“The government has been, even now, pretty much missing in action on any key issue in the innovation space.”
When announcing its plans to work with the tech industry to alleviate a skills shortage – an issue many in the sector have nominated as their key election issue – the government listed other areas it said it has adopted in its digital economy strategy.
Zero chance of winning the tech vote
These included reforms to employee share schemes to help start-ups attract and retain the talent; a $111 million national quantum computing strategy, a $124 million artificial intelligence action plan and tax incentives to encourage small and medium-sized businesses to embrace digital tools.
In addition, it listed expansion of the consumer data right, increased investment in cyber security and an upgrade of the national broadband network as examples of its tech policy credentials.
Mr Petre said most of these government announcements on tech issues had lacked specific actions, resource allocation or timetables, and that it now had “zero chance of winning the tech community vote,” as there had been little worthwhile innovation from the Coalition since the early stages of Malcolm Turnbull’s leadership.
“Since then simple issues like bringing in skilled immigrants, changes to ESOP (employee stock ownership), and shoring up the R&D tax incentives have taken years to get any traction and are still not resolved,” he said.
“When it has put in funding it has been ridiculously small amounts of money; $124 million for AI will do f— all, when the UK and EU both allocated €1 billion. At least Labor has allocated an appropriate amount of money to try to move the dial.”
Blackbird Ventures co-founder and partner Rick Baker also threw his support behind Labor’s billion-dollar initiative, saying it would encourage additional investor support in fields like quantum computing, where breakthroughs can take many years and hundreds of millions of dollars to commercialise.
“Quantum will be a huge, nation-building industry. Australia has some excellent talent and capability, but it is going to need a lot of long-term support. Knowing the government has a mind to support these types of businesses gives private money the confidence to come in, and particularly to come in early,” he said.
“If a [quantum] company is doing a seed round, you know it’ll need hundreds of millions of dollars to get it off the ground. It’s got a long way to go.
“[Government backing] sets the right mindset and builds the confidence of both the founders, investors and the customers, who at some stage have to take some risk in paying for these products. They’re more willing to do it if they know there’s a source of capital there along the way.”
While a “huge believer” in private markets making investment decisions, in deep tech industries that need a long-term focus, Mr Baker said it was helpful having the government “step up”.
As well as tipping in cash, Mr Baker said one of the biggest things the government could do to help boost the local tech industry was to become a customer.
“It’s better than equity,” he said.
“It’s a bit like in the US – SpaceX got so many US government contracts, and it really got it off the ground. We’re just starting to see some of that come through in Australia, but it’s on a much smaller scale.
“I totally understand that governments have processes that have to be rigorous, the last thing you want to see is a government showering money around to unworthy contracts, but it is really hard for start-ups, and we’re all we’re hoping to find a middle ground where there is enough rigour, but still a willingness to take risks with younger companies and newer products.
“There needs to be understanding too, that there will be failures sometimes, and no one gets slammed for them.”
A founder’s view
As one of the country’s most successful tech founders in recent years, Young Rich Lister Sam Kroonenburg, who sold his company A Cloud Guru to Pluralsight last year, said he supported any government policy that backed “hardcore science”, and encouraged more financial support for research and development.
He said he would also like to see policy change to address one of the biggest challenges he had faced; managing office space requirements.
“I found real estate was the biggest challenge in Australia. The system requires you to sign five or seven year leases, but when you’re a fast-growth company, you’re doubling every year,” Mr Kroonenburg said.
“We rented a space that would hold 40 to 50 people, but after a year we had 120 staff and then 250. You have to invest in these huge fitouts and a year later you need someone to take over the lease.
“We need better rules to share leases, or be able to sign them over more easily to other companies. We need better infrastructure around that because it takes up so much time and attention.”
Other industry insiders and entrepreneurs polled by The Australian Financial Review about the election campaign, and their hopes leading into next Saturday’s vote, expressed disappointment that the topic of tech as a driver of jobs and growth had figured so scarcely in debate.
‘Tech’ a dirty word
Andrew Porter, chief executive of industry body Fintech Australia, said it was worth acknowledging the government has worked closely with the fintech sector in the past few years on crypto legislation and development of the consumer data right, but lamented its aversion to publicly discussing innovation policy.
“That speaks to the assertion that tech is still a dirty word within the Coalition party room, and the legacy of the failed Innovation Agenda push is still stinging the party,” Mr Porter said.
“We’re nearing the end of the election campaign, and it’s a real shame that aside from this key policy from Labor, released after the final leader debate, we’re just finally seeing some vision for what our tech sector can expect from the outcome of this poll.
“As for the policy Labor is proposing, this is something we have seen abroad and have advocated for in the past for the fintech sector … It is crucial that investments from this plan are comparable to that of a VC, as if it’s too hard to access we simply won’t see uptake from the start-up and fintech community.”
Matt Tyrrell, who moved to Sydney from the UK last year to set up the Asia-Pacific operations of fast-growing fintech Codat, said even with tech leaders advocating for immigration rule changes to ease the national skills shortage, the topic was ignored by both sides in the campaign.
Early in the campaign, Labor announced an education and training-based policy to create and fill 340,000 additional tech-related jobs by the end of the decade, but avoided the topic of increased immigration to assuage immediate shortages.
The Coalition’s skills roundtable, meanwhile, is also part of a plan it says will help get more people into tech jobs, and it announced last week that it would spend $5 million on developing a tech skills passport for Australian workers to be able to be matched with organisations seeking their talents.
“The tight labour market in Australia is the number one factor that is holding the sector back. If you are building a software business in Australia right now, you’ve basically got zero chance of building a software development team from scratch,” Mr Tyrrell said.
“Not only are software developers scarce, they are also incredibly expensive, and unless you’re a multi-billion dollar company like Google or Atlassian, start-ups simply can’t compete at that level.
“In my view, the number one thing the government can do to help the sector right now is to do whatever it takes to make it incredibly quick and simple for Aussie tech businesses to bring in experienced and talented employees from the UK, Europe and North America, similar to what they have done for critical skills shortages in the health sector.”
Melissa Price, the Minister for Industry, Science and Technology, was contacted for comment on the assertion that the Coalition has neglected tech and innovation policy, her views on Labor’s funding announcement and whether the Coalition would make a similar funding commitment.
The Financial Review was sent a response from Coalition Campaign Headquarters, in which a government spokesperson said the Morrison government had released a detailed plan aimed at making Australia a top ten data and digital economy by 2030.
They sought to claim that record Australian venture capital investment in 2021 was a result of policies including the employee share scheme reforms, favourable VC tax incentives and the consumer data right.
“Labor has come late to the table on tech – the Coalition already released a blueprint and action plan for critical technologies and a $124 million artificial intelligence action plan last year,” the spokesperson said.
“We also announced development of a $111 million national quantum strategy, aimed at positioning our nation to capitalise on the potential for quantum technologies to add $4 billion and 16,000 new jobs to our national economy by 2040.”