Startups and entrepreneurs are a vital part of the Australian economy but issues affecting startups, or policies and promises focusing on investment in innovation, have received little air time in this federal election campaign, James Bull, Director of Frank, Hall & Wilcox’s dedicated start-up practice, asked key industry players and members of Hall & Wilcox’s Frank Lab cohort (all start-ups in varying stages of their entrepreneurial journey) to share their election wish lists.
Shendon Ewans, Founder, Gobbill and Frank Lab member
What happened to the ‘Ideas Boom’ and our innovation agenda under Malcolm Turnbull’s leadership? The key issue I see is that investment in innovation seems to have evaporated from election policies.
Rather than quick hit handouts, we are looking for inspirational leadership to drive future prosperity. We want strategies and policies that don’t just aim to win or hold marginal seats.
Investment in innovation should sit as a centrepiece of driving our jobs of the future. We saw a glimpse when Labour on 23 April committed to spending $4 million on creating a national centre of artificial intelligence in Melbourne if it wins the upcoming May election.
In contrast, the UK has touted to be spending £1 billion as a package to support the development of AI in industry and academia. The UK has an AI skills gap which it is keen to close to remain at the forefront of AI innovation.
Australia is competing with the rest of the world and we’re losing out.
Nick Northcott, Executive Chairman, Eudaemon Technologies and Frank Lab member
Innovation Policy / R&D Tax
I don’t mind if the R&D Tax legislation is tweaked to an alternative approach to drive innovation, such as a direct incentives approach as proposed by Bill Ferris (formerly Chair of Innovation and Science Australia). In saying that, Innovation funding as a whole should be increasing, not having cash cut out of it arbitrarily. We need a sensible set of policies put in place to drive innovation and there needs to be stability in those policies and funding and support to encourage entrepreneurs and investors.
Childcare concession restructuring
I believe we should make childcare tax deductible, or at least do an evaluation on it. I agree with Diane Smith-Ganders’ policy position on this (Diane is a director of Wesfarmers and AGL and a former president of Chief Executive Women, who would make childcare tax deductible). As an entrepreneur with two children and a wife who works fulltime, our childcare costs are exorbitant. I would hope that evidence-driven policy around childcare would encourage more women to stay in the workforce, in particular in high growth innovation companies.
Industry Growth Centres
What is going to happen with the Industry Growth Centres moving forward? Will Australia make big bets on industries of the future that we can win? If not why not? Connected to this discussion is our investment in the infrastructure to support the future of work and the industries that will provide growth.
We are a small country of migrants. To be competitive in the future we will need to encourage and support skilled migration.
Genuine tax reform
Not just tinkering around the edges. I would like to see a serious attempt at this so that it incentivises aspiration. We don’t need another review though – it’s really about a government’s (and all elected officials) role and responsibility to work in a bipartisan fashion to implement genuine reform.
Sarah Agboola, founder of mtime, Frank Lab member
I work in recruitment and the lack of grant options for service-based businesses, visa restrictions and the payroll tax are the biggest issues I care about.
I think the NEIS (New Enterprise Incentive Scheme) scheme should be reviewed. At the moment, the scheme cuts out anyone who may have a side hustle but wants to pursue it full-time because, in order to be eligible for the scheme, you need to have started a business within the program and you also need to be receiving a government payment before entering. I think it should be expanded out to encourage more people to give small business a go.
Alex Scandurra, CEO, Stone & Chalk
This is a critical time to review how we can best put in place the infrastructure and frameworks that will help Australia’s industries become creators of jobs and wealth.
Unfortunately, there is a lack of awareness in Australia around how the creation of innovative technologies leads to higher levels of economic investment and new jobs.
While primary industries and services are important, without technology these industries become stagnant due to lack of competitiveness with international markets. Without a strong domestic technology and innovation economy, we will not be able to create jobs to support the number of people entering the workforce each year.
Technology matters. We need to create policies to safeguard the future of Australia and ensure our nation is positioned as the most attractive market for talent, investors and researches. We also need to be providing incentives to attract this kind of investment.
The UK, France, Ireland and the NZ, are offering incentives – from R&D taxes to funding incubators, providing significant tax relief for investors and founders given the risks they are taking. They are also providing low-interest loans and direct grants for promising startups as well as de-politicising visas to ensure they suck the best talent in to plug their skills shortages and in turn help these companies succeed.
At Stone & Chalk alone, around 50% of our residents were born overseas, which highlights Australia’s need for international talent and the reality that we have significant shortages of people with the emerging skills we need.
Therefore, it is absolutely key that we need to help startups and scaleups sell to larger organisations and encourage collaboration between corporates and governments with startups. We also need to speed up initiatives that will encourage competition, such as not delaying open banking any further.
Australia has an incredible opportunity to offer initiatives to create the jobs of tomorrow for our children, and grandchildren.
Saul Wakerman, Co-Founder, Atticus and Frank Lab member
For this election and those to come, the government should think long term and focus on education. As automation and AI knock on the doors of every industry, the government has a responsibility to ensure that the benefits of this transition are experienced across our society. This includes ensuring that sufficient funding is going to primary, secondary and tertiary institutions to ensure that companies have the talent they need coming through, and that every student gets the opportunity to participate in the technological revolution.
Jacqui Barrett, Partner and Frank Lab Sydney lead, Hall & Wilcox
Given the critical role that start-ups and technology play in the future of the Australian economy, it is important for an incumbent government to make the growth of the start-up and technology ecosystem in Australia a priority.
One means by which this might be achieved is for the Federal Government to throw its support behind R&D and more expenditure on innovation. Such action will generate innovation and more job creation.
The Federal Government would also be well served to analyse startup initiatives and policies in other countries to identify where improvements might be made
Take the Entrepreneurs’ Relief provided in the UK, where eligible entrepreneurs pay tax at 10% on all gains on qualifying assets, which is largely applied to gains on the sale of some of the shares in the start-up company. The reduced tax rate allows entrepreneurs to “let their funds go further” to support themselves and their family while they are working on great ideas for the betterment and competitiveness of their industries and their country.
Perhaps our biggest wish for this election would be for startup and fintech industry to once again be an election issue.
These companies have the power to transform our nation, but there’s a disconnect this reality and perception of fast-growing businesses in Australia. Politicians of both sides of parliament need to brave this divide and convince the public on the long term benefits of a vibrant tech ecosystem and an innovation-led economy.
Beyond this, there’s a number of policies we’d like to see implemented.
We would like to see a firm commitment to R&D spending in the forward estimates to ensure they are not cut again in future budgets. We would also like further clarification on what’s included in this funding and moves from government to ensure this funding is directed towards emerging companies rather than Australia’s largest businesses.
Startup loans from the government
We would like the government to follow the UK’s lead and introduce a loans program for early-stage businesses. The UK government provides £25,000 ($46,000) fixed interest loans to help get ideas off the ground. Its peak federal start-up body, Innovate UK, also holds competitions to fund companies for as much as £10 million. This isn’t much money in the overall scheme of the multi-billion dollar federal budget, but will have a massive impact on the industry.
Widen the ESIC
The government should consider broadening the ESIC to ensure more startups and early-stage investments are eligible. We need to incentivise early stage business building and investment for pre-revenue companies. This policy is now a crucial bridge for the sector as R&D tax incentives scheme remains in limbo.
Funding for rollout of the CDR
FinTech Australia is concerned that no money was allocated in the budget to the implementation of various tech reforms, including the consumer data right (CDR). We’re currently investing heavily in consultation and framework on to see the policy fall flat through a lack of support when its implemented. We need to stop this trend and rectify it before the CDR is rolled out.
Skill development and retraining
In the not too distant future, we will create more jobs through technology than we will through building roads. We need to prepare for this and incentivise and promote retraining and up-skilling.
Cameron Dart, CEO of Australian FinTech
Australian FinTech works tirelessly to promote over 600 Aussie fintechs to Australia and the world – from pre-launch and start-ups, to scale-ups and ASX-listed multinationals. It would be nice if organisations like ours had further support from the government in various aspects – tax incentives, grants, job placements – we’re doing the job for the government and helping companies get promoted globally which in turn increases growth and results in more jobs. But there’s nothing.
We were recently made aware of a government grant opportunity, and after ticking 9 out of 10 boxes, the 10th box stated we needed a turnover of $2 million per year! Surely if you’re generating that sort of money you don’t need a grant. It seems like governments – state, local and federal – all ‘say’ they want to help and offer grants, but they grants are unattainable.
Frustrating is the word here!
Shailla Van Raad, Co-Founder, Airbooth and community member of RMIT Activator
Real change for equal pay and creating a fairer playing field to ensure women have access to be able to participate in the workforce. This may mean better support for women through childcare, for example. This is will add $$$ to Australian GDP and productivity as well as create a more diverse workforce!
Tom Nijam, Co-founder, Hood Food Guide and community member of RMIT Activator
Technology is the largest creator of new, desirable jobs globally, making high-growth tech startups critical to Australia’s economic future.
To create those jobs, we need local startups being globally competitive. To achieve that, we need access and be attractive to local great talent and overseas talent, but the government’s crackdown on 457 visas stops that dramatically.
They passed it to “help more Australians get better jobs” but in reality it will do the opposite, stopping Australian companies from attracting international talent, making us less competitive and therefore less attractive for local talent to work at. Great Australian talent will leave for more desirable international jobs and overseas talent won’t even look at us.
So what is the government doing to support Australian startups in attracting local and international talent to the Australian startup industry?
The federal government last year revealed plans to cut $2.4 billion from the R&D Tax Incetive scheme through a range of changes. I’d like to see a firm commitment on R&D spending estimates and to ensure that this funding impacts startups rather than Australia’s largest companies.