The appointment of Prime Minister Malcolm Turnbull last week brought along with it a number of technology buzzwords and a keen new focus from the government on the start-up sector. Far from being a contentious election battle between Labor and Liberal, both parties are keen to work with each other to cultivate a sector that has flown under the radar for governments of all stripes for the past few years.
“The Australia of the future has to be a nation that is agile, that is innovative, that is creative … We have to recognise that the disruption that we see driven by technology, the volatility and change is our friend … if we are agile and smart enough to take advantage of it,” Turnbull said on the night he won the Liberal leadership over Tony Abbott.
To that end, Turnbull has appointed Liberal MP for Longman Wyatt Roy as assistant minister for innovation, working under Industry, Innovation, and Science Minister Christopher Pyne. Since coming to Parliament, Roy has spent much of his time on the backbench talking with the start-up sector, travelling to the United States and Israel to examine their start-up sectors.
Roy has a particular focus on the “brain drain” in Australia that has led to some 20,000 Australians leaving the country for Silicon Valley for a better chance of starting their own technology company. Roy told Crikey that Australia can learn from Silicon Valley, or Israel, but it was important for Australia to develop its own start-up culture.
“I think it is very important we develop an Australian start-up system that is uniquely Australian, and capitalises on the strengths that we have and the competitive advantage we have,” he said.
The government hasn’t announced much in the way of policy yet. Roy said it was just a week into the new government under Turnbull, but he said the combination of money, ideas, and talent were important for success for start-ups, but also that direct government investment was not the answer.
“Essentially, this is not going to be the heavy hand of government creating innovation. That never happens. But the government, through its policy settings, needs to set up a framework in which the private sector can develop a vibrant startup ecosystem. The most important thing is to change our Australian culture, to embrace in our collective psyche this aspirational mindset, this entrepreneurial spirit, and reject the tall-poppy syndrome that seeps into our culture sometimes,” Roy told Crikey.
“We need to recognise risk isn’t a bad thing, it’s a good thing, and having a go they might fail, one or two times in business but they ultimately learn from those experiences, and often go on to create great businesses.”
Roy pointed to the need for more investment. He said last year Australians bet over $200 million on the Melbourne Cup, but only $100 million was invested in venture capitals for start-ups. He said there was a need for more scientists and researchers to work in the private sector, and for government to foster commercialisation of research. Roy said that the CSIRO, under the new CEO Larry Marshall and chair David Thodey — both having significant experience in venture capital — would be working to “transform” institutions toward more commercialisation.
While policy is still in development for the government, it has been on the table with Labor for some time. In his budget reply speech, Opposition Leader Bill Shorten announced plans to teach coding in schools, wiping the student debt for 100,000 people studying science, technology, engineering or maths, and to put $500 million in a smart investment fund. This week Labor also announced a $17.8 million policy to create a “Startup Year”, funding students at universities to develop their start-up idea, and get financing and business experience. The party is also promising to create two new visa classes to attract skilled migrants to build a start-up ecosystem in Australia. Labor is also promising to create a Challenge.gov-style site to look at how to tackle public policy issues, and the party is also promising to work with start-up funders, superannuation funds and start-up stakeholders to look at how to break down the barriers in investing in Australian start-ups.
The Labor MP most focused on this sector, the member for Chifley and shadow parliamentary secretary to the shadow treasurer, Ed Husic, has been working closely with the sector, alongside Roy, for a number of years. He told Crikey that Labor policy was about pulling down barriers for growing talent in Australia through growing skills, making funding more easily accessible, and improving culture.
“This is about sending a very strong signal, particularly to young people, that if you’ve got a willingness to start your own enterprise, we are actually going to back this in through government policy. This government policy is sending a signal to the broader community that we are taking the risk to become your own enterprise. We think this has a really big part to play in breaking down some of the cultural barriers that exist that don’t value people building their own start-up,” Husic said.
While the two parties are keen to work with each other now, there are already notably different approaches being taken by the two parties. The Labor approach favours direct government investment through Startup Year, while the Coalition government is advocating for a more hands-off approach from government cultivating the private sector to grow on its own. Both Husic and Roy want the sector to succeed by making as much of the policy approach to the sector as bipartisan as possible.
“I don’t want to attack the Labor Party. I think this is an area we can rise above the political fray, and I think it is important that we, wherever possible, at least have agreement on the aspirations and the policy objectives, but there should obviously be some competitive tension around those policies themselves,” Roy said, noting that the Startup Year policy is “a new round of debt”.
“There’s been a lot of talking the talk, but our policy announcement yesterday is about walking the walk,” Husic said. “We want to actually provide something concrete. There has been a desperate need from the start-up community for some bipartisanship. They don’t want one side to fight the other side, and tear down ideas.”
“It’s good we’ve got two major political parties talking from their leadership levels about innovation. You do need the competition of ideas, but not to the point where it is counterproductive.”
Both Roy and Husic are confident that while risk is a big component of the startup sector, the government is not helping to create another tech bubble. Roy says innovation across all sectors will make growth more sustainable.
“This isn’t just about tech. A big part of it is tech, absolutely, but it is also about innovation across a whole range of industries, and I think through a diversified economy and a much larger marketplace….I think that will help make this a sustainable trajectory of growth, prosperity and new jobs,” Roy said.
“It’s not just tech and developers. It’s also about innovation in our renewable sector, innovation in our resource sector, our agriculture sector, in our health services, in our education services. It really is an across-the-board approach that will make this much more sustainable.”
Why would Turnbull expect innovators to be in Australia when all he offers is a second rate Braodband
Well it’s always a lot easier to start up when you’re going downhill ..
My thoughts exactly Pav and Graeski. If you were really interested in providing a startup culture, which these days is heavily skewed towards the tech sector, then providing a quality NBN would be key.
Can we have that please!
As for Roy invoking the ‘tall poppy syndrome’ cliche, you can be sure whenever anyone brings that one up that all thinking has ceased.
The Pav is correct, it’s going to be hard work for innovators with last centuries internet. And Roy talks of the advantages that we have in Australia. Could he tell us what our advantages are?
Slow broadband, expensive real estate and high rents,no world class universities and very few people studying science and maths because of a dumbed down education system.We also have a government full of morons who helped defund the CSIRO and dont believe the science of climate change.
But we do have lots of lawyers, financial advisers, bankers,hairdressers, Indian taxi drivers and Indian migration agents.
There has already been a lot of innovation shown by shonky education providers who are able to charge their victims a big fee before they leave home.Then the provider gets a big fee from the taxpayer and is able to employ their students in the food processing industry for a few dollars an hour cash to advantage the big supermarkets. Or contract to Australia Post and employ the students to deliver parcels and earn themselves $1.50 a time.
This is the innovative Australia of 2015.
Roy’s recognition that you can fail a couple of times before you succeed isn’t allowed to happen in Australia. A banking culture that understands big business and real estate but little else. Yes you can finance a new venture provided you have your own real estate to use as the real collateral. Lending against an idea is unheard of. I once applied for loan funding describing my business as having an R&D culture. The loans officer told me his bank doesn’t like R&D. Yes let’s encourage all kinds of small business, not just startups and one key area to change is the availability of capital.