The 2015 federal budget fails to make a distinction between small businesses and startups, which is stopping the latter from reaching their potential and creating the jobs of the future, according to the founder and chief executive of Freelancer.
Speaking to StartupSmart this morning, Matt Barrie said Australia’s commodities will diminish in the near future and it was worrying to see a “gaping hole” in the budget where there should have been a vision for a digital future.
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“Government does not know the difference between the word startup and SME at all,” he says.
“Every time there is a discussion about startups it morphs into SMEs, and that’s why we don’t see anything major happen… but I can’t think of a greater industry for producing multiples than technology. The fact a 20-year-old can start a company worth $20 billion in a decade is mind-blowing.”
While the announcement that Australia will likely have a crowdsourced equity funding scheme before the end of the 2015-2016 financial year is welcomed by Barrie, he still has his reservations as little detail has been released.
“This actually has real potential to change the way the technology industry gets financed, which is desperately needed in this country,” he says.
“The problem is the way government implements things – it looks at what everyone else is doing and implements something worse. This is exactly what they did with the employee share scheme program. There are some pretty amazing things happening in the US and UK around this and I’m worried Australia is going to come along and cap something that is too low or restrictive in some way.”
Barrie said it didn’t make sense that people can walk into a casino and blow their money on the pokies but not make a considered investment in a high-risk startup with potentially very high returns.
“You can go into any casino in this country and bet your entire life savings, but for some reason we think there should be a cap in what people should be investing in what will have a huge impact on wealth in this country.”
The Freelancer chief also took aim at the government’s so-called ‘Netflix tax’, which will come into effect from July 2017 as long as all states and territories support the measure.
“Basically it is a tax on Australians using the internet, which I think is pretty brain-dead,” Barrie says.
“I know Australia is not alone here in how this operates, but the problem is it’s a bloody nightmare. My company and all the other companies like us are going to have to end up filing tax returns in every single country. It also looks like Australia is, in the wording, going to go even further than they did in Europe.”
Meanwhile, other startup founders and VCs have raised concerns that the federal budget contains few measures to encourage or educate potential entrepreneurs.
Rui Rodrigues, managing partner at Tank Stream Ventures, told StartupSmart until the government makes a long-term commitment to the tech startup sector Australia won’t be able to reap any meaningful benefits.
“Overall, it’s positive that the government has mentioned startups twice in the budget but specific incentives are still lacking or aren’t applicable to the sector, so in the end it’s difficult to look at the glass half full with this budget,” he says.
The chief executive of the Australian Computer Society, Andrew Johnson, says many initiatives in the budget were supportive but it was worrying not to see a significant focus on STEM skills.
“In today’s globally connected digital world, our education and training systems need to place a far higher priority on the science, technology, engineering and maths skills, including information and communication technology skills,” he says.
“We need to work collaboratively as a nation to shape a workforce that has the skills, competencies and attributes needed to prosper and create jobs in a digitally connected, fast moving world.”
Meanwhile Yasser El-Ansary, the chief executive of the Private Equity & Venture Capital Association Limited, said the government still has a lot more work to do when it comes to pivoting the economy away from the mining and resources industry.
“Many of our competitors around the world are putting in place policies that are targeted at attracting our best and brightest entrepreneurs away from Australia,” he said.
“We need to get on with the job of laying down a long-term bi-partisan strategy for innovation. The budget has not provided more detail on the proposed investment mandate for the new Medical Research Future Fund, so there is still considerable uncertainty about how the research outcomes will be translated and commercialised into economic gains for Australia.”