Government may cut more SME programs

The Federal Government may take the axe to more business programs as it starts to restore the budget to surplus, Innovation Review head and deputy chair of CSIRO, Terry Cutler says.

Cutler was responding to reports this morning that Finance Minister Lindsay Tanner is reviewing almost 50,000 grants valued at $44.5 billion. The Government’s budget committee will start four months earlier than usual in a bid to find new spending cuts and counter criticism from the opposition that it is a debt happy government.

However, Cutler says there is a real risk that large programs aimed at SMEs could be slashed. “Last year’s budget was good in terms of the level of commitment to new innovation initiatives,” he says. “The real risk with the next budget, given the climate for SMES is really tough, is you might get another slash and burn like the cutting of Commercial Ready in 2008. That came out of the blue and it was an ill thought out cut.”

He also points out that it is easy to look at major programs. “That’s where you get a big slash.”

And he warns it’s easy to slash innovation investment. “Innovation investment is about long-term returns to the community rather than the immediate electoral impacts around more social programs.”

He says COMET is relatively safe as it is morphing into Enterprise Connect. But then the whole Enterprise Connect program could be a target. “That’s a big chunk of money,” he says.

He is also concerned that the Government might go after the R&D tax credit. “That might be attacked. It depends what they do to the edibility guidelines.”

And is also concerned that the Government might cut back the support of the program that helps fund start-ups – the IIF funds.

“The issue we have is there is permanent market failure at the start-up end – which they recognise in the US – and they need continued government support in this area. We don’t want any wind back there in this climate where everyone is already having huge problems. It should be strengthened rather than diminished.”

Cutler is also concerned there might be cut backs to university funding and the CSIRO.

“There is also the impact of the Government reducing IT expenditure through an overall review. IT platforms are so crucial to productivity gains in the service sector and public sector health and community services are driven by innovation off IT platforms,” he says.

Cutler is also concerned that the Government appears to have dropped the ball in including Australia’s SMEs in government procurement programs. “That’s unfinished business,” he says.