The AiF network of small and medium-sized enterprises has warned against cutting back on research funding in view of the economic slowdown and expected losses in tax revenue.
The tax incentives planned by the coalition government for research-based companies alone will not be enough to raise the potential for innovation and to master the conversion to climate-friendly production, for example, said AiF President Sebastian Bauer in Berlin. Especially since small as well as medium-sized companies are unlikely to benefit from this billion-dollar subsidy.
"Economic growth is weakening, tax revenues are lower, and cuts are on the horizon in the federal budget," says Bauer. "We are constantly concerned that savings are being made in project funding."But it is precisely a sustainable climate policy that requires new technologies and financial support for small and medium-sized companies for more resource-efficient and CO2-neutral production.
The German Federation of Industrial Research Associations (AiF) brings together small and medium-sized companies and research. In contrast to large corporations, small and medium-sized enterprises often do not have their own research departments. They want to keep up with new trends, but often can’t afford the funding. About the AiF network with 100 research associations and 50.000 participating companies should be given easier access to new technologies.
This is made possible by the Central Innovation Program for SMEs (ZIM) and Industrielle Gemeinschaftsforschung (IGF). Research alliances in which scientists, small and medium-sized companies and networks across all sectors pool their expertise are intended to make technologies marketable more quickly. In Bauer’s view, however, a financial push is necessary: "Of course, we would like to see extra funds. We are in the starting blocks."
The need is great. Although corporate spending on research and development (R&D) is on the rise. In 2017, R&D spending accounted for 3.02 percent of Germany’s economic output, as shown in an overview of the National Reform Program. The target is 3.5 percent by 2025. At the same time, however, the number of "innovation-active companies" in Germany is falling – from 130.000 in 2008 to around 107.000 in 2017, according to economists at the Leibniz Center for European Economic Research.
Expenditure on innovations is concentrated in large companies and some medium-sized enterprises, according to an analysis by the Institute KMU Forschung Austria for the Ministry of Economics. For small and medium-sized companies without sufficient research capacities, programs such as the ZIM would come into play. This should be continued as a "broad, open-topic program," the study recommends.
So much for the recommendation to Economics Minister Peter Altmaier (CDU). He also calls joint industrial research "a core element of SME policy". His house points to increased funding in the past, but since then the amount has stagnated. At just 169 million euros, the funds are a "pittance," says AiF President Bauer. Much innovation potential remains untapped. After all, the draft budget for 2020 has so far earmarked 177 million euros – but tax estimates and budget discussions are still to come.
Bauer believes that project funding via the ZIM and the IGF would be far more effective than a tax allowance, which, according to the draft bill, would cost more than a billion euros from 2021 onwards. AiF is concerned that the tax allowance will result in a shortage of funds for funding programs. The Left Party politician Petra Sitte in the Bundestag also warns against this: a coexistence threatens to cannibalize programs such as the ZIM: "I think it is an absurd process to endanger successful funding without necessity."
The Union and the SPD claim to have expanded their programs. "It is this coalition that has increased the funds for ZIM year after year," praises CDU economic politician Mark Hauptmann in a Bundestag debate. A "significant increase" in spending on the "really very innovative" IGF program is what Thomas Jurk of the SPD is calling for. Sitte counters: the ZIM is stagnating at around 560 million euros per year.
The left-wing parties do not support the idea of a German Transfer Community, which the liberals are striving for. If it’s up to FDP expert Thomas Sattelberger, these projects should be selected, "gladly with the proven networks, such as industrial joint research under the umbrella of the AiF, as a backbone. This would give them a further boost".
If ZIM or IGF were to be absorbed into this transfer community, this would ultimately mean that these successful programs would be phased out, Sitte believes: "And I think that is rather absurd."Finally, the Ministry of Economics has pointed out that the turnover in ZIM projects has increased by two thirds, which has led to an increase in employment of 60 percent.
If it were up to AiF President and construction manager Bauer, not only project funding should be expanded. In order to increase the innovative power of small and medium-sized businesses, corporate income tax would also have to be lowered – on the condition that companies reinvest the freed-up funds.