Fintech startups are some of the biggest winners out of Tuesday’s budget, with the government unveiling policies including the expansion of the fintech regulatory sandbox, extending crowdsourced funding to proprietary companies and removing GST from digital currencies.
FinTech Australia chief executive Danielle Szetho believes the most exciting initiatives unveiled this week include the government’s plans to allow a wider range of fintech ventures to test products without a licence, for a period of up to 24 months instead of 12, as well as the sector’s wish for an open data regime being granted, which will force banks to share customer data when requested.
“It’s very much a wait and see [but] the intent of the measures is fantastic,” Szetho tells StartupSmart.
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With the move to lift the GST on digital currencies like Bitcoin, Szetho says, Australia will be one of the first jurisdictions in the world to make “actual” changes to tax laws to keep up with these new technologies.
“It shows how serious the government is in moving to embrace these new financial innovations,” she says.
StartupAus chief executive Alex McCauley also believes “tackling double taxation on cryptocurrencies that doesn’t make sense” is a strong move for Australia.
“It catches us up,” McCauley tells StartupSmart.
Where the excitement ends
However, McCauley believes the federal budget largely fails to measure up to the expectations the government set in its promises to make “Australia one of the best places in the world to be an innovator”.
With no real news on the outcome of the research and development tax incentive investigation, more restrictions on recruiting international talent and an estimated $2.8 billion in cuts to higher education, McCauley and other members of the startup sector have raised concerns over whether the budget is really one for innovation.
“Countries around the world are moving very fast in this space to catch up with world leaders and make world-class startup ecosystems a reality,” he says.
According to McCauley, this can only be powered by the “next wave of innovation and science policies”, which he found to be missing from the budget papers he scoured through during the lock-up in Canberra on Tuesday afternoon.
“Maybe this is no longer a top priority for government [so] to alleviate that concern we’re going to have to build some positive momentum again in this space,” he says.
In a similar vein, QUT Creative Enterprise chief executive Anna Rooke says the budget is a step back from its “ideas boom”, innovation and startups.
“This is a budget built around traditional skills and traditional industries like housing and transport infrastructure,” Rooke said in a statement this week.
“We need a plan that focuses on enabling our startups to compete globally, and that empowers companies to capitalise creative industries which [contribute] $90 billion to the Australian economy.
“We welcome the further reduction of red tape but more clarity is needed to ensure startups and small businesses maximise the use [of] these new schemes.”
Rooke does, however, believe the extension of the small business instant asset write-off of $20,000 is “helpful” to startups.
“It’s good news that this has been extended by a further 12 months given this is exactly the investment startups and small businesses need in technical infrastructure to remain competitive,” she says.
Cuts to higher education
Universities Australia chief executive Belinda Robinson says the $2.8 billion in cuts to higher education is a massive blow to growth.
“Investments in university education and research help all Australians in the transition to a new economic era,” Robinson said in a statement.
Earlier this year Startup Muster revealed more than 70% of Australian founders hold a Bachelor’s degree or higher level of education and that the type of education completed affects the type of startups produced Down Under.
McCauley says, “universities and startups are linked and experience around the world suggests that strong universities often lead to strong startup ecosystems”.
Girl Geek Academy co-founder Sarah Moran echoes that sentiment.
“With Australian youth unemployment so high it’s a bit rich putting up the university fees,” Moran tells StartupSmart.
“Students will face a 7.5 per cent tuition hike, phased in over four years from 2018.
“If you could buy university degrees from the shops, as a customer right now you’d probably ask for your money back.
“They aren’t doing what they were advertised to do and that is to equip young people to get those well-paying jobs the government keeps wanting them to get.”
Moran is also concerned about plans for schools funding and plans for STEM education.
“Australia needs to concentrate on education to ensure our startups can access more STEM [science, technology, engineering, maths] graduates,” Moran says.
“Last night’s federal budget was concerning regarding the Gonski funding, which they are funding the same way they funded the NBN – not enough!
“This funding approach for the NBN was a disaster and I’d hate to see [our] schools end up with only three-quarters of their needs met.”