The Australian Federal Budget for 2012/13 delivers mixed messages for innovative businesses

by Joe Seisdedos, SENIOR Associate & Dr Vicky Longshaw, IP CONSULTANT

The Australian Federal Budget for 2012/13 delivers mixed messages for innovative businesses

Authors: Joe Seisdedos, SENIOR Associate & Dr Vicky Longshaw, IP CONSULTANT

While many expected the 2012/13 Federal Budget to result in deep cuts in several areas of government funding, it is pleasing to find that there have been no substantive cuts for funding of scientific and medical research. Research funding will be increased in line with expectations.

The Australian Research Council will receive $879 million in the next financial year, an increase of 4.8%. The National Health and Medical Research Council has also been allocated increased funding being tipped to receive $853 million next year. While the Innovation Investment Fund received $100 million to assist building businesses, Commercialisation Australia has been allocated $294.1 million to support Australian companies, entrepreneurs, researchers and inventors.

Rumours that the R&D tax incentive would be axed have also proved to be unfounded. This incentive, which was passed into law last year, is expected to provide support for small and medium-sized companies to the value of about $1.8 billion.

One of the more positive budgetary announcements is the allocation of $29.8 million for a new Manufacturing Technology Innovation Centre. The Centre is designed to foster innovative Australian industrial design and product development through the bringing together of a number of industry, research and government partners. The Centre is expected to provide a boost to innovation in the struggling Australian manufacturing sector.

The Federal Budget announcements fall on fertile ground in the Australian biotech market. Confidence in the biotechnology innovation sector is currently high with the annual Biotechnology Industry Position survey indicating a bullish sentiment. An overwhelming majority (82%) of respondents expect their business to grow in the coming year and the responding biotechnology companies indicated their intent to spend at least $610 million on R&D in the 2012/13 financial year.

While government spending on innovation and research has remained largely untouched, the business community has not been so fortunate. The business community has reacted negatively to the 2012/13 Federal Budget. A proposed cut in the company tax rate has not eventuated. The mining tax proceeds, originally intended to deliver tax cuts for small and large businesses, will now be allocated to households instead. Some commentators believe that the mining tax may also discourage investment in the mining sector. Businesses in power-intensive industries have expressed concern about the impact that the carbon tax will have on their bottom line.

While the business community has expressed frustration at being sidelined by the 2012/13 Federal Budget, confidence in the Australian innovation sector remains positive in light of the continued research funding. However, it is unclear how this mix of policies will flow through to research and investment decisions made by the business community. For businesses that rely heavily on innovation and intellectual property for growth, now is the time to build your research and development capabilities and consolidate your intellectual property assets.

To discuss your requirements please contact Joe Seisdedos ( or Vicky Longshaw (


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