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‘A grim outcome’: startup and tech sector reactions to the 2022 Budget measures


There’s been a mixed reaction to the Morrison government’s last budget before the election.

While The Tech Council of Australia welcomed the measures for small business offering additional tax deductions for employers who invest in digital skills training for their staff, while William Buck startup advisor and accountant Jack Qi gave the budget a “C-” for the sector – a lower mark than last year.

You can read more about what’s in the budget for startups and the tech sector here.

In the meantime, here are the views of a range of startup founders and tech execs after they took a closer look at what Treasurer Josh Frydenberg put on the budget table.

Andrew Porter

CEO, FinTech Australia

” No solution to talent shortage a grim outcome”

Fintech Australia CEO Andrew Porter

After years of close work with the Federal Government it’s a shame to see that the fintech industry failed to have really any of its key matters addressed in this budget.

The closest we came was a $38 million commitment to the rollout of the CDR — $12.5 million per year till 2026. This funding won’t go astray, with many in the industry asking why solutions aren’t already in the market, and why this is taking so long.

At a stretch, earlier stage fintechs may be able to capitalise on the budget’s incentives towards retraining. Other fintechs building their businesses around e-invoicing will also have their efforts supported by Canberra.

Now with both parties’ cards on the table, they have no immediate policy response to the tech talent shortage in Australia. Further training, and plans for retraining is admirable for the medium-term, but our sector will shrink and job growth will slow without an immediate response.

The sector now has to assume that any changes regarding skilled talent visas are politically too tough for either party to enact going into an election. It’s a grim outcome for fintech and the broader sector.

Paul Byrne

CEO, Zai

“We want to hire in Australia instead of overseas. That now seems impossible”

Paul Byrne

Zai CEO Paul Byrne

One area that needs much stronger action is addressing the challenge of the tech talent shortage in Australia.

We are investing heavily in developing and launching new products to the Australian market this year and then selling them globally.

As a result, we have an ambitious hiring plan in Australia. But a lack of policy assistance — or even recognition of the problem — makes this difficult in the short term. At this rate, we and other ambitious fintech businesses will be forced to seek out talent in other countries, which is a shame given our Australian foundations and the opportunity for Australia to be a global fintech leader.

We would like to see more be done to develop a larger hiring pool of Australian-based tech talent. Whether this is through overseas campaigns encouraging tech workers to relocate or expats to return. It’s pleasing to see more being done to train tech talent at a TAFE and University level, but like most fast-growing businesses, we need to hire now, not in two years’ time.

In addition, while it is fantastic to see a strong budget come through this year in support of Australian small business, it’s disappointing to see no specific policy or mention to assist in broader recognition and awareness of PayTo, given its launch in July this year.

PayTo, the latest initiative from New Payments Platform (NPP) Australia, is the first of its kind in the country and will allow customers and businesses to conduct cost-effective payments in real time. This innovative product also puts Australia at the forefront of real-time payments globally.

Australian fintech companies such as Zai have been and will continue to be strong advocates and educators for innovations such as PayTo and its value to businesses and consumers alike. However we also need the support of the Government to reach as wide an audience as possible, preferably through a detailed public awareness campaign.

Unfortunately, the banks are also moving slowly on educating the public on PayTo. Zai is investing significantly in creating a strong PayTo product and promotional campaign in the lead up to the launch of the platform later this year, and would like to see this investment supported by Government action.

Mina Nada

CEO & Co-Founder, Zoomo

“The cost of living with climate change needs priority too”

We support the government’s prioritisation of the cost of living during this turbulent time for Australian households and welcome the initiatives in place to support motorists, taxpayers and more. In saying this, we feel there was a missed opportunity to consider another, equally important, cost of living. The cost of living with climate change.

The cutting down of fuel is critical to easing some of the financial pressures Australians are currently burdened by. However, there is an alternative solution that we would have liked to see explored which is the long-term opportunity to invest in and realise the true potential of clean transport alternatives.

The fuel excise is a crucial step in economic recovery, but its intent is to maintain Australia’s reliance on increasingly unaffordable fossil fuels and pollutive transport modes.

We are confident that the Morrison government and future governments will see the full potential available to them from micro-mobility and hope to see specific funding for investment into cycling infrastructure, subsidies for individuals and businesses to own and use e-bikes, and financial mechanisms to dissuade the use and purchase of fossil fuel-guzzling cars and vans in the near future.

Australia is well placed to take advantage of the booming micro-mobility market and reduce the impacts of climate change and we welcome a positive discourse with the government to speak to this opportunity. There is so much we can and should be doing.

Adam Milgrom

Partner, Giant Leap

“A confusing budget for startups”

This is a confusing budget for the startup sector. To start off with there isn’t even a mention of startups in the budget, once again the sector has been lobbed in with small business.

It’s unusual for us too, as some of our portfolio companies will actually benefit, with funds being poured into retraining, supporting women in the workforce and the NDIS. Yet for companies not tackling a broader issue, there’s little here in terms of support.

For us, this again underscores the importance of founding impact companies. If they are tackling the correct issues, budget policy will fall in their favor. And if they aren’t, well, they better hope Canberra starts to understand the difference between a small business and a startup.

Beyond this, the level of climate policy and support in the federal budget is disappointing. It sidesteps this issue, leaving it the private sector to make up the shortfall. It’s 2022. We just endured some of the worst flooding we have seen as a direct byproduct from climate change. Surely this should be at the top of the agenda, but it barely copped a mention.

Nigel Freeman-Fellowes

CEO, Kanopi

“A lack of action on tech talent will cost jobs”

Kanopi’s Nigel Fellowes-Freeman

Everyone in the startup industry was expecting at least one point in tonight’s budget, and this is a measure to ease the bottleneck on tech talent. It’s the one problem that the Federal Government can easily solve for the sector, in streamlining the Skilled Visa process for tech workers.

Indeed there were a number of changes to visas outlined tonight, but the tech sector sadly did not get a look in. It’s a shame as it leaves startups in a holding pattern until more local talent is trained — which could take years. Some startups simply won’t have the capital to hold out of it, so there is a real risk that a lack of action will cost future jobs.

Elsewhere, it’s heartening to see further investment from the Federal Government on the CDR. It’s good to see it’s still on their radar and hope these funds will help in accelerating the rollout.

Sam Pratt

CEO, Render

“Where is our vision for the future of the internet?”

Sam Pratt, CEO, Render

There was no mention whatsoever of technology or connectivity in the Treasurer’s speech to the House.

Compare our version of ‘nation building infrastructure’ — which is touted as a pillar of the Coalition agenda  — to that in the US. Biden has already committed an additional $USD130 billion in combined Broadband and Energy infrastructure investment over the next 5 years – and they’re already out in front.

The NBN kept millions of us connected throughout the pandemic however our level of connectivity is nowhere near world class.

We trail Japan, New Zealand and Canada, and will only continue to fall further behind without significant federal investment.

The concern here is that yet another year passes by where we fail to make the necessary digital infrastructure investment required to keep pace.

 

Professor Virginia Kilborn

Swinburne’s Chief Scientist

“No increase or initiatives for fundamental science”

Professor Virginia Kilborn, Swinburne University chief scientist

Australia’s space industry is a critical sovereign capability we need to develop. The announcement of $1.2B in funding for a series of Earth observation satellites will not only sure up Australia’s access to this vital data, but develop expertise, manufacturing opportunities and supply chains in Australia for satellite development.

We also saw $65.7M committed over five years to fast-track Australian launch capability and more the $20M was allocated for coming years to build on other areas in the sector, including international engagement.

In terms of broader science, research funding spending comes primarily through the university commercialisation investment with increased budget for research translation.

There was no increase or initiatives for fundamental science which provides the foundation for translation. This is concerning given the importance of fundamental research and the benefit such an investment has to a nation (as outlined in the Academy of Science budget statement).

Previously announced support of Women in STEM programs is welcome, including the superstars of STEM and STEM ambassador programs, which recognise the importance of attracting and retaining women in the STEM areas, but unfortunately there was no new funding announcements to further boost gender equity in STEM.

 

Chris Dahl

Director of Sales and Growth, Pin Payments

 “This budget falls short for small business”

Chris Dahl, Pin Payments

It’s encouraging to see the government finally investing in digital and providing tax incentives for small businesses. Such measures will assist SMBs reluctant to invest in technology due to their constrained budgets.

However, it will not necessarily contribute to their survival. Small businesses have been hit the hardest in the last two years, and it’s disappointing that the government did not go further.

Very little support was included to help with small business cash flow and depleted capital. Still, greater rebates surrounding staff training is a positive. The rebate will ensure talent feel nurtured, reduce mass movement in the market and promote business productivity.

Overall this budget falls short for small businesses given the severe disruption from the recent floods, global conflict, and the lasting effect the pandemic has had.

 

David Burt

Director of Entrepreneurship at UNSW Founders

“$37.4m to make scientists more entrepreneurial is important”

David Burt, head of entrepreneurship at UNSW Founders

Communicating big commercial ideas is typically where scientists struggle. There are cultural differences between academia and startups, with one of the big ones being able to tell the business story.

Soft skills like building networks, negotiating deals, and easily explaining your idea are every bit as important as the technical skills scientists must master to gain credibility.”

But the truth is, these are all learnable skills. That’s why programs like the newly announced CSIRO Research Translation Start program is so important – to help scientists and researchers learn the skills to take an idea and make it a commercial product.

That’s exactly what we did with the CSIRO’s ON program and it’s great to see the government continuing to put efforts into the building of further cooperation between our researchers and industry to supercharge commercialisation journeys.

Innovation is at the core of all science disciplines. Those who study science know how to solve problems that yield results based on the facts they have. These individuals must learn to shift their mindset from researcher to entrepreneur to succeed in the world of startups.

Not every scientist will become an entrepreneur however, there is a huge opportunity to unleash innovation in the country if we tap into those scientists that have the skills and initiative to think commercially.

 

Joseph Lyons

MD, Australia & Asia, Xero

Xero managing director Joseph Lyons

Xero managing director Joseph Lyons

Treasurer Josh Frydenberg has offered small businesses a targeted economic roadmap that also recognises that those with higher digital and skills capability perform better.

The budget seeks to address the economic risk of consumers shutting their wallets as a result of concern about the state of the economy. Continuing economic growth and closing the capability divide has the potential to spur innovation and productivity among small businesses.

We welcome the range of measures announced to support small businesses to digitise and upskill. We are also pleased to see digital service providers recognised in this budget, alongside tax practitioners, as helping small businesses go digital.

Delivering a $120 tax deduction on every $100 spent on technology, such as cloud computing, cyber security and web design, will provide small businesses with access to better tools and services. This should help spur business and job growth. Xero Small Business Insights research shows that highly digitised small businesses outperformed their peers in recent years; technology incentives can help more see these benefits.

Recent Xero research also found one third of small businesses surveyed (33%) believe a cash rebate or grant to spend on technology would help them use digital tools in their business, indicating these measures could bring a welcome tech boost. However, the Business eInvoicing Right was a noticeable omission from the Budget papers despite its broad-reaching potential; the adoption of eInvoicing could generate cost savings of $28 billion for the economy.

We also welcome the addition of $5.6 million committed to the Fair Work Commission to establish a new dedicated small business unit supporting the sector. Combined with the previous announcement to invest in the Modern Awards Pay Database and other measures on the Attorney General Regtech Roadmap, we foresee a simpler, fairer and more digitised industrial relations system for small businesses.

Overall, the budget offers a positive agenda for small businesses to harness the opportunities of a more productive, digitised operation.

 

Professor Hugh Bradlow

President, Australian Academy of Technology and Engineering

“Long-term strategy lacking”

The Federal Budget is a starting point, but lacks a long-term holistic strategy essential to safeguard Australia’s economy, society and environment.

We welcome funding for green energy infrastructure and expanding the STEM workforce. However, this budget does not represent a comprehensive and evidence-based investment to decarbonise, or develop the essential foundational skills required for the aspirational technology-forward economy the government has envisaged.

As Australia seeks to transform to a net zero emissions economy and evolve traditional industries, applied science is fundamental to actualising the ideas, technologies, systems and processes needed.

ATSE welcomes $247.1 million over 5 years for low emissions technologies, and support to farmers for biodiversity activities. However, we are concerned that other energy related announcements are at odds with fast-tracking a net zero future and risks stranded assets.

The $12 billion investment in roads is a missed opportunity to fast-track electrification of the transport system and achieve Australia’s emission reduction commitment.

While the expansion of the Patent Box for agricultural innovation is welcome, ATSE is disappointed this does not extend to green energy.

ATSE welcomes the enhanced support for technology infrastructure, including $9.9 billion for cyber security capabilities. These investments will create strong demand for a highly skilled national science, technology, engineering and mathematics (STEM) workforce, and a skills strategy from kindergarten-to-career is urgently needed.

By 2023, digital technologies are estimated to contribute $65 billion to our economy and we will need an additional 100,000 digitally skilled workers by 2024. By 2025, we need 40,000 more engineers. This is an immediate need that is not being met by support for teachers, students, and the higher education sector.

ATSE also reiterates its support for previous announcement including the $750M regional investment in telecommunications to improve wireless connections and the $41.2 million Elevate: Boosting Women in STEM Program which represents the largest single Government investment in gender equity in STEM to date.

Ahead of the federal election, ATSE calls on all parties to articulate a vision for a skilled, thriving, resilient, tech-powered Australia which puts people first.

 

Mark Khabe

Co-founder, PRIME BPM

“Backing small businesses with the lowest tax rates in 50 years”

Mark Khabe

It’s encouraging to see that Treasurer Frydenberg has provided significant weightage to the importance of digital innovation and small businesses in the Federal Budget 2022.

Backing small businesses with the lowest tax rates in 50 years is a great move to support the recovery and growth of the SMB sector, which has been severely impacted by disruptions created by the pandemic and extreme weather conditions.

The government’s thrust on digital technologies and technology advancement is a right step that will provide significant impetus to the sector.

The tax incentives surrounding cloud computing, eInvoicing, cyber security and web design will encourage SMBs to further speed up digital innovation and enhance their businesses. Small businesses without the cash flow to invest in digital transformation will now have the capacity to do so, which will positively affect the overall economy.

Likewise, we’re pleased to see support for training and skill-building initiatives. The tax relief on staff upskilling will encourage SMBs to train and develop the right skill set, which will contribute to their productivity, growth and competitiveness.

However, for borderless businesses, such as ours, with staff across the globe, it’s disappointing that the government has limited funding to Australia only.

Since we have customers worldwide, around 50% of our staff works remotely from different geographic locations, with Australian hours and an Australian head office.

As digital transformation changes the way business operates, the government should not limit business and staff incentives to Australia. This will help Australia-based businesses to expand globally and put the national economy on a favourable growth path.

Dionne Woo

Chief People Officer, SiteMinder

Dionne Niven, Chief People Officer, SiteMinder

 “Make it easier for tech talent to enter Australia”

Australia’s tech skills shortage demands both immediate action and an implementable vision for systemic change, something this year’s budget again fails to deliver.

While the shake-up of employee share schemes and proposed tax reforms may attract some global talent to our shores, these initiatives don’t deliver what many companies need today, nor create an environment to make Australia the tech powerhouse it could be.

In the short-term, finding staff is the one universal challenge for Aussie tech businesses of all sizes. Jobs are being created fast, and to address current shortages, we need to be making it easier for tech talent to enter the country.

Without this, salaries will continue to inflate, attrition grow, and ultimately more and more businesses will be forced to offshore work in an attempt to deliver for their customers.

The bigger missed opportunity, however, is the failure to deliver on the medium and long-term initiatives that can boost home-grown talent into the future.

In the medium term, there must be an increase in the number of pathways into tech via reskilling and upskilling programs, as job opportunities increase.

Programs like the digital cadetships package announced in recent days, bring us merely one step closer to addressing the opportunity to focus on those still under-represented in our industry, such as women, who make up just 25% of the tech workforce.

 

Noel Allnutt

Managing Director, Sekuro

Noel Allnutt

“More talk than walk on cybersecurity”

The $9b investment into cyber defence is a welcomed one from the industry.

It’s a sign that the government is recognising what the industry has been saying for years – that cyber security is a massive threat to our nation and that it needs to be treated as such.

Combined with a bigger slice of the action for SMEs by making it easier for them to gain defence contracts, this is good news for the sector.

However, as always, the devil (and the red tape) is in the details, so we’ll be watching carefully to see how this plays out in the coming months.

In saying that, we still haven’t seen any investment from the Liberals (unlike their Labor counterparts) in a dedicated cyber security ministry. And it’s hard to walk to talk if you’re not prepared to have dedicated resources to fight what is now the frontline of modern warfare.

The 2022-23 Federal Budget highlighted the Morrison Government’s strong focus on the technology sector, bringing in appropriate policy and measures across cyber security, business, digital economy, skills, innovation and low-emissions technologies.

Ron Gauci

CEO, Australian Information Industry Association

“Employee share reforms will help skilled innovators attract talent”

The significant investments in innovation technology proposed by the Government are recognition of the AIIA’s previous calls that technology is an essential driver to economic growth creating employment opportunities, improving services, and becoming globally competitive.”

It is pleasing to see technology take a prime spot on the main stage in this year’s budget with a broad range of policies and strategies including the release of the Digital Economy Strategy 2022 Update which supports our progress to become a top 10 digital economy by 2030 as we called for in our 2020 White Paper.

While the $7 billion total investment in skills and training is welcome, the AIIA would have liked to see more clarity around its allocation to ensure a heavier focus and funding allocation towards Australia’s ICT industry and business – this is the area that is suffering severely when it comes to skills shortage and is going to be the driver for economic recovery. The AIIA is very pleased, however, to see $3.9M to support women in mid-career transitions to the tech workforce.

Small business is supported in the budget with a bonus 20% tax rebate for investment in digital technology, along with skills and training of staff. Additionally, the Morrison Government also announced employee share reforms in which people working in start-up businesses will be able to receive more incentives and bonuses. The new form will hope to encourage further innovation in Australia. Employees will be eligible for up to $30,000 in shares per year.

The employee share reforms will help skilled innovators attract talent and see innovations move from the R&D stage to commercialisation. Australia is very good at supporting R&D, but we must make steps to improve support to commercialise brilliant Australian IP.

We risk continuing to see brilliant Australian innovations sold overseas without better support. Policies such as the changes to the employee share scheme are a great step to supporting Australia’s future economic prosperity.

Treasurer Josh Frydenberg referred to the world being a far more dangerous place than it ever has been and the significant investment in cyber shows that the digital dangers are understood by the government and will support national security and see jobs created as a further consequence.

The AIIA would also like to see the Cybersecurity measures extended to the SME sector to protect their businesses as well.

Jonathan Perumal

Country Manager, ANZ, Safeguard Global

“International skills needed”

It’s pleasing to see the government prioritise skills reform in this year’s budget, including an allocation of $3.7 billion towards a new National Skills Agreement for jobs of the future and $500 million in tax relief for small businesses investing in upskilling their employees.

However, it will take time for the industries that are most under pressure to feel the benefits of this funding. And in the interim, Australian organisations are still frantically seeking new ways to recruit the skilled workers they need.

Accessing skills in international markets will not only be a key survival mechanism for Aussie businesses looking to plug their talent gaps – it will also create a foundation for them to enter new markets by building a global team with employees in key locations.

 

NOW READ: The cost-of-living election budget: the key things you need to know





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