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Industry and Competitiveness Agenda unveiled : Employee share schemes overhauled

Tony Abbott has unveiled his new $400 million policy blueprint to bolster industry performance, enhance competition, drive business innovation and better harness the commercial and economic potential of the scientific and research community.

The National Industry, Innovation and Competitiveness Agenda was announced this week by the Prime Minister along with Industry Minister, Ian Macfarlane. In good news for start-ups, it contains key changes to employee share schemes and aims for the establishment of new industry precincts to bolster growth and innovation.

Significant efforts are also being made to elevate science, both in the classroom and in in the area of product commercialisation. The Prime Minister has established a new Science Council which he will chair himself to better inform government priorities and policy.

However, in changes sure to opposed by the union movement, the rules governing the politically contentious 457 visa regime are to be relaxed. The government will proceed with changes to the Vocational Educational and Training sector with apprentices numbers on the slide.

The agenda is comprised of several planks:

1) Industry Growth Centres

At the heart of the Abbott government’s plan is the $188.5 investment to establish growth centres across five key industry sectors: food and agribusiness; mining equipment, technology and services; oil, gas and energy resources; medical technologies and pharmaceuticals; and advanced manufacturing.

The aim is to foster a greater interaction between the science community and the profit driven realm of industry in order to leverage better returns from the Commonwealth’s annual investment of $9.2bn in research.

Yet, industry will be left to do most of the heavy lifting, with the centres receiving $3.5 million a year before becoming self-sustaining after four years. The government will expect industry to establish the centres themselves, with Mr Macfarlane taking expressions of interests from business-led consortia.

“The more familiarity there is between the research world and the world of business, the more likely the co-operation is between, if you like, the high street and the ivory tower,” Mr Abbott said. “We want to see our best researchers come out of their universities and get involved in our workshops and factories.”

A series of stakeholder roundtables will be held in coming weeks with industry figures to thrash out the details.

2) Employee Share Scheme Shake-Up

A key plank of the agenda unveiled by the government is its renovation of the tax treatment of employee share schemes. Such schemes will now be reformed to give a leg-up to Australia’s start-up sector and help firms attract and retain staff.

Changes to the tax treatment of employee share schemes were introduced by the former Labor government in 2009 to reap a $200 million budget saving.

But Mr Macfarlane today announced the government would unwind the changes. All companies will now generally have the taxing point for discounted options shifted so the options are only taxed once they are converted to shares.

In a further move sure to please many budding entrepreneurs, the government will move to ensure that discounted shares provided by eligible start-ups to employees are not subject to upfront taxation.

If conditions are met, taxation will be now deferred until sale and shares issued at a discount will have that discount exempt from tax.

To be eligible for this tax concession, the company must be unlisted, incorporated for less than ten years and have a turnover of $50 million or less. The employee must also hold the shares for at least three years.

Treasurer Joe Hockey will consult with industry to ensure that the draft legislation delivers on its objectives. The changes are planned to take effect from July 1 2015.

3) Foreign-worker visa reform

The government will move to unwind the heavy-handed regulation around the 457 visa scheme which became a key political issue under the Gillard government after it was alleged employers were rorting the system.

Safeguards will remain to prevent rorts with 457 visa workers to receive the same market rates and workplace conditions as an Australian worker.

However, the government will make it easier to nominate and sponsor a foreign worker if there is a low risk of exploitation while gearing compliance and monitoring activities towards the high-risk end of the spectrum. Other restrictions will be eased, including a relaxation in some cases for English language requirements.

The Significant Investor Visa, open for applicants with an investment in Australia of $5 million, will also be overhauled to encourage more “high net worth individuals” to call Australia home. Visa processing times will be speeded-up, the criteria for eligible investments will be better aligned with the government’s priority areas and the pathway to permanent residency will be expedited.

4) Greater focus on STEM subjects

The government will put $12 million towards improving outcomes in the Science, Technology, Engineering and Mathematics (STEM) courses in schools across the country.

A new Commonwealth Science Council (to be chaired by the Prime Minister) will be established to advise government on areas of national strength and to forge stronger relationships between government, research organisations, universities and business.

It will include the Chief Scientist as well as the Ministers for Industry, Education and Health. In addition, five eminent scientists, researchers and educators as well as five business leaders will form the majority of the Council.

In his press conference, Mr Abbott said he wanted to put “science at the centre of industry policy”.

The government will invest $7.4 million to bolster mathematics resources at a primary and secondary level, $3.5 million to bolster student exposure to computer coding and a $500,000 P-TECH pilot programme to help nurture innovation.

5) Vocational Education Reform

Reforms in the VET sector form part of the government’s industry and competitiveness agenda and are geared to achieving practical outcomes, rather than training for training’s sake.

The government is pouring $200 million into a new apprenticeship support network from July 1 next year to help boost apprentice numbers and retention rates. The numbers of apprentices and trainees in training dropped 12.4 per cent in the 12 months to April sparking concern from employer groups like the Australian Chamber of Commerce and Industry.

The government has announced two pilot programs to help skill young Australians, including those in rural and remote areas.

6) Red Tape Reduction

The government will look at ensuring businesses do not have to pass through further regulatory obstacles to sell products if those products have already met widely accepted international standards or risk assessments.

This imposes a layer of extra red-tape on businesses while adding to costs and providing little extra protection to consumers.

If the product has already been accepted under a “trusted international standard or risk assessment”, then Australian regulators will be expected not to impose any additional requirements unless it can be shown there is a sound reason for doing so.

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Joe Kelly

Joe Kelly

Joe Kelly is a writer for Dynamic Business. He has previously worked in the Canberra Press Gallery and has a keen interest in business, the economy and federal policy. He also follows international relations and likes to read history.

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