Startup Opinion

The government has abandoned Australian startups and left innovation for dead

Dominic Powell /


Prime Minister Scott Morrison. Source: AAP/Daniel Leal-Olivas.

It’s hard to pinpoint exactly when the coalition government abandoned Australian startups.

It might have been at the end of 2016, when Malcolm Turnbull’s grandiose innovation agenda — a perhaps well-intentioned but poorly executed spruik for ‘jobs and growth’ — was revealed as largely a fizzer, kickstarting a number of positive initiatives but failing to capture public support for Australia’s tech industry.

Perhaps it was early-2017, with the government’s crackdown on and subsequent removal of the popular 457 visa, an anti-immigration policy sold to voters as a way to promote “Australian jobs” but with the added side-effect of crippling our startups’ global competitiveness.

Or was it the gutting of the R&D tax incentive? Introducing a $4 million cap on refunds for companies under $20 million in revenue, and a resulting crackdown on some of the country’s brightest startups who had claimed through the scheme, forcing them to repay millions.

It could be our four innovation ministers in three years, with our most recent minister not even featuring ‘innovation’ in her title. Or when the Department of Innovation stripped funding from Australia’s only comprehensive survey of startups, declaring the data-gathering exercise didn’t meet its “value for money” principles.

Maybe it was the damaging and “tech-phobic” AA Bill, which weakens security, actively discourages international companies from hiring Aussies, and may cause successful local startups to move elsewhere.

Or maybe it was just this week, when Treasurer Josh Frydenberg stood up to deliver his much-lauded budget, which mentioned startups precisely once, ignored innovation, and snuck through a further $1.35 billion cut to the R&D tax incentive.

And in a fitting sonata to the coalition’s shitty symphony, last night new laws were rushed through the Senate to penalise tech companies who host “abhorrent violent material”, a strong response in the wake of last month’s massacre in Christchurch, but, yet again, poorly executed and without consultation.

Atlassian boss Scott Farquhar labelled the bill “flawed” and said it would unnecessarily cost jobs and “damage our tech industry”. The Australian Greens said the bill was rushed, and StartupAus dubbed it “knee-jerk”.

But the bill passed the Senate regardless, with the government and opposition again failing to pay heed to the pleads of a battered industry.

Speaking to StartupSmart, Airtree Ventures founder and prominent venture capitalist Daniel Petre accused the coalition of being “backwards-looking, anti-science laggards”, and slammed the government’s hopeless approach to innovation.

“The coalition government has no vision for what it takes to build an economy of the future and jobs in the future. The reduction in R&D is criminal, especially considering Australia already has such a low R&D spend,” he says.

“All other OECD countries are increasing R&D spend because they’ve worked out it’s a proxy for an innovative economy. And in the face of that, what does Australia do? Reduce it two years in a row.”

Petre says by both “action and by tea leaves”, the coalition rejects all innovation policy and says despite lobbying by himself and other industry advocates, he’s achieved “diddly squat” thanks to the coalition being totally unwilling to listen.

“There’s a strong indication this government doesn’t want anything to do with innovation, science or technology, though every single job in every single industry is going to be impacted by technology,” he says.

“If we don’t have a strong base of innovative companies, Australians will struggle to get jobs, and the standard of living will decline. It’s not just about having a few cool, fun startups.”

As draining as this outlook is, it should come as no surprise for those in the tech industry. It’s been a long time since anyone in the ‘Canberra bubble’ spoke positively about startups and innovation, as Turnbull’s bungled ideas boom clearly showed the issue was far from a vote winner.

And as Australians look down the barrel of an election, expect that rhetoric (or lack of) to continue.

Even Labor, who are currently tipped to win the election come May, are far from the idyllic saviours of startupland some see them as.

Despite staunch supporters in MPs such as Ed Husic, the opposition has twice failed to prevent damaging legislation from passing parliament. The party has shown an aptitude for publicly declaring laws not fit for purpose, but waving them through anyway as to not appear weak on national security.

Action needed now

Startup founders are hopeful a change in government will mean a positive change in startup policy. Well, it won’t, not unless we get off our arses and do something about it.

“The bigger problem here is with what the tech sector is communicating to the government,” says Girl Geek Academy founder Sarah Moran. “Without a coordinated strategy, certain voices in the ecosystem are bearing most of the load by accident rather than design.”

Moran has been at the forefront of the fight against the AA Bill, moderating a special panel last month in Sydney, and coordinating much of the lobbying efforts on behalf of the Australian ecosystem.

Girl Geek Academy

Sarah Moran and the Girl Geek Academy team. Source: Supplied

She’s tired of being one of the few fighting the good fight, saying startup founders need to step up and put real work in to get behind pushes to change the industry for the better, and need to understand the issues important to startup founders rarely translate into vote-winning policies.

“The tech industry’s gotten so far up its own arse thinking we’re ‘special’ and we need to be looked after,” she says.

“Startups have a branding problem, which means the government doesn’t know how to sell startups to the public. Saying we’re concerned about R&D tax incentives and visas come across to rural Australia as smart, rich, tech kids pleading for more money.”

Instead, Moran thinks lobbying groups and founders should endeavour to better position startup issues within the broader benefit they could have for the future economy, citing figures which predict 25% of jobs by 2026 will require STEM skills.

“How will the government manage this, how are they not freaking out? We need transitional programs to get the average person these skills, and this is where we can tie startup policy together with everyday policy,” she says.

“And it’s too risky to assume that because this government doesn’t care about startups, we can just wait for the next one who will. Bill Shorten can still mess up his Stephen Bradbury moment. We can’t rely on that alone.”

So what can founders do to take material action? Send a letter or email to your local MP demanding change, says Moran.

Founders can find a draft letter protesting the AA Bill here, along with contact details for their local MP.

“The startup industry’s lack of willingness to ‘be political’ will be the end of us. If we don’t front up now, our voices will never be heard.”

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Dominic Powell

Dominic is the former features and profiles editor at SmartCompany.