Govt startup bill supported but more work needed

Joseph Brookes
Senior Reporter

Australia’s universities have backed legislation to introduce the government’s startup program but want flexibility in the pilot phase to iron out a range of issues with the proposal, including access problems driven by more student debt and limited placements.

At a Senate inquiry on Monday, university groups and individual institutions gave broad support for the Albanese Government’s Startup Year program.

University representatives welcomed the clarity that had been provided in the bill compared to an initial consultation last year, but noted much more work will be needed in the pilot phase and in the development of guidelines before a full roll out next year.

Universities also defended a challenge from private providers wanting to deliver the program.

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The bill, which passed the lower house in March but is still under consideration in the Senate, amends Higher Education Support Act 2003 to create a new HELP assistance loan.

Two loans of up to $11,800 would be available for final year undergraduate students, current post-graduate students and recent graduates to attend accelerator program courses at Australian universities and university colleges.

Several submissions to the inquiry have raised the issue of saddling students with more debt at a time of higher inflation and when the individual is closer to having to pay it off. The prospect of more debt for a risky startup venture could be a bigger barrier to students from certain backgrounds.

Charles Sturt University deputy vice-chancellor, research, professor Mark Evans said his university’s students are “very concerned” about taking on additional debt, particularly those from low socioeconomic backgrounds.

“We would hope that the government’s widening participation agenda would focus attention on this area,” Professor Evans said.

“You can’t be in support of widening participation and at the same time lift barriers to participation through schemes like this.”

Professor Evans flagged it as an issue for more work and said universities would be open to matching funding from government or the private sector for scholarships to increase the participation rate of disadvantaged students in the Startup Year.

Australian Technology Network executive director Luke Sheehy expressed similar concerns about more student debt.

“That does act as a barrier,” he told the inquiry.

“Particularly once you’ve finished university because you’re much more cognisant of the amount of debt you’ve got. So we want to work continuously with the government on this program to make sure it continues to deliver what it promises, which is more entrepreneurs.”

The initial allocation of 2000 places potentially spread across dozens of Australian universities may also damage the network effect of accelerator programs, QUT Pro Vice Chancellor, Entrepreneurship, Professor Rowena Barrett said.

“We don’t think they should be spread so widely because you cannot create that cohort effect which is the key driver of learning in many accelerator programs,” Professor Barrett said.

She told the inquiry the 2000 place cap is a key design flaw in the program and would create competition between universities.

“[The bill] makes it appear as though everyone needs to have this, when we know that not every university needs to deliver every single possible variation of courses that exist,” she said.

“The strength of an accelerator program is in the cohort, so the cohort has to be big enough to actually generate that into cohort learning.”

In an earlier submission, private accelerator provider The Hacker Exchange told the inquiry universities are not necessarily well placed to deliver a program like Startup Year because “risk-averse research cultures of universities are at odds with the gritty, high-risk, rapid-iteration culture in startups”.

It argued third party partners are “better value for money” and recommended criteria be widened to include them.

The Hacker Exchange submission also warned universities would be incentivised “to repurpose existing Accelerator programs, which are normally free for students, – resulting in a not-fit-for-purpose experience, while adding to a student’s HELP debt unnecessarily”.

Universities rejected the characterisation at the inquiry, noting there was a range of risk appetites and industry engagement levels across and within Australian universities, which often produce the breakthroughs startups take to market.

“When all is said and done, most of Australia’s basic research and applied research emanates from universities, and without that research and without the ideas that come from the research, the startup community would be much poorer,” Universities Australia deputy chief executive Peter Chesworth said.

The Hacker Exchange’s founder Jeanette Cheah said the comment in the submission was “cheeky” but maintained universities typically operate with longer lead times and with sizable investments making them more risk averse.

She also said limiting the program to universities could lead to unintended “gatekeeping” of entrepreneurial skills to university students.

The Startup Year bill gives the legislative authority to create guidelines that will determine which university accelerator programs will be eligible, the number of places (including a provision to account for equitable access for disadvantaged and underrepresented groups) and the set of “core capabilities” accelerator courses will need to deliver.

These guidelines are yet to be determined with a pilot now 10 weeks away.

University representatives at the inquiry had few concerns about the timeline, however, and want to preserve flexibility in the pilot to ensure it is adaptable and able to provide lessons for next year’s full roll out.

“It’s not going to be one uniform program delivered across the country, it is going to be many different programs delivered by many different institutions,” Curtin University commercialisation director Rohan McDougall told the inquiry.

“I think you have got to allow for that and embrace that in fact.”

Mr Sheehy, who represents many universities with established accelerator programs likely to participate in the Startup Year, agreed flexibility in the program implementation will be key and that requiring the Startup Year to deliver educational credentials could be a barrier.

“One lesson we have learnt from our experience is that we need to be as flexible, dynamic and trailblazing as our entrepreneurs are in providing these programs,” he said.

“The success of Startup Year will ensure that if students are given the right preparation, we’ll let them work as hard and fast as they want and provide them with the power and confidence to shape their respective ideas.”

Universities Australia’s Mr Chesworth welcomed the lack of prescription in the bill, which instead allows legislative instruments to deliver the guidelines.

“If we strive for a particular legislative outcome, we could be constraining the flexibility of the program moving into the future. That’s why program guidelines form such an important part of how a program, as described at a high level in legislation, can be transformed into an operational mechanism for the benefit of students and startups.”

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