Malcolm Turnbull has long been considered a champion of Australia’s tech and startup scene, but his declaration upon taking over as Prime Minister in September that “the Australia of the future has to be a nation that is agile, that is innovative, that is creative” made startup hearts across the country swoon. Now, three months later, the Turnbull Government is walking the walk with the launch of a National Science and Innovation Agenda that aims to inspire innovation and entrepreneurship in Australia.
Today’s announcement, the Prime Minister’s first big policy statement, is heralding the start of an ‘ideas boom’. The mining boom has been great for Australia, Turnbull said, but it has inevitably receded, and innovation will now be the driving force behind Australia’s prosperity. He highlighted the role that Asia can play in helping drive this prosperity, thanks to Australia’s place “on the doorstep of Asia” and the new trade agreements with China, Japan, and Korea.
The Government’s announcement revolves around four key ideas: culture and capital, collaboration and skills, incentivising risk, and government as an exemplar, with Turnbull saying that “a government has to be as agile as the startup businesses it seeks to inspire.” At its core, the Government is looking to create a culture of creativity and innovation, and keep it in Australia, by investing in STEM education and incentivising risk to encourage both founders to have a go and investors to take a chance on them.
“We’ve got to be more prepared to have a go, and embrace risk and experimentation,” Turnbull said.
Peter Bradd, CEO of StartupAUS, said today’s announcement is a great start from the Government, showing that it is intent on “real action rather than just rhetoric.”
“It’s fantastic to have this at the top of the political agenda. Both sides of politics are now recognising the critical importance of innovation to Australia’s economy – and the vast opportunities we can harness if we are smart and act quickly,” he said.
Culture and capital
Turnbull’s announcement today focused on the idea of creating a culture that fosters and inspires entrepreneurship and innovation, which the Government aims to create through the providing of education and opportunities.
The Government said it is committed to giving young Australians the requisite skills for the jobs of the future, earmarking $51 million to be spent across five years on various initiatives aimed at improving the digital literacy of our students.
“We are committed to ensuring our students have the ability to find high skilled jobs…and promoting coding and computing in skills to ensure students have the skills necessary for the jobs of the future,” Turnbull said.
The Government will also invest $13 million over five years to encourage more women to enter, and remain in, STEM-related careers. This funding will go towards initiatives such as partnerships with the private sector on programs to celebrate female STEM role models and foster interest in STEM among girls and women, the establishing of a new program under the ‘Male Champions of Change’ project to focus on STEM-based and entrepreneurial industries, and the expansion of the Science in Australia Gender Equity Pilot.
Nicole Williamson, startup advisor and investor, told Startup Daily that while today is a “great day for science and startups in Australia”, she was hoping to see a more direct focus on women in tech in today’s announcement.
“There is $13 million for STEM education for women and establishment of a startup “Male Champions of Change”, one of our key recommendations at Wyatt Roy’s recent PolicyHack, which is a great start. But we need to turn ideas into action. More focus on co-funding high growth female-led startups and education for female angel investors as they do in the US, England and New Zealand would have been ideal,” Williamson said.
With $8 million put aside by the Government to support accelerators and incubators, Williamson said she hopes to tap into this funding to focus on female-led businesses. She has also called on the Prime Minister to include more women on the team advising him on innovation.
“At the moment it’s a sea of men,” she said.
As well as creating and keeping jobs in Australia, the Government will also be looking to engineer a reverse brain drain of sorts by introducing a new Entrepreneur Visa “for entrepreneurs with innovative ideas and financial backing, and a pathway to permanent residence.” In addition, pathways to permanent residents for postgraduate research graduates with STEM qualifications will be “enhanced.”
Dr Jana Matthews, ANZ Chair in Business Growth, welcomed the initiative, saying, “We want to grow more Australian entrepreneurs, but we also need to welcome entrepreneurs from other countries who want to come to Australia to start and grow their companies here. This new visa class should enable that to happen. More successful startups will have a positive, long-term impact on the economy.”
Collaboration and skills
The Prime Minister emphasised the need for collaboration between business, research organisations, and educational institutions in order for greater commercialisation of ideas.
“Australia is falling behind when it comes to commercialising good ideas and collaborating with industry; Australia ranks last or second last amongst OECD countries for business collaboration. Increasing collaboration between research, universities and business is essential to commercialising great ideas and research and growing it into new sources of revenue and new industries,” Turnbull said.
With the role of universities a hotly-debated topic in the startup sector over the last few months, the Government is set to introduce “clear and transparent measures of non-academic impact and industry and end-user engagement” through a national assessment of university research performance. The measures will be determined through consultation with university, industry, and community stakeholders and with a pilot assessment program to begin in 2017.
The Government has also earmarked $100 million funding for CSIRO, with $75 million to go to its Data61 arm. While the funding was welcomed by the organisation, it falls short of the $110 million in funding CSIRO lost due to the Abbott Government’s budget cuts.
Australians love reward, but when it comes to failure it’s hard for startups and small businesses to land back on their feet. The startups ecosystem benefits from those who fail and those who experiment. Every change and challenge drives innovation forward and Turnbull has made it loud and clear that incentivising risk is at the forefront of the Innovation Statement.
A cultural shift is being crafted and Australian’s attitude to failure will be transformed from fear to ambition. Through tax incentives and changes to the bankruptcy laws, risks will be encouraged and entrepreneurs will be backed. We have a Government that believes there is no better risk to be made than in innovation and entrepreneurship.
To incentivise the leaps forward into innovation and to make Australia competitive on a global scale the Turnbull Government has relaxed the bankruptcy laws. A proposal paper will be released next year to change the Insolvency Law, with proposed changes including:
- reduction on the default bankruptcy period from three years to one year
- introducing a safe harbour to protect directors from personal liability for insolvent trading
- creation of ‘ipso facto’ clauses, which allows contracts to be terminated due to an insolvency event.
The Government has announced it will increase access to company losses, by relaxing the current business test and introducing tax incentives for investors. Concessional tax treatments will be applicable for investors who support innovative startups, which will include a 20 percent non-refundable tax offset, based on the amount of their investment and capped at $200,000 per year. A 10 year capital gains tax exemption for investments will be held for three years.
In the lead up to the statement, a major business briefing discussed the path of innovation culture and investment in Australia. The key focus was on Israel, a world leader in innovation and how Australia can learn from its business culture, a culture that relies on collaboration and the Government’s promotion of risk. The statement has acknowledged that policy levers and tax incentives can help change the culture around risk and failure.
Turnbull believes that this statement will be the first of many and the new tax incentives are a stepping stone in the right direction to make Australia globally competitive. He was adamant that today’s announcement was not the end point, but just the beginning.
Tyson Hackwood, head of Asia at Braintree Payments, said that encouraging more homegrown startups to succeed will encourage more competition, and competition breeds innovation.
“What we need is a culture that encourages success and to do this we need reform that keeps apace with speed of innovation,” he said.
Government as an exemplar
Since his first few days as Prime Minister, Turnbull has been quick to use tech or startup lingo to outline his vision for Australia. In an echo of his first official speech, Turnbull today said that the Government must be nimble and lead as example right across the board.
‘Leading by example’ will take various forms, from cutting red tape in order to make it easier for individuals and businesses to interact with Government through digital platforms, to opening a digital marketplace of digital and technological services. These will be provided by small to medium businesses for Government agencies to seek procurement.
“There are too many forms and red tape, we need to work swiftly and nimbly and the Government needs to lead the way,” said Turnbull.
The Government will also be releasing non-sensitive public data for the private sector, which will be used to improve service delivery and evaluate policy. The Government will enact as an enabler for investment, which is effective through greater private sector involvement. Existing barriers to sharing data holding will be overcome through transparent public data and analysis.
Stay tuned – Startup Daily will be taking an in-depth look at all the measures proposed over the next week.