CANBERRA -- Australia’s startup business sector has described the Turnbull Government’s four year $1.1 billion dollar Innovation Statement as “not perfect,” but still a “game changer” for the nation.
In 24 measures across nine ministerial portfolios, Prime Minister Malcolm Turnbull has returned some of the previous budget cuts to the CSIRO, offered tax incentives for business risk, overhauled insolvency laws and moved to establish overseas “landing pads” for Australian entrepreneurs.
Turnbull is also seeking a broad cultural change to drive an “ideas boom” and will chair a new, eighth Cabinet sub-committee, the Innovation and Science Committee of Cabinet (ISC), to co-ordinate all Australian research and science spending.
Peter Bradd, the CEO of Startup Aus, has been championing innovation ideas to the major parties for more than two years and is now feeling “pretty proud”.
“There is still a lot of detail to be worked out. It is great to have the Prime Minster-chaired committee inside Cabinet,” he told The Huffington Post Australia.
“It is a testament to Turnbull putting this at the centre of his government.
“It is a game changer.”
In Turnbull’s first major economic statement, there’s non-refundable tax offsets for startup business and early stage venture capital investment, while reform is on the way for Australia risk adverse insolvency laws.
The orthodox view is that nine out of 10 startups will fail. Under the Turnbull plan, Australia’s default bankruptcy period will be reduced from three years to one, while directors in financial difficulty will be offered a “safe harbour” from personal liability for insolvency trading.
“The way the insolvency laws have operated is that directors have had every incentive to the minute there is a problem to basically put in the administrators and that's essentially curtains,” Turnbull told reporters in Canberra.
“What they will actually do is protect creditors and shareholders. It takes us some way, but not all the way to the American Chapter 11 system.”
Chapter 11 bankruptcy measures in the U.S. give business the chance to turn around and thrive.
Bradd expects the tax breaks and bankruptcy changes will lead to culture changes, where risks can be taken and failure can be learnt from.
“If you want people to become investors, they often want a seat on the board, but in Australia that really is quite risky,” he told HuffPost Australia.
“We are not talking about people that do criminal things. We are talking about people that have met their obligations as a director, but because of something that has happened that is no fault of their own, they should not be unfairly punished.
“They have removed (insolvency) from three years down to one year in terms of the punishment, so there is still a punishment if you go bankrupt. They have just reduced it.”
The new Entrepreneurship Visas have warmly welcomed by Startup Aus, “it is something that a number of other countries have used very successfully", while Bradd expects the new innovation agenda will boost jobs.
“(Over the past five years) startups, zero to two years, added worth four million jobs to the economy. Businesses from three years plus in age, they fired half a million people.
“The Australian people, if they want to know where the jobs are coming from it is coming from small business.”
Another key focus of the Innovation Statement involves strengthening ties and collaboration between business and scientific and research institutions.
The CSIRO, which was hit by a $110 million funding cut on the 2104 budget, has got a slight reprieve, through more funding designed to commercialise research. There is a $200 million CSIRO Innovation Fund, $70 million of which is new money.
There will also be a $20 million expansion of CSIRO’s accelerator program to bring in other publicly funded organisations to prepare research for commercialisation.
The Labor Opposition has announced it can work together with the Government on a substantial number of the initiatives, as they are similar to Labor announcements.
However, Labor is concerned that some of the returned funding to institutions, like the CSIRO, ANSTO and DSTO, don’t match the budget cuts made by the Abbott Coalition Government.
“We are playing a massive game of catch up,” Shadow Parliamentary Secretary for Innovation Ed Husic told HuffPost Australia.
“Let the ideas race commence in terms of federal politics.”