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Urgent reform needed for Australia to capitalise on the coming tech start-up boom
Entrepreneurs and government officials will gather this week in Melbourne for the Australian Internet Governance Forum, which is set to include a panel discussion on how to develop Australia’s entrepreneurial ecosystem.
Panel chair and entrepreneur Sandy Plunkett told StartupSmart Australia has to act quickly to create the right environment or risk losing leading entrepreneurial and development talent to a wide range of better-focused governments.
“There is an exit of talent already. But if we want to be part of the global trend of innovation and tech as wealth creation tools, we need to get on that bandwagon pretty soon,” she says.
“We shouldn’t be too afraid of talent going where it needs to go to be successful, because many come back. But we can’t have too much going one way. We need to fix the environment to give them the choice.”
Plunkett says many in the start-up community are concerned Australia will be left behind in the tech start-up boom if the government fails to step up and implement the necessary changes.
Australia has always been a small business powerhouse, but needs to overhaul a variety of issues before it can become a tech start-up one.
“Australia has work to do at every level of the value chain. It’s about education, about policy, it’s about tax, venture capital and culture. And that much work is a big ask,” Plunkett says.
She adds despite the challenges, the start-up community was providing a lot of positive growth and output, and that this is essential to develop momentum for the policy and capital-related changes needed to create a thriving ecosystem.
“The growth of the entrepreneurial class, those actually starting new businesses and the incubator and accelerator is all very good. On a community level, what we’re really trying to achieve is the network effect with economies of scale and connections spanning the community getting wider and deeper,” Plunkett says.
She says the growth of entrepreneurial talent will increase investment as both communities work together and grow, adding deal flow was improving but more capital was needed for bigger and more deals.
“Ecosystems should be grown organically because it’s about width, about culture and highly skilled people. A large pool of talent will attract capital, which in turn will require more talent, and this will form natural clusters,” Plunkett says.
As the clusters begin to take off, Plunkett says it’s becoming increasingly urgent the government establishes a more tech start-up friendly policy environment.
“Policy plays a role. You can’t force entrepreneurial clusters, but you can help them thrive and develop in various ways,” she says. “The challenge for governments is to create a policy environment which doesn’t discourage risk-based entrepreneurial activity by penalising.”
Plunkett says the recent change of government could be positive for start-ups but both parties need to dramatically adjust their approach to start-ups.
“Neither party have a deep understanding of the nuance and policy mechanism to encourage success in this area. You can’t force entrepreneurialism on a country, but the government certainly shouldn’t get in the way,” Plunkett says. “The way the government treats employee share schemes is positively punitive. No other progressive country in the world is thinking that way, not even China.”
Plunkett adds it’s not just tax and business regulation policies that are diminishing Australia’s chances of reaping the rewards of technology entrepreneurship.
“The other big potential crisis for Australia is the lack of skills in engineering, especially computer engineering. It’s reaching crisis point and the government needs to act fast to fix the way schools approach technology,” Plunkett says.