Federal Budget 2017: what does the innovation sector want?

2nd May, 2017

While Malcolm Turnbull might be cooling it with his use of the word ‘innovation’ lately, the sector remains vitally important for Australia’s future.

Where and how the government allocates money to innovation could either see Australia slip further behind on the world stage or begin an ascent to the truly clever country.

We spoke to leading incubator BlueChilli, which mentors and help grow the next wave of startups, about what could help nurture baby companies.

Alan Jones, BlueChilli’s Startup Evangelist, isn’t exactly optimistic about the chances of the government resetting the debate with this budget.

“Looking at the recent tightening of the R&D tax concessions and axing of the 457 skilled immigration scheme, it feels more like there’s an undeclared policy of active discouragement of a viable startup industry,” he told The Pulse.

He also pointed to a planned cut of $2.8 billion to tertiary education as a possible knock on the industry when Australia is competing to both attract and keep tech talent.

But there are some things that Jones thinks would help the startup sector if they were implemented in the budget.

A government-funded investment fund

Jones would love to see a government-backed fund established which would match private sector investment in early-stage startups.

“Unlike export and research grant schemes, this would give the taxpayer an equity stake in potentially successful investments while also putting Australian startups on a level playing field,” said Jones.

He said a similar scheme exists in Israel. It has helped the country become a startup hub – largely as a response to positive government policy.

In fact, Israel now produces more startups than nations such as China, the UK and Korea.

Clarify grant funding for accelerator and incubator programs

Supporting the organisations that support Australia’s startups seems like a no-brainer, so luckily there is grant support available from the government.

However, according to Jones, the actual criteria for applying for a grant is fuzzy at best.

“[The government should] work with the ATO to clarify the qualifying criteria for recently announced grant funding for startup accelerator and incubator programs, as well as funding for entrepreneurs-in-residence,” he said.

“While funding is available, it remains mostly unallocated because qualifying criteria haven’t yet been established.”

Stop the brain drain

The brain drain of Australia’s tech talent is an enormous problem that is holding back the sector.

While Jones thinks that the government’s recently announced changes to higher education fees aren’t going to help this, there is something it can do to help correct the ship.

“The government could resist brain drain by providing grants or scholarships to Australian startups to assist them in providing internships and employment to our best final year and postgraduate computer science and engineering students,” he proposed.

Currently, Australia’s best and brightest are simply heading overseas to chase opportunity, with a lack of market maturity in Australia.

By providing a reason for them to stick around, Jones is hoping that the talent can help grow Australia’s market rather than helping another country’s.

Clarification on 457 replacement

At the moment, everybody’s trying to work out how the 457 changes are going to affect the employment landscape, and the innovation sector’s no different.

Jones, and the innovation sector more broadly, is seeking what every sector is seeking – clarity.

“Whatever replaces the axed 457 visa system must reflect the needs of Australia’s tech startup industry,” said Jones.

He also pointed to an interesting side note on how skills gaps are calculated.

At the moment, the Australian Computer Society alone defines the areas of shortage in the ICT sector.

Instead, Jones would like to see startup involvement in the definition of skills shortages.

“It must be determined in consultation with bodies such as StartupAus and TechSydney which more closely represent the interest of startups,” said Jones.


Do you have an idea on how the government help the innovation sector? Comment below.