by Chris Becker

This could actually work. From Fairfax:

Labor will go to the next election pledging to introduce HECS-style loans for entrepreneurial university graduates who want to create their own start-up companies.

The $5.5 million plan, to be announced by Opposition Leader Bill Shorten in Sydney on Thursday, would create the option of a “start-up year” at the end of a degree similar to an academically focused honours year.

“By expanding the existing income-contingent loan system, Australian students will have the opportunity to undertake an additional business-focused year of university and develop their ideas into a start-up business,” Mr Shorten said.

“In a time of economic change and transition, the choice before Australia is clear: we must get smarter or we will get poorer.”

While the amount is paltry – need to move the decimal point to the right a couple times Mr Shorten – this is better than nothing and provides another echelon in the very thin ranks of capital raising and real risk-taking investments.

Any approach that removes the focus on turning universities into profit-driven institutions, thus creating an American style Frankenstein with a trillion dollars of unpayable student debt and a focus on “bums on seats” and not “brains at work”, is to be applauded.

By linking this funding to the income-contingent loans that characterise the HECS/HELP system – which are in effect, money the government owes itself – it provides a much better way of funding initial startups than the traditionally moth in wallet approach that big business Australia takes, leaving real research spending on the floor.

According to the Organisation for Economic Co-operation and Development, only 3.5 per cent of large Australian businesses collaborate on innovation with higher education or public research, far behind other advanced economies.

Thirty-one per cent of British companies, 43 per cent of German companies and 70 per cent of Finnish companies collaborate with universities on research.

Those damn Finns again and their brilliant education system!

I’ve long called for a revolution in the way Australia funds its research, both pure and applied, by tapping the superannuation sector and households. This sound policy, that will obviously require more inspection, is another way of helping lift that sector off the floor from which its been squished by successive governments.

One hopes in a bipartisan environment that Labor could take this policy to the new PM for consideration. But a Treasurer hell bent on reducing a “spending problem” – which largely doesn’t exist – leading into a real revenue slump in the coming years would nix this idea.

The key multiplier in the future prosperity of Australia resides in its youth, and how they can use their innovation and ideas. Its never been about holes in the ground or selling mortgages.

Labor considers HECS model for business startups