Australia’s recent budget reflects a shift in economic priorities. The Australian government’s 2024 budget walks a tightrope between addressing pressing concerns like the cost of living and fostering long-term innovation.
While measures aimed at established industries and social issues are plentiful, the fintech and startup sectors are left with a sense of cautious optimism mixed with disappointment. This year’s budget prioritizes tackling immediate challenges faced by Australians. Initiatives focused on lowering the cost of living dominate the headlines. However, this focus raises questions about the government’s commitment to nurturing the very industries – fintech and startups – that hold the potential to drive long-term economic growth and create jobs.
Rehan D’Almedia, CEO of FinTech Australia, welcomes some positive steps but worries about the lack of dedicated funding for the Consumer Data Right, a central pillar in the government’s plan to increase competition and reduce costs.”As expected, cost of living is front and centre of this budget and supporting existing proven industries such as fintech wouldn’t be a priority. We, however, welcome some of the measures that will benefit fintechs, such as the much-needed funding to continue modernising the regulatory frameworks for payments and digital assets while ensuring ASIC can handle the licensing influx. This was included in our pre-budget submission as well.
“We also welcome the new funds for sustainable finance initiatives, net zero transition and programs designed to address financial scams and fraud. Fintech has a key role to play here. We also look forward to the establishment of two new Austrade Landing Pads, which have been well utilised by fintechs in the past. But we’re concerned that the fintech industry, with a proven track record for innovation and job creation, receives limited support. While existing funds are yet to run their course, there’s no new funding measures for the Consumer Data Right — a key piece of the government’s plans to help reduce cost of living pressures by raising competition. To see this policy realised, after years of work, we’re now banking on funding for the CDR during a potential election year budget.
“Nor is there much in the way of direct measures that will support a marked decline in fintech funding, which is down from a high of $3 billion in 2021 to $331 million last year. Fintechs and the startup ecosystem were perhaps expecting more, given the circumstances. But perhaps, while currently less of a focus, there are ways in which it can play a key role in other areas such as the Future Made in Australia policy and the National Reconstruction Fund.”
Little support for startups
Meanwhile, the startup ecosystem seems to be left out in the cold entirely. Adam Milgrom, Partner at Giant Leap,Australia’s first Impact VC fund, acknowledges the budget’s focus on impactful areas like health and climate change, but questions the lack of direct support for startups. “”This is perhaps Australia’s most impact-led Federal Budget yet; it resonates strongly with our investment focus and we’re excited to see new funding commitments for health, climate and education.
“Unfortunately despite the support for these key high-impact sectors we see little in the way of direct support for the startup industry and it’s unclear how the startup sector will interact with the Future Made in Australia policy.We are buoyed by the focus on the environment and resources aimed at improving health and educational outcomes but the lack of support for the startup ecosystem is a missed opportunity. There’s plenty of policy changes and strategic investments the Government could make that include the industry to lever greater change. Perhaps that’s the message behind these measures, that the government still isn’t convinced that it’s their role to ensure Australia’s startup ecosystem continues to thrive into its next growth phase.”
Support has dwindled for startups
Des Hang, CEO of Carbar, Australia’s first car subscription platform, observes a change in tone. “There’s a change of tone in this Federal Budget. Rather than fund support services or programs that benefit startups, the government is making a specific bet on industries, such as energy or quantum computing. Given this, event the continuation of the instant asset write-off is a surprise. “This makes sense given the government is towing a fine line of supporting the economy while trying to dampen inflation. Support for the startup industry was bound to be in the firing line, as it can be an economic accelerator. Still, each year, the sector acts surprised. Is it time to accept that the Federal Government won’t support the sector as we’ve seen in the past? And perhaps that raises questions about the sector’s relationship with the Federal Government.
“With regard to the auto industry, there’s also questions as to whether the government’s level of support for the EV rollout is enough. There is a genuine tug of war between EVs and hybrids going on in Australian new car sales. The government has continued to pour funds — to the tune of $60 million — in creating new infrastructure for EVs. With cost of living biting, and EV price decline stagnating, more may need to be done to broaden out adoption and ensure that spend isn’t put to waste.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
