Government policies can make or break a tech company's chances of success.
As Treasurer Josh Frydenberg prepares to hand down his first, and perhaps only, budget, business executives have told Business Insider Australia what they need in order to thrive. There's a lot on their list, but there are several recurring wishes.
They want certainty on the research and development tax incentives and an expansion of the early significant innovation company (ESIC) tax incentive.
There's also calls for greater superannuation tax breaks for primary caregivers and a greater focus on health technology, among other things.
Here's this year's list of wishes and predictions for federal budget 2019-20.
Mike Rosenbaum, cofounder of The Sharing Hub and CEO of Spacer.com.au
This year we hope the budget will include more support and tax breaks for Australian businesses. By investing in our homegrown businesses we can boost our international prominence as an innovation nation that’s home to exciting startups and tech companies, which ultimately contributes to our overall economic prosperity.
The sharing economy is a mainstay that’s improving the way many live, earn and work. As such, it warrants the need for government to work closer with industry to learn how to develop effective regulation, which is why we hope to see the government introduce a Minister for the sharing economy.
Beau Bertoli, co-chief executive of Prospa
Prospa would love to see the Australian Business Securitisation Fund (ABSF) Bill passed. There is no time to waste in getting the ABSF passed into law and starting to solve a very large wholesale funding need.
We want to see small business borrowing and creating jobs.
In addition, the government has also previously announced tax cuts for small business that will provide much needed relief. It would be good to see this process expedited and tax cuts brought forward for this hard working sector, who continue to drive Australia’s future growth in GDP and jobs.
Des Hang, chief executive of CarBar
There’s been a lot of uncertainty on the R&D tax incentives and we would expect that this budget would further clear this up. Our biggest concern is that the overall pool of funds allocated to R&D tax credits shrinks, but the government still allows Australia’s largest companies to easily access them.
For instance, under the existing regime, CBA alone attempted to claim up to 5% ($100 million) of the $1.8 billion in government funds allocated to this policy. It’s no wonder the policy has cost the government $3 billion instead of the anticipated $1.8 billion.
Ideally, we would like to see a scenario where this policy is further honed on emerging businesses and government works to reduce access to it for Australia’s top companies -- who already have access to several other incentives and breaks and employ accounting manpower to leverage them.
Michelle Gallaher, chief executive of ShareRoot
I predict there will be a continued focus on developing and encouraging more women coming into STEMM entrepreneurship. There is an alarming deficit in the number of women who are chief scientists or company founders in the Australian STEMM sector.
I also predict there will be increasing investment in digital health technologies and opportunities for new business growth and data-driven technologies that are health and medical research accelerators. Australia has banks of digital health data that could save lives. The health and medical research ecosystem is currently comprised of complex funding and ethics approval processes, as well as ad hoc policies and data governance strategies that differ across state and federal boundaries.
I hope the government see the need to invest in reducing barriers and red tape and encouraging transformative technology solutions that can drive economic, health and social benefits.
Trevor Townsend, CEO of Startup Bootcamp Australia
We would like to see the ESIC (early stage innovation company) rules simplified to provide more certainty around eligibility and status at the time of investment.
At present, the test is rather complex and it is causing startups to either pay accounting firms to certify them as ESIC compliant and/or seek tax office rulings. There should be budget set aside to build a simple online ESIC evaluation tool run by the ATO and also the additional budget allocation made to cater for the increased number of startups who would qualify.
Meanwhile, the number one issue that we would like to see the budget tackle is measures to accelerate the adoption of electric vehicles into the Australian market. This should take the form of the removal of the luxury car tax and/or subsidies that take into account the reduction of carbon emissions from the vehicles.
Rebecca Schot-Guppy, general manager of FinTech Australia
This budget, we’re expecting the government will further clarify its position on the R&D tax incentive. This clarification is important for fintech and startups looking to leverage the funding to help grow their businesses and finally end the ongoing uncertainty over the future of this policy.
Beyond that, we would like to see the Australian Government take note of the learnings from the UK Open Banking experience and carve out funding for consumer education to promote the use cases and adoption of Open Banking in Australia. The biggest issue for the Open Banking policy in the UK is adoption, and some preemptive thinking here could see Australia pull ahead in terms of its use of associated technology.
Finally, we would like to see the government expand the early significant innovation company (ESIC) tax incentive. This policy offers tax incentives to early investors of innovative companies, and next to R&D is another key policy underpinning the growth of the fintech sector.
Will Richardson, managing director of Giant Leap Fund
Clarification on the R&D tax incentive will prove crucial for this budget, and getting it wrong could send our ecosystem backwards.
We have a thriving accelerator and incubator network in Australia, but a shortage of angel funding. When companies leave these programs they rely on incentives like R&D tax rebate to give them more runway to succeed and go on to find further funding.
There’s also been a groundswell of support for a government fund that could help super funds and other institutional investors better invest into venture capital.
Anthony Clarke, AVP and country manager of ANZ at Pivotal Software
If Australia is to compete at the pace increasingly set by global tech giants, we must invest in innovation - especially education and skilling initiatives to address our technology skills deficit.
With this year’s budget, I’d like to see government working hand-in-hand with industry to raise awareness and a sense of urgency to address the skills gap and to better support the development of Australia's technology ecosystem as well as looking to modernise the methods by which innovation is funded.
Name: Kym Atkins and Cofounder and chief executive at The Volte
We’d love to see more investment into startups and more tax breaks for startups. We’d especially like to see tax breaks around technology upgrades to sharing economy sites and apps, which are constantly needed. We’d also like to see more support women who juggle motherhood and business.
Tim Ebbeck, SVP and managing director of Automation Anywhere ANZ
A commitment from the government to invest in the provision of better technology education and training across universities and innovation centres will better equip Australian enterprises, dealing with a skilled workforce that will allow us to compete on a global platform. This is a medium-term solution due to the latency in every education system.
In the near term, by leveraging technology we can invest in valuable innovation that addresses the growing skills gap in Australia and can, through the adoption of a digital workforce driven by process automation, free up the capacity of our skilled human workforce.
Additionally, a budget that supports SMEs and their ability to accelerate in their digital transformation journeys, will also help enterprises of this size implement technology like automation, therefore freeing up resources for expansion and innovation.
Mark MacLeod, CEO of Roll-it Super
The facts are that primary care givers - the vast majority of whom are women - will retire with less super as they take time out of the work force. Spouse contributions enable the working spouse to top up their partner's super account up to $3,000 and receive a tax offset of up to $540. This helps boost the balance of the primary care giver and provides an incentive for the bread-winning partner to keep super contributions rolling into their partner’s super account while away from work.
The issue is that the maximum rebatable contribution amount of $3,000 hasn’t changed in over 10 years. Increasing the rebatable amount to encourage more couples to contribute to their partner’s super will support greater super balance equity.
Trent Innes, managing director at Xero
We regularly hear from small business founders about the key concerns that are keeping them up at night. Better access to capital and funding would be at the top of that list, and we’re looking forward to hearing of measures in the federal budget that make it easier for small businesses to thrive in this challenging economy.
Having to pledge one’s own home in order to get a business loan shows a real lack of confidence in small business from the banking sector, and we need to explore other avenues that reduce the burden on founders to access the capital and funding they require. There’s already a precedent for this with NAB and Moula, who offer loans of up to $500,000 with no collateral, and base their lending decisions upon real-time financials in Xero.
Fred Schebesta, cofounder of Finder and HiveEx
My greatest hope is that the Federal Government will put a laser focus on the Research and Development Tax Incentive (R&DTI) scheme by making start up tech more affordable. Doing this will give businesses the ticket they need to create groundbreaking products, processes and services.
More tax relief is needed to give small businesses some breathing space. Internationally companies are looking at tax rates and where to start up. Australia does not provide globally competitive rates. Singapore and the UK seem to really be leading this. The Prime Minister has extended the Instant Asset Write-Off until June 2020, and upped it from $20,000 to $25,000 which is a huge win for small businesses – but I think this should be extended even further.
Shendon Ewans, CEO of Gobbill
Small business cashflow is tightening and many owners are drawing down on cash reserves to meet their payables. The federal budget urgently needs to address this to avert more windups later this year.
We hope the federal budget will quickly inject a stimulus to increase spending directed especially to small businesses. It’s also important to increase and extend the instant asset tax write-off for small businesses. Local small businesses are doing it tough.
Dr Silvia Pfeiffer, CEO of Coviu
It’s no secret that there’s a shortage of doctors in many rural and regional communities in Australia. In fact, a small town in NSW, Temora, even created a music video in a bid to attract more doctors to the community. The situation of having too few doctors in rural towns is also hard to change, particularly for specialists and allied health professionals, since the population density isn’t quite there to open up such a practice.
Given this, I’d like to see a federal budget that really focuses on modernising Australia’s health care sector. This should include reimbursements for Telehealth. Research has shown that up to 80% of clinical visits can be provided online via video consultations with comparable clinical outcomes, which would result in fairer access to healthcare for all citizens, regardless of their location. One of the ways this can be achieved is through improving support for non face-to-face healthcare delivery, which Telehealth makes possible through covering a larger area without having to travel more. I’d also like to see private health insurers get on board with it too.
Greg Muller, founder and CEO at Gooroo
In Tuesday’s budget we’re expecting the announcement that 1.25 million new jobs will be created in the next five years. The world of work is in a state of flux, with new jobs being created and old roles being made redundant and in the process we hear of a 'skills gap' being created.
This means that with 1.25 million new jobs being created, in order to secure them, Australians will need to develop new skills. Technology exists today that can help organisations hire future employees based on the way they will engage in the role and integrate in to the workplace. Understanding how people think and how they might respond to change or learn new skills is arguably more valuable than relying on how that person has "performed" in the past. Fit to role and team improves satisfaction, performance and keeps people in roles.
One of the biggest fears employees have about the future is that their current skills will become obsolete in the workplace. To address this, employers need to provide ongoing training to help workers keep their skills and knowledge up-to-date. Training must be interactive, continuous and where possible, personalised to the individual’s preferred mode of learning. Millennials have grown up in a technology-dependent age, expecting to access trusted information they seek quickly and on-the-go. And preparing the workforce for the digital world does not apply only to the general workforce. Senior leaders and executives will need new skills and the right mindset to lead in this new in order to take advantage of disruption and constant volatility.
Nick Smith, managing director for Informatica in Australia and New Zealand
The challenge for government is to start taking an incremental approach based on the skills they have today, rather than making big announcements about disrupting themselves. The question they need to ask is “How can we better use the data we have today and how can we structure ourselves to do this?”
There are pockets of excellence in government when it comes to innovation and a more effective use of technology to enable a more efficient government and even better citizen outcomes.
For example, Service NSW has already completely changed the way citizens engage across parts of NSW government agencies, and it’s brilliant.
When it comes to technology for government, there isn’t just one approach or answer and my hope is that the NSW government recognises that the technology already exists to store, analyse and share data between agencies and interested third parties.
I’d recommend that the NSW government prioritise identifying and investing in its tech-savvy people and embed then into the process of using technology to generate better outcomes for our citizens.
This can mean recruiting more people at leading agencies who know how to use technology to improve better outcomes or providing a means for those already embedded in the process to engage across agencies.
Bede Hackney, ANZ country Manager of Tenable
Cybersecurity needs to be firmly on the government's federal budget agenda in 2019. Rising geopolitical tensions and an expanding attack surface have left governments and businesses more vulnerable than ever to targeted cyber attacks. The 2018 Global Business Risks report from the World Economic Forum ranks cyber attacks as the No. 3 global risk in terms of likelihood, behind extreme weather events and natural disasters. Given the increased threat of cyber attacks and the global consensus on the importance of cybersecurity, it'd be great to see the government increase its investment in Australia’s cybersecurity capabilities and deliver solutions to ensure the safety of its businesses and citizens.