The Industry Growth Program pause comes as startups grapple with broader uncertainty around grants, tax reform and Australia’s evolving innovation strategy.
The federal government spent budget week promoting new startup tax incentives and innovation reforms. Not to mention scaring the ecosystem with CGT changes. But behind the scenes, one of Australia’s biggest commercialisation grant programs has quietly paused new applications.
As first reported by InnovationAus, The Industry Growth Program (IGP) is no longer accepting new grant applications while the government reviews the program’s future. Businesses and advisors were reportedly notified of the pause last week.
The program itself was originally launched in 2023 as a $392 million initiative designed to help startups and SMEs commercialise new technologies.
The IGP was introduced after the winding back of the former Coalition government’s Entrepreneurs’ Programme and quickly became the federal government’s flagship commercialisation support initiative for startups and SMEs.
Many IGP-supported projects aligned with sectors prioritised under the National Reconstruction Fund (NRF), including advanced manufacturing and critical technologies.
The program combined advisory support with grants of up to $5 million aimed at helping startups and SMEs commercialise new technologies.
A mixed message for startups
The move arrives at an awkward moment for Australia’s innovation ecosystem.
In the same federal budget, the Albanese government promoted a series of startup and R&D tax reforms. These were part of a larger push towards improving productivity and encouraging investment into innovation-heavy businesses. Those measures included changes to VC incentives and proposed reforms to the R&D Tax Incentive.
At the same time, however, the budget also included reductions to existing commercialisation funding programs.
The Department of Industry, Science and Resources (DISR) told Startup Daily that $47.4 million in uncommitted IGP funding would be redirected over the forward estimates, reducing funding in 2028-29 and 2029-30.
DISR also confirmed the IGP “has been paused for new applicants” from May 12 while the department considers “changes for better targeted grant rounds and a more predictable grant application process”.
The department also said existing advisory services and grant agreements would continue during the pause.
“The Industry Growth Program has delivered more than $200 million in matched grants for small and medium enterprises… Funding of $186 million remains over the forward estimates,” the spokesperson said.
The program had already faced funding reductions in last year’s Mid-Year Economic and Fiscal Outlook (MYEFO), which cut more than $100 million from uncommitted IGP funding.
At the time, it was reported the savings formed part of a broader reprioritisation effort across industry and commercialisation programs.
Founders are increasingly worried about certainty
The latest pause is also likely to revive concerns about the long-term stability of Australia’s startup support programs.
In recent years, founders and advisors have dealt with repeated changes across both federal and state-backed innovation schemes.
In addition to the removal of the Entrepreneurs’ Programme, there have been reforms to Export Market Development Grants as well as the eventual death of Boosting Female Founders after years of controversy and confusion surrounding the program.
It also comes as the government considers broader recommendations from the Ambitious Australia review into Australia’s R&D system, which called for more coordinated and targeted commercialisation support.
Australia has long struggled to convert research and technical capability into globally scaled companies, with multiple reviews over the past decade warning about gaps in commercialisation support.
Why this matters beyond the Industry Growth Program
For many founders, the issue is no longer just access to grants, but whether innovation programs will still exist by the time applications are ready.
Because the IGP operated on a rolling basis, rather than fixed annual rounds, some startups may already have been deep into application preparation when the pause was introduced.
Commercialisation grants often involve months of preparation work, external advisors and detailed business planning before applications are lodged.
A sudden pause risks leaving some companies in limbo, particularly those relying on grant funding to support hiring, product launches or manufacturing scale-up.
The episode also raises broader questions about whether Australia is shifting away from direct commercialisation grants in favour of tax-based innovation incentives instead.
A spokesperson for industry minister Tim Ayres said the government remained committed to startups through broader innovation and tax reforms announced in the budget.
“The Albanese Government is a big backer of startups – innovation is a big part of lifting productivity and this Budget delivers more support,” the spokesperson said.
