Intergenerational Report released

The Government has released its next Intergenerational Report, which sets the vision for productivity growth up to 2050. The main themes in the report surround an ageing population and consequent pressures on health care along with associtated increases in health spending.

There is mention of the need for a Carbon Pollution Reduction Scheme with reference to investment in the development of low-emissions technology - in the form of a $4.5 billion clean energy initiative to develop this technology and build the infrastructure, skills and capacity required for a low pollution future.

The Report makes brief mention of the NBN and how this will aid in delivery of areas such as education and health, as well as enhancing the competitive dynamics of the telecommunications sector. Of particular interest to AIIA and the ICT industry is recognition of the place innovation and R&D plays in productivity growth:

“Where there is high-risk, experimental research, the high upfront cost generally outweighs the often uncertain returns. The benefits of research also tend to spillover to parties other than the original investor in that research. As a result, it may be beneficial for governments to correct underinvestment by the market through policy intervention.

A competitive and stable economy is important for encouraging innovation. Competition improves the incentives to innovate and encourages the flow of information between firms and across economies. The Productivity Commission has noted that market competition is the main driver of innovation and its diffusion throughout the economy.

The Government is supporting innovation in critical areas, including innovations by business, collaboration between private and public sector researchers and investing in the research capacities of our universities and public research agencies.”

While we welcome these statements, they do not sit well with recent announcements about amending the R&D tax concessions regime and introducing stricter definitional hurdles for potential R&D claimants, as well as outmoded multiple sales test which the government itself admitted last year were not appropriate for the software sector.

The IGR can be found at www.treasury.gov.au