The October 2020 federal budget was “an oxygen mask to keep us going,” according to Australian National University associate professor Catherine Ball, and the nation will won’t face its year of reckoning until 2021.
It’s a sobering thought, given the difficulties Australians and the rest of the world have face in this much unloved year 2020.
But it is a common theme of InnovationAus’ Budget Insider webinar featuring Dr Ball, UTS Innovation Council chair Roy Green, and Bang the Table founder and CEO Matthew Crozier. Despite some good initiatives that were in the October budget, all eyes have already turned to the next budget in May as a better indicator of longer-term policy directions for the recovery.
“If you think about it, in 2020 we are still in the middle of the war. 2021 will be when we enter peacetime. 2021 will be the year of reckoning,” Dr Ball said.
“By the time we hit April or May 2021, that’s when we will start to see where the damage has been done across our small business sector, across our startup sector and our university sector,” she said.
“We are all holding on across those sectors – or holding our breath – and you can only hold your breath for so long before you start to drown.”
Dr Ball said there were many positives in the budget, welcoming the unexpected $1 billion in university research funding, as well as the additional $459 million in funding for CSIRO. But these measures were about immediate-term survival, rather than longer term strategic investment.
There were some positives in the budget, but the glaring omission was the lack of a childcare component to the response. Clearly annoyed, Dr Ball says it is not simply that women will bare the brunt of the unemployment fall-out as a result, but that Australia continues to miss diversity targets or which childcare is an important contributing factor.
Dr Ball said government should also be using budget statements to pull whatever policy levers it can to improve board diversity and boost the ranks of female senior executives and female founders – because of the positive economic impact this has been proven to have.
Roy Green could possibly be accused of damning the budget with feint praise as he lightly applauded measures to stem the fall in investment in R&D – before immediately chronically the depth of that shocking fall to the lower ranks of the OECD in recent years.
And he too said the unexpected dollars directed at university research and the CSIRO was a good thing before questioning the modest scale of the investment by immediately comparing it to the giant R&D funding announcements of Germany, the UK, the US and even tiny Singapore ($20 billion).
But Prof Green is already focusing on the 2021 budget.
“We have to think on [this October budget] as a holding pattern. This fits the government logic,” he said.
“The first stage of the government response to COVID was really to introduce job protection and income protection. That was essential and they did that on a large scale and that has been commendable.
“This round is about job creation – JobMaker – and these measures are really focused on things like infrastructure.
“And now we look forward to the stage three response, which is the structural reform component.”
If the measures in this budget have been welcome, he said, what would be even more welcome in the next iteration would be “a broader national industrial strategy in which all of these components are joined-up in a much more coherent way.”
“We can use this crisis as an opportunity to reposition the economy, which we still haven’t done since the mining boom. And that means [building] a more complex economy and a more research-intensive economy and one based more on knowledge and ingenuity.”
For Bang the Table founder Matt Crozier, there was a lot for the tech sector to like about the budget, given the enormous demands on the Treasury coffers from across the economy.
There are reasons for optimism in the sector, although Mt Crozier wants government to pay close attention to a generation of high-growth startups that have been stunted by COVID, companies with a funding runway that has been made difficult by the pandemic.
There are companies that would ordinarily have been travelling to international markets to build their businesses, but who have been unable to do this.
The changes to the Foreign Investment and Review Board (FIRB) rules will make it difficult for some companies to access capital and strategic partners to grow into international markets, and that will create problems for some promising startup companies.
Mr Crozier says he hopes government ratchets up policies to help “the next wave of absolute startups” at the earliest stage of the journey. There will be many people who lose their jobs in this pandemic who will have an idea and want to take the entrepreneurial route.
He has personal experience in this. “I started my business when I was made redundant from the government. It was the best thing that ever happened to me.”