Last week, StartupAus held an online debate to discuss Australia’s technology future. The background and context were centered firmly on the Senate Select Committee on Financial Technology and Regulatory Technology, chaired by Senator Andrew Bragg.
Senator Bragg was joined on a panel by AfterPay founder and chief executive Anthony Eisen and Deputy chief financial officer Jacqui Purcell.
According to sources cited in the Select Committee’s own original Issues Paper, Australia’s FinTech industry is undergoing rapid growth. While I applaud all Australian tech innovation, I fear any single industry focus is too narrow in any debate about Australia’s tech future.
There is so much more to Australia’s technology future. We must focus on the wider perspective, the wider opportunities, and the efforts that have already delivered real success, from a number of software and IT companies founded here.
Much confusion remains around the current support for Australian software companies. I was pleased to hear Andrew Bragg declare that “software development is and should continue to be supported.” He also said that it was wrong to claim that Canberra doesn’t support innovation.
Yet, Prime Minister Scott Morrison has said “we are not trying to be the next Silicon Valley” and “we’ve just got to be the best at adopting.” Minister for Industry, Science and Technology Karen Andrews has ruled out software development as a deductible research and development expense.
These are conflicting positions.
Australia’s tech future: intent, success, clarity
Any debate about Australia’s technology future must consider three things.
First: intent – that of the businesses seeking to create innovation, and the regulatory and government initiatives that support and enable that innovation to happen.
In practice, this means investment by the companies and their founders, by the government either in grants or tax incentives, and by the creation of a flat and fair playing field.
Second: the success of software companies. As AfterPay’s Andrew Eisen pointed out, software and technology are export businesses, they know no boundaries and they are frictionless.
Jacqui Purcell reminded us that the quality of our people, the education and training they get, and the affordability of this expertise, are the envy of the world, in particular of Silicon Valley.
As one example, my own company Digivizer has over its first 10 years grown from 5 people to over 45, from 1 country to 15, and from revenues generated entirely in Australia to generating 60 per cent of our revenues offshore.
The global successes of Australian software companies that include Atlassian, Altium, AfterPay, Wise Tech, Canva and Appen are well known. Only software can grow that fast.
Third: clarity and certainty. The reality is that certainty is missing when it comes to software companies in general, with back-tracks to policy supporting Australian software companies starting in the Budget handed down in May 2018 .
Many software companies have been hit, Digivizer included. We have spent more than two years jumping through an ever-increasing number of ever-changing hoops fighting a rearguard action by the government to take back a tax refund previously awarded to us as part of the R&D Tax Incentive scheme.
An original champion of R&D tax incentives, we leveraged them to help us commercialise our technology. They allowed us to continually invest to explore new knowledge and outcomes, which later translated into growth, employment and export revenues.
And yet with so much to gain for our future, this uncertainty and bureaucracy over the last two years have hurt our company. We have fought to defend our position and a final finding is yet to be made.
Here are the asks
What should we in business ask of the policy makers and regulators?
Provide stability from the outset and play the long game. Make what’s on offer clear, accountable, and easy to access and to apply to all those innovating across all industries. Don’t make that process more-taxing than the development of the software that forms our personal livelihoods and which is a pivotal part of the nation’s future economic prosperity.
Invest – either by direct injection of capital (and the budget did provide for that in some industries) or the removal of impediments. Invest not only in R&D but in commercialisation. Helping a company scale is one of Australia’s weakest areas compared to other countries.
Focus on industries with frictionless exports, ones where scale and jobs can grow the fastest.
Stop trying to pick winners, and instead create regulatory frameworks that provide consumers with the protection they need around data and job security but allow the markets and the acumen of business founders to determine success or failure.
Do more of the recent Australia-Singapore Digital Economy Agreement, less of the short-term clawing back of refunds already invested in the future.
Two final sets of figures to close. First, the Senate Committee’s own Issues Paper states that Australia ranked 22nd globally in the 2019 Global Innovation Index (GII), down from 20 in 2018, and that Australia was weak across knowledge and technology outputs.
Second, the Atlas of Economic Complexity, part of Harvard University’s Center for International Development, reminds us that Australia remains a country whose trade surplus (over 44 per cent of our exports) is built on tourism, coal and iron ore. We’ve seen the economic impact of Covid-19 on tourism. Australia’s ICT contribution to exports remains at just 1.27 per cent. We need our software companies to provide economic growth into the future, more near-field than ever.
The biggest ask of all is a call to develop the knowledge economy that can infinitely scale at speed, unlike manufacturing, and can apply to all types of future applications and industries.
We must ensure the aspirations and plans of the current and next generation of IT and software companies are championed, nurtured and secured.
As Andrew Bragg said, “We do need to always take the global view.” When it comes to Australia’s tech future, it is time we did.