After watching Treasurer Wayne Swan attempt to tear down what is left of the Government’s relationship with business for the last few days, Prime Minister Julia Gillard and senior ministers Bill Shorten (he’s in charge of workplace relations and superannuation) and Chris Evans (science) have emerged to try and re-engage.
Gillard was front and centre yesterday with the heads of the Australian Chamber of Commerce and Industry and the Business Council of Australia to announce a new business forum that will sit alongside the regular Council of Australian Government meetings, where the federal and state governments try and get nation-wide reform going.
Generally, COAG reforms move pretty slowly, so the idea of a business forum that can point the pollies in the right direction is a good idea.
But the word “forum” doesn’t really fill me with hope. These things are too often talkfests that go nowhere, and sometimes seem set up with the express purpose of appearing to do something without actually doing anything. We’ll see how it goes.
Shorten and Evans were also talking up a storm yesterday, pushing the idea of getting superannuation funds talking more closely with Australia’s research and development community, which since the start of the GFC has complained that super fund cash flowing to the sector has slowed to a trickle.
The super fund retreat is not surprising – with equity markets tumbling, super funds naturally pull back from the riskiest forms of investment, and it doesn’t get much riskier than early-stage R&D and venture capital.
But the funding drought’s impact on the biotech sector has been huge, with big numbers of firms forced to sell or shut down. There have been some success stories – Mesoblast and Acrux stand out – but times remain very hard in the sector.
Evans, who joined Shorten at the Science Meets Superannuation summit in Melbourne, says Australia’s private sector contributes about 6% of university research funding, compared to contributions of 11% by the private sector in South Korea, 14% in Germany and 37% in China.
Just putting half a percent of super funds into R&D would increase funding by $6.5 billion.
But just getting scientists and super funds talking isn’t enough. The chief of the Australian Private Equity and Venture Capital Association, Katherine Woodthorpe, says the focus needs to be on the process by which venture capital helps commercialise research.
“I strongly believe we spend a lot of money on R&D but we don’t spend enough on actually commercialising R&D,” she told me this morning.
“Without venture capital, the drugs that we spend a fortune on researching will simply sit on shelves gathering dust and not actually curing people.”
That’s why the venture capital sector still rues the Rudd Government decision to kill off the Commercial Ready program way back in 2008 and feels the current Government needs a strong policy in this area.
Shorten was also pretty clear what the Government’s role is in all this, according to a report by the Australian Financial Review.
“Our role is not to mandate but to challenge the way that structures are set up. There is an opportunity to match long-term research and innovation with the long-term expectations of investors, who are prepared to take a long-term position but want a return to come.”
There’s a lot of “long-term” in there, which is a worry.
As Katherine Woodthorpe says, the funding situation is not getting better quickly, so Shorten and Evans need to be developing real policies sooner rather than later.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
