Before Malcolm Turnbull launched his successful challenge for the leadership of the Liberal Party, Prime Minister Tony Abbott was scheduled to visit San Francisco and Silicon Valley late next week.
There are people in the hi-technology and startup sector who hope that visit – by the new PM – occurs sooner rather than later after the political dust settles in Canberra.
The planned visit – about which the Prime Minister’s press office declined to respond to The Vanguard’s queries yesterday – would have provided insights of the factors fuelling Silicon Valley successes which may, in turn, have influenced the Federal Government’s policy positions.
The Federal Government has been criticised for policy inertia in recent times, not least by a report published by the not-for-profit StartupAUS – a coalition of 50 leaders in the national startup community.
StartupAUS’s Crossroads 2015 report says existing federal support schemes are missing their mark and it criticised Canberra for dragging its feet in an area other countries have recognised as vital to their economic fortunes.
The report maintains the Federal Government’s inaction in supporting hi-technology companies will see Australia’s economy languishing while other countries reap the benefits of high job creation and economic growth that the sector offers.
“Despite extensive engagement with the government by StartupAUS and others, most of the proposed actions in this paper have not been progressed since its first release in April 2014, and indeed there is little evidence that the government has fully grasped many of the issues facing startups or is seeking to address them with any sense of urgency,” the report says.
Crossroads 2015 – subtitled An action plan to develop a vibrant tech startup ecosystem in Australia – dispels the notion that hi-technology companies do not produce the high levels of employment associated with traditional industries like mining and manufacturing, the mainstays of the Australian economy for decades.
Quoting University of California, Berkeley, economist, Professor Enrico Moretti, the report says technology jobs have larger “multiplier effect” than jobs in other sectors.
“Moretti found that for each new technology-based job, five additional jobs are created in other sectors,” the report says.
“He notes that this multiplier effect is three times larger in the technology sector than in extractive industries or traditional manufacturing. This multiplier is one of the reasons that employment in the US technology sector has grown at 25 times that of other parts of the economy.”
Crossroads 2015, which was published in April but attracted little media interest, also notes that the OECD Science, Technology and Industry Scoreboard 2013 recorded that “over an extended period, including during the global financial crisis, new businesses have consistently been net job creators whilst existing businesses have bene net job destroyers”.
“Furthermore, technology-based companies are consistently able to generate jobs with much higher productivity (revenues per employee) than any other sector,” it says.
StartupAUS reviewed the Federal Government’s assistance regime for startups and hi-technology companies and found it wanting.
In a submission to the Government’s review of Australia’s innovation system in 2014, StartupAUS said “it is highly conspicuous that the Australian Government’s support for the startup sector is decreasing at a time when the rest of the world is increasing its investment in this sector”.
StartupAUS says Australia needs to take “immediate and far-reaching steps to address market failures that are impeding the maturation and growth of our startup ecosystem”.
It proposed an eight point plan:
- Create a national innovation agency
- Increase the number of entrepreneurs
- Improve the quality and quantity of entrepreneurship education
- Increase the number of people with CT skills
- Improve access to startup expertise
- Increase availability of early stage capital to startups
- Address legal and regulatory impediments
- Increase collaboration and international connectedness.
Prime Minister-designate Turnbull has both personal and policy experience in the hi-technology space. StartupAUS and others will be watching developments in Canberra with great interest.
The Vanguard is a weekly column highlighting innovation in South Australian business.
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