Role for government in all economic climates

ONE of the most important players in the R&D field in any industry is the government. When times are good, we look to governments to set competition or deregulation policies, provide a good investment climate and avenues for export.

When things are like they are now, with thousands shed from the technology sector every week, we look to the government for help – everything from protective tariffs to making sure the welfare system can cope with the downturn.

There are too many government and government-directed bodies, schemes and grants to describe in detail, but more important is what the industry (both R&D and investment in R&D) thinks of them. The two questions that arise are – exactly what should governments provide, and are they doing enough?

Asked what responsibility the government has in R&D in the WA IT sector, Professor Leyland Pitt of Curtin University’s marketing department is emphatic. “An enormous one,” he says.

“Giving the tax breaks that will encourage individuals and corporates to fund and engage in research.”

Peter Why, chief executive of Dutch Venture Capitalist Zernike Australia, says there is a need for government to act faster in response to the R&D industry – especially the breakneck pace of IT.

“The State Government needs to improve in the area of knowledge-based industries,” he says. “I still think a lot needs to be done in commercialisation at the start-up level.”

But Brian Kasten, general manager of successful R&D operation KDC Systems and something of a self-described market liberal, cautions against expecting the government to hold the industry’s hand, placing more faith in the spirit of commercial development.

“I don’t think the government should be the sole source of support,” he says. “If you take away the entrepreneurial market, you end up with a nanny State. If people don’t help themselves they don’t deserve any help. You shouldn’t expect handouts.”

Phil Harman, chief technology officer at 3D technologies developer DDD, goes one step further, suggesting there are some areas government doesn’t belong in simply because it can’t cut it.

In the analogy of an inventor/engineer programmer (IEP) visiting a leading Manhattan venture capitalist, you’re unwittingly two minutes into your pitch during the elevator ride upstairs. By the time the meeting is under way in the boardroom, the manager will have already decided if they like you or your idea.

Mr Harman believes it’s that contact that is missing from the government’s way.

“Doing it locally, filling out a form, dealing with people who don’t have that expertise of making their mind up about you in a short time because they can see how passionate you are about your project is a really negative thing,” he says.

So where do governments’ responsibilities lie? Nimal Jayaratna, Professor of Information Systems at Curtin University, favours a stakeholder-driven approach, where the government, investors and consumers have an equal financial stake in the success of a product or service and will take more interest in (and demand results from) the machinations of investment. But, he says, “there should be more government incentives. The government hasn’t recognised the development of intellectual capacity to contribute to the Australian economy.”

Zernike’s Peter Why describes governments’ duty not in direct injections of cash, but rather making R&D a good thing to get involved in.

“The government needs to provide a prosperous business environment,” he says.

“In Europe, regional governments contribute to seed funds rather than give subsidies or grants – private sector management is focused on creating successful businesses.”

KDC’s Brian Kasten agrees.

“The government should provide support, but to industry that affects inventors, not just as a department that gives inventors money,” he says.

And while tax incentives and other mechanisms designed to help the industry prosper are all well and good, Rob Newman of Entrepren-eurs in Residence thinks the government should know its place.

“I wouldn’t expect the gov-ernment to handle R&D in IT,” he says.

“But we do expect them not to create impediments.”

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