This year, Australia continued its descent in the Global Innovation Index, dropping four places*. Now ranked 23rd, the nation’s innovation performance lags behind that of neighbour (and Rugby rival) New Zealand. This is concerning given the Federal Government’s $1.1 billion National Innovation and Science Agenda, launched nearly two years ago, was intended to transform Australia into an innovation leader.
As part of this week’s exclusive “Let’s Talk…” feature, focusing on Innovation, Dynamic Business put the following question to more than a dozen entrepreneurs and industry experts: “What could the Federal Government do to better support innovation?”
There were calls, amongst this week’s line-up, for the Federal Government to pay the R&D tax incentive quarterly, reserve tenders for startups and SMEs, raises awareness of the support available to entrepreneurs and improve ease of access to international talent.
Commentators also recommended the Government subsidise flexible arrangements that support women’s workforce participation, take inspiration from the governments in Sweden and New Zealand, increase support for accelerators and incubators, have a continuity plan for initiatives to ensure they survive a change of administration, and tackle innovation at the educational level by, for instance, connecting startups to students and graduates.
Read on for a ‘wish list’ of innovation recommendations for Federal Government:
“What could the Federal Government do to better support innovation?”
Mark Fletcher, CEO, Cohort Go: “The R&D tax incentive has been a major support for tech startups and a very positive regulation by the Federal Government. Unfortunately, the way in which it is administered can be a roadblock to innovation. Considering the refund is applied on an annual basis and it can take 16 to 18 months for the funds to come back, this can have a negative impact on a startup’s capital position and cash flow. With capital being a major issue for early-stage ventures, this can really reduce their ability to invest in product development. Increasing the R&D tax incentive to a quarterly cycle would be hugely beneficial in helping smaller businesses to innovate.
“Another area in which all governments could show more support for innovation is through their tender process. By having a designated percentage of government tenders strictly for SMEs and startups, the federal government could significantly boost national innovation and help raise the acceptance of startups as a valuable part of the eco-system”.
Helen Awali, CEO, Bookmarc & Heads Over Heels Portfolio CEO: “Innovation leads to futureproofing our jobs, industry and livelihoods, hence it is critical for economic growth. The Federal Government can support innovation by creating campaigns to raise awareness of the resources and support available to entrepreneurs seeking to enter the tough world of startups. In addition, they should consider running innovation camps for businesses who are internet of things – as not everyone is in fintech.”
Alex Gruszka, COO, StartupAUS: “The most important move the Federal Government could make is to define innovation and set concrete goals for our innovation strategy. The National Innovation and Science Agenda did that in 2015 and was a massive step forward; however, since then the message has become diffuse, broad and largely lost.
“Tech startups the world over are showing they have incredible potential for growth, able to produce unprecendented wealth and jobs for the economies in which they are founded. Better support of innovation should mean narrow targeted policies that support these companies in their infancy and as they grow.
“Paying the R&D Tax Incentive quarterly, allowing better access to international talent via the 457 Visa replacement or Entrepreneur Visa, providing a modern regulatory framework around copyright and employee share schemes, and expanding the digital curriculum are all examples of positive policies to achieve that goal.”
Sarah Moran, CEO & Co-founder, Girl Geek Academy: “Support in marketing innovation to a mainstream audience would be a really powerful step in helping to grow the startup industry. Treasurer Scott Morrison recently said that the sector needs to better communicate the benefits of new technology to the general population if we expect to see it thrive. And I agree. But generally, startups are working hard with limited budgets and limited experience in media and marketing strategies – so support in this space in helping tell the innovation story would hugely benefit the industry.
“The stories that need telling are not only around the products themselves and generating more customers, but also about the industry as a whole – the jobs it’s creating, the culture, and the potential for international scale. It’s critical that universities and Federal Government help startups to generate these stories and get them in front of the students and graduates who startups want to hire, and the investors and businesses who want to support this important growth sector”.
Tanya Titman, Founder, Acceler8: “Government should support innovative solutions that deliver more flexible work environments, which in turn drives and enables growth and innovation across all industry. Government should look outside the grant prism and reward small business that are working to establish innovative solutions within their own workplaces.
“For example, my accounting practice invested in an onsite childcare facility for staff to help more women re-enter the workforce. This innovative solution has not received any government funding and staff using the service do not qualify for any government rebates, despite spending a decade trying to bring this issue to the attention of state and federal government through grant applications and submissions to the productivity commission. To deliver this flexible work environment, my small business continues to subsidise the costs associated with this childcare centre to ensure staff can access the service at no extra expense to them.”
Sean McCreanor, Co-Founder, Assignar: “The construction industry is ripe for innovation – it’s an industry where productivity has been stagnant for a while and widespread use of construction technology is going to be essential to manage infrastructure projects. The Federal Government is one of the industry’s main stakeholders and benefits from productivity improvements that decrease project time and costs.
“While the government announced $75 billion in infrastructure funding and financing from 2017-18 to 2026-27, there’s an opportunity for the government to incentivise construction contractors to improve their productivity through technologies that strengthen field communication, manage multiple project components, collect reliable data and monitor safety and compliance.”
Jonas Lembke, Executive Creative Director, Atomic 212 Group: “Heralding from the country that brought us Spotify, Skype and Minecraft, I believe the Federal Government could look to my fellow Swedes for a bit of inspiration when it comes to fostering innovation. The focus on generating intangible value, as opposed to governments initiatives predominantly directed towards growing tangible assets, is certainly more in tune with both the times we live in and the limitations of mother earth.
“Now, we don’t have to replicate their entire social system, but we can take a few pointers from the way intangible qualities, such as education and connectivity, are a priority for their government in terms of creating a sustainable economy. Ultimately, Australia could benefit from looking at its infrastructure as well as the focus and nature of its education system, beyond traditional university structures.”
Rob Newman, CEO at Nearmap: “In recent years, we’ve seen a lot of new government initiatives, aimed at boosting startups and innovation, roll out. While this is all positive, it’s important that regardless of government changes, there is consistent and sustained support for Australian businesses. Unfortunately, all too often a new administration will cancel old programs, rename others and introduce new ones. This lack of consistency is hindering the innovation and startup industry.
“Sometimes the best policy is in fact not to change policy. Australia’s innovation, tech and startup communities need policy consistency that continues across changes in leadership and changes in government. This is more important than simply releasing a new program every so often, and will ensure more employment opportunities for future generations of innovators.”
Sean Senvirtne, Founder & CEO, MyDeal.com.au: “Innovation is underpinned by allowing the free market economy to prosper through promoting competition and incentivising investment. Lower business taxes, lower payroll tax, cheap and reliable energy and a flexible industrial relations system are all hallmarks of fostering innovation and growth. Reforms in these areas can give companies the freedom to be more agile, competitive and innovative.”
Brett Shanley, CEO & Founder, Study Loans: “In order for the Federal Government to truly support innovation they need to adopt a grassroots approach. This means tackling ‘innovation’ at an educational level, so there’s greater encouragement for those looking to pursue alternative career paths. The government’s recent funding cuts to VET courses like computer coding and the creative arts, shows a lack of encouragement in the very fields that bring about revolutionary thinking. But the government cannot be the sole provider of funding for education. To solve this problem, and better support innovation in Australia, we need to move towards a blended funding model for education of part government, part private and part corporate”.
Mark Gustowski, CEO, QUT Creative Enterprise Australia: “The startup and investment community needs support through skills development, program development (e.g. more support for accelerators, incubators) and international channel development. Supporting further opportunities to trigger angel investment will also bring Australia closer to international precedence helping investors to see Australian startups as a more attractive alternative. At the moment, there is a funding gap across the Australian landscape for early stage and seed startups. These businesses often have to be more efficient with capital as being early stage ventures, often they’re having they need to finance themselves when starting out. Supporting angel investors financially will help to bridge that gap.”
Jennifer Maritz, CEO, Nvoi: “The workforce is undoubtedly undergoing significant changes. We are seeing more jobs shift to a more contract basis allowing individuals to have better control of their work and lifestyle. The government needs to accommodate and support this contingent workforce. They should be considering ways to partner with a range of user groups to encourage or develop teaching methods that focus on developing skills required for the growing contingent workforce to foster innovation. They should also encourage employers to create contract roles where they can test these skills and hone their ability to deliver innovation.”
Mick Spencer, CEO, ONTHEGO: “A key criteria on Government tenders and sourcing arrangements could be around innovation and the ability to provide an innovative solution. This would drive many companies to innovate to win Government business. Innovative companies are specialist resource intensive organisations so an allowance of special visas in key innovation categories could help drive innovation further (for example, we were very lucky to secure a Digital Marketing specialist who was living locally on a partner visa from Europe. Europe is widely acknowledged as being years ahead of Australia in ecommerce and he was able to drive our e-commerce innovations forward more rapidly than would have be otherwise possible).”
“Innovative companies shouldn’t be looking for a handout from the Australian Government, rather a marketplace where our innovations can be deployed back into drive the Government forward. This would provide an avenue for Aussie companies to return the support they have gained through grants and concessions back into the organisation that has help sponsored them. An idea would be an allocation/quota of government funds that set aside every year towards purchasing Australian innovations and deploying them into Government.”
Andrew Barnes Co-founder & CEO, GO1: “There are two necessary conditions for successful and sustainable innovation: the first is the ability to think creatively and the second is the grit and skills required to execute on the idea. Continuing to ensure our education system values problem-solving abilities helps support the first. Then secondly, we should leverage the Australian culture of supporting mates to create ecosystems that can then help bring these ideas to fruition.”
David Jones, GM, Business Growth & Innovation, Wellington Regional Economic Development Agency (WREDA): “Government at all levels should play an active role in nurturing and growing the ideas of entrepreneurs and innovators. New Zealand’s capital city, Wellington has become a hotbed of innovation with the Weta Group of companies making acclaimed movies, online accounting giant Xero taking on the world, and a thriving mixed reality sector which includes hologram specialists Point Zero who recently opened a branch in Brisbane. In Wellington, we focused on growing, developing and creating publicly supported programs that allow people to grow ideas into businesses.
“WREDA is the Regional Business Partner (RBP) tasked with making Wellington businesses innovate and grow through easy access to early stage business support. It helps businesses accelerate R&D programmes by evaluating innovation potential, accessing expert assistance, facilitating access to innovation development programmes and services, and guiding them through the grants process. WREDA subsidiary Creative HQ runs a range of accelerator programmes including the R9 Accelerator which fosters innovation within New Zealand’s government to make it easier for them to interact with businesses. It’s one of the first programmes of its kind in the world and was a finalist in the NZ Innovation Awards 2016. The combined efforts of all levels of government has made Wellington home to New Zealand’s highest concentration of web-based and digital technology companies, and the South Pacific’s leading Innovation hub.”
About “Let’s Talk…”
This exciting new, weekly initiative provides entrepreneurs and industry experts with a forum to share rapid-fire views on a range of issues that matter to start-ups and SMEs. Every Wednesday, we pose a themed question to a line-up of knowledgable industry figures, with a view to picking their brains for valuable insights to share with you, our readers.