By now you would have seen the news concerning the Prime Minister’s National Innovation and Science Agenda that aims to “create a modern, dynamic, 21st century economy for Australia”. The Government plans to invest $1.1 billion to incentivise innovation and entrepreneurship, rewarding risk-taking, and promote science, mathematics and computing in schools.
In a recent PwC report, The Startup Economy, we found that the Australian tech startup sector has the potential to contribute $109 billion (four percent of GDP) and 540,000 jobs by 2033. To achieve the sector’s potential, Australia needs an additional 2,000 tech entrepreneurs to switch from the existing workforce, and in the longer term needs to adjust the education system to create a tech entrepreneur production line. The Innovation Statement gives tremendous substance to what we’ve been hearing from the government about agility, creativity and innovation. Support for the creation of a more accommodating environment for startups and innovation has been building for some time, although it’s fair to say until now that support has not been active. All too often I find investors, startups and emerging companies citing access to capital as a major barrier for growing their business in Australia. My view is that opening up small business and startups to retail investors through crowd-sourced equity funding measures, coupled with handsome tax breaks for investors and less onerous insolvency laws, will help unlock growth and innovation in Australia. Fostering a ‘have a go’ mindset for embracing innovation and entrepreneurism underpins the Prime Minister’s statement, whilst acknowledging there needs to be the necessary safeguards in place to protect our community. The US has long been touted as an entrepreneur-friendly environment and consequently has many innovators and ‘cutting edge’ industries. Working closely with promising startups and angel investment, I have lost count of the number of businesses I’ve helped relocate to countries like the US, buoyed by access to capital and the ‘fail fast’ ethos, which encourages entrepreneurs to experiment with new ideas. I’m hopeful the proposed changes to Australia’s insolvency laws will help our business environment become more accepting of those who have experienced a false start. To the government’s credit, it intends to unlock the potential of collaboration between businesses, universities and researchers to commercialise ideas and boost returns to the economy. Australia is lagging behind our global counterparts when it comes to teaming the public and private sectors, and by developing a structure encouraging collaboration, we should benefit from an increase in market innovations by 70 percent. Although the government’s proposed spend encouraging these relationships is significant, for collaboration to truly work, it requires a degree of humility on all sides and behaviours which are positive, inclusive and geared towards the betterment of the nation. Thankfully, the Innovation Statement provides some tangible measures that will help deliver its aim to “create a modern, dynamic, 21st century economy for Australia”. My only concern is that the measures the Government is proposing still need to be fleshed out, debated and legislated, and, as such, investors may hold off making decisions so they can take advantage of future tax breaks and other changes. Similarly, while measures remain unclear, we’re unlikely to see more collaborative engagement between the public and private sectors. For investors, there needs to be clarity as to whether the measures outlined in the Innovation Statement will be retrospective. I am starting to see more early stage venture capitalists setting up funds in anticipation of changes, which is encouraging. However, given the current economic environment, we need them to be raising and deploying capital into our startups as soon as possible. James Blackburn, Director, PwC pwc.com.au