Ed Husic back in boxing ring over claims Turnbull Government is “robbing” regional incubators in Budget 2017

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Shadow minister for the digital economy Ed Husic is back in the boxing ring, this time with claims the Turnbull Government is “robbing regional Australia” by refocusing funding away from incubators outside metropolitan areas.

“This cut means it’s far from an exciting time to be a university or business that wants to innovate in regional Australia – they’ve been left out by this government,” Husic said in a statement according to Innovation.Aus

“Australia’s innovation community, particularly in regional areas, deserves consistent policy and support from the Turnbull Government, not a stealthy attempt to cut and run.”

Husic’s claims relate to planned changes to the government’s $23 million Incubator Support program, which according to the 2017-18 federal budget, will be “refocused to better reflect the importance the Australian government places on regional development”.

The program was included in the government’s Innovation Statement in December 2015, at which time $8 million in funding was allocated to its delivery. The government added another $15 million in funding to the program prior to the 2016 election, however, Husic is now arguing the ‘refocusing’ of the program is hiding a funding cut.

Innovation minister Arthur Sinodinos has hit back, claiming the federal government is doing “more” for regional incubators while stating the incubator support initiative is “still available in capital cities and metropolitan areas”.

“The Australian Government is providing more support for regional businesses through additional regional incubator facilitators and providing grants to support the establishment of regional business incubators,” Sinodinos said in a statement last week.

“The government’s Incubator Support initiative assists new and existing incubators to improve the prospects of Australian startups achieving commercial success in international markets.

“Contrary to recent claims, the Incubator Support initiative remains a $23 million commitment and there have been no changes to the program’s budget.”

The claims have caused confusion within in the startup sector as the exact nature of the program’s ‘refocusing’ is yet to be released.

However, StartupAus chief executive Alex McCauley believes the fact that regional incubators is a topic for debate between Australia’s major parties is a sign that “regional startups now have a political profile”.

“That’s encouraging, because one of the great benefits of technology is that it helps overcome the tyranny of distance,” McCauley tells StartupSmart. 
“So we need to make sure the support is there. At the same time, we need to make sure we stay focused on big, system-level mechanisms for helping Australia as a whole become one of the best places in the world to build and grow a startup.”

What’s in Budget 2017 for regional incubators?

In the 2017-18 federal budget papers, the government states it will “refocus” incubator support in the Entrepreneurs’ Programme this year “to provide additional support for regional businesses” but no further detail on how the program will be altered.

On page 132 of Budget Measures 2017-18, the Department of Industry, Innovation and Science’s expense for “Incubator Support – regional focus” is negative $3 million in 2016-17 and negative $300,000 in 2017-18.

In the year 2018-19, the expense on this shifts to $1.5 million then $1.8 million in 2019-20, which indicates the total allocation of funding to the Incubator Support program doesn’t actually change over the four year period from 2016 to 2020.

Budget Measures 2017-18 - Part 2: Expense Measures [page 132]

Budget Measures 2017-18 – Part 2: Expense Measures [page 132]

When queried about these figures, the Department told StartupSmart maintained “there have been no cuts to the Incubator Support Initiative”.

“The funding for this program — $23 million – remains. There have been no cuts,” a spokesperson for the department says.

“Like all new programs, the incubator initiative is tailored to suit the needs and preparedness of applicants.

“There has been some small shift in the allocation of the money – which remains $23 million – to ensure it is allocated in the most efficient way to meet applicants’ requirements and to ensure the most effective and efficient allocation of taxpayers’ money to get the best results.”

According to the Department, there will be “amendments to the Incubator Support Programme Guidelines to further facilitate regional incubators and maximise outcomes for the regions”.

“These changes will build on the current initiative,” the spokesperson says.

“It will still be open to new and existing incubators in capital cities and metropolitan areas to apply after the additional regional aspects are launched later in 2017. The initiative is still open for new and existing incubators to apply.”

The Entrepreneurs’ Programme currently offers new and existing incubators in “regions or sectors with high potential for success” matched grants ranging from $10,000 up to $500,000, with incubators required to provide 50% of the funding in order to secure a grant, 30% of which must be provided up front.

Under the initiative, incubators can also apply for a grant of $1000 to $25,000 for an “expert-in-residence”.

Despite the confusion over the program’s funding, some members of the startup community say there are more important issues at play.

Peter Dostis, chief executive of regional incubator Runway Geelong recently told StartupSmart this year’s budget fails to address the real issues incubators face and the grant application process remains “fuzzy”.

“They have failed to change some of the key conditions which are show stoppers for regional incubators, such as the 30 percent cash requirement,” Dostis says.

“The government is also very specific around what types of expenses you can claim. A big part of our costs are fit-out costs, but we can’t claim them for a grant.”

StartupSmart contacted Ed Husic for further comment but did not receive a response prior to publication.

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