On Tuesday night, Treasurer Josh Frydenberg unveiled several measures aimed at expanding Australia’s digital capabilities and knowledge economy.

Included are record spending on cyber security, changes to Australia’s foreign investment framework, expansion of the patent box regime to support AgTech and CleanTech and a further announcement affecting the employee share scheme.

The Australian Investment Council (AIC) welcomed the government’s commitments, with the body’s chief executive hailing several key measures.

Patent box extension

On Tuesday night, the government promised to expand the patent box regime to cover certain low-emissions technologies and activities in the agricultural sector.

As part of this measure, the government said it would extend the preferential effective tax rate of 17 percent to cover corporate taxpayers who commercialize their eligible payments related to agricultural and veterinary chemical products and those who commercialize their patented technologies that have potential to reduce emissions.

"The extension of the patent box regime to support AgTech and CleanTech and the expansion of the previously announced regime for biotech companies is a natural fit for industries where Australia has a competitive advantage in the global economy," said AIC's Yasser El-Ansari.

“It's consistent [with] the council's views that the regime proposed in last year's budget was too narrow.

Foreign investment

In its election budget, the government also promised to change the framework for foreign investment in Australia to help the country's economic recovery from the COVID-19 pandemic.

These amendments, due to come into effect on April 1, aim to streamline the requirement that some investors notify the government before acquiring an interest, while preserving the government's ability to deal with issues of national interest as they arise.

Commenting on the government's announcement, the Australian Investment Board said it was a "positive step" that should ensure the Foreign Investment Review Board's (FIRB) resources are directed appropriately.

"As an open economy dependent on attracting foreign capital, it is vital that the process remains efficient and does not create unintended consequences for passive investors in the Australian economy."

Employee Sharing Schemes

The government has pledged to expand access to employee share schemes and further cut red tape so that employees at all levels can directly participate in the growth of the businesses they help to generate.

Where employers make larger offers in relation to employee share schemes in unlisted companies, participants can invest up to:

• $30,000 per participant per year accrued for unexercised options up to five years, plus 70 percent of dividends and cash bonuses; or

• any amount if it would enable them to immediately take advantage of a planned sale or listing of the company to sell their purchased shares at a profit.

The government has also confirmed it will remove regulatory requirements for independent contractor bids where they do not have to pay interest.

Commenting on the announcement, Mr El-Ansary said the changes come at a crucial time, marred by a critical skills shortage in the innovation sector.

"Employee sharing schemes are widely recognized as one mechanism for attracting and aligning the interests of skilled employees to innovative, high-growth enterprises that often have limited financial and cash resources but need access to a highly skilled workforce to to help realize a vision and become large global enterprises in the long term.”

REDSPICE Pack (Sustainability, Effects, Defense, Space, Intelligence, Cyber ​​and Enablers)

In addition, the government has committed $9.9 billion over 10 years to 2030-31. to the Australian Signals Directorate (ASD) for the provision of the Resilience, Effects, Defence, Space, Intelligence, Cyber ​​and Enablement Package (REDSPICE).

The funds are to triple ASD's offensive cyber capabilities and double its cyber hunt and response activities.

"Cyber-attacks are becoming more prevalent in all spheres of government, business and society as Internet capabilities beyond computers and mobile phones into other cyber-physical or 'smart' systems extend the threat of remote exploitation to a host of new technologies that are at the core of everyday Australians such as transport control systems, power grids and industrial plants,” Mr El-Ansary said.

"The commitment to invest $9.9 billion over 10 years to double the capacity of the Australian Signals Directorate will provide much-needed additional access to training and skills, as well as neighboring cyber security industries, and which should support greater investment in research and developing innovative solutions in Australia.”

Commercialization of university research

The government has also pledged $988.2 million over five years from 2021-22. (and about $325.1 million annually) to deliver an ambitious research reform package that will boost university-industry collaboration, workforce mobility, and the translation and commercialization of research

This measure will provide $505.2 million over a 5-year period from 2021-22. to establish Australian Economic Accelerator (AEA) grants to support university research projects from proof of concept and proof of scale to commercialisation.

According to Mr El-Ansary, increasing collaboration between private sector firms and universities is vital to ensure Australia can continue to build its innovation capacity to drive the next wave of economic growth.

"There is significant economic gain to the nation that comes from supporting high-growth businesses built on relevant and industry-focused university research that will create new industries and new high-value jobs," he said.

Maja Garatsa Djurdjevic

Maya's career in journalism spans more than a decade in finance, business and politics. Already an experienced editor and reporter in all elements of the financial services sector, before joining Momentum Media, Maya reported for several established news outlets in South East Europe, looking at key processes in post-conflict societies.