A booming tech industry faces being “derailed” in Australia because of the government’s decision to slash funding for research and development grants, it has been alleged.
The rapidly growing new-era battery market is currently worth $213 billion, according to Perth-based maker Lithium Australia, but Australia’s already small $1.1 billion share of the global market faces severe headwinds after the government slashed funding in the May budget.
“Australia's lithium industry risks being consigned to international backwaters if such an opportunity to become a global front-runner in the emerging battery technology race is allowed to slip,” the listed company’s managing director, Adrian Griffin, said.
“The window for this opportunity is closing fast. If Australia shows initiative by providing R&D incentives for industry, we can capture an extra 12-27 per cent (an estimated extra $25-57 billion) of the value of the lithium chain globally.
“But Australia will never get there unless the federal government removes its newly imposed cap, which limits research and development rebates within the lithium-related sector to $4 million a year maximum for development companies with less than $20 million a year in revenue.”
According to Mr Griffin, previous rebates were open-ended for companies developing new energy resources.
“Ironically, while the federal government continues to allow open-ended R&D rebates for the biotech sector, if its proposed cuts prevail elsewhere, they will destroy any hope of establishing a locally based Lithium Valley,” he said.
At the time the funding cuts were announced, Reckon’s ANZ managing director, Sam Allert, said the move would have “huge implications” for innovation in the SME space.
“It’s disappointing to see that the government has decided to restructure the R&D Tax Incentive. This will have huge implications on many Australian small businesses that rely heavily on the tax concession to drive research, development and innovation, as well as start-ups who do not have the capacity to work on projects with a substantial R&D spend above industry peers,” he said.
However the government, in delivering the budget, pitched these changes as boosting transparency around eligibility requirements rather than a cut in funds being allocated.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.