The Department of Industry confirmed the freeze on Friday, however is remaining tighted-lipped about the details. ZDNet Australia has obtained an AusIndustry Notice advising relevant parties that whilst the total funding to the Start program was not affected, there would an unavoidable and open-ended delay in the approval of grant assessments.
According to the Notice, the freeze is the result of an unprecedented increase in demand for grant funds, and a doubling of the amount spent by grant recipients in their first contractual year.
The statement provided no indication of when the Industry Research and Development Board (IR&D) might reconvene to consider funding for new projects.
While many have been concerned for some time that the grant scheme was under threat, the total freeze has come as a shock to those in the process of applying for funding through Start.
AusIndustry representatives prevaricated when approached by ZDNet Australia a week ago, commenting only that the sudden drop in the grant approval rate was the result of an increase in applicants.
When asked directly if an overspend had resulted in cuts to the Start program, Les Baxter, NSW manager for AusIndustry, said the grant process was ongoing and had not been curtailed in any way as the result of excess spending.
Nonetheless, several sources close to the grant process have confirmed that AusIndustry staff knew about the overspend for some time, although they suggested no one was aware the program would be frozen.
Kris Gale, managing director of Michael Johnson & Associates, who has been assisting applicants in the grant process, said his clients would be severely affected by the news.
-A number of my clients are well advanced in the application process and they have been greatly affected by the decision to put the application funding on hold," Gale said. -Although they are suggesting the program might restart at some stage in the future, the decision to cancel applications that were already underway will damage the program's reputation."
The IR&D Board Annual Report 2000-2001 indicated that the IR&D Board overshot its budget by AU$50 million, having already overspent AU$20 million in its first year of operation, according to the previous year's report.
However, another source close to the grant approval process pointed out that the program's funding, which was announced in the Prime Minister's Backing Australia's Ability launch in January 1999, was to be spread over five years.
-The figure of AU$180 million per year only ever represented the average of the total funds awarded to the program if the same amount were spent every year," the source said. -They would have done better to indicate that less funds would be available in future years, as per the amount originally put aside for these grants, rather than bring the process to a sudden halt."
The decision to freeze the grants has attracted particular criticism as it coincides with the Department of Industry's provision of AU$35 million to Japanese car manufacturer Mitsubishi Motors, and AU$125 million to mining giant Rio Tinto.
Sounds like a monumental stuffup. Why don't they use an accounting package like MYOB or QuickBooks and keep track of things themselves like I have to do run my small business and do the BAS? May be impose BAS on these bodies so they are uptodate with their accounts. I was pretty ticked off too that a Japanese company gets millions but we get very little. Let Japan go under and start imposing some sanity on our local embryonic industry. Sounds like there need to be a few head accountants sacked here. Sounds very much like kickbacks from big businesses are moving the grants to them over and against small businesses and startups. Fight back! We'll nab the tricksters.