In the shadow of an imminent election, this year’s federal budget included some welcome investments for Australian innovation ecosystem, but didn’t go far enough, according to a panel of experts at InnovationAus’s sixth annual Budget Insider event.
The panelists broadly welcomed a number of tech-focused budget inclusions but said the government needed to adopt a longer-term perspective to growing the ecosystem in Australia. The panel included representatives from quantum computing company Q-CTRL and venture capital fund Beckon Capital, among others.
Before being handed down by the Treasurer Josh Frydenberg on Tuesday evening, a panel of industry members gathered to discuss what the innovation ecosystem needed out of the budget. Attendees then watched the Treasurer’s speech before a second panel discussed their impressions of the announcements.
The post-budget panel featured Beckon Capital chief executive Anne-Marie Elias, Vault Cloud chief operating office Joe Ruggero, and Q-CTRL chief executive office and founder Professor Michael Biercuk.
On a positive note, Professor Biercuk remarked that the budget was “surprisingly not so bad”. He commended the expansion of the proposed patent box scheme a well as the $1.2 billion being invested in satellites for the National Space Mission for Earth Observation.
“The idea of government as customer instead of government handouts and little tiny grants of 100 or 200k, that don’t change anything. That’s very powerful. Q-CTRL just last week was announced as winning a Cooperative Research Centre project grant for earth observation, and now seeing that this is going to be part of a much bugger initiative is very exciting,” Mr Biercuk said.
He also expressed his disappointment regarding the lack of support for universities.
Professor Biercuk also welcomed the changes to the employee share scheme but said that Australia still needed a cultural change to create more entrepreneurs. He acknowledged that he wasn’t sure this could be solved through budget announcements, but said that the 10-year $9.9 billion investment in the Australian Signals Directorate (ASD) was potentially counterproductive for innovation.
“There are some great things that are going to flow from the ASD investment, but it’s also going to dramatically expand the public service. Australian culture has lacked entrepreneurialism as a general concept so giving more opportunities for conventional public service jobs in the tech sector is not necessarily going to help,” Professor Biercuk said.
“A lot of these people could be joining early-stage startups, learning how to be entrepreneurs, and contributing to the growth of the one part of the economy that is able to break us out of the cycles that we’ve been in before.
“I wanted to see a little bit more of an expansive vision and how it can lead to transformational change in the economy, diversification of the economy, and we didn’t see that. But I don’t want to detract from the positive nature of a lot of the things that we did see in the budget tonight.”
Beckon Capital’s Ms Elias began by saying “it’s a very election budget”, targeting areas that could score the most political points. She said the expansion of the patent box scheme is something that has been talked about for years, and “doesn’t go far enough”.
She also expressed concern at the funding cuts for the Digital Transformation Agency (DTA) as well as increasing funding to support manufacturing.
“Hearing that [the DTA is becoming a] policy agency and not a service agency is very disappointing, because we don’t have the capability in the public sector to deliver what we need to deliver. The idea of the DTA was to build that capability across the public sector. That really does concern me,” Ms Elias said.
“They’ve not been able to get rid of the manufacturing grants that they have, and they’re throwing more money at it. That really does concern me. With the closure of funding for the manufacturing growth centres, I think there’s going to be less capacity than what we think overall. I’m a little bit disappointed, [the government] could have really gone a little bit further and brought the population with them.”
Ms Elias also questioned whether the talent required to fill the 1900 positions being created at the ASD was readily available in Australia given the ongoing skills shortage. She said the government has again failed to invest in developing cybersecurity and computer science skills within Australian universities and TAFEs.
Vault Cloud chief operations officer Joe Ruggero said he was pleased with the funding set aside for the ASD to bolster Australia’s cybersecurity capability. But he also said that more innovation policy was needed, and also referenced the patent box scheme.
Mr Ruggero also hoped that the large investment in the ASD would lead to a loosening of procurement rules within the public sector to help small and medium enterprises compete for contracts.
“With the money going to ASD, I think the intent is also the loosening some of the procurement rules to make it easier for the government to procure from small and medium enterprises. That’s really important because the government typically has a pattern with their procurement, which makes it difficult for local players with innovative solutions to breakthrough,” Mr Ruggero said.
During the first panel before the budget was revealed, Fishburners chair Clive Mayhew described it as constituting a “tradie budget, not an innovation budget” and also as “a budget to win an election”.
“It’s disappointing that we have such a focus on short term, rather than longer term goals. The tech in this country is getting better and better. But we’re just not cracking the innovation inside Australia,” Mr Mayhew said.
“We’re not building the next platforms, which we can sell the intellectual property around the world. We have the gig workers, the tradies equivalent in that space, but we’re not building the platforms that are empowering those gig workers and keeping that innovation in Australia.”
Mr Mayhew hoped to see 50,000 visas made available for skilled labour, the creation of a $500 million seed investment capital programme, and a structural change that takes money out of super funds and puts it towards innovation investment.
ANDHealth chief executive Bronwyn Le Grice called on government to implement bold policies and described current initiatives as only going three quarters of the way.
“I’d love to see a bigger, broader focus on innovation, looking at technologies and commercialisation opportunities that maybe don’t come through academic traditional academic pathways. Not everything does come through a university or medical research institute,” Ms Le Grice said.
“Also looking at programmes that focus on the whole point about scale. We’re really good at research and we’ve kind of got quite a lot going on with startups but I want to know what we can do to grow companies from 50-500 people.”
In particular, Ms Le Grice also compared the proposed patent box scheme, which introduces a concessional tax rate of 17 per cent for profit derived from local intellectual property, to similar 10 per cent concessional tax rates in the UK and France. Rather than matching the policy set by other countries, Ms Le Grice wants to see Australia go beyond them.
Jas Chambers, the chair and convenor of advocacy group Ocean Decade Australia and Science and Technology Australia secretary, wanted support for the implementation of natural capital accounting.
“My first initial response might have been, I’d love funding for an ocean agency. We have a space agency, but we don’t have an ocean agency,” Ms Chambers said.
“My number one thing that I’d be looking for is funding to support this idea of natural capital accounting. Valuing nature is incredibly difficult. Since 1992 the system for including the environment in economic accounting has been thought about in the United Nations and there are a lot of initiatives around this.”
She added that including things such as carbon emissions, oxygen availability, and forests in our accounting practices would affect our behaviour and attitude towards sustainability. Ms Chambers also called for the removal of subsidies that support carbon-based energy.
