Budget 2020: Here’s what nine startup founders really want from Frydenberg

R&D Tax Incentive

GoKindly co-founder Laura Conti. Source: supplied.

The 2020 budget is very nearly upon us, and while we’ve had some hints as to what we can expect from Treasurer Josh Frydenberg, there’s still a lot up in the air.

It’s been dubbed the most important budget since the Second World War. That certainly rings true for the tech sector.

We know the R&D Tax Incentive will be the big focus for many startups tonight.

Last week, StartupAus chief Alex McCauley called that the “number one priority” for the sector. And when we reached out to our community, the call for rolling back changes to the scheme, or at the very least some clarity on the whole thing, was echoed again and again.

But there are other things that came up, too.

We know, for example, the recession has been harder on women than on men. There’s demand for more support for women running startups and small businesses, with one founder suggesting incentives for startups that champion women in leadership positions.

Founders would also welcome employment incentives, and easier routes for bringing overseas talent Down Under.

Of course, this has been a tough time for all kinds of businesses, and startup founders would also welcome an extension to wage subsidy support and other stimulus measures to help them see this crisis through.

Ultimately, there’s an opportunity here for the government to get behind the tech community as an enabler for economic growth, post-COVID-19. These founders want Frydenberg to grab it with both hands.

Here’s what these startup founders want to see in the Federal Budget 2020

Laura Conti, co-founder of #GoKindly

From the grassroots upwards, our budget needs to focus on improving the lives of women in business.

Free long-day daycare, to enable all parents to work in the careers/startups they are passionate about and build a stronger economy and startup community.

They should change eligibility criteria for all government grants (export, R&D, et cetera) to exclude businesses that don’t have women in key leadership roles such as CFO, COO and CEO.

No government funding should go to businesses that have made no effort to recruit and retain women — there are no excuses. Women have been coming out of universities at the same rate as men for over 30 years, if a business can’t find women for their leadership teams, they’re not trying.

Every day in Australia, 200 women are turned away from housing services, because there isn’t enough emergency and social housing to support them. In the vast majority of these cases, women are leaving family violence.

Our budget needs to fund the building of high-quality social housing, and funding family violence services (including women’s legal services) to cope with this awful reality for many women.

Every year there are 49,000 women experiencing homelessness — in our country, a first world nation. Women in Australia are not getting a good deal from our government and budgets.

Avertro co-founders

Avertro co-founders Ian Yip and Roman Mandryk (left to right). Source: supplied.

Ian Yip, co-founder and chief of Avertro

There’s talk of a subsidy program for apprentices and trainees. It would be great to have a similar program for companies of all sizes to hire and train entry-level technology employees.

This will help people most affected by the pandemic find a new career, setting them on a fast-track to build skills for the future and gain relevant experience, particularly given skills shortages in areas such as cyber security.

I would welcome more government programs to help small businesses navigate their ever-changing tax and legal situation, due to the current crisis.

At the moment, most of the guidance is quite generic, and businesses are being forced to pay for additional accounting and legal advice.

I would also like to see tangible financial incentives in the form of tax relief or government funding for every dollar that organisations spend with Australian companies.

Michelle Akhidenor The Peers Project

The Peers Project founder and chief Michelle Akhidenor. Source: supplied.

Michelle Akhidenor, founder and chief executive of The Peers Project

First, direct support for small businesses, through the form of one-off payments to help us navigate this extremely tough time — similar to the $3 billion the Victorian government has promised us.

And also, through the preservation of the JobKeeper and JobSeeker. These are now being reduced (which is tough) and once they end, it will be even tougher.

We need to have this support replaced in some way, shape or form in order to keep small businesses afloat.

Second, income tax cuts.

Thankfully, from what has been said, we will see a reduction in personal income tax, which is extremely important in order to book consumer spending and confidence.

Global Sisters founder and chief Mandy Richards. Source: supplied.

Mandy Richards, founder and chief of Global Sisters

As a result of COVID-19, we are experiencing a pink recession, and the measures to address it need to prioritise women.

Here are three steps that would go a long way to address this.

1. Microbusiness in the Women’s Economic Security Statement (WESS). We welcome the news that the WESS will be delivered later this year. It should recognise the potential for women-led micro and small business to provide an alternative to low-paid, insecure and inflexible work or welfare.

2. Invest in women’s micro and small business. Investments should include support for idea generation (in other words, through ParentsNext), training and coaching, assistance through the startup phase and business scale-up.

Investments should particularly target women experiencing financial disadvantage and barriers to economic participation, especially single mothers, women living in rural areas and older women.

Address the current barriers in the welfare system that create a disincentive for single mothers to start a business, including the impacts on their stability of income, counterproductive reporting requirements and inflexible mutual obligation requirements.

Vow

Neil Perry [left] with Vow co-founders Tim Noakesmith and George Peppou. Source: supplied.

George Peppou, co-founder and chief of Vow

As an R&D-stage deep-tech startup we need to think long term. For us, number one on our wishlist is real and long-term commitment to support R&D-intensive companies.

Vow has gone from zero to 17 employees in 12 months, with four of these people moving to Australia to join the company.

Now more than ever we need more R&D-intensive companies in this country to create high-paid, high-skilled roles, and to bring in the best and brightest from across the planet to train and mentor Australian scientists and engineers.

The global talent scheme has made huge improvements to accessing Australian visas, and the government should be applauded for these well thought out changes.

Now, clarifying and increasing support for R&D-intensive firms is the missing piece — either through long-term commitment and funding for the R&D Tax Incentive or other means to encourage startups and university spinoffs to build the next wave of great Australian companies.

ok bouquet founders

Bronwen Clune and Peter Costin, founders of ok bouquet. Photo: Mim Costin.

Bronwen Clune, VP of growth at Inkl and co-founder of ok bouquet

With my startup hat on, I will say the R&D Tax Incentive needs to be clarified and any proposed amendments — which see a $4 million cap on repayments, and a tiered system for the incentives — abolished.

The R&D incentive has been a lifeline for many Australian startups and remained a reason why many stayed here when overseas markets were more embracing of them and their ideas. The money recouped through R&D goes directly back into these companies and Australian innovation. The instability over this has the last few years has had the effect of starving the innovation industry.

The other issue facing startups is around the current talent pool and the hesitation of many Australians to work in startups.

Inkl chief executive and founder Gautam Mishra and I think we need some radical out-the-box thinking on this one. Perhaps employees leaving traditional sectors can get a personal tax break working for a startup.

With my small business hat on, I note small businesses have been the hardest hit during this pandemic — they are the backbone of most communities and need real financial support to survive.

We need to understand the implications of their loss beyond their ability to create jobs — they create the neighbourhoods we live in. JobKeeper has been instrumental in keeping so many of these businesses alive, and needs to be something we continue to fight for, particularly in Victoria.

I’d like to see some support for companies under one-year-old.

A lot of government grants require businesses to have been trading for a year, but we need to incentivise people to create businesses.

I’d love to see some initiatives on this. I also support a proportion of this being targeted at women.

hospitality covid-19

Mr Yum co-founders Kerry Osborn, Kim Teo and Adrian Osman are growing rapidly.

Kim Teo, co-founder and chief of Mr Yum

It’s pretty clear the budget is going to be about the creation of jobs.

The current wage subsidies are specifically tailored to businesses whose revenues have dropped to help them retain existing staff.

This was what Australia needed over the last six months, and now we need a focus on growth so we can create jobs.

I would like to see support for new hires and growing industries. Many of our hospitality customers have had to hire new staff and are therefore not eligible for JobKeeper.

A few lucky industries, such as online e-commerce, have thrived over the past six months and created many new jobs. These businesses have adapted and should be supported.

I’d also really like to see clarity around qualification criteria for R&D incentives, especially the ‘novel’ criteria.

This used to be a real boost to the startup community but recent audits of claims from years ago have made the startup community wary of depending on the R&D incentive.

This means we are more conservative on hiring if we can’t be certain whether we are eligible or not.

Carbar

Carbar co-founders Davie Saw, Desmond Hang, Kenneth Teh and Richard Chen. Source: supplied.

Des Hang, founder and chief of Carbar

While the aim of this budget will be to cushion the blow of the recession, I think there’s a real opportunity here to address future problems with smart technology-focused solutions. There’s also scope for the government work in tandem with startups on these issues too.

Take climate change, for example. Small changes now, such as incentivising the adoption of EV cars, for instance, could both stimulate the economy and pay dividends well into the future.

In the current economic climate, anything that doesn’t directly create jobs or keep business going will likely be left out of the budget.

But I hold out hope that there will be some long-term thinking in this budget.

Surely COVID-19 has shown us that we are all in this together.

If we can come together to beat this pandemic, then we can do the same with other issues too.

Elon Datt, founder of Tapt by Hatch

Tapt would love to see the federal government drive innovation in startups. The Australian startup community is continuously growing, which is not only creating simple solutions to complex problems but also creating future employment opportunities for Australians.

With startups such as Uber, Mailchimp, Airbnb, Slack (the list goes on) beginning during a recession, 2021 is the best time for the federal government to really invest in its innovators.

Further increasing the R&D Tax Incentive and ESIC investor incentives will enable the startup community to continue to grow and meet other countries on the startup global stage.

NOW READ: Attention Josh Frydenberg: Here’s a federal budget wishlist from working mothers everywhere

NOW READ: “They are all rubbery”: Why Josh Frydenberg has built a budget on assumptions and uncertainty

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