12/08/2010 - 00:00

Sector struggling with lack of certainty

12/08/2010 - 00:00


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MORE than two years after the federal government axed its Commercial Ready program, the innovation sector is still waiting for stability and certainty of government support.

Sector struggling with lack of certainty

MORE than two years after the federal government axed its Commercial Ready program, the innovation sector is still waiting for stability and certainty of government support.

Commercial Ready provided $200 million a year to small and medium enterprises, to foster research and development, proof-of-concept and early-stage commercialisation at the grassroots level.

Ernst & Young senior partner Robin Parsons said that, since the scrapping of the program, inconsistent federal government policies had hurt the innovation sector.

“The Commercial Ready scheme was sacrificed on the altar of politics,” Mr Parsons told the boardroom forum.

“If government can keep a stable policy around core enabling intervention in the market I think that’s invaluable and I think that’s the thing that’s missing.”

Coretrack chief executive Nanne van ’t Riet said the short-term nature of government was where it all went “horribly wrong” for innovative firms looking for government support.

“I think we’ve got all of the financial expertise to come up with solutions, we just for some reason can’t get governments, whether its federal or state to buy into that,” he said.

Alexium chairman Gavin Rezos said a big issue for innovative firms was not just investors, but those in power in the state, particularly the state government, not being interested in advancing renewable energy because of its cost and potential unpopularity with voters.

“They are not particularly interested in building a renewable energy system that will benefit their grandchildren, because it’s going to cost them too much now,” Mr Rezos said.

Nearmap non-executive chairman Rob Newman agreed that stability of government policy was key for the advancement of innovative technologies.

Mr Newman said it went further than just funding, as regulations surrounding renewable energy were subject to change, which shifted the goal posts for renewable energy firms.

“We’ve invested in a solar energy company, and in the time we were setting it up, in the three months funding the management team, federal plus state government regulations changed three times in those three months.” he said. “How the hell do you build a business model when the government won’t make up its mind whether it is going to support this or not?”

Carnegie Wave Energy managing director Mark Ottaviano said the federal government’s decision to defer its climate change legislation had a negative effect on investment capital in the renewable energy and clean technology sector.

Dr Ottaviano said a key issue was that there had been a lot of recent press about policy uncertainty in the mining sector due to the mining tax, but there had not been a lot of analysis on the impact of policy changes in the clean technology sector.

“When government signals strongly it’s going to do something and then they don’t do it, that just kills investor confidence,” he said.

“If you look at the Australian clean tech index of Australian clean tech companies, its down 60 per cent for the last 12 months, there haven’t been too many winners in that sector in the last 12 months.

“Its more about perception more than anything else, because the carbon price, which has been the big policy change, doesn’t really pull new technology through, we’re not talking about a big enough carbon price to do that, and it just drains confidence from the sector, and in turn that drains capital out.”

But Australian Venture Consultants principal consultant, Larry Lopez, played down the importance of government help, saying it was folly to expect it was the cure-all for the sector’s capital woes.

“If you’re going to tell me that any investment that you bring to me that is reliant on government policy, then it’s a crap investment,” Mr Lopez said.


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