Yesterday we published Nick McNaughton’s analysis of the 2009 Federal Budget and its impact on emerging Australian businesses. Today, our Government Grants specialist Adrian Spencer considers the post-Budget winners and losers. Looking for a Government Grant? Here’s your cheat sheet.
The 2009 budget is underwhelming for business. There is a real lack of broad-based grant initiatives and support. The faded and almost forgotten Innovation White Paper (Venturous Australia), with 72 recommendations, only made one remarkable impact – the R&D Tax Concession will become a tax credit program, starting July 2010.
R&D Tax Credit – A New System
What this change actually means in reality is yet to be fully detailed. However, the program will deliver a better benefit to business. In the 2009-10 lead up, the current rebate cap on R&D expenditure will be lifted from $1m to $2m. For the first time, this would entitle a company in losses and with an R&D spend of $2m to potentially access a cash rebate of $750k.
The environment is the other big winner, with $4.5 billion in funding being pumped into clean energy and carbon capture. Full details have not yet been released to explain just how much funding in this space will be made available through competitive grants. Notably, there is no ongoing support for Climate Ready.
Unfortunately, Commercial Ready has not been resurrected. The simple explanation given is that the new R&D Tax Credit will fill this gap. This is extremely disappointing and the billion dollar funding gap left in pre-commercial development and support for innovation will now remain largely unaddressed. It will be interesting to see to what extent the new Commonwealth Commercialisation Institute addresses this gap with grant funding.
- R&D Tax Credit: The R&D program will change from a tax concession to a credit system, in an attempt to simplify the system. The changes are significant and complex.
- Clean Energy Initiative: support for clean energy initiatives, focusing on carbon capture and storage, solar and non-solar renewable technologies. Creating:
- Carbon Capture Storage Flagships: $2.4 billion will go to two to four projects.
- Solar Flagships: $1.6 billion will go to 2 solar thermal and 2 PV projects, totalling 1,000MW.
- Renewables Australia: $465 million to support new technologies, including a VC investment program.
- Joint Research Engagement Program: $1.2 billion for combined university and industry research.
- National Energy Efficiency Initiative: $100 million grant for integrated renewable energy and infrastructure in one regional city.
- Bionic Eye: $50 million grant program for research to develop a bionic eye.
- Securing Australian Apprentices: $146 million for employers to hire out-of-trade apprentices.
- Productivity Places: 10,000 training places for Cert 3 or higher qualifications.
- Commonwealth Commercialisation Institute: $196 million for commercialisation of local innovations.
- Victorian Bushfires: income recovery subsidy for small businesses.
- Drought assistance: a raft of programs will aid small business and primary producers with one off grants of up to $150,000, providing professional advice, planning and income support.
- Small Block Irrigators: grants for removal of irrigation planting and infrastructure increased to $20k and new exit grants up to $150k.
- Small Business Tax Break: bonus deduction of 50 percent for eligible new assets for small businesses (less than $2 million group turnover) until 31 December, 2009.
- Carbon Pollution Reduction Scheme: $80 million for a capital investment grants. Plus $100 million for energy audits and capital investments, and $20 million for business information packages.
- LPG Vehicle Scheme: Rebates for post-factory conversions have dropped to $1,750.
- Entrepreneurs’ tax offset (ETO): the income test has been put on hold for another 12 months.
- Product Diversification Scheme: funds have been redirected to the Clothing and Household Textile Building Innovation Capability Program.
- TCF Supply Chain Opportunities: funds redirected to Competitive Grants to Build Innovative Capability Program.
- Demonstrator Capability Program: innovation grants to industry, in support of Defence-related projects, will now occur within Priority Industry Capability Centres of Excellence.
- Textile Clothing and Footwear: more funding to continue and redevelop the current raft of grants.
- Export Market Development Grants Scheme: a pool of an extra $50 million is now available.
- The Jobs Fund: $650 million to create jobs and skills, in mainly non-business areas.
- Innovation Investment Follow-on Fund: a pool of up to $83 million will be provided to ‘early stage innovative Australian companies’ previously funded.
- Digital Regions Initiative: in partnership with state and local governments, will provide grants to rural and regional community-based organisations for broadband in health, education and emergency.
- Water for the Future: grants of $20 million to projects that develop stormwater harvesting systems.
- Climate Ready: There will be no further funding once the allocation has expired, expected to finish this June.
- Re-Tooling for Climate Change: There will be no further funding rounds after March 2010.
- Green Building Fund: There will be no further funding rounds after April 2010.
- International Science Linkages: The 2009 round has been cancelled.
- Land & Water Australia: There will be no further funding rounds.
- Greenhouse Gas Abatement Program: There were no new rounds over at least five years.
- Small Business & Household Initiative: There will be no further funding rounds.
- Phase out of the Inefficient Light Bulbs Program.
A range of new measures have been proposed to assist small business. Unfortunately, they do not offer cash assistance. They will be delivered in the form of training, support or mentoring and include the following:
- Royal Institution of Australia: $15 million to unite industry, scientists, government and community to further public knowledge on the use of science and technology.
- Golden Gurus: for over 55s to provide mentoring support to business and community.
- Small Business Online Program: $10 million to advise small businesses on e-business issues.
- Small business Support Line: $10 million for a support line and referral service to assist small business.
Adrian Spencer is a dedicated grants specialist. He has accessed over $40 Million for organisations through State and Federal Government grants, rebates and concessions. Adrian is the Founder and CEO of GrantReady.