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Start-ups’ federal election wish list

Thursday, 31 January 2013 | By Oliver Milman

feature-tony-julia-parliament-thumbSome say it’s too late. Some, even those who have been continuously calling for the nation to go to the polls for the past three years, say it’s too early, given the budget announcement isn’t until May.

 

Either way, Australia is set for a marathon bout of electioneering, following Prime Minister Julia Gillard’s decision yesterday to circle September 14 as election day in the diary.

 

Business reaction has been mixed – many agree with Gillard that the eight month notice period provides “certainty” to investors, consumers and bosses. However, there are concerns that consumer spending will instinctively pull back in the lead up to the poll.

 

But these are minor quibbles in the grand scheme of things. For start-ups, the policies adopted by the winning party are of far greater importance in the long run.

 

Will the economy keep growing? Will entrepreneurship be supported properly? Will the government help provide the skills, training and infrastructure needed to help new businesses flourish?

 

There will be many things on entrepreneurs’ election wish list ahead of September 14. Here, we look at five of the most pressing issues. Which, if any, of these will be your burning start-up concern come polling day?

 

 

1. The economy

 

As ever, the economy will be centre stage during the election campaign. While Tony Abbott will cite excessive government waste and a failure to return the budget to surplus, Labor has some decent credentials to call upon.

 

Inflation, despite populist appeals to cost of living concerns, is at just 2.2%. Unemployment is low. As are interest rates. The economy has now grown every year for the last 21 years, with Australia now the 13th largest economy in the world, up from 15th in 2010.

 

However, there is a realisation that Australia survived unscathed from the GFC due to its resources boom.

 

With fears that this is beginning to wane, how will our economy evolve? Crucially for start-ups, will new economic opportunities present themselves in the years to come, other than digging stuff up out of the ground?

 

As Innes Willox, chief executive of the Australian Industry Group, puts it: “The mining investment pipeline is expected to ease earlier and from a lower peak than previously expected while the fiscal policies of the federal and state governments are detracting from, rather than contributing to growth.”

 

“These sources are yet to be replaced by a meaningful pick-up in activity or earnings from other key sectors such as commercial and residential construction, manufacturing, or education exports.”

 

“Consumers are not likely to step into the breach in the absence of any plans for tax cuts or boosts in income support. A ‘gap’ in the drivers of growth now looks likely.”

 

Abbott feels there are five economic ‘pillars’ that Australia should build upon – manufacturing, education, mining, agriculture and services. Gillard says she is focused on reforms such as education and disability insurance.

 

 

2. Support for start-ups

 

Australia is, arguably, one of the more supportive nations when it comes to start-ups. There are initiatives such as the research and development grant and the export marketing development grant.

 

We have Commercialisation Australia, which is back to forking out cash to deserving applicants after a politically motivated freeze last year.

 

There is also the Innovation Investment Fund, which helps support early venture capital investment in businesses, as well as two of Labor’s better SME policies – the small business advice hotline and the installation of a federal small business commissioner.

 

But many start-ups will feel that we could be doing a bit better. Much of the political debate is dominated by traditional, conservative businesses rather than innovative, hungry risk-taking ones.

 

Australia has no specific start-up strategy, unlike the US or UK. There are no groups, even symbolic talking shops, designed to drive entrepreneurship.

 

Our leading business figures fulminate on red tape, tax and productivity while their counterparts overseas (think Bill Gates and Sir Richard Branson) are ploughing their time and money into start-ups.

 

A simple start-up strategy would be a great start, from either of the main parties. It’ll be interesting to see whether the next eight months will produce one. Don’t hold your breath.

 

 

3. Tax reform

 

The Coalition has a “pledge in blood” that it will tear up the carbon tax, with the mining tax also set to follow.

 

This stance will be welcomed by many businesses. Recent research shows that 80% of retailers claim they have been negatively affected by the carbon tax.

 

But there are a bundle of other taxes that will concern start-ups. With no carbon price or mining tax, where will the revenue come for the company tax cut which was promised but then taken away by Treasurer Wayne Swan last year?

 

There are other, more esoteric, tax concerns for start-ups. As Shoes of Prey co-founder Michael Fox opined recently, there are problems in the employee share option regime, which should help cash-strapped enterprises attract top talent.

 

Meanwhile, the Australian Retailers Association says it wants to see a “reduction of the Low Value Imports Threshold (LVIT) and abolition of inefficient taxes on businesses and individuals to drive economic reform and create more jobs including a full review of the GST.”

 

Is the tax burden on start-ups a fair one? Given that new businesses do not have armies of lawyers and accountants to help siphon off money to low-tax enclaves, government policy on this issue will be a significant factor for entrepreneurs.

 

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4. Red tape reduction

 

Red tape isn’t a new concern for business owners, but it appears to be becoming an increasingly pressing one.

 

Research out last year showed that nearly three quarters of Australian small businesses spend longer complying with regulations than they did two years ago, with one in 10 taking more than 20 hours a week to tackle red tape.

 

The actual process of starting up in Australia is relatively easy – the second easiest in the world, in fact – but the red tape problems begin to mount after then.

 

Just one in ten Aussie firms feel that red tape doesn’t impact their business. Try doing anything that involves bureaucratic approval and you will probably fall into the 90%.

 

But what to do about it? The Coalition claims that Labor has failed in its ‘one in, one out’ policy towards regulation, promising to slash the regulatory burden. Victoria even has Australia’s first red tape commissioner.

 

Start-ups will be hoping for progress in this area in the policies formed before the September poll.

 

 

5. Cost of doing business

 

As Gillard acknowledged in her speech yesterday, businesses face growing pressures on both time and money.

 

“Our travel time to work keeps getting longer: we know that in our biggest cities, the time spent travelling every week has increased by as much as an hour and a half in the past decade – as many as one in six workers spend more than an hour every day getting to and from their job,” she said.

 

“The price we pay for electricity and gas has increased by 120% in the last decade and 26% in the last two years.”

 

“Despite low inflation and low interest rates, we still feel these pressures on living standards.”

 

Earlier this week, we learned that energy costs for start-ups have risen by 14.5% since the introduction of the carbon tax.

 

Then there’s the cost of labour, soaring business premises rates and the stubbornly high Australian dollar. All of these factors impact new businesses, in one way or another, and proposals to help alleviate this pain are likely to be listened to by entrepreneurs.

 

 

What do you think?

 

We’ve outlined five battleground areas that will interest start-ups, but what will be your main consideration going into the federal election?

 

What policies would you like to see developed to specifically help innovation and start-up businesses in Australia?

 

Click here to cast your early ballot.

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