
0.00
0
0.00
Total Tax Offset *
3,537
1,256.81
3,870
1,473.60
Total 175% Premium **
2,302
11,375.67
2,222
8,310.70
76
766.13
54
819.70
(F)
175% Premium and Tax Offset and
Internat. Premium
(G)
Total International Premium ***
Note: 2009-10 year incomplete
a
This table uses Innovation Australia registration data and indicates
the declared intention of registrants to claim under each element.
Actual benefits will vary depending on individual circumstances.
*
Total registrants for the R&D Tax Offset are (A+D+E+G).
**
Total registrants for the 175% Premium are (B+D+F+G).
Page 9 of 89
***
Total registrants for the International Premium are (C+E+F+G).
Table 2.1 illustrates the number of companies registered for different
elements of the R&D Tax Concession and their reported R&D expenditures
for 2008-09 and 2009-10.
The total number of companies registered as at 30 June 2011 for the 200910 income year was 8,614. Of these, a total of 3,161 companies (37 per
cent) intended to claim only the R&D Tax Offset and 1,508 companies (18
per cent) intended to claim only the 175 per cent Premium, while 706
companies (eight per cent) intended to claim both the R&D Tax Offset and
the 175 per cent Premium. In addition, a total of 54 companies indicated
an intention to claim the International Premium.
Figures 2.4 and 2.5 present the number of registrations for 2009-10 by R&D
expenditure and turnover respectively.
Figure 2.4 Number of registrations by R&D expenditure and element for 2009-10, as at
30 June 2011 (incomplete year)
Figure 2.4 data set
Page 10 of 89
Figure 2.5 Number of registrations by turnover range and element for 2009-10, as at
30 June 2011 (incomplete year)
Figure 2.5 data set
Companies reporting a turnover of less than $5 million per annum
represented the largest single group of registrants (65 per cent) for the R&D
Tax Concession in the 2009-10 income year. The number of large companies
with turnovers of more than $50 million per annum represented 12 per cent
of registrants.
Table 2.2 New registrants as at 30 June 2011 a
New Registrants b, as at 30 June
2011
Total new registrants
125% R&D Tax Concession
R&D Tax Offset
(A)
2008-09
Number
of
Companie
s
2008-09
2009-10
Reported 2009-10
Reported
R&D
Number of R&D
Expenditur Companies Expenditur
e ($m)
e ($m)
1,866
1,406.75
1,606
921.43
807
721.79
624
526.84
878
251.73
860
238.11
Page 11 of 89
New Registrants b, as at 30 June
2011
2008-09
Number
of
Companie
s
2008-09
2009-10
Reported 2009-10
Reported
R&D
Number of R&D
Expenditur Companies Expenditur
e ($m)
e ($m)
175% Premium
(B)
126
250.19
87
144.27
International Premium
(C)
24
170.8
2
0.29
Tax Offset and 175% Premium (D)
26
9.39
32
11.89
Tax Offset and Internat. Premium
(E)
2
0.47
1
0.03
175% Premium and Internat.
Premium
3
2.38
0
0
0
0
0
0
Total Tax Offset *
906
261.59
893
250.03
Total 175% Premium **
155
261.96
119
156.16
Total International Premium ***
29
173.65
3
0.32
(F)
Tax Offset and Premium with
Internat. Premium
(G)
Note: 2009-10 year incomplete
a
b
This table uses Innovation Australia registration data and indicates
the declared intention of registrants to claim under each element.
Actual benefits will vary depending on individual circumstances.
*
Total registrants for the R&D Tax Offset are (A+D+E+G).
**
Total registrants for the 175% Premium are (B+D+F+G).
***
Total registrants for the International Premium are (C+E+F+G).
A ‘new registrant’ is a company registered for the R&D Tax
Concession for the first time in a given income year. A ‘new
registrant’ may be a member of a company group, other members of
which may have registered for and claimed the R&D Tax Concession.
Page 12 of 89
TAKE UP OF THE R&D TAX OFFSET AND 175 PER CENT
PREMIUM ELEMENTS
The R&D Tax Offset and the 175 per cent Premium have been in operation
since the 2001-02 income year.
For the most recent complete income year 2008-09, a total of 3,537
companies indicated their intention to claim the R&D Tax Offset
(including 633 companies intending to claim both the R&D Tax Offset and
the 175 per cent Premium). This represents 41 per cent of total registrants
and approximately seven per cent of total R&D reported expenditure, which
is comparable with the equivalent figures for the 2007-08 income year (42
per cent of registrants and eight per cent of R&D expenditure).
For the 175 per cent Premium, 1,651 companies indicated an intention to
claim this element for the 2008-09 income year (including 633 companies
intending to claim both the R&D Tax Offset and the 175 per cent Premium).
This corresponds to 19 per cent of total registrants and 60 per cent of total
R&D expenditure, which represents no change on the equivalent figures for
the previous income year (2007-08).
REGISTERED RESEARCH AGENCIES
The Australian Government’s commitment to encouraging business R&D is
complemented by facilitating access by small and medium sized companies
to R&D expertise through the services provided by Registered Research
Agencies (RRA).
RRA registration allows companies which would be unable to claim the tax
concession for R&D if their R&D expenditure has not reached the minimum
threshold ($20,000), to benefit from the concession by contracting their
R&D work to an organisation with RRA status. This enables companies to
access expertise in Australia’s public and private sector R&D organisations,
reducing unnecessary duplication of R&D facilities and improving the overall
effectiveness of Australia’s R&D effort.
As at 30 June 2011, 173 organisations were registered as RRAs.
GOVERNANCE OF THE R&D TAX CONCESSION PROGRAM
The R&D Tax Concession is administered by Innovation Australia (assisted by
AusIndustry) and the Australian Taxation Office.
The Tax Concession Committee (TCC) administers the R&D Tax Concession
under delegation from Innovation Australia.
The role of the TCC is outlined in Section 3 - Corporate Governance.
Page 13 of 89
LIAISON WITH THE AUSTRALIAN TAXATION OFFICE
AusIndustry and the ATO continued to maintain a high level of formal and
informal interaction throughout the year. Strategies to improve joint
administration of the R&D Tax Concession and to safeguard its integrity
continued to be developed through day-to-day contact between the two
agencies and through formal liaison meetings.
There has also been a high level of collaboration in preparation for the
implementation of the proposed R&D Tax Incentive.
Collaboration has included:

involvement in strategic planning activities

review of the operational interface and ongoing exchange of
information by each agency

ongoing development and implementation of the joint risk
management strategy including the establishment of a special
project team to address fraud

joint development of new guidance materials ahead of the
transition to the proposed R&D Tax Incentive

extended interaction with the distributed ATO network.
PROGRAM MONITORING AND ASSESSMENT
On behalf of Innovation Australia, AusIndustry actively monitors the R&D Tax
Concession on a risk management basis. Following the implementation of a
revised Compliance Framework for the R&D Tax Concession, in 2010-11
AusIndustry reviewed approximately 15 per cent of all registrations for
compliance.
All annual registrations are assessed against the program’s risk selection
framework, which is aimed at identifying eligibility risks as early as possible.
Compliance findings continue to show that the majority of companies
represent a low risk in respect to the compliance of their R&D activities.
AusIndustry’s risk assessment may lead to formal determinations of R&D
eligibility by Innovation Australia or its delegate, which may in turn result in
denial of the tax concession deductions for R&D.
Through its national customer service network, AusIndustry continues to
provide a range of program guidance materials, educational seminars and
risk assessment activities.
CUSTOMER FEEDBACK AND LIAISON
The AusIndustry distributed network hosts consultative forums which
support the dissemination of information and provide direct interaction
Page 14 of 89
between the program customers, practitioners, AusIndustry and the ATO.
During 2010-11 consultative forums were held in capital cities and the TCC
Chair presided over the proceedings.
Topics discussed at these meetings included:

registration trends and statistics

the compliance culture and new AusIndustry compliance
framework

the ATO compliance and advice frameworks

future development of guidance material.
Further collaboration with customers has taken place on specific issues
throughout the year. There was a significant increase in stakeholder
engagement as preparations took place for the implementation of the
proposed R&D Tax Incentive. Stakeholder engagement, communication,
marketing and guidance strategies were developed to support the increased
commitment to building partnerships throughout the diverse R&D Tax
program network.
An R&D Tax National Reference Group (NRG) will be established in 2011-12
to take the place of the former R&D Tax Concession Administrative
Consultative Group. The NRG will provide key stakeholders and program
administrators with a forum for the identification, prioritisation and
discussion of views on significant technical and administrative issues relating
to the R&D Tax Concession and R&D Tax Incentive programs.
Page 15 of 89
R&D TAX CONCESSION
CASE STUDIES
FRESHBINS CLEANS UP WITH RESEARCH
FreshBins’ specially equipped and fitted bin-cleaning truck has it all over
Sadie the cleaning lady… one truck can clean up to 1000 bins in a day using
just half-a-cup of water on each bin.
Made possible by FreshBins’ passion and Australian Government assistance
with research and development programs, the truck solution uses patented
3D robotics and chemical-free cleaning and sanitising processes, destroying
all bacteria and pathogens without toxic chemicals.
The unit also filters all waste from the sanitised water which is recycled for
continuous cleaning. This process removes the need to dump contaminated
water, thus saving our most precious resource, water.
Many other washing methods for domestic and commercial bins end with the
waste dumped into stormwater systems. The release of this toxic effluent is
illegal and can result in litter, chemicals, pollutants, pathogens, toxins and
other waste ultimately passing through rivers and waterways into oceans
and presents a threat to the marine environment.
Dumping the waste water onto gardens impacts groundwater systems and
also has an adverse impact on our environment.
FreshBins’ technology removes those concerns and the risk of disease
transfer which typically occurs via hand contamination.
FreshBins director Paul Sewell said he and fellow director David Nelson
could not have invested the 2½ years of research and development activities
that went into the truck system without being registered for AusIndustry’s
R&D Tax Concession.
“It is a great program,” Paul said. “Research and development is very
important for creating new jobs in Australia and the concession helps make
that R&D possible.
“The driving force for FreshBins is to create well-paid jobs for Australia and
we are really proud that all of our manufacturing is done here in Australia.
It took us a lot of work to do that.” CEO John Robinson added that the R&D
Tax Concession led FreshBins to a position of global leadership in 3D robotics
and ozone sterilisation.“In addition, the support allowed us to effectively
protect our position via patents,” John said.
FreshBins’ awards cabinet is now full to overflowing after taking out four
awards in 2010 with its truck, which was also a weekly winner in 2011 on the
ABC New Inventors.
Page 16 of 89
R&D SPEND IS WORTH IT – BIG OR SMALL
Canberra company Perimeter Security Industries Pty Ltd is proof that you
don’t need to spend tens of millions of dollars in research and development
to attract invaluable Australian Government assistance.
Investors behind the research and development arm of cutting-edge security
technology firm, Perimeter Securities, invest hundreds of thousands of
dollars annually into R&D to come up with a suite of products for perimeter
security and the deterrent and detection of intruders.
That research spend is not in the big boys’ league these days but was vital
to Perimeter Securities’ development and a good example of how the
Government’s R&D Tax Concession program can help all levels of research
investment.
“The R&D Tax Concession is very important to us. In fact, it is essential,”
Perimeter Security CEO Ian Bergman said. “The reason we attracted the
investors to our research and development project was because we had the
backing of the R&D Tax Concession from the Government. That is a big
attraction for investors to know that concession is available for our R&D.
“We are a company that was specifically established because of the [Tax
Concession] program. We wouldn’t be here, we wouldn’t be doing this,
without the program.’’
Perimeter Security’s products have been under research and development
for more than two years and have been “real-world” tested in “real-world
situations” for almost a year.
They have outdoor and indoor applications which provide for the deterrent
and detection of intruders in a range of situations.
The initial product – the SecureMat – is a versatile on-ground mat which
detects any intruders walking across a protected area. When an intruder is
detected sensor boxes emit a deterrent alarm and simultaneously send an
SMS to a home base.
Perimeter Security has developed a suite of proprietary algorithms which
ensure negligible false alarms and a very high probability of detection.
The technology has also been designed for use as a perimeter system for
areas up to 500 metres long, an area system of up to 200 metres in length
which can incorporate sensors on openings, and a container system which is
suitable for securing almost any building or shed.
The next step for Perimeter Security is to scale-up and set-up for mass
manufacture of its technology.
Page 17 of 89
A GOOD DROP FOR WINE WASTE RECYCLER
Tarac Technologies is making a good drop – in the form of products to make
fortified wines, and wine enhancers – from wine growers’ waste. Tarac
recycles waste from 78 per cent of the national crush, providing a valuable
service to wine growers.
The South Australian company was founded more than 80 years ago by a
former CSIRO scientist who saw a business opportunity for distilling grape
alcohol to make fortified wines and brandy, as well as tartaric acid, from
winery by-products such as grape skins and seeds (known as grape marc).
A changing Australian palate for drier wines saw that market shrink and in
response Tarac developed new products and sought markets in countries
where brandy remains popular.
Tarac was also quick to meet the need for an environmentally responsible
way to dispose of winemaking residuals. A rapid growth in the Australian
wine industry has resulted in thousands of tonnes of waste. CEO Chris Zajac
says that as a pioneer in its field, being able to claim the R&D Tax
Concession for sometimes risky research and development has given Tarac
the confidence to explore new products and processes.
The company developed new products, notably GrapEX and OakEx, which
are used by winemakers to enhance their wines. More recently its R&D has
focused on improving processes.
“We have to take risks with R&D as there are not many alcohol processors
like us in Australia,” Chris said. “It is up to us to come up with new ways of
doing things. The strength of the Australian dollar means we have to be as
efficient as we can in our production process because 80 per cent of our
product goes offshore. “We are continuing to focus on being more energy
efficient by reducing the amount of natural gas used in production. This is
reducing our costs, as well as our carbon emissions.”
In 1999 a wine recovery plant was built at Nuriootpa, in the Barossa Valley.
Tarac also operates distilleries at Berri in South Australia and Griffith in New
South Wales.
Chris says Tarac strives to reduce its carbon footprint. Solid by-products are
recovered for stock feed. Liquid waste is treated at a modern waste water
treatment facility, developed and owned by Tarac in association with a
major Australian wine producer. Last year, more than 120 megalitres of
treated water was used to irrigate vineyards and pasture, reducing offtake
from the Murray River.
Each year, Tarac collects and processes:

130,000 tonnes of grape marc
Page 18 of 89

7,000 tonnes of filter cake

50 million litres of distillation wine, lees, tank.
Page 19 of 89
APPENDIX CHART DATASETS
FIGURE 2.1 DATA SET
Figure 2.1 shows the number of companies registering for the R&D Tax
Concession and the reported expenditure in millions, each year from 198586 to 2009-10, as at 30 June 2011.
Registration Year
Number of
Companies
Registered Expenditure
$m
1985-86
2549
107.76
1986-87
1666
731.45
1987-88
2067
1093.25
1988-89
2153
1321.72
1989-90
2365
1625.45
1990-91
2499
2189.91
1991-92
2836
2698.31
1992-93
2960
2973.30
1993-94
3436
3391.79
1994-95
3624
3958.47
1995-96
3734
4470.44
1996-97
3295
4173.87
1997-98
3304
4353.42
1998-99
3185
5094.49
1999-00
3274
4919.57
2000-01
3732
5669.83
2001-02
4755
6091.87
2002-03
5097
6362.91
2003-04
5646
6923.29
2004-05
5997
8271.48
2005-06
6421
9745.07
2006-07
6965
12387.31
2007-08
7906
14918.56
2008-09
8567
18076.19
2009-10
8614
16546.60
Page 20 of 89
FIGURE 2.2 DATA SET
Shows the percentage of registrants under the R&D Tax Concession within
each R&D expenditure level (as reported by registrants). Fifty-eight per
cent of registrants reported expenditure less than or equal to $500,000.
R&D Expenditure Ranges ($)
Proportion of
Registrations
(%)
Number of
registrants
<= $500K - % of registrations by R&D
expenditure
58%
5038
>=$500K and <= $1M - % of registrations by
R&D expenditure
18%
1540
>=$1M and <= $5M - % of registrations by
R&D expenditure
18%
1531
>=$5M and <= $10M - % of registrations by
R&D expenditure
3%
236
>=$10M - % of registrations by R&D
expenditure
3%
269
Page 21 of 89
FIGURE 2.3 DATA SET
Research conducted by users of the R&D Tax Concession for the 2010-11
year, as measured by reported R&D expenditure against Australian Standard
Research Classification (ASRC), shows the top four areas are Engineering and
Technology (62 per cent); Information, Computing and Communication
Sciences (24 per cent); Agricultural, Veterinary and Environmental Sciences
(4 per cent); and Medical and Health Sciences (4 per cent).
Page 22 of 89
Field of research – Australian Standard
Research Classification (ASRC)
No of
times
nominated
(a)
R&D
Expenditure
($M)
Agricultural, Veterinary and
Environmental Sciences
576
598.60
Architecture, Urban Environment and
Building
146
315.60
Behavioural and Cognitive Sciences
8
0.60
Biological Sciences
198
169.90
Chemical Sciences
302
169.10
Commerce, Management, Tourism and
Services
140
115.10
Earth Sciences
195
207.40
Economics
3
2.50
Education
24
9.50
Engineering and Technology
4,635
10,601.20
History and Archaeology
1
0.40
Information, Computing and
Communication Sciences
2,523
3,635.80
Journalism, Librarianship and Curatorial
Studies
1
0.00
Language and Culture
1
0.00
Law, Justice and Law Enforcement
5
1.60
Mathematical Sciences
41
18.10
Medical and Health Sciences
380
670.40
Physical Sciences
50
18.76
Philosophy and Religion
1
0.04
Studies in Human Society
2
0.00
The Arts
20
12.00
Page 23 of 89
FIGURE 2.4 DATA SET
Gives a breakdown of the number of companies registering for each element
of the R&D Tax Concession and the levels of expenditure.
R&D
Expenditure
Range ($)
125% R&D
Tax
Concession
R&D
Tax
Offset
Incremental
Tax
Concession
(175%
Premium)
International
Premium
Tax
Offset &
175%
Premium
Tax Offset
with
International
Premium
175%
Premium
with
International
Premium
<=$500K
1737
2519
406
5
370
1
0
>$0.5M
<=$1M
567
468
279
3
222
1
0
>$1M
<=$5M
661
174
562
18
114
1
1
>$5M
<=$10M
107
0
117
9
0
0
3
>$10M
<=$25M
70
0
89
3
0
0
3
>$25M
<=$50M
27
0
33
3
0
0
0
>$50M
16
0
22
2
0
0
1
Page 24 of 89
FIGURE 2.5 DATA SET
Shows the number of registered companies in each turnover range in 201011 and within this data set, the number of registrations sought for each
element of the R&D Tax Concession.
Turnover
Range
($)
125%
R&D
Tax
Concess
ion
R&D
Tax
Offset
Incremen
tal Tax
Concessio
n (175%
Premium)
Tax
Offset &
175%
Premium
Internati
onal
Premium
Tax
Offset
with
Internati
onal
Premium
175%
Premiu
m with
Internati
onal
Premiu
m
<=$500K
460
1957
126
280
1
3
0
>$0.5M
<=$1M
191
424
50
133
1
0
1
>$1M
<=$5M
712
744
229
281
9
0
0
>$5M
<=$10M
388
0
189
0
2
0
0
>$10M
<=$25M
441
0
214
0
5
0
1
>$25M
<=$50M
299
0
181
0
7
0
0
>$50M
679
0
511
0
18
0
6
Page 25 of 89
GREEN CAR INNOVATION FUND
ESTABLISHMENT
The Green Car Innovation Fund (GCIF) is a key element of A New Car Plan
for a Greener Future announced by the Australian Government in November
2008. The GCIF opened publicly for applications on 24 April 2009. On 27
January 2011, the Prime Minister announced the closure of the Green Car
Innovation Fund (GCIF) as part of the Australian Government’s saving
measures to support the rebuilding of infrastructure damaged by the floods
over large areas of Australia. In taking the decision to close the program,
the government undertook to honour all existing grant contracts and grant
offers and to progress all applications accepted on, or before, 27 January
2011. Other elements of the New Car Plan for a Greener Future, such as the
Automotive Transformation Scheme, remain in place to assist the Australian
automotive industry.
As at 30 June 2011, GCIF had awarded funding of $311.61 million1 to
Australian companies.
OBJECTIVES
The policy objective of the GCIF is to enhance research and development
and the commercialisation of Australian technologies that significantly
reduce fuel consumption and/or greenhouse gas emissions of passenger
motor vehicles.
Table 2.3 Australian Government budget and expenditure at 30 June 2011
2010-11 ($m)
2011-12
($m)
Budgeta
62.90
136.44
68.68
39.70
Commitments
0.00
135.78
67.98
39.51
Payments
made
62.98
0.00
0.00
0.00
Component
a
1
2012-13 ($m) 2013-14($m)
GCIF payments include amounts that relate to the previous financial year’s budget.
This figure includes funding agreements executed as at 30 June 2011
Page 26 of 89
PROGRAM PERFORMANCE
During 2010-11, participation in the GCIF increased as the Australian motor
vehicle industry recovered from the impact of the global financial crisis. The
program received 18 applications for a range of projects designed to reduce
fuel consumption and greenhouse gas emissions. Eleven applications were
supported.
Table 2.4 GCIF applications considered during 2010-11
Grant Type
Applications
Applications
Applications
approved ($m)
considered (no.)
approved (no.)
Stream A
2
2
102.82
Stream B
16
9
81.77
Total
18
11
184.59
OUTCOMES
The GCIF operated for 21 months. Most of the projects funded under the
program are at early stages of implementation. On 28 February 2011 the
Minister for Innovation, Industry, Science and Research and the Prime
Minister attended the launch of the locally produced Holden Cruze Sedan.
This was a major milestone for the co-investment agreement between the
Commonwealth, Holden and the South Australian Government that was
announced in 2008. This announcement saw the Commonwealth award $149
million for Holden to build an all-new fuel-efficient, low-emission small car
in Australia.
SUPPORT PROVIDED TO CUSTOMERS
The GCIF program provided funding to Australian companies under the
following two streams:

Stream A provided grants from $5 million for Motor Vehicle
Producers (MVPs) registered under the Automotive
Competitiveness and Investment Scheme or the Automotive
Transformation Scheme.

Stream B provided grants from $100,000 for non-tax exempt
companies other than MVPs. Non-tax exempt companies, or an
individual or other entity type who warranted to form such a
company before signing an agreement, were eligible to apply.
Page 27 of 89
Grants were provided at a ratio of one dollar of government funding for
every three dollars of eligible expenditure contributed by the grantee (25
per cent), unless agreed otherwise by the Program Delegate on an
exceptions basis. The GCIF supports research and development, proof-ofconcept, early-stage commercialisation and pre-production development
activities that are carried out in Australia. GCIF projects are funded to a
maximum of three years duration with the provision to extend for a further
12 months, subject to Program Delegate approval.
Page 28 of 89
GOVERNANCE
The Minister issued the GCIF Guidelines on 24 April 2009. The policies and
procedures of the GCIF are set out in the Guidelines and GCIF Directions,
which were also issued on 24 April 2009 in accordance with subsections 18A,
19 and 20(1) of the Industry Research and Development Act 1986. Guidelines
for the closure of the program were issued on 28 January 2011.
Innovation Australia, through its Green Car Innovation Committee,
considered eligible applications for both Stream A and B of the GCIF and
provided technical assessments and merit ranking of applications. The role
of the Green Car Innovation Committee is outlined in Section 3 - Corporate
Governance.
Applications for $5 million and above were subject to assessment by
Innovation Australia.
Stream A applications for grants of $5 million or more that were
recommended to receive financial assistance of greater than 25 per cent of
eligible expenditure, were referred to the Minister for consideration.
Applications for grants of $10 million or more that were recommended for
funding were referred to the Cabinet of the Australian Government for
consideration.
Page 29 of 89
GREEN CAR INNOVATION FUND
CASE STUDY
BENEFITS GO ROUND FOR REVOLUTIONARY CARBON FIBRE
WHEEL
Victorian company CFusion says it will manufacture the world’s first
automobile wheels made from a single piece of carbon fibre from 2012.
The wheels deliver significant fuel savings, and are much stronger than
conventional aluminium wheels, despite being 50 per cent lighter. They also
provide improved acceleration, braking, suspension and cornering.
CFusion – trading as Carbon Revolution – is commercialising the wheel, with
help from the Australian Government’s Green Car Innovation Fund (GCIF).
CFusion was awarded $1,393,130 in 2011 from the GCIF to help complete
product and process validation work ahead of full commercialisation. This
included high-level testing in Germany with the world renowned Fraunhofer
Institute, as well as process development and design activities to establish a
manufacturing facility in Australia.
Executive Chairman Jake Dingle says the company will start manufacturing
the wheels in 2012, and at full capacity the new facility will produce
250,000 wheels a year. “We will also be employing 180-200 skilled workers
in this new high-tech manufacturing industry,” Jake said. “This is a good
news story for Australia.” “The next step after that will be to build
production facilities that are capable of producing two million wheels a
year, which is the typical scale of conventional aluminium wheel
manufacturing plants around the world. “While our carbon fibre wheels will
initially be used in more premium vehicles, variants of the technology are
destined for the mass car market. Eventually they will be used widely in
mainstream cars all over the world because they are very economical. That
will provide significant greenhouse gas savings because they are significantly
more fuel efficient.”
In 2011 CFusion tested the wheels at the Fraunhofer research facilities in
Frankfurt, Germany, and found they are superior to aluminium wheels from
a durability and an impact resistance perspective. Modelling has confirmed a
minimum fuel saving of three per cent, with eight per cent possible with full
integration to vehicles.
The company is now working with some of the world’s largest car
manufacturers to conduct in-house testing and validation of the wheels, and
based on the testing already performed with Fraunhofer, they exceed the
manufacturer’s requirements.
Page 30 of 89
Jake says the GCIF grant has been “absolutely critical” for getting the wheel
to the point of commercialisation and being able to sell it to the huge global
market. “The grant has enabled us to bring people with critical skills into
the company,” Jake said. “We have also been able to build and test
numerous prototypes and purchase plant and equipment, all of which will
enable us to start manufacturing in 2012. The funding has significantly
accelerated commercialisation activities.”
The wheel has been in development for over seven years, with much of the
initial research and design undertaken in partnership with Deakin University.
The early concept development activities involved academics and students
participating in the global university car design program - Formula SAE.
Deakin University’s Institute for Technology Research and Innovation has
been a key technology partner. Another early partner was Shelby SuperCar
in the United States – the company’s Ultimate Aero was previously the
world’s fastest car. CFusion’s partnerships with major vehicle manufacturers
and with Fraunhofer in Germany are now critical to progressing this
technology to the point of global industry acceptance in the coming 12
months.
Page 31 of 89
INNOVATION INVESTMENT FUND PROGRAM
ESTABLISHMENT
The Innovation Investment Fund (IIF) program was established in 1997 to
promote the development of an Australian venture capital market. The
Australian Government co-invests with private sector investors in IIF funds
to invest in promising early-stage, technology-based companies
commercialising Australian research. By demonstrating the returns
achievable from investing in such investee companies, the IIF program aims
to encourage private sector investors to take a more active role supporting
Australian innovation.
There have been three rounds of the IIF program. Five funds were
established in 1998 under Round 1, four funds in 2001 under Round 2 and
seven funds have been established under Round 3.
The Australian Government committed $220.7 million for Rounds 1 and 2 of
the program, with private sector investors bringing total funding for the two
Rounds to $354 million. The Australian Government has committed $200
million for Round 3 of the IIF program.
Under IIF Round 3, up to 10 funds will be established with each fund
comprising $20 million of Government capital matched on at least a dollar
for dollar basis with private sector capital. IIF funds operate for a period of
10 years with an additional three years for the orderly divestment of
investee companies.
IIF funds are managed by private sector fund managers awarded licences
through a competitive selection process, based on merit criteria which
includes expertise and capacity to manage venture capital investments and
the ability to raise private sector capital. The selection process is conducted
by the Venture Capital Committee (VCC) of Innovation Australia.
Fund managers are responsible for all investment decisions which are made
on a commercial basis in accordance with the Fund’s investment practices,
subject to the IIF Ministerial Guidelines.
OBJECTIVES
The objectives of the IIF program are:

to develop fund managers with experience in the early stage
venture capital industry

by addressing capital and management constraints, to encourage
the development of new companies which are commercialising
research and development
Page 32 of 89

to establish in the medium term a "revolving" or self funding
scheme

to develop a self-sustaining Australian early stage, venture capital
market.
Table 2.5 IIF Australian Government budget and expenditure at 30 June 2011
2010-11
($m)
2011-12
($m)
2012-13
($m)
2013-14
($m)
75.79 b
32.57
24.00
18.50
Commitments
18.71
17.55
9.53
5.07
Payments made
8.46
0.00
0.00
0.00
Budget
a
c
a
Portfolio Budget Statements 2011-12, Budget Related Paper No. 114, Innovation,
Industry, Science and Research Portfolio.
b
Includes Revolving Fund proceeds of $37.56 million.
c
The ‘Payments made’ figure includes management fees and recoverable expenses
of $2.54 million.
PROGRAM PERFORMANCE
The licensed fund managers report to Innovation Australia every six months
on their operations, including the current valuation of investments. Fund
managers reported varying performances during 2010-11.
In 2010-11, total capital of $12.40 million was invested into 16 companies,
of which $6 million was drawn from the Australian Government. Nine of the
16 companies were new investments to the IIF in 2010-11.
In 2010-11, the Australian Government received distribution returns from IIF
fund managers Allen & Buckeridge Pty Ltd, Cleantech Ventures Pty Ltd,
Coates Myer and Company Pty Ltd, Four Hats Capital Pty Ltd (formerly
Kestrel Capital), GBS Venture Partners Limited, Stone Ridge Ventures Pty
Ltd (formerly Foundation Management Pty Ltd) and Start-Up Australia
Ventures Pty Ltd, totalling $15.64 million. As at 30 June 2011 this brought
total returns under the IFF program to $456.78 million, of which the
Australian Government has received $148.43 million. Of this, $105.54 million
has been added to the IIF Revolving Fund in line with program objectives,
$64.41 million of which has been allocated to the Innovation Investment
Follow-on Fund program.
Page 33 of 89
OUTCOMES
The IIF program has contributed to the commercialisation of Australian R&D,
with investee companies bringing new products to market.
Since the inception of the program, outcomes achieved include:

private capital of $283.30 million has been raised

101 individual investee companies have received investment

95 professionals have been developed through the 16 fund
managers.
Examples of recent successful investee companies include:

Pharmaxis Ltd’s Australian drug Bronchitol was granted approval
from the Australian Therapeutic Goods Administration as the first
new cystic fibrosis treatment for 15 years. The product may also
prove effective for a range of other respiratory ailments.

Dynamic Hearing has exported its patented audio signal processing
products overseas through partnerships and licensing agreements
with hearing aid, mobile phone and Bluetooth headset
manufacturers in the United States, Canada, Europe and Asia.
During 2010-11, 12 investee companies were fully divested and five were
partially divested. Seven of the 16 IIF fund managers have raised other
funds, contributing to the development of the venture capital industry in
Australia. Generally, these funds invest in a broader range of investments
than their IIF funds.
SUPPORT TO CUSTOMERS
Investee companies eligible for investment by IIF fund managers must,
amongst other things:

be commercialising research and development activities

have a majority of its employees (by number) and assets (by
value) inside Australia at the time the licensed fund first invests in
the company

have an annual revenue over the past two years of income that
does not exceed $5 million per year.
Investee companies supported must also be at the seed, start-up or early
expansion stage of their development.
GOVERNANCE
Innovation Australia oversees the operation of the IIF fund managers through
its Venture Capital Committee (VCC), assisted by AusIndustry.
Page 34 of 89
The role of the VCC is outlined in Section 3 – Corporate Governance.
For IIF Rounds 1 and 2 and the PSF and REEF programs, the Australian
Government established five wholly-owned companies (IIF Companies) which
operated under the legislative framework set by the Corporations Act 2001
and the Commonwealth Authorities and Companies Act 1997 (CAC Act).
To achieve compliance with the Uhrig Review principles Round 3 of the IIF
program is now administered by the department. As a result the Australian
Government has invested directly into the licensed funds. This direct
investment approach was also adopted for the Innovation Investment
Follow-on Fund program.
Four of the five IIF Companies were closed in 2010-11 through voluntary
deregistration by the Australian Securities and Investments Commission
(ASIC). The activities of the remaining single IIF Company, IIF Investments
Pty Ltd, are described in a separate annual report, the IIF Investments Pty
Ltd Annual Report 2010-11.
Page 35 of 89
INNOVATION INVESTMENT FUND
CASE STUDIES
VENTURE CAPITAL INVESTMENT HELPS BIONOMICS
COMMERCIALISE TWO MAJOR DRUG DISCOVERIES
Bionomics Limited has two potential blockbuster drugs in the development
pipeline – BNC210 to treat anxiety and depression; and BNC105 which
targets blood vessels in cancerous tumours.
Anti-anxiety drug BNC210 promises to be more effective than current antianxiety drugs. Two human trials, undertaken in Europe in 2011, showed that
BNC210 significantly reduced panic symptoms, and did so faster and without
side effects – paving the way for a major international pharmaceutical
partnership.
Anxiety is a common debilitating condition that affects up to 19 million
people in the United States alone. The global anti-anxiety market is worth
$US15 billion annually, and the market for medication to treat depression
worth $US11 billion.
Meanwhile, Phase II trials of BNC105 on patients with renal cancer and
mesothelioma have had promising preliminary results. The drug works by
shutting down blood vessels in tumours, and can be used alone, or with
other established chemotherapy drugs. Clinical trials have been expanded to
include women with ovarian cancer.
Bionomics CEO and managing director, Dr Deborah Rathjen, anticipates the
drug will be licensed after full Phase II results are released in 2012.
“We believe that BNC105 is the biggest thing in cancer in the last several
years,” Dr Rathjen said.
Bionomics was founded in 1999 as a gene discovery company, but its focus
turned to drug discovery and development in 2005 when it acquired Iliad
Chemicals – a small Victorian drug discovery company which had developed
a drug to target blood vessels in tumours.
Venture capital funding has been central to Bionomics growth.
Start-up Australia Ventures Pty Ltd – a fund manager licensed under
AusIndustry’s Innovation Investment Fund (IIF) – invested $4.94 million in
Illiad and Bionomics between 2003-07.
In November 2009, through AusIndustry’s Innovation Investment Follow-On
Fund (IIFF), Start-up Australia invested $7 million in Bionomics.
Page 36 of 89
Start-up spokesman George Jessup said the clinical trial results of BNC210
were “a major value-adding event” and would not have been possible
without Australian Government investment through the IIFF.
“The clinical trials would not have happened without the most recent IIFF
investment,” he said. “We thought this drug would perform well but these
results are better than we expected. “Now we are expecting a major
international pharmaceutical partnership this year, and looking forward to
the results of two cancer clinical trials in a few months. These trials are in
mesothelioma and renal cancer. We expect the value of the drug assets of
Bionomics to continue to rise during the next few months and years.”
AusIndustry’s IIFF was a temporary, targeted and timely response to address
the lack of capital available to the most promising innovative companies
during the global financial crisis. The fund enabled these early-stage
companies to continue to develop and to commercialise research.
Under the fund, the Australian Government invested $64 million into some
of the most promising early-stage companies in Australia.
Bionomics – which is listed on the Australian stock exchange - has a number
of drug discovery programs underway.
Page 37 of 89
AUSTRALIAN DRUG DISCOVERY MAY HELP CHRONIC PAIN
SUFFERERS
For millions of people around the world suffering from untreatable chronic
neuropathic pain, a new drug being developed by a small Australian drug
development company could offer much-needed relief.
Current frontline pain relief medications are not always effective, but an
innovative approach to treating pain – discovered by Professor Maree Smith
from the University of Queensland – could be the answer for those living
with neuropathic pain.
Spinifex Pharmaceuticals has licensed Professor Smith’s technology, and is
embarking on international Phase II clinical trials of the drug, known as
EMA401. A Phase II trial, encompassing 27 sites across five countries, will
test the drug on patients with postherpic neuralgia, a painful condition that
can follow shingles. Results are expected in mid-2012.
In August 2011, Spinifex announced two additional Phase II trials – for the
treatment of pain and hypersensitivity in peripheral nerve injury, and in
cancer chemotherapy patients.
Spinifex was formed in 2005 and has received backing from four venture
capital companies – GBS Venture Partners, Brandon Capital Partners,
Uniseed and UniQuest.
Two of these Fund Managers, GBS and Brandon Capital, are licensed under
two of AusIndustry’s venture capital funds, the Pre-Seed Fund (PSF) and the
Innovation Investment Fund (IIF).
Tom McCarthy, CEO and Managing Director of Spinifex, says the support that
the fund managers brought to Spinifex is twofold. “The access to capital
that we've been able to tap into has really driven our research and
development programs,” Dr McCarthy said. “With those investors on board,
we've been able to work with some of their international network of experts
and clinicians.” “Without the IIF Fund Managers' investment in Spinifex,
along with important investments from Uniseed and UniQuest, we wouldn't
be able to do what we're doing now; which is mount an internationally
competitive drug development activity from an Australian base.”
GBS Venture Partners initially invested $300,000 via its Genesis Fund in 2005
alongside investments Uniseed and UniQuest. After the company received
the go-ahead for clinical trials from the US Food and Drug Administration in
2008, another $12 million was raised from these foundation investors and
Brandon Capital as a new investor.
In August 2011, these partners invested another $6.2 million.
Page 38 of 89
INNOVATION INVESTMENT FOLLOW-ON FUND
PROGRAM
ESTABLISHMENT
On 18 March 2009 the Australian Government announced the Innovation
Investment Follow-on Fund (IIFF) program to provide funding to selected
early-stage start-up companies.
The IIFF program is a temporary and targeted program in response to the
impact of the global financial crisis on the availability of venture capital
funding to early-stage companies commercialising research. The fund
enables selected companies with high potential to continue to develop and
to commercialise research.
The IIFF program will run for a maximum of five years to 2015-16 with the
last two years of the program for the orderly divestments of investee
companies.
Funding for the IIFF program is sourced from the IIF Revolving Fund. The IIF
Revolving Fund is comprised of capital returned from successful exits from
IIF investee companies. Through the IIFF program the Australian Government
will retain all returns from IIFF investee company exits to replenish the IIF
Revolving Fund.
OBJECTIVES
The objectives of the IIFF program are to:

respond to the constraint in accessing capital in the global
financial crisis

support selected fund managers through the provision of
additional follow-on investment capital

ensure that the early stage venture capital industry in Australia
continues to develop

achieve value by targeting investee companies which have the
highest potential to utilise the IIFF program funding to continue to
develop

continue to provide the management and entrepreneurial
expertise of fund managers to investee companies

provide funding to investee companies in an expeditious manner

replenish the IIF revolving fund with returns from the IIFF
program.
Page 39 of 89
Table 2.6 IIFF 2010-11 Expenditure (Australian Government contribution)
Fund Manager
Total
Total
Approved Expenditure
Funding
($m)
Investees
Supported to
30 June
2011
($m)
Allen & Buckeridge Asset
Management Ltd
7.10
7.04
3
AMWIN Management Pty Ltd
5.44
5.37
1
Coates Myer and Company Pty
Ltd
1.91
1.91
1
Divergent Capital Pty Ltd
2.75
2.75
2
GBS Venture Partners Pty Ltd
10.05
9.78
5
In-tellinc Pty Ltd
2.30
1.73
3
iQ Fund 3 Pty Ltd (trading as
InQbator)
3.95
3.89
4
NEO Technology Ventures Pty Ltd
5.10
4.74
1
Playford Capital Pty Ltd
7.45
4.71
4
Starfish Ventures Pty Ltd
9.85
7.88
4
Start-Up Australia Ventures Pty
Ltd
8.51
8.46
2
TOTAL
64.41
58.26
30a
a
Twenty nine companies (including one co-investment by two fund managers) have
received investment since the program’s inception.
PROGRAM PERFORMANCE
During the 2010-11 financial year $17.32 million was drawn down which
brought the total funding drawn down to $58.26 million (including $0.20
million in recoverable expenses).
Page 40 of 89
OUTCOMES
The IIFF fund managers report every six months to Innovation Australia on
their operations, including the current valuation of investments. One
divestment of $10.53 million was made during the year.
SUPPORT TO CUSTOMERS
The IIFF program was open to fund managers supported under the Australian
Government’s eligible venture capital programs: IIF Rounds 1 and 2, PSF,
REEF and the ICT Incubators Program (ICTIP). Eligible investments were
restricted to investee companies already supported by these programs.
GOVERNANCE
Innovation Australia oversees the ongoing operation of the IIFF fund
managers through its Venture Capital Committee (VCC), assisted by
AusIndustry.
Compliance audits of IIFF fund managers continued during 2010-11 with a
further two IIFF fund managers audited. No issues of concern were reported.
The role of the VCC is outlined in Section 3 – Corporate Governance.
Page 41 of 89
INNOVATION INVESTMENT FOLLOW-ON FUND
CASE STUDY
VENTURE CAPITAL INVESTMENT HELPS DEVELOP PREGNANCY
TEST FOR CATTLE
Australian cattle farmers may soon be able to cheaply and accurately
pregnancy test their own herds thanks to an innovative hand-held device
backed by Australian Government venture capital programs.
HEARD Systems’ ePreg unit can detect, when held against a cow’s side, a
foetal heartbeat through novel biomedical sensors to produce an on-thespot diagnosis.
The system is so user-friendly that the sensors’ electrodes can be used
without gel or conductive paste and simply dipped into water.
The obvious benefit of the HEARD unit is that scheduling ahead those
expensive veterinarian appointments can be eliminated, saving the farmer
money but also time. Animal management decisions can then be made
instantly once a farmer determines the pregnancy status of the cow.
Traditional pregnancy testing methods require cows to be rectally examined
by an expert. Commercial ultrasound scanning systems still require rectal
insertion and a high level of operator skill and in some states the task is
limited only to vets.
Milk and blood testing for pregnancy is lengthy, often unreliable and
expensive.
HEARD Systems was founded by cattle veterinarian Richard Shephard and
assisted by University of Sydney researchers.
Allen & Buckeridge (A&B) is the Fund Manager of the two AusIndustry
programs - a Pre-seed Fund (PSF) and an Innovation Investment Follow-on
Fund (IIFF) - that backed HEARD to develop this product.
A&B invested $1.75 million into HEARD through the Pre-seed Fund before
adding $1 million in IIFF capital. Meat & Livestock Australia also recognised
HEARD’s potential and provided $1 million to assist develop the ePreg
product and provide marketing and commercialisation assistance.
A&B has representation on HEARD’s board and provides strategic planning
and direction, marketing and legal advice.
HEARD has also been registered for AusIndustry’s R&D Tax Concession, which
has allowed the company to deduct up to 125 per cent of qualifying
expenditure incurred on research and development activities.
Page 42 of 89
“This product would have died at the idea stage without venture capital
funding, and the R&D Tax Concession credits really helped us through the
difficult phase - especially the Global Financial Crisis when the bulk of
investors vanished,” Dr Shephard said.
HEARD is aiming to have the ePreg commercially available to farmers during
2011.
Page 43 of 89
COMMERCIALISATION AUSTRALIA
ESTABLISHMENT
Commercialisation Australia was announced as part of the 2009-10 Federal
Budget and is a component of the Australian Government’s 10 year vision Powering Ideas: An Innovation Agenda for the 21st Century. It will receive
funding of $278 million over the five years to 2013-14, with ongoing funding
of $82 million a year thereafter. Commercialisation Australia opened to
applications on 4 January 2010.
Commercialisation Australia is delivered as a partnership between
Innovation Division and AusIndustry, and is supported by a network of Case
Managers contracted from the private sector. The network of Case Managers
services regional and metropolitan centres across Australia. The program
has an expert committee of independent members appointed by the Minister
(Commercialisation Australia Board). It is headed by a Chief Executive
Officer who guides the program’s implementation, drawing on his
commercialisation experience from the private sector.
OBJECTIVES
Commercialisation Australia aims to build the capacity of and opportunities
for, Australia’s talented researchers, entrepreneurs and innovative firms to
convert ideas into sustainable commercial ventures, creating high skill jobs
and increasing our global competitiveness.
The objectives of the program will be achieved through:

providing tailored assistance including initial advisory services,
access to experienced business mentors, and funding for a range
of early-stage commercialisation activities assessed against clear
selection criteria

providing a single coordinated commercialisation support service
with multiple entry and exit points, and referrals to other sources
of support as appropriate

using stringent initial assessment processes to select applicants
with high potential for commercial success and growth, while
acknowledging the risk inherent in the pathway to
commercialisation

tailoring support to needs of individual applicants based on their
stage of development

ensuring efficient delivery by building on current innovation
activities and working with existing service providers

leveraging private capital to maximise the effectiveness of
Commercialisation Australia support
Page 44 of 89

sharing risk by adopting a mutual obligation approach where
appropriate

rigorously monitoring the progress of each participant and, if
necessary, redirecting funding from underperforming participants

regularly collecting data and analysing trends to measure the
short and long term impact of the program and to inform future
initiatives to support innovation and commercialisation

enhancing access to business services and domain expertise across
the nation.
Table 2.7 Australian Government budget and expenditure at 30 June 2011
2010-11
($m)
2011-12
($m)
2012-13
($m)
2013-14
($m)
Budget
23.47
56.24
62.06
66.03
Commitments
0.00
22.33
3.13
0.04
Payments made
22.22
0.00
0.00
0.00
Component
Commercialisation Australia has a broad mandate that goes beyond
providing grant support to commercialisation projects. Commercialisation
Australia’s role includes investigating new commercialisation policy
approaches and their applicability to the Australian innovation system. Up
to $2 million is available each year to fund pilot projects that support new
or alternative methods of supporting commercialisation. This flexibility
allows Commercialisation Australia to remain relevant and responsive to
changes in the innovation landscape, and assists in fully achieving its policy
objective.
PROGRAM PERFORMANCE
During the 2010-11 financial year, the Commercialisation Australia Board
considered 172 applications. Of these, 98 applications were approved for
funding, for a total value of $39.56 million.
Page 45 of 89
Table 2.8 Commercialisation Australia Applications
Applications
Considered
Applications
Approveda
Approved
($m)
Skills and Knowledge
39
25
1.20
Experienced Executives
42
15
2.45
Proof of Concept
98
56
12.26
Early Stage Commercialisation
45
21
23.65
Component
a
Applicants can apply for grants with one or more components
Of the 98 applications approved for funding, as at 30 June 2011, 94
customers had signed Commercialisation Australia funding agreements.
OUTCOMES
As at the end of the 2010-11 financial year Commercialisation Australia had
been in operation for 18 months.
Since its commencement in 2010, Commercialisation Australia has offered
financial assistance to support 130 projects across a wide range of industry
sectors, worth a total of $51.43 million.
Eleven Commercialisation Australia projects were completed in 2010-11.
All have reported to be successful or partially successful in achieving their
objectives.
Companies receiving assistance under the Early Stage Commercialisation
component have additional obligations to repay the grant. Once a company
achieves accumulated sales of $100,000 which relate to outcomes of the
commercialisation project, it is required to repay the grant at a rate of five
per cent of these sales.
At 30 June 2011, no companies had commenced repayment of their Early
Stage Commercialisation grant.
SUPPORT PROVIDED TO CUSTOMERS
Commercialisation Australia supports Australian companies, researchers,
entrepreneurs and inventors through four funding components as well as
access to Case Managers and Volunteer Business Mentors. The funding
components comprise:

Skills and Knowledge
Page 46 of 89

Experienced Executives

Proof of Concept

Early Stage Commercialisation.
Grant funding ranges from $50,000 to $2 million. Other than for the Skills
and Knowledge component, funding recipients are provided with up to
50 cents for each dollar they spend on eligible project activities. The Skills
and Knowledge component attracts 80 cents of Australian Government
funding for every dollar spent on eligible project activities.
Depending on the funding component, the maximum duration of a project
ranges from one year to 2.5 years. Participants can apply for more than one
component initially, or subsequent components as their commercialisation
project progresses.
In addition to financial support, participants work with a Commercialisation
Australia Case Manager. The Case Manager's key role is to guide participants
through the commercialisation process.
Case Managers have extensive experience in commercialisation. Many have
taken their own products and services to market, and have good networks
within industry. At 30 June 2011 there were 22 Case Managers.
Case Managers support participants by:

assisting them to identify the skills and knowledge they need

helping them access specialist advice and service

identifying and linking them with appropriate Volunteer Business
Mentors

assisting them develop professional networks

providing strategic and operational advice

monitoring their progress.
Volunteer Business Mentors are an important element of the tailored
assistance Commercialisation Australia offers to its participants. Small
companies and people new to business often lack diverse contact networks
and find it difficult to make the right business connections. Volunteer
Business Mentors are an additional resource that will further assist
Commercialisation Australia participants.
Commercialisation Australia is building a database of Volunteer Business
Mentors who have hands-on experience in building and/or selling a business,
specialist domain expertise, knowledge of international markets and
extensive networks in an area of expertise. Mentors are well placed to offer
guidance and practical approaches to assist Commercialisation Australia
participants in tackling specific commercialisation hurdles and building
valuable business networks.
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As at 30 June 2011, Commercialisation Australia had registered 70
Volunteer Business Mentors.
Commercialisation Australia also has the capacity to fund pilot programs of
up to 12 months duration. Up to $2 million per year is available to run one
large, or a number of smaller pilot projects to test new commercialisation
policy approaches. Applications for pilot program proposals may be made by
individuals, corporations, industry bodies or government. The intent is to
assess the practicality and effectiveness of new, alternative methods of
support for commercialisation that are consistent and complementary with
Commercialisation Australia’s policy objective.
Guidelines and application forms for the pilot program component were
published on the Commercialisation Australia website in March 2011. The
department received several enquiries from potential applicants and
provided feedback on three draft applications. No final applications were
considered by the Commercialisation Australia Board during the financial
year.
GOVERNANCE
Ministerial Program Guidelines and Program Directions, issued by the
Minister under the Industry Research and Development Act 1986, provide
the policy and procedures for administering the Commercialisation Australia
program.
Commercialisation Australia is managed by a Chief Executive Officer (CEO)
who has overarching responsibility for the program. Innovation Australia (the
Board) through its program specific committee (the Commercialisation
Australia Board) provides the Program Delegate with technical assessments
and merit rankings of eligible applications for the Commercialisation
Australia program. In undertaking its role, the Commercialisation Australia
Board considers grant applications under the program and provides the
Program Delegate with advice on other technical matters and policy issues.
The role of the Commercialisation Australia Board is outlined in Section 3 –
Corporate Governance.
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COMMERCIALISATION AUSTRALIA
CASE STUDIES
EWATER INNOVATION PTY LTD
An Australian invention that simulates stormwater flows to assist, monitor
and control pollution impacts has gone global thanks to a Commercialisation
Australia grant to customise it for the UK market. Through a joint venture
with a UK water engineering group, the company plans to take its product
further afield, to European, North American and Asian markets.
The product called music (model for urban stormwater improvement
conceptualisation) was developed by the Canberra-based eWater
Cooperative Research Centre. music has demonstrated the potential to
achieve a 40 per cent improvement in pollutant reduction in performance
tests against similar UK-developed applications.
The company received a grant from Commercialisation Australia in 2010.
This included funding to engage an experienced executive and access to a
Case Manager.
“Without Commercialisation Australia assistance, this project would not
have gone ahead properly resourced. The grant has allowed us to engage a
skilled executive in the UK to ensure staff are trained, processes are built
and that the product is properly prepared for new market entry” said Tim
Blackman, CEO of eWater Innovation. “Our Case Manager’s support and
advice has been timely and pertinent and it is great to share the enthusiasm
of the project with someone who wants to see it succeed.”
Page 49 of 89
IPSCAPE
The IPscape cloud contact centre solution helps global businesses drive
customer service excellence through real time, multi-channel customer
communication. Whilst many traditional multi-channel solutions work as
silos, IPscape’s cloud technology integrates a real-time customer
conversation across multiple channels. A customer can be in a web chat
session with a sales agent, with a real-time link to the cloud CRM and in
parallel process a payment for a new policy or product on their smart
phone.
IPscape’s solution is built on a 100 per cent proprietary public cloud
platform. This means businesses can scale technology expenditure in line
with business growth, and benefit from zero capex and per second pricing.
The solution also enables rapid scaling for emergencies, natural disasters
and seasonal campaigns and supports the employment of remote workers as
contact centre agents.
"Traditionally contact centre technology solutions have been expensive,
inflexible and have failed to deliver against the customer service promise”
said Simon Burke, CEO of IPscape. “In today’s market, businesses need a
technology solution which helps them experiment with new multi-channel
contact solutions and execute new customer service campaigns within
hours. The IPscape technology has been designed to meet all these
requirements. It is an agile, flexible technology solution which supports
business transformation - all with minimal financial commitment and risk.
This is just not possible with traditional technologies”.
The new IPscape Agile Messaging Service (AMS) is the very latest example of
IPscape’s customer-led innovation. AMS blends contact centre and mobile
technology into a single solution and drives the automation and reporting of
customer interactions via email, SMS, voice, applications and payment
gateways. This gives customers greater choice in how they communicate via
smart phones and frees up sales or contact centre staff to focus on
managing more complex, higher value tasks”.
The Australian Government has assisted IPscape through the R&D Tax
Concession, which allowed them to invest in innovation and fund the R&D
team which represents about a third of the company’s employee base.
In 2010 IPscape also received support from Commercialisation Australia to
drive global expansion. This funding has helped IPscape invest in a high
calibre senior management team, create strong international alliance
partnerships which are driving overseas market expansion and continue to
commercialise innovation such as AMS in the UK and Asia.
Throughout this process IPscape has worked closely with their
Commercialisation Australia Case Manager. “Our Case Manager has been a
terrific advisor in terms of getting involved in our business and creating new
Page 50 of 89
executive introductions for prospective global alliance partners” said Simon
Burke, CEO IPscape. “The Australian Government is now playing a critical
role in fostering technology innovation.
The ongoing funding of companies like IPscape will ensure that Australia
maintains a leadership position in technology innovation and more
importantly in the commercialisation of that innovation across the world”.
Page 51 of 89
MARATHON ROBOTICS PTY LTD
ALL-TERRAIN AUTONOMOUS ROBOTIC TARGET FOR LIVE-FIRE
MARKSMAN
Marathon Robotics builds autonomous robotic targets for military training.
Dr Alex Brooks, Marathon Robotics Director, said the targets could move and
think for themselves, and were unlike any other kind of target that exists on
the market today.
“Ours look, behave and move like humans,” Dr Brooks said. “For example,
they can be reactive. If one target gets hit, it can send a message to its
buddies who will respond to that by scattering and running for cover.”
Dr Brooks said the company started out as a group of academics. “We know
a lot about the technical side of things,” he said. “A lot of the challenge
was really all the business side of things,” he said.
In 2009 Marathon received a Commercialising Emerging Technologies
(COMET) grant.
“It made a huge difference for us,” said Dr Brooks. The grant allowed
Marathon to access expert business advice.
In 2010 the company was awarded a Commercialisation Australia grant to
finalise development of its new four-wheeled, all-terrain robotic military
target – to open up further markets, validate customer requirements and
develop a commercialisation strategy.
Tobias Kaupp, also a Marathon Robotics director, said the Commercialisation
Australia grant provided necessary funds to accelerate the product’s
development.
“Another great benefit of Commercialisation Australia is the help our case
manager contributes, such as valuable feedback on our project plan and our
corporate strategy in general,” he said.
Marathon has also taken advantage of the Australian Government’s R&D Tax
Concession. Mr Kaupp said that without this financial support, the company
would have spent most of its time searching for funding rather than working
on the technology and pushing the product to market.
Page 52 of 89
CLIMATE READY PROGRAM
ESTABLISHMENT
The Climate Ready program was an element of the $240 million Clean
Business Australia initiative, announced by the Australian Government in its
2008-09 budget statement, to support innovation projects that address the
impacts of climate change.
OBJECTIVES
The objectives of the Climate Ready program were to:

support the international competitiveness of Australian industry by
encouraging innovation through increasing research and
development (R&D) activities, proof-of-concept activities and
early-stage commercialisation activities that address the effects
of climate change

generate national benefit for the Australian economy and wider
community, through support for the development and
commercialisation of new products, processes or services that
address the effects of climate change.
Table 2.9 Australian Government budget and expenditure at 30 June 2011
2010-11
($m)
2011–12 ($m)
Budget
14.57
8.53
0.00
0.00
Commitments
0.00
8.51
0.00
0.00
13.01
0.00
0.00
0.00
Component
Payments made
2012–13 ($m) 2013-14 ($m)
PROGRAM PERFORMANCE
Although the program is closed to new applications, all existing contracts
continue to be honoured.
As at 30 June 2011, 49 customers continue to be managed under the
Climate Ready program.
OUTCOMES
The Climate Ready program has been in operation for three years. Thirty
seven projects were completed in 2010-11. Seventy six per cent of these
Page 53 of 89
projects were found to be technically successful and progressing towards
commercialisation.
Forty nine per cent of the 49 active projects as at 30 June 2011 are either
on schedule or ahead of schedule in meeting contractual milestones. A
further 43 per cent of projects are on track but slightly behind schedule in
meeting contractual milestones. Eight per cent of projects are not meeting
contractual milestones.
SUPPORT PROVIDED TO CUSTOMERS
Climate Ready provided a competitive grants program which aimed to
support the development and commercialisation of innovative products,
processes and services that address the effects of climate change. The
program, which closed to new applications, offered grants from $50,000 up
to $5 million on a matching funding basis for research and development,
proof-of-concept and early-stage commercialisation activities.
The program targeted small and medium sized businesses, and offered two
types of grants - small ($50,000 to $500,000) and large ($500,001 to $5
million). The small grants supported small business, as well as companies
controlled by universities and public sector research organisations.
The program opened for applications on 28 July 2008 and supported projects
that address the effects of climate change. In response to the four funding
rounds, 311 eligible applications seeking $228.13 million were received. A
total of 102 projects worth $75.95 million in grant funding proceeded
through the four funding rounds.
GOVERNANCE
Ministerial Directions issued by the Minister under the Industry Research and
Development Act 1986 provide the policy and procedures for administering
the Climate Ready program.
Innovation Australia (the Board), through its Climate Ready Committee,
provided technical assessments and merit ranking of eligible applications.
Applications for $3 million and above were subject to final assessment by
the Board. The Program Delegate, based on the Board’s recommendation,
made a final decision on which projects to support.
The role of the Climate Ready Committee is outlined in Section 3 Corporate Governance.
Page 54 of 89
RE-TOOLING FOR CLIMATE CHANGE PROGRAM
ESTABLISHMENT
The Re-tooling for Climate Change program was announced by the
Australian Government in its 2008-09 budget statement as part of the
government's Clean Business Australia initiative. Re-tooling for Climate
Change was launched in September 2008 as a competitive merit based
grants program.
During the 2010 election, the government announced its intention to reduce
funding for the program as part of its commitment to return the Budget to
surplus in three years. On 9 November 2010, the program was closed to new
applications.
OBJECTIVE
The objective of the Re-tooling for Climate Change program was:

To help small and medium sized enterprises undertaking
manufacturing in Australia to reduce their environmental
footprint, through projects that improve the energy and/or water
efficiency of their production processes.
Table 2.10 Australian Government budget and expenditure at 30 June 2011
Component
2009-10 ($m)
2010-11 ($m)
2011-12 ($m)
Budget
15.29
8.08
4.80
Commitments
0.00
0.00
4.71
Payments made
4.91
7.62
0.00
PROGRAM PERFORMANCE
During 2010-11, the Re-tooling for Climate Change program has provided
financial assistance to support 21 projects, from a broad cross section of
industry sectors, worth a total of $5.59 million.
Table 2.11 Re-tooling applications considered during 2010-11
Applications
Applications
considered (no.) a
approved (no.)
Applications
approved ($m)
Page 55 of 89
31
a
21
5.59
Represents all applications received including eight received during the 2009-10
financial year.
Page 56 of 89
OUTCOMES
As at 30 June 2011, 55 companies had completed their grant projects and
reported savings of 20,162 tonnes of greenhouse gas per annum and 299
megalitres of water per annum. A further 34 companies are yet to complete
their projects and/or evaluate results from completed projects, with
additional projected savings of 56,390 tonnes of greenhouse gas per annum
and 516 megalitres of water per annum. This is from a total government
funding commitment of $17.9 million.
SUPPORT PROVIDED TO CUSTOMERS
The Re-tooling for Climate Change program supported organisations
undertaking manufacturing in Australia to reduce their environmental
footprint through projects that improve the energy and/or water efficiency
of production processes. Grants from $10,000 up to $500,000 were
available on a competitive basis for up to 50 percent of eligible project
expenditure.
GOVERNANCE
The Re-tooling for Climate Change Program Ministerial Directions No 1 of
2009 provide the formal direction to Innovation Australia and set out the
merit criteria against which eligible applications must be assessed and
ranked. They also provide for a range of other functions which Innovation
Australia may be asked to perform.
The Minister for Innovation, Industry, Science and Research has issued
Program Guidelines which set out the program eligibility criteria, and
minimum requirements for assessment of applications and management of
grant contracts. The Program Guidelines provide that Innovation Australia
will assess eligible applications. Innovation Australia has delegated its power
to recommend applications for grants above $100,000 to the Climate Ready
Committee, and grants up to and including $100,000 to designated
departmental officials.
The role of the Climate Ready Committee is outlined in Section 3 Corporate Governance.
Page 57 of 89
COMMERCIALISING EMERGING TECHNOLOGIES
ESTABLISHMENT
The Commercialising Emerging Technologies (COMET) program was
established in November 1999 with funding of $30 million over three years.
COMET was established to increase Australia's sustainable economic growth
through stimulating the successful commercialisation of Australian
innovation. COMET received additional funding of $40 million in 2001.
Further funding of $100 million as part of the previous Australian
Government's 2004 Innovation Statement enhanced the program, extending
it until 2010-11. The program closed to new applications from 1 January
2010 and ceased on 30 June 2011.
The COMET program was a merit based assistance program with a strong
focus on mentoring, business management and support. The program was
targeted at early growth companies, individuals and spin-off companies.
COMET customers were provided with a tailored package of support to
improve their potential for successful commercialisation. COMET aimed to
increase the commercialisation of innovative products, processes and
services by supporting access to financial assistance and business
development advice.
COMET was delivered by AusIndustry and supported by a network of private
sector consultant business advisers. Business advisers were located in
regional and metropolitan centres across Australia.
OBJECTIVES
The objectives of the COMET program were to:

increase Australia’s sustainable economic growth through
stimulating the successful commercialisation of Australian
innovations

build sustainable and high growth firms by increasing prospects for
successful commercialisation of innovations through the attraction
of capital and partners.
Table 2.12 Australian Government budget and expenditure at 30 June 2011
Component
Budget
Commitments
a
2010-11 ($m)
2011-12 ($m)
5.82
0.00
0.00
0.52
Page 58 of 89
Payments made
a
4.79
0.00
Payments for 2011-12 commitments will be met from the previous year’s allocation.
Page 59 of 89
PROGRAM PERFORMANCE
A longitudinal study of COMET firms commenced in 2006 and will conclude
in 2013. It involves 48 firms selected at random between 2006 and 2009.
Survey data is collected by interview at five stages between entry into the
program and up to two years after completion of the COMET
program. Information from the study will be used to inform future program
design and evaluation.
The number of respondents to the survey has declined over time by twenty
per cent. Stage 3 of the study is largely completed. The final report will
be prepared when Stage 5 is completed in 2013.
OUTCOMES
COMET assisted customers to achieve commercialisation outcomes in a
variety of ways. Results by financial year for specific commercialisation
outcomes are shown in Table 2.13. Overall, COMET customers achieved
5,266 commercialisation outcomes, including 2,807 alliances, licences and
agreements; and 1,048 manufacturing commencements and product or
service launches (refer Figure 2.6). In 2010-11 COMET customers achieved
926 commercialisation outcomes (refer Figure 2.7).
From the commencement of the program to its conclusion on 30 June 2011,
the program paid around $110 million in grant funding with customers
raising approximately $714 million in private capital. This represents just
over six dollars in private capital being raised for every dollar in government
grant funding.
Table 2.13 Commercialisation outcomes achieved by COMET customers 1999-2001 to
2010-2011a
Commercialisation
outcome
Capital
raisings
Value ($m)
1999–01
2001–
02
2002
–03
2003
–04
2004
–05
2005
–06
2006
-07
200708
43
56
79
74
90
117
183
291
2008
-09
2009
-10
2010
-11
TOTA
L
154
157
167
1,411
50.48
41.83
41.92
100.8
63.12
86.52
73.79
115.4
0
44.0
6
59.50
36.63
714.0
3
Alliances
15
48
74
62
44
64
121
130
128
185
212
1,083
Licences
16
16
14
26
18
20
37
23
46
74
76
366
Agreements
21
64
96
77
72
88
169
162
161
178
270
1,358
Production
22
80
77
52
47
49
107
143
126
139
201
1,048
Page 60 of 89
Total
117
264
340
291
271
343
617
749
615
733
926
Adjustments have occurred since last report, due to revised/updated
customer reporting.
Page 61 of 89
5266
Figure 2.6 Number of COMET commercialisation outcomes 1999-2001 to 2010-2011 as
a percentage of total commercialisation outcomes
P r oduc t i on, 1048, 20%
Capi t al r ai s i ngs ,
1411, 26%
A gr eement s , 1358,
26%
A l l i anc es , 1083, 21%
Li c enc es , 366, 7%
Figure 2.7 Number of COMET commercialisation outcomes as a percentage of total
commercialisation outcomes 2010-11
Page 62 of 89
Production, 201,
22%
Capital raisings, 167,
18%
Alliances, 212, 23%
Agreements, 270,
29%
Licences, 76, 8%
Page 63 of 89
SUPPORT TO CUSTOMERS
COMET funding was used to subsidise access to third party service providers
for activities which were agreed with a COMET business adviser. Approved
customers could access assistance from COMET for a maximum of two years.
Applications closed from 1 January 2010 and the program ceased on 30 June
2011.
COMET financial assistance for companies was available through a two-tier
funding structure:

Tier 1: grant value up to $64,000 (exclusive of GST). The rate of
assistance was available at 80 per cent of the eligible
expenditure.

Tier 2: grant value of up to an additional $56,000 (exclusive of
GST). The rate of assistance was available at 50 per cent of the
eligible expenditure.
Assistance was also available for individuals, limited to $5,000 (exclusive of
GST), to develop management skills required to progress their innovation
towards commercialisation.
GOVERNANCE
The COMET program was administered by AusIndustry under delegation from
Innovation Australia. The financial administration of the program was the
responsibility of AusIndustry under delegation from the Minister. The COMET
Committee was revoked with effect from 30 June 2010. Innovation Australia
continued to provide oversight and guidance for the final year of the
program in 2010-11.
Innovation Australia operated under directions issued by the Minister under
the Industry Research and Development Act 1986.
Page 64 of 89
EARLY STAGE VENTURE CAPITAL LIMITED
PARTNERSHIPS
ESTABLISHMENT
The Early Stage Venture Capital Limited Partnerships (ESVCLP) program was
established in June 2007 under the Venture Capital Act 2002 (VC Act) and
amendments to the Income Tax Assessment Act 1997 and the Income Tax
Assessment Act 1936.
The ESVCLP program uses a key component of the Australian Government’s
approach to tax-based venture capital programs, the incorporated limited
partnership (ILP). A world-class venture capital fund structure, the ILP was
first made available to the industry in 2004 through the Venture Capital
Limited Partnerships (VCLP) program and has gained industry acceptance.
The ESVCLP vehicle is a specialised investment vehicle for fund managers
seeking to raise a new venture capital fund to make early stage venture
capital investments in Australian businesses. ESVCLPs can only make
investments as provided for under the legislation. Broadly, these are new
equity investments in companies or unit trusts with total assets of not more
than $50 million that do not have property development or financial services
as their predominant activity.
An ESVCLP must also divest itself of any holdings once the total assets of the
investee exceed $250 million. An ESVCLP must have its investment plan
approved by Innovation Australia and be structured as a limited partnership,
with committed capital of at least $10 million and not more than $100
million.
OBJECTIVES
The ESVCLP regime is an investment vehicle providing flow-through tax
treatment and a complete tax exemption for income (both revenue and
capital) received by its domestic and foreign partners. The ESVCLP regime
has progressively replaced the PDF program although existing registered
PDFs continue to operate and are entitled to concessional tax treatment.
PROGRAM PERFORMANCE
The number of registered ESVCLPs as at 30 June 2011 was nine (including
five conditionally registered). This represents an increase of three ESVCLPs
since 30 June 2010, with $120 million being committed under the program
of which $80 million (representing government and private investor coinvestment) is from the Innovation Investment Fund program. This
represents an increase of $40 million from 2009-10.
As at 30 June 2011, ESVCLPs reported making four investment deals in which
$10.4 million was invested into three businesses.
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SUPPORT PROVIDED TO CUSTOMERS
The ESVCLP program uses the ILP structure and offers a complete tax
exemption to both domestic and foreign investors on returns made from
early stage venture capital investments.
GOVERNANCE
The ESVCLP program is jointly administered by the Australian Taxation
Office (ATO) and Innovation Australia through its Venture Capital Committee
(VCC) with the assistance of AusIndustry. ESVCLPs are required to operate in
accordance with the VC Act and the relevant Income Tax Assessment Acts.
The VCC deals with registration purposes and the ATO provides the tax
concession for partners registered under the program.
It is the role of the VCC to monitor certain aspects of compliance and
administer and take actions as required. Registration of applications is
decided by the VCC and ESVCLP activity reports are reviewed for compliance
by both the VCC and the ATO.
The role of the VCC is outlined in Section 3 – Corporate Governance.
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VENTURE CAPITAL LIMITED PARTNERSHIPS
ESTABLISHMENT
The Venture Capital Limited Partnerships (VCLP) program was established in
December 2002 under the Venture Capital Act 2002 (VC Act) and
amendments to the Income Tax Assessment Act 1997 and the Income Tax
Assessment Act 1936.
Fund managers seeking to raise a new venture capital fund to make
investments in Australian businesses with total assets of not more than $250
million can apply to register the fund as a VCLP. A fund must have an
appropriate investment plan and be structured as an incorporated limited
partnership with committed capital of at least $10 million. VCLP registration
entitles a fund to flow-through tax treatment (i.e. it is not a taxing point).
Further, a fund’s eligible foreign investors receive a capital gains tax
exemption for their share of the fund’s gains from eligible investments. The
fund’s other investors have their share of the fund’s gains taxed in their
hands according to their circumstances.
VCLPs can only make eligible investments as defined by the VC Act and the
relevant tax acts. Broadly these are equity investments in companies or unit
trusts with total assets of not more than $250 million that do not have
property development or financial services as their predominant activity.
The VC Act also provides for two other types of registration:

For an Australian resident general partner, registration is available
for a specific limited partnership investment vehicle called an
Australian Venture Capital Fund of Funds (AFOF) in accordance
with section 9-5 of the VC Act. Such funds can only make
investments in a VCLP or invest in a company in which a VCLP is a
limited partner. To date no AFOFs have been registered.

For tax-exempt foreign residents, registration is available as an
Eligible Venture Capital Investor in accordance with Part 3 of the
VC Act. Registration allows the entity to make direct investments
and disregard any gain made on disposal of an eligible venture
capital investment. To date no eligible venture capital investors
have been registered.
OBJECTIVES
The VCLP program is designed to stimulate the Australian venture capital
industry by providing incentives for increased foreign investment which will
support patient equity capital investments in relatively high-risk start-up
and expanding businesses that would otherwise have difficulty in attracting
investment through normal commercial means.
Page 67 of 89
PROGRAM PERFORMANCE
At 30 June 2011, there were 41 VCLPs (including five conditionally
registered) with total committed capital of $4.5 billion 2. This represents an
increase of four VCLPs and $666 million in committed capital compared to
2009-10. As with the previous year the primary source of capital continues
to be domestic institutional investors, with around 20 per cent coming from
foreign investors.
At 30 June 2011, VCLPs held eligible investments in 134 businesses costing
$1.4 billion, which are valued at $1.7 billion.
OUTCOMES
As at 30 June 2011, VCLPs made 117 deals in which $432 million was
invested into 79 businesses. Thirty-seven of the deals were initial
investments into companies, and 80 were follow-on investments. The
number of deals increased slightly over the previous year’s total of 113.
However, the amount invested during the year was a significant increase on
the $141 million recorded in the previous year.
DIVESTMENTS
Eighteen VCLPs reported 18 divestments during the year, realising $501
million from investments that cost $191 million, recording a capital gain of
$310 million. This is an increase over the previous year in which three
divestments occurred realising a total capital gain of $0.9 million.
SUPPORT PROVIDED TO CUSTOMERS
A VCLP receives flow-through tax treatment – that is, it is not a taxing
point. Eligible foreign investors in a VCLP are exempt from income tax on
profits or gains derived from the sale of eligible investments by the VCLP. A
VCLP’s other investors have their share of the VCLP’s gains taxed in their
hands. The general partner of a VCLP has its share of the gains made by the
VCLP on the sale of eligible investments (the carried interest) taxed as
capital gain.
GOVERNANCE
The VCLP program is jointly administered by the Australian Taxation Office
(ATO) and Innovation Australia through its Venture Capital Committee (VCC)
with the assistance of AusIndustry. The VCC deals with registration purposes
and the ATO provides the tax concession for partners registered under the
2
This is a headline figure as most VCLPs have a unit trust attached through which
committed capital can be invested. This enables fund managers to acquire otherwise
attractive investments that are deemed ineligible for a VCLP.
Page 68 of 89
program. VCLPs are required to operate in accordance with the VC Act and
the relevant Income Tax Assessment Acts.
Page 69 of 89
It is the VCC’s role to monitor certain aspects of compliance and administer
and take actions as required. Registration applications are decided by the
VCC and VCLP activity reports are reviewed for compliance by both the VCC
and the ATO.
The role of the VCC is outlined in Section 3 – Corporate Governance.
REVIEW OF THE VENTURE CAPITAL LIMITED PARTNERSHIPS
REGIME
On 11 May 2010, the then Assistant Treasurer and the then Minister for
Financial Services, Superannuation and Corporate Law announced that the
government had requested the Board of Taxation to undertake a review of
the tax treatment of collective investment vehicles (CIV), having regard to
the new managed investment trust tax framework and including whether a
broader range of tax flow-through vehicles should be permitted. As part of
the review, it was announced that the Board of Taxation would also examine
the treatment of Venture Capital Limited Partnership vehicles (i.e. the VCLP
and ESVCLP programs).
Although the reporting date for the review of CIV is the end of December
2011, the Assistant Treasurer requested that the Board of Taxation bring
forward the reporting date on the Venture Capital Limited Partnership
component to 30 June 2011.
At the time of this report the Board of Taxation’s report has not been
released.
Page 70 of 89
POOLED DEVELOPMENT FUNDS
ESTABLISHMENT
The Pooled Development Funds (PDF) program commenced on 30 June 1992
and operates subject to the Pooled Development Funds Act 1992 (the PDF
Act), the Pooled Development Funds Regulations 1992, and both the Income
Tax Assessment Act 1936 and 1997, and the Income Tax Rates Act 1986. The
program was closed to new registrations on 21 June 2007 at the time that
the Government announced the establishment of the Early Stage Venture
Capital Limited Partnerships (ESVCLP) program.
PDFs are venture capital funds, structured as a company, that must operate
and make investments in accordance with the requirements of the PDF Act.
Broadly the PDF Act requires that investments are new equity investments in
growing Australian companies with assets of not more than $50 million at
the time of investment that are not undertaking retail sales or property
development as their primary activity. PDFs may provide management
assistance to companies in which they hold an investment and may provide
debt financing in limited circumstances.
The PDF Act also provides special provisions for tax-exempt foreign
superannuation funds to register as Venture Capital Entities. Registration
allows the entity to invest venture capital into qualifying Australian small
and medium sized entities. Currently there are no Venture Capital Entities
registered.
OBJECTIVES
The PDF program was aimed at stimulating Australia's venture capital sector
and increasing the pool of venture capital available to fund the growth of
small and medium sized Australian companies.
PROGRAM PERFORMANCE
In view of the closure of the program to new applications the Venture
Capital Committee (VCC) has increased its monitoring of PDFs and has
targeted inactive PDFs with the aim of revoking their registrations. Existing
PDFs continue to operate and are entitled to concessional tax treatment
until such time that their registration is revoked.
As at 30 June 2011, there were 47 venture capital funds registered as PDFs.
This represents a reduction of 12 PDFs from 2009-10 and an overall
reduction of 51 since the closure of the program in 2007.
As at 30 June 2011, PDFs reported holding investments in 23 companies
costing $19 million and which are valued at $17 million.
During 2010-11 PDFs reported investments totalling $3.3 million in 12
Australian companies. They reported three full and partial divestments. PDF
Page 71 of 89
divestments realised a total of $0.8 million from investments costing $4.4
million for a loss of $3.6 million.
PDFs reported raising a total of $14.8 million in new capital during the year.
Capital was raised primarily via private placements or the exercise of
options.
PDFs reported a total of $38 million in paid-up capital as at 30 June 2011,
with an additional $3 million available from investors.3
OUTCOMES
Since the program's introduction in July 1992, $992 million has been raised
by PDFs and $826 million of this capital has been invested into 732
Australian businesses.
SUPPORT PROVIDED TO CUSTOMERS
Venture capital funds registered under the program are taxed at 15 per cent
on their income from eligible investments. Shareholders in these funds
receive their returns tax free and are not subject to tax on any capital gains
they may receive from selling their PDF shares.
GOVERNANCE
The PDF program is administered by Innovation Australia through the
Venture Capital Committee (VCC) with the assistance of AusIndustry. PDFs
are required to operate in accordance with the PDF Act and the relevant
Income Tax Assessment Acts. It is the VCC’s role to monitor certain aspects
of compliance and administer and take actions as required. The VCC deals
with discretions under the PDF Act and the Australian Taxation Office
provides the tax concession for partners registered under the program.
The role of the VCC is outlined in Section 3 – Corporate Governance.
3
PDFs provide annual reports four months after the end of each financial year (i.e. by
31 October 2011). The information above has been derived from reports received at the
time of preparing this publication (September 2011). For this reason the information
should not be taken to be a full and complete picture of the program’s activity.
Finalised figures will be made available on the AusIndustry website after
31 October 2011.
Page 72 of 89
RENEWABLE ENERGY EQUITY FUND
ESTABLISHMENT
The Renewable Energy Equity Fund (REEF) is a specialist renewable energy
venture capital fund established in 2000 and modelled on the Innovation
Investment Fund program. The fund will wind-up in 2011-12.
The REEF program assisted the development of investee companies
commercialising R&D in renewable energy technologies.
Under the program the Australian Government awarded a 10 year licence to
the private sector fund manager, CVC REEF Limited. The Australian
Government committed $17.7 million to the program on a 2:1 basis with
private sector capital creating a total fund of $26.6 million.
OBJECTIVES
The objectives of the REEF program are to:

encourage the development of companies and other incorporated
bodies which are commercialising R&D in renewable energy
technologies, by addressing capital and management constraints

develop fund managers with investment experience in the
renewable energy industry.
The REEF fund became fully drawn in December 2008, with no further
capital available for investment.
Table 2.14 Australian Government expenditure for REEF investments in 2010-11
Fund manager
Investment
expenditure ($m)
CVC REEF
0.0
Number of investee
companies
0
PROGRAM PERFORMANCE
At 30 June 2011, 13 investee companies had been supported under the
REEF program. The amount invested (including the reinvestment of funds)
since inception of the program totalled $21.57 million, of which the
Australian Government provided $14.38 million.
No investments were made and no returns were received in 2010-11. To
30 June 2011 REEF has returned a total of $8.05 million to the Australian
Government. The returns have been used towards repayment of the
Australian Government’s investment.
Page 73 of 89
OUTCOMES
The REEF program has enabled venture capital investment in renewable
energy technologies. It has aided the commercialisation of Australian
technologies for renewable energies, including biofuels, geothermal, ocean
waves, battery energy and wind power. The program’s successes include
three investee companies listed on the Australian Stock Exchange as at 30
June 2011.
SUPPORT PROVIDED TO CUSTOMERS
Companies eligible for investment by the REEF fund manager were required,
among other things, to:

be commercialising renewable energy technology

have a majority of its employees (by number) and assets (by
value) inside Australia at the time the licensed fund first invests in
the company

have an annual revenue over the past two years of income that
does not exceed $5 million per year.
Companies supported were also at the seed, start-up or early expansion
stage of their development.
GOVERNANCE
In 2009 the Australian Government established the Australian Centre for
Renewable Energy (ACRE) within the Department of Resources, Energy and
Tourism. ACRE has policy responsibility for the REEF program.
Innovation Australia oversees the operation of the REEF fund manager
through its Venture Capital Committee (VCC) assisted by AusIndustry.
The role of the VCC is outlined in Section 3 - Corporate Governance.
Page 74 of 89
PRE-SEED FUND PROGRAM
ESTABLISHMENT
The Pre-Seed Fund (PSF) program was introduced in 2001 to increase the
commercialisation of promising research opportunities within Australian
universities, Cooperative Research Centres and Australian public sector
research agencies. It seeks to develop further the management and
entrepreneurial skills of public sector researchers and to encourage the
private sector to take a more active role in funding and managing the
commercialisation of research from universities and public sector research
agencies.
The Australian Government committed capital of $72.70 million which,
when combined with capital from private sector investors, universities and
public sector research agencies, amounts to $104.11 million in available
commitments. These commitments cover investments and management
fees.
The PSF program has licensed four venture capital fund managers to invest
in companies or projects, and to provide management and technical advice
to commercialise the technology being developed.
In view of the high risk of the investments made under the PSF program, on
the realisation of investments the Australian Government will receive an
amount equivalent to its committed capital and private investors (including
the fund manager) will share all distributions (i.e. profit) in excess of this
amount.
OBJECTIVES
The objectives of the PSF program are to:

assist the commercialisation of R&D activities undertaken by
universities and public sector research agencies by providing
finance and managerial advice

encourage private sector investment in R&D activities undertaken
in universities and public sector research agencies for
commercialisation

build linkages between universities, public sector research
agencies, the finance community and business for the
commercialisation of R&D activities

build entrepreneurial and intellectual property management skills
in Australian universities and public sector research agencies

encourage researchers in universities and public sector research
agencies to consider the commercial opportunities of their
research discoveries.
Page 75 of 89
Table 2.15 Australian Government budget and expenditure at 30 June 2011
Component
2010-11 ($m)
2011-12 ($m)
2012-13 ($m)
3.00
0.00
0.00
Commitments
3.00
0.00
0.00
Payments made b
3.72
0.00
0.00
Budget
a
a
Portfolio Budget Statements 2011-12, Budget Related Paper No. 114, Innovation,
Industry, Science and Research Portfolio.
b
The ‘Payments made’ figure includes management fees and recoverable expenses
of $2.17 million including excess of $0.53 million from funds carried over from the
previous financial year.
SUPPORT PROVIDED TO CUSTOMERS
Support is provided by the fund managers in the form of capital and
expertise to investee companies established to commercialise research.
To be eligible for investment, companies and projects must be
commercialising Australian research and either:

be controlled (or, in the case of a project, supervised) by a
university, a public sector research organisation or a qualifying
researcher

use intellectual property that is at least 50 per cent owned by a
university, a public sector research organisation or a qualifying
researcher.
Investee companies must also be incorporated in, and operate substantially
in Australia, and projects must be undertaken in Australia. Neither must
have generated any sales revenue at the time of the first investment.
PROGRAM PERFORMANCE
To 30 June 2011, the four PSF funds have drawn $94.22 million of which the
Australian Government’s contribution has been $65.79 million.
In 2010-11, $2.98 million was invested into 12 companies, of which $2.08
million was drawn from the Australian Government. The four PSF fund
managers are now focussing on making exits and achieving realisations.
In 2010-11, the Australian Government received returns from five investees
totalling $0.12 million, with $0.05 million returned to private investors. At
30 June 2011 the total returned to the Australian Government was $1.03
million.
Page 76 of 89
OUTCOMES
Since the inception of the program, outcomes achieved include:

private capital of $31.41 million has been raised

71 investments have been made

2,530 investment proposals have been reviewed by the fund
managers

21 professional venture capital managers have been engaged in
running the funds.
An example of a recent successful investee company includes:

AiMedics is helping children and young adults handle the
challenges of Type One diabetes after developing a non-invasive
alarm system, called the HypoMon, that identifies sleep-time
hypoglycaemia and triggers an alarm if the blood glucose level
drops dangerously low.
GOVERNANCE
Innovation Australia oversees the operation of the PSF fund managers
through its Venture Capital Committee (VCC), assisted by AusIndustry.
Page 77 of 89
(ACIS STAGE 2) MOTOR VEHICLE PRODUCER
R&D SCHEME
ESTABLISHMENT
The ACIS Stage 2 Motor Vehicle Producer R&D Scheme (MVP R&D Scheme)
was introduced on 24 June 2004 by the Australian Government to encourage
Australian motor vehicle producers to invest in high-end R&D technologies.
The MVP R&D Scheme was established under the legislative framework
contained in the ACIS Administration Act 1999.
The MVP R&D Scheme was a part of the post-2005 assistance package for the
Australian automotive industry and provided funding for R&D from
2006 to 2010.
OBJECTIVES
Through the MVP R&D Scheme, the Australian Government aims to increase
the level of R&D undertaken by motor vehicle producers in the Australian
automotive industry.
SUPPORT PROVIDED TO CUSTOMERS
The MVP R&D Scheme was competitively based and offered up to $150
million in R&D assistance from 2006 to 2010. The MVP R&D Scheme was
accessible to Australian motor vehicle producers and successful projects
received 45 cents, in the form of duty credits, for each dollar spent on
eligible R&D. Projects funded under the MVP R&D Scheme involved a diverse
range of new and emerging technologies resulting in benefits such as vehicle
weight reduction, fuel economy, emissions improvements and improved
vehicle safety.
OUTCOMES
Two application rounds were undertaken in 2005 and 2006 resulting in three
Australian Motor Vehicle Producers (MVPs) being awarded funding for a total
of 12 R&D projects. The total project value for the two rounds was
$289 million, with committed Scheme funding of $141.7 million.
Assistance worth $78.03 million has been paid to 30 June 2011.
PROGRAM PERFORMANCE
During 2010-11, technical difficulties caused the delay of several large
projects. As a result, the related approved funding for these projects was
not fully spent by the end of the scheme on 31 December 2010. A total of
$14.77 million was returned to the general ACIS funding pool during 2010-11
for final distribution to the MVPs under ACIS Stage 2.
Page 78 of 89
GOVERNANCE
The MVP R&D Scheme was administered by AusIndustry. Innovation
Australia, through the Green Car Innovation Committee (GCIC), reviewed
the progress of residual projects of the MVP R&D Scheme.
The policies and procedures to be followed by Innovation Australia are set
out in Ministerial Directions issued under the Industry Research and
Development Act 1986 in 2004.
The role of the GCIC is outlined in Section 3 – Corporate Governance.
Page 79 of 89
COMMERCIAL READY PROGRAM
ESTABLISHMENT
The Commercial Ready program was announced on 6 May 2004 as part of the
Australian Government's $5.3 billion Backing Australia’s Ability – Building
Our Future through Science and Innovation package. The program combined
elements of the previous R&D Start, Biotechnology Innovation Fund and the
Innovation Access (Industry) programs. Commercial Ready was launched on
1 October 2004 as a competitive grants program aimed at providing small
and medium sized businesses with funding to undertake research and
development, proof-of-concept and early-stage commercialisation activities.
The program was initially funded to provide approximately $200 million per
year in grant funding until 2011. On 1 May 2007, the Australian Government
announced an additional $90.3 million to fund Commercial Ready Plus, a
funding stream specifically intended to provide small grants, between
$50,000 and $250,000, to Australian companies.
The program was closed to new applications as a result of the Australian
Government's 2008 Federal Budget announcement. Existing contracts under
the program continue to be monitored.
OBJECTIVES
The objectives of the Commercial Ready program were to:

support the international competitiveness of Australian industry by
encouraging innovation through increasing the level of research
and development (R&D), proof-of-concept and early-stage
commercialisation activities undertaken by Australian companies

generate national benefit for the Australian economy and wider
community, including for example, through increasing
productivity, supporting collaboration and developing Australia’s
skills base.
Table 2.16 Australian Government budget and expenditure at 30 June 2011
Component
2010-11 ($m)
2011-12 ($m)
2012-13 ($m)
Budget
5.10
2.00
0.00
Commitments
0.00
0.89
0.00
5.57
0.00
0.00
Payments made
a, b
Page 80 of 89
a
All commitments and payments for Commercial Ready and REDI are made against
this allocation.
b
Commercial Ready payments include amounts that relate to the previous financial
year’s budget.
Page 81 of 89
PROGRAM PERFORMANCE
Although the program is closed to new applications, all existing contracts
continue to be honoured.
As at 30 June 2011, seven customers continue to be managed under the
Commercial Ready program.
OUTCOMES
Commercial Ready has provided financial assistance to support 524 projects
across a wide range of industry sectors, worth a total of $493.72 million,
since its commencement in 2004. Of these, 506 projects have been
completed to date with 81 per cent considered to be technically successful
with results to be commercialised. Forty projects were completed in the
2010-11 financial year. Seventy five per cent of these projects were found
to be technically successful and progressing towards commercialisation.
Six of the seven active projects as at 30 June 2011 are either on schedule or
ahead of schedule in meeting contractual milestones. The remaining project
is slightly behind schedule in meeting contractual milestones.
SUPPORT PROVIDED TO CUSTOMERS
Commercial Ready provided Australian companies with grant funding from
$50,000, up to a maximum of $5 million to undertake research and
development, proof-of-concept and commercialisation activities. Grant
recipients were provided with up to 50 cents for each dollar they spent on
eligible project activities.
Commercial Ready projects were funded for a maximum period of 3.5 years,
while projects funded under Commercial Ready Plus could be funded for up
to two years. Grant instalments were paid quarterly in advance after the
receipt of satisfactory project progress reports, and on a six-monthly basis
for Commercial Ready Plus projects.
GOVERNANCE
Ministerial Directions issued by the Minister under the Industry Research and
Development Act 1986 provide the policy and procedures for administering
the Commercial Ready program.
The Innovation Grants Committee has responsibility for monitoring and
assessing requests for variations and other matters as required under grant
agreements for the Commercial Ready program.
The role of the Innovation Grants Committee is outlined in Section 3 Corporate Governance.
Page 82 of 89
RENEWABLE ENERGY DEVELOPMENT INITIATIVE
ESTABLISHMENT
The Renewable Energy Development Initiative (REDI) was announced on
15 June 2004 as part of the Australian Government's white paper, Securing
Australia’s Energy Future, in which it outlined its comprehensive approach
to addressing the greenhouse gas challenges associated with the production
and use of energy.
The $100 million program was established as a competitive merit based
grants program to support the development of renewable energy technology
products, processes or services that had strong early-stage
commercialisation and emission reduction potential.
The REDI program closed to new applications in May 2008 as a result of the
Australian Government’s 2008 Federal Budget announcement. Existing
contracts under the program continued to be managed for the duration of
the project contract. All REDI customers have now completed their projects.
OBJECTIVES
The objectives of the REDI program were to:

support the development of new renewable energy technology
products, processes and services that have strong early-stage
commercialisation and emission reduction potential

support the international competitiveness of Australian industry by
encouraging innovation through increasing the level of research
and development (R&D) activities, proof-of-concept and/or earlystage commercialisation activities undertaken by Australian
companies

generate national benefits for the Australian economy and wider
community, including for example, through increasing
productivity, supporting collaboration and developing Australia’s
skills base.
In supporting such projects, the intention of the program was to reduce the
environmental impact of energy demand, contribute to the international
competitiveness of Australian businesses and generate national benefits for
the Australian economy.
Page 83 of 89
Table 2.17 Australian Government budget and expenditure at 30 June 2011
Component
2010-11 ($m)
2011–12 ($m)
2012–13 ($m)
0.00
0.00
0.00
Commitments
0.00
0.00
0.00
Payments made
0.60
0.00
0.00
Budget
c
a
All commitments and payments for REDI are funded from within the Commercial
Ready allocation.
OUTCOMES
Since the program’s commencement in 2004, REDI has provided financial
assistance to 29 projects, worth a total of $65.83 million, to support the
development of renewable energy technologies. All REDI projects have now
been completed with 67 per cent considered to have had successful
outcomes.
SUPPORT PROVIDED TO CUSTOMERS
REDI provided competitive grants to eligible Australian companies to
undertake new renewable energy projects involving R&D, proof-of-concept
and early-stage commercialisation activities. Financial grants ranging from
$50,000 to $5 million were available to companies on a competitive basis,
providing up to 50 cents for each dollar they spent on eligible project
activities.
GOVERNANCE
Ministerial Directions issued by the Minister under the Industry Research and
Development Act 1986 provided the policy and procedures for administering
the REDI program. Innovation Australia's former Renewable Energy
Committee provided technical assessments and advice to Innovation
Australia in relation to REDI applications.
The Climate Ready Committee is responsible for monitoring ongoing project
activity under the former REDI program.
The role of the Climate Ready Committee is outlined in Section 3 –
Corporate Governance.
Page 84 of 89
INDUSTRY COOPERATIVE INNOVATION PROGRAM
ESTABLISHMENT
The Industry Cooperative Innovation Program (ICIP) was announced on
8 October 2004 as a $25 million program (through to 2010-11) to support
cooperative innovation projects. The program operated over three rounds
with the final round closing to applications on 12 June 2007.
OBJECTIVES
The ICIP program objectives were to:

encourage business to business cooperation on innovation projects
within a sector that enhances productivity, growth and
international competitiveness of Australian industries - the
program will support projects aimed at meeting strategic industry
needs, with a focus on those identified through an action agenda

generate national benefit for the Australian economy.
Table 2.18 Australian Government budget and expenditure at 30 June 2011
Component
2010-11 ($m)
2011-12 ($m)
Budget
1.46
0.00
Commitments
0.00
0.00
Payments made
1.37
0.00
PROGRAM PERFORMANCE
Over three rounds a total of 105 applications were considered, of
which 44 were approved for funding of $22.34 million. Three
applicants subsequently did not take up the offer.
The program had two streams of funding that covered small-scale
cooperative projects aimed at identifying the strategic scope of direction of
future innovation in an industry and more extensive projects aimed at
progressing strategic innovation and achieving significant benefits for an
industry. In 2010–11 payments of $1.37 million were provided to 11
organisations. All customer contracts were completed in line with the
program closure on 30 June 2011.
Page 85 of 89
OUTCOMES
No funding rounds were launched in 2010-11. Ongoing benefits from all ICIP
projects will be assessed through post project reporting, which will be
conducted for two years post 30 June 2011. An evaluation of ICIP is planned
for 2011.
SUPPORT PROVIDED TO CUSTOMERS
ICIP was a competitive grants program that provided up to 50 per cent
matched funding on cooperative innovation projects. Grants were provided
under two streams:

Stream A — supports project scoping or innovation mapping
activities. The maximum grant under this stream was $150,000 for
projects of up to 18 months duration.

Stream B — supports R&D, proof-of-concept, innovation
demonstration and adaptation and/or innovation implementation
activities. The maximum grant under this stream was $3 million
for projects of up to three years duration.
GOVERNANCE
The policies and procedures of the ICIP program are set out in Ministerial
Directions issued under the Industry Research and Development Act 1986.
ICIP was delivered by AusIndustry, through Innovation Australia. In 2008-09
the COMET/ICIP Committee, which provided technical assessments and
merit ranking of eligible applications to the program delegate within
AusIndustry, was revoked. Innovation Australia directly oversees any
continuing activity from ICIP.
The role of Innovation Australia is outlined in Section 3 - Corporate
Governance.
Page 86 of 89
R&D START PROGRAM
ESTABLISHMENT
The R&D Start program was announced in the Australian Government's 1996
Budget as a four year, $520 million competitive grants and loans program
where successful applicants would receive 50 cents in the dollar to
undertake research and development (R&D) and the commercialisation of
technical innovations.
The program was extended in 1998 as part of the Australian Government's
Investing for Growth statement which provided additional funding to 200102. In the Australian Government's 2001 Backing Australia’s Ability science
and innovation statement, further funding was announced that continued
the administration and operation of the R&D Start program until 2005-06.
The program was again extended in the 2003 Budget, continuing it to 2007.
On 10 September 2004, the program was closed to new applications and was
absorbed into the Commercial Ready program from 1 October 2004. Existing
R&D Start grants continue to be managed until the contract completion
date, which is five years after the project end date.
Payments for R&D Start Concessional Loans and Start Premium ceased on
30 June 2006. Contracts under these program streams will continue to be
managed until all repayment obligations are extinguished.
OBJECTIVES
The objectives of the R&D Start program were to:

increase the number of projects involving R&D activities with a
high commercial potential that are undertaken by companies

foster greater commercialisation of the outcomes

foster collaborative R&D activities in industry and between
industry and research institutions

encourage successful innovation in small companies by supporting
commercialisation of internationally competitive products,
processes and services

increase the level of R&D activity in Australia that is
commercialised, in a manner that will benefit the Australian
economy

increase the level of R&D conducted that provides national
benefit.
Page 87 of 89
PROGRAM PERFORMANCE
The R&D Start program was closed to new applications on 10 September
2004, and was absorbed into the new Commercial Ready program from 1
October 2004. The final round of applications was approved in 2004-05. The
final R&D Start grant was paid in the 2009-10 financial year.
OUTCOMES
R&D Start has provided funding of $1,365.37 million to 1,385 projects across
a wide range of industry sectors since its inception in 1996. R&D Start grants
funded 1,264 projects to the value of $1,292.79 million and R&D Start loans
funded 121 projects to the value of $72.59 million.
All R&D Start grant projects have now been completed. Seventy seven per
cent of the 1,264 grant projects supported were successful, with
results commercialised or expected to be commercialised. At the end of the
2010-11 financial year, there were 32 active R&D Start loan customers still
remaining in the program.
SUPPORT PROVIDED TO CUSTOMERS
The R&D Start program provided grant and loan funding, on a competitive
basis, to Australian companies to assist them to undertake R&D and
early-stage commercialisation of technological innovation. Financial
assistance was provided on a matching funding basis for projects that
involved R&D, related product development and market research activities.
While typically ranging between $100,000 and $5 million, grants of up to $15
million were available. Projects had to have clearly identified commercial
potential and applicants were required to demonstrate that the project
could not proceed satisfactorily without R&D Start support. In addition,
applicants had to demonstrate that they could fund their share of project
costs.
R&D Start also provided concessional loans to companies which employed
less than 100 staff and were involved in the early commercialisation of
technological innovations. Applicants had to demonstrate that they could
meet their share of project costs but were unable to obtain sufficient
funding for the project from financial institutions. Loan projects were to be
completed within three years and the loan repaid within the following three
years. Companies were able to request an Alternative Repayment
Arrangement to extend the timeframe within which the loan was repaid.
GOVERNANCE
The policies and procedures of the R&D Start program are set out in
Ministerial Directions issued under the Industry Research and Development
Act 1986.
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The Innovation Grants Committee has responsibility for monitoring and
assessing requests for variations and other matters as required under grant
agreements for the R&D Start program.
The role of the Innovation Grants Committee is outlined in Section 3 Corporate Governance.
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