Comment from CEO of StartupAUS, Alex McCauley, regarding the Australia 2030: Prosperity through Innovation report from Innovation and Science Australia (ISA)

30 January, 2018

Australia: 30 January 2018: StartupAUS today welcomed Innovation and Science Australia’s 2030 Plan and its strategy for securing talent for high-growth scaling firms. StartupAUS highlighted the importance of swift translation of the recommendations into tangible policy action.

StartupAUS CEO Alex McCauley said the focus within the 2030 Plan on the role of startups and small to medium sized businesses as job-creators and economic stimulators is critical, adding that it was pleasing to see the 2030 plan align with a number of the recommendations made by StartupAUS in its submission.

McCauley cautioned that the largest hurdle was still to come for the government, which now needed to take the advice of industry leaders and the ISA with confidence and achieve tangible, timely policy outcomes for the sector.

Access to world class talent the leading issue for startups:

“Our aim is to foster a world-class innovation system in Australia, which will deliver a huge multiplier effect for Australia’s economy. We know that young, innovative, high-growth companies account for almost all the new jobs in the economy and providing these firms with access to world class innovators and technologists is currently the number one issue.

“The 2030 Plan calls for the continued refinement of immigration rules to improve access to specialist skilled talent and attract entrepreneurs. We believe the new skilled migration regime is an ideal opportunity for the Federal Government to update the list of occupations for which skilled visas are available.

“To put it into perspective, in response to the current IT skills shortage, Australia saw a net inflow of 19,600 IT workers from overseas in 2015, with 13,900 of these workers coming to Australia under Subclass 457 (temporary skilled work) visas. According to Atlassian, around 25 per cent of its approximately 1,000 Sydney-based staff are employed on skilled work visas, a trend which is mirrored in other rapidly-growing Australian startups as well as multinationals performing R&D in Australia.

“Rather than presenting a threat to Australian workers, overseas IT workers are helping Australian startups bridge the skills gap and at the same time providing management and product development experience to Australian tech companies as they scale and begin to enter global markets.

“The focus on STEM and education, while too slow to help in the next few years, is also a critical longer-term step to improve our talent inputs by 2030,” Mr McCauley said.

R&D focus needs to be better align with startup needs

“The 2030 Plan addresses R&D in its Industry component but specifically calls for the Research and Development Tax Incentive (R&DTI) program to be better targeted to increase business R&D investment. From our discussions with the startup community, 87.8 per cent said that receiving the R&D Tax Incentive quarterly rather than annually would make a ‘huge’ (77 per cent) or very large (10.8 per cent) difference to their businesses’ cashflow because many are borrowing against future R&D Tax Incentive payments and – in some cases – incurring hefty interest rates.

“Reversing the fall in R&D spend is important. It is critical the scheme does not focus only on the ‘Research’ side at the cost of ‘Development.’ A clear declaration that commercial development from Australian startups, particularly in the software space, will continue to be covered by the scheme would go a long way to providing clarity and certainty for founders.

“StartupAUS would also like to see the Federal Government change payment of the R&D incentive from annually to quarterly to help early-stage startups with cashflow, as outlined in our Crossroads 2017 report. This would help support one of the other key themes of the 2030 Plan – establishing a thriving and sustainable base of high-growth businesses,” Mr McCauley said.

Other high impact recommendations for startups:
“Helping young firms access export markets by increasing funding for Export Market Development Grants is another important recommendation in the Plan. This grant is an important tool to both bring wealth into the country via exports and accelerate the growth of successful startups as job creators. According to StartupAUS research, while over 90 per cent of large scale-ups claim the R&D Tax Incentive, only 35 per cent claimed the EMDG. Better targeting this scheme to help young high-growth startups access global markets is exactly the right move.

“The recommendation around an Australian Innovation Precincts Statement to help shape Australian Government involvement in emerging localised innovation ecosystems in cities and regions is a valuable way to build on the investment made by individual ecosystems by linking these precincts to a network across the country.

“The establishment of secure, long-term funding for national research infrastructure is a vital structural change for Australia which will help move longer-term projects out of the political cycle. This was a key part of the StartupAUS submission to the ISA and is one of many measures that can be immediately put in place to build for the future.

“We also commend the importance of creating more detailed public data around the startup ecosystem and support the development of innovation metrics and methodologies to fully capture innovation and link it to economic, social and environmental benefits.

“Overall we commend ISA for its focus on strengthening Australia’s digital economy to capture the opportunities presented by the ‘fourth wave’ of the internet. Startups are a key player in our economic future and, by definition, if they are to succeed they must innovate intensively. It is therefore critical to make sure Australia cultivates an environment in which startups can attract capital and talent on a large scale.

“Now it is clear that there is broad alignment among innovation experts, within both government and the private sector. But the key measure of success will be the policy outcomes that are born from this plan. This is a great report, but we can’t leave it till 2030 to do something about it. These ideas require action immediately.

“This is a time of critical importance for innovation in Australia. We already have a roadmap established, through the StartupAUS Crossroads Report, to Australia becoming one of the best places in the world to build a high-growth startup. What we need now is rapid action in a number of key policy areas to capitalise on the momentum we have built. This is not only of paramount importance for the sector, it will help secure the economic future of the country,” said Mr McCauley.

ENDS

About StartupAUS:
StartupAUS is a not-for-profit entity with a mission to transform Australia through technology entrepreneurship. StartupAUS believes a strong home-grown tech sector is vital to future Australian jobs and wealth. But getting there will require a national imperative to create the right environment, with a supportive culture and more entrepreneurs with the right skills.

For more information visit: www.startupaus.org

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