The federal government is looking to follow through on an election promise to back university students looking to launch their own startup ideas with a HECS-style loans program.

Speaking at the University of Technology Sydney today – home of UTS Startups run by Murray Hurps – industry and science minister Ed Husic said the Startup Year program will provide up to 2000 loans annually to final-year undergraduate students and current post-graduate students to participate in uni-based incubator or accelerator programs. 

“We want our next generation of businesses to grow from the ideas and energy of young Australians. And we want Startup Year to help make that happen,” he said. 

“By expanding access to vital capital and startup programs we will help diversify the talent and skills pipeline so that new ideas can come online from all corners of the Australian community.”

Husic said they want to get the program up and running next year and have opened the Startup Year consultation paper for feedback until mid November. 

“It will strengthen links between our universities, industry and the startup community, leading to greater research translation and commercialisation,” he said.

But the plan comes as the Productivity Commission issued its third interim report into innovation in Australia this week arguing that with just 1-2% of Australian companies producing true global innovation, attention should turn to the other 98% and the government should move from investing in public research with grants and incentives to a more open trade and investment regime and recognition of the value of skilled migration as a source of new ideas.

Productivity Commission Deputy Chair, Dr Alex Robson said policy has traditionally been focused on cutting edge invention.

“But there are likely to be bigger gains in encouraging everyday, incremental innovation across the vast majority of Australian businesses,” he said.

“There are worrying signs that the principal vehicles for acquiring and transferring knowledge – what we refer to as diffusion – have slowed or stalled. While previously we could have relied on labour mobility and investment in machinery, equipment and intangible capital to spread ideas, these have all been either stagnating or declining. Diffusion has the potential to lift the performance of over a million businesses.”

The Productivity Commission is after feedback on the interim report 5-year Productivity Inquiry: Innovation for the 98% until October 21.

Meanwhile, federal education minister Jason Clare is backing the Startup Year program, saying it will build the pool of knowledgeable entrepreneurs and encourage the development of startups to drive innovation. 

“The higher education sector has wonderful incubators and startup support schemes, but are limited by the number of students they can take on board,” he said.

“We want consultation for Startup Year to learn from the best programs and appropriately expand them to reach new layers of students with great ideas.

“By working in specialist higher education settings, these new entrepreneurs can gain access to resources, facilities, mentoring and business networks. This will give them the best chance at success.”

Clare said they want higher education providers, industry, entrepreneurs, investors and students to share their views and advice on how this program should work.

Feedback on the Startup Year consultation paper is open until November 15.