The government’s budget measures have been broadly welcomed by the tech sector but many argue more should have been done to capitalise on a once in a lifetime opportunity to reshape the nation, including by opening up several of the measures to more sectors.
The government’s limited patent box initiative was welcomed but seen as doing little for early stage companies not yet generating revenue and nothing for those outside the only two eligible sectors: medical and biotech.
Similarly the government’s $124 million AI investment was seen as long overdue but falling well short of what the industry had said would be needed to catch Australia up in the global race.
The tech sector also supported changes to migration and foreign investment programs to attract more talent and capital to Australia.
The Australian Information Industry Association (AIIA) welcomed the budget as a “good start” towards Prime Minister Scott Morrison’s goal of Australia becoming a leading digital economy by 2030, but said more changes are needed to make Australia’s technology industry globally competitive.
AIIA chief executive Ron Gauci said the budget recognised the fundamental role of ICT but the federal government should have invested much more in emerging areas and widened new tax incentives.
The government’s $1.2 billion digital economy package includes $124 million for AI research and grants, well short of $250 million recommended by the AIIA in April.
“While investment in R&D is important, more needs to be done to ensure that there is significant investment in the commercialisation of AI here in Australia to deliver jobs and economic growth. Without it we will continue to fall behind the rest of the world,” Mr Gauci said.
The AIIA also welcomed the patent box program that will provide tax breaks to medical and biotech companies to ensure IP is developed locally, but said it should be extended other ICT areas. Currently the government is only considering extending it to clean energy.
Australian fintechs had also been hoping for more tax incentives, including reforms to the research and development tax incentive to support early stage companies, and a standalone scheme for software-related claims.
Both were recommended in a report by the government-led Senate Select Committee on Financial Technology but neither were confirmed in Tuesday’s budget.
“It may have been optimistic given the timing, however this was a great opportunity to immediately implement more of the recommendations suggested in Senator Bragg’s Senate Inquiry report,” FinTech Australia chief executive Rebecca Schot-Guppy said.
Ms Schot-Guppy said there were few surprises in the budget with most major reforms announced last week in the government’s digital economy package. But she welcomed the Women in STEM scholarship program and the patent box incentive program.
“We would like to see this program rolled out to other sections of the technology industry sooner rather than later, as it encourages innovation and rewards success,” she said.
Several Australian fintechs, including Shootsta, Carbar, Assembly Payments and Perkbox, echoed the need to expand the patent box program.
“We’re heading in the right direction,” Perkbox chief executive Gautam Saghal said.
“Introducing a patent box policy — which is used across several European countries — is smart. But will raise questions as to why its initial scope is so limited when the policy’s effectiveness has been tried and tested in other regions.”
Australian Investment Council (AIC) chief executive Yasser El-Ansary said Tuesday’s budget had created a platform to accelerate investment in the innovation economy,
“We wanted to the see the government take steps in tonight’s budget to make the innovation economy a priority for our future economic growth, and pleasingly we’ve seen the government take decisive action to do just that,” Mr El-Ansary said.
The AIC, which represents private capital investors, welcomed reforms to investment vehicles and more support for foreign investors looking to back Australian businesses.
Mr El-Ansary also welcomed changes to migration programs designed to attract leading global talent.
“To be internationally competitive, highly innovative fast-growth Australian businesses need access to world leading talent in key areas where we are still building local capability,” he said.
“We’ve seen too many examples over the years of domestic businesses that cannot access talent and capital being forced to relocate overseas, taking with them highly skilled jobs and economic activity.”