Federal Budget: startup wish list, part one
Fri 4 May 2018 - 3:12 pmNews | Startup
Ahead of the release of the 2018-19 Federal Budget on Tuesday (8 May), Dynamic Business spoke to a cohort of startup advocates about the measures they hope to see from the Turnbull Government.
In this article, the first in a two-part series, Sarah Moran (Girl Geek Academy), Beau Leese (Intersective), Mick Spencer (ONTHEGO), Bridget Loudon (Expert360) and Jonathan Miller (Bit Trade) discuss the need for Government to, amongst other things, better sell innovation to voters, improve the Export Marketing Development Grant (EMDG), increase funding for the R&D tax incentive scheme and ‘catalyse’ startup-university collaborations.
‘Few everyday Aussies care about innovation’
Noting that Prime Minister Malcolm Turnbull has thrown his support behind the blueprint for Gonski 2.0, Sarah Moran, co-founder and CEO of Girl Geek Academy – an advocacy group for women in STEM careers – said she hoped to see a big focus on education in the Budget.
“A major investment is needed within our education system if we want to fill our workplaces with local talent in the future,” she explained. “We need to be globally competitive with schools overseas, where a native focus on building entrepreneurial mindsets and technology skills is built into curriculums.”
In addition, Moran said the Government must not fail to budget for innovation and that it must work hard to sell innovation budget items to the general public.
“We know that few everyday Australians actually care about innovation while the money needed to advance the space is quite large,” she said. “While it may appease voters to decrease budget across innovation, it’s not healthy for Australia’s economic future in the long-term. I hope this year there is budget allocated to innovation and R&D projects within the areas of public concern, such as education, job creation, health care and national defence. This is one way to repackage the budget around technology and innovation and help get Australians to back spend in this area.”
‘Uni/business collaborations worth $19.4b’
Moran’s comments about innovation were echoed by Beau Leese, the co-CEO and co-founder of experiential education technology startup Intersective. Noting that innovation is ‘the key to the nation’s future prosperity’, Leese said it must not only be prioritised in the budget but have bipartisan support.
“Australia has no choice but to work hard on innovation fundamentals and long-term, continued transformation of the economy to be more dynamic, competitive, internationalised and technologically intensive,” he said.
“A thriving and intensifying tech startup sector is a critical driver of innovation and while we’ve made advances, we’re not yet playing at the top tier globally. The National Innovation & Science Agenda was great policy and has been pretty effective – CSIRO’s ON science accelerator program and Main Sequence Ventures innovation fund are two great examples of large scale, deep tech innovation translation mechanisms now in place and successfully operating.
“The Future Fund has started investing in early stage VC funds. We’ve now had another fundamental innovation strategy brought forward. The Government (and opposition) should both lift their commitment to boosting Australia’s innovation performance and making the case for kitchen table voters around great jobs and standard of living for our children.”
Leese said he would like to see the Government improve long-term settings for skilled migration pathways for international students. He explained, “We’re the third most popular destination market worldwide and these students are an underappreciated source of talent for startups and long-term linkages for Australia into international markets.”
In addition, Leese said he also hoped the Government would invest in ‘catalysing’ collaborations between universities and the business sector, including startups.
“These collaborations drive innovation performance and change the innovation capacity and culture of participants on both sides,” he said. “A recent report by Universities Australia showed 16,000 businesses have formal partnerships with a university, generating more than A$10 billion a year in revenue for those firms. Those collaborations were found to have flow-on effect worth 30,000 full-time Australian jobs and A$19.4 billion a year to the national economy.”
‘Small companies need REAL customers to scale’
Mick Spencer, founder and CEO of custom sportswear startup ONTHEGO said he would like the Federal Budget to reflect a continued commitment from Government to funding innovation and overseas business expansion through the R&D tax incentive scheme plus key grants. He described the R&D tax concession as an ‘important accelerator’ for ONTHEGO, explaining that it enabled the company to “channel all available funds into R&D to become a leader in our industry”.
In addition, Spencer said the Export Marketing Development Grant (EMDG) and Accelerating Commercialisation grants have played an integral role in supporting companies to grow and innovate. However, he said funding limitations around the EMDG program allowance must be addressed to enable companies such as ONTHEGO to fully realise their plans for expansion into international markets. He explained, “Expansion is a factor of innovation, allowing access to new markets and new customers, and a growing Australian business is good for our local economy.”
Finally, Spencer said he would like to see the Federal Government facilitate a “tighter relationship” between emerging, innovative companies and government bodies through the procurement process.
“I believe young companies do not get the opportunity to have their goods procured through certain larger bodies because of bureaucracy,” he said. “Small emerging companies and ideas need REAL customers to scale, this is what will build the next generation of employers in this country.”
‘Capping R&D refunds means capping innovation’
Bridget Loudon, CEO of online consulting marketplace Expert360, hopes that ‘talk’ of the Government imposing restrictions on accessing the R&D Tax Incentive Scheme remain just that – talk.
“By placing an annual cap on R&D refunds the government is essentially placing a cap on innovation,” she said. “It’s important to note that it’s not just startup businesses who will suffer from R&D cuts, but scaleups too.
“In the last year, 60%of our expenditure has been on R&D and I think it’s great that the government is looking to reward businesses achieving high levels of R&D ‘intensity’. When the budget is announced, I’m excited to see how the government will further incentivise corporate Australia’s commitment to true R&D”.
Jonathon Miller, co-founder and managing Director of Bit Trade said the bitcoin and blockchain service provider would like to see the government grant more tax concessions and more direct and indirect incentives for investors to look to startups rather than traditional areas, such as property.
“In addition, the R&D and commercialisation acceleration budget have been underfunded and there has been little indication of a turnaround,” he said. “R&D is a critical investment in an economy and the ability for Australian startups to compete on the global stage requires government support.”