Denham Sadler
November 29, 2017

At a Crossroads: StartupAus report

StartupAus

At a Crossroads: StartupAus report

Alex McCauley: Australian startups have made great gains, but so have our competitors

The government must step up and implement policies that focus on innovation and startups for the benefit of the country even if the general public isn’t supportive of the moves, StartupAUus CEO Alex McCauley said.

The StartupAUS Crossroads 2017 report, released on Thursday, urges government to make reforms including to skilled visas and the R&D tax incentive to ensure the Australian tech and startup sectors don’t fall behind the rest of the world.

Mr McCauley said government needs to act on a number of these measures within the next year, even if they aren’t politically popular.

“This is important national economic policy. When you’ve got something that you think isn’t popular you’ve either got to sell it well or do it anyway, or maybe both,” Mr McCauley told InnovationAus.com.

“I don’t think the fact that it’s interpreted as not being popular is a reason not to do it. This stuff is going to secure Australia’s future prosperity. There are plenty of economic policies in the past that haven’t been popular but have been important.

“Real leadership at a federal level means taking forward steps on important policies whether they’re popular or not. We really need to see a significant block of policy delivered in the next 12 months, so for government that’s pretty urgent,” he said.

“But a lot of them don’t require a big spend or radical policy shift, they require attention and a bit of leadership.”

The Crossroads report includes nine key policy recommendations to government to address the range of issues and barriers that it says is holding the startup sector back, including improvements to technology and entrepreneurial education, mechanisms to attract overseas talent to Australia, improvements to the R&D tax incentive and dedicated policy teams to advise on emerging technologies.

The report found the biggest issue the startup sector faces is a lack of talent and an inability to attract highly skilled overseas workers to Australia.

In the report, StartupAus recommends that government expand the eligible occupations for worker visas to include digital skills and more startup-friendly jobs.

Earlier this year the government shocked the tech sector by axing the 457 visa scheme, replacing it with a new skilled visa with less jobs and no pathway to permanent residency.

The Crossroads report said that new-age roles like product management, user experience, interface design and digital growth need to be included in the list of jobs eligible for a working visa.

“This is the single biggest factor holding Australian startups back, and it’s critical to building a business right now,” Mr McCauley said.

“Australia doesn’t have a visa system that allows access to global talent. This isn’t immigrants taking the jobs of Australians, this is creating jobs for Australians.”

“If a company’s growth is held back because they can’t get a person with a visa then the jobs are held up too. There are a number of talent people looking to do work outside of the US and UK,” he said.

“They could and should be thinking about Australia right at the top of their list, and if we take advantage of that we can set ourselves up for the next 20 to 30 years and build the next wave of our economy.”

StartupAus is also arguing for improvements to the Entrepreneur Visa, which came into effect last year but which it says is “unlikely to attract any applicants unless it is substantially improved”.

The organisation said the visa needs to be easy to apply for and obtain, quick to process, simple and well advertised, but is not any of these at the moment.

It argued that the qualification criteria for the visa should be altered and simplified, processing times should be slashed and application fees reduced.

Another major policy that StartupAus is lobbying for is that the R&D tax incentive be modified to be paid quarterly rather than annually. It argued that this would more closely align it with the timing of the refundable tax offset with business needs.

The startup community has been eagerly awaiting the government’s response to a comprehensive review of the R&D scheme for nearly two years, with this wait leaving the sector in limbo.

“We’ve said for a while that this is an area that needs attention so it’s concerning that the response has taken this long. The longer we wait the more uncertainty there is.”

“There’s now a real sense that the response needs to now address the place of software companies and startups in the R&D scheme more broadly,” Mr McCauley said.

“Things have changed since the review was handed to government and every month we wait brings more questions that need to be answered.”

StartupAus has recommended that the interpretation of eligible activities for the R&D tax break be expanded, and more emphasis be placed on the development side of things.

The Crossroads report also calls for improvements to technology and entrepreneurial education around the country, with input from all levels of government. It recommends that the digital technologies curriculum be extended to make computer science and computational thinking mandatory up until Year 10, and an elective for Year 11 and Year 12 students.

The current curriculum includes computational thinking as mandatory until Year 8 and an elective in Years 9 and 10. StartupAUS is also pushing for entrepreneurship programs to be implemented in high schools and universities with financial assistance from state governments.

Mr McCauley said that while the visa changes are to address Australia’s skills shortage in the short term, the focus on education is about filling these gaps in the longer term.

“It’s about growing our own talent pool in Australia so the next wave of companies in this country has local talent to draw upon to build global businesses from here, so we’re making a workforce that is suited to a style of business that’s built on digital and technology. We need to make sure that’s baked into the education system,” he said.

In terms of internal government recommendations, StartupAUS has called for the establishment of dedicated emerging technology policy teams within governments at all levels.

It said this would ensure that new technologies and digital business models are regulated effectively and quickly, pointing to issues such as intellectual property, immigration and corporations law reform.

This would be a cross-departmental government body dedicated to “proactively identifying and actioning policy” to help local tech companies compete globally, and address emerging technologies like driverless cars and drones. The idea stems from StartupAUS’ submission to Innovation and Science Australia’s 2030 strategic review.

“One of the big things that we need to do if we’re going to be successful in innovation in the next five to 30 years ahead of us is to proactively think about what technologies are going to be disruptive for our economy, and be actively on the front foot about thinking about how they fit in,” Mr McCauley said.

“If we want to be successful on things like driverless cars and drone delivery we have to make sure we have people that know what they’re talking about setting policy for the adoption of that technology to put businesses on the front foot.”

 

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