Australia, 13 October 2015: , Australia’s national peak advocacy group for technology entrepreneurship, has outlined its Federal policy priorities to improve capital and talent for Australian startups and strengthen Australia’s economic prosperity.
The recommended policy action items include: Creating income and capital gains tax incentives for early stage startup investments, doubling R&D tax concessions and re-thinking the way the law deals with Directors of technology startups.
StartupAUS presented the recommendations to The Hon. Christopher Pyne MP, Minister for Industry, Innovation and Science, in a special board meeting on Friday 9 October.
CEO of StartupAUS, Peter Bradd, said: “Australia’s economy is at a critical juncture. With the right policy settings we can build an agile, innovative economy capable of taking advantage of the enormous opportunities technology is creating.
“The benefits to Australians will be far-reaching. Innovation can replace resources as the new engine room for economic growth in Australia, bringing with it vast new job opportunities and prosperity.”
A recent report by PwC predicted that by 2023 technology based startups could be worth over $US109 billion and could have created 540,000 jobs. This outcome is critical in light of the prediction that in the next decade, 40 per cent of Australian jobs could be replaced by automation (Committee for Economic Development of Australia 2015 report).
Earlier this year, StartupAUS released the latest version of its – a credible, action-oriented plan to help Australia capitalise on the enormous opportunities technology presents. The report has shifted the political debate around policy settings to stimulate start-up activity.
Mr Bradd continued: “To realise these gains, we need to take a vision for innovation which is coordinated and strategic. A comprehensive national innovation agenda would help build towards that goal.
“But this change is coming fast. There are a small number top priority measures, which would have an immediate positive impact on our innovation economy. These policy changes would provide a boost to startups in two core areas: capital and talent,” Mr Bradd said.
The policy action points in full:
Action 1: Create income and capital gains tax incentives for early stage startup investments. Currently there is a funding gap at the initial high-risk ‘seed’ stage of a company’s formation. We must make it easier to start a high growth, innovative business in Australia by freeing up some of the vast financial resources for early stage funding in startups.
Adopting a scheme similar to the UK’s successful Seed Enterprise Investment Scheme (SEIS), which provides significant capital gains and income tax concessions for eligible early stage investments, would substantially boost the number of startups. Furthermore, it would greatly enhance the ability of Australian startups to grow, and amplify their already significant impact on job creation and economic activity.
Action 2: Double the R&D Tax Concessions for technology startups. The current R&D Tax Concession regime allows young innovative companies to employ the right people and develop world-class products. It is valued extremely highly by startups in Australia.
This is an area where the government already does great things to help Australian innovators and could be doing more. StartupAUS recommends doubling the amount of funding available for technology startups under this scheme to boost employment and competitiveness in our most innovative companies.
Action 3: Re-think the way the law treats Directors of technology startups. Building a successful startup involves having the right experience and talent on the board of directors. However, Australian law makes it a very high-risk proposition for prominent business leaders to sit on the board of companies that have the potential to fail and this potential always exists for high growth technology startups.
StartupAUS sees this as a weakness and recommends that we rethink our approach to Directors’ liabilities to encourage our most successful business leaders to help the nation’s most promising companies to grow and succeed.
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.