Ahead of the 2018-19 Federal Budget, which will be released on Tuesday (8 May), Dynamic Business spoke to a cohort of business leaders about the measures they hope to see from the Turnbull Government.
In this article, the second in a two-parter, Julius Wei (BMYG), James Lynch (CastleCoin), Michael Jankie (PoweredLocal), Trevor Townsend (Startup BootCamp), and Emma Lo Russo (Digivizer) discuss the need for government to – amongst other things – be more flexible with skilled worker visas, make the tax system more favourable to innovative businesses with global agendas, support startup accelerators and incubators and enable startups to safely undertake ICOs on a global level.
Internationally competitive startups
According to Emma Lo Russo, co-founder and CEO of social analytics tech startup Digivizer, the success of the budget should be measured in terms of how it helps businesses compete internationally.
“Our future economic wellbeing is dependent on our ability to be relevant in this already global, digital and tech-charged, tech-automated world,” she explained.
“We will be looking to see investment in technology and information infrastructure, tech education, tech financing and the balancing of our tax system to make it more favourable to those innovating, hiring and growing global businesses.
“We need to make it easier for businesses to access capital between the startup and VC stages. Further tax incentives for corporate, superannuation and government co-funding will positively impact our ability to keep our tech onshore, and so keep hiring and paying taxes here.
Other initiatives Lo Russo said she would like to see in the budget included incentives for businesses to promptly pay startups and SMEs (“this can help cash flow at critical stages”), greater flexibility around technical labour visas (“this would help new businesses flourish”) and incentives to provide work-based tech training.
“As founders and business owners, we should be asking the government of the day to strip away the short-termism of the three-year election cycle, to apply a medium- and long-term view, to see Australian innovation and business growth accelerate,” she said.
Accelerator support, ICO framework
Trevor Townsend, CEO of Startup BootCamp Melbourne said the startup accelerator would like to see additional funding for innovation support activities such as accelerators and incubators. In addition, he called for the ESIC (early stage innovation company process) to be simplified to allow startups to get free certification from government – “This should enable certainty around their status as ESIC compliant. At the moment, it is creating additional cost for accountants to do the review”.
Further, Townsend call for the government to reaffirm its support for initiatives such as the Accelerating Commercialisation program of guidance and grants and the R&D tax incentive, and to establish a framework for initial coin offerings (ICOs) to enable startups to safely raise funds globally without fear of breaching ASIC or other guidelines.
Attract further investment in startups
Julius Wei, co-founder of wealth management firm BMYG, said government can do more around the tax rebate/benefit rules to help startups.
“For instance, currently only an early stage venture capital limited partnership (ESVCLP) vehicle is tax free for investment into early stage companies, which requires a very complicated structure and approval process,” he explained.
“We at BMYG believe in having a more general tax-concession and incentive directly according to the company’s characteristics, instead of a vehicle specific rule, because that is a much better way of attracting further investment into our local startups. We also noticed that the ATO has done a lot of investigation into the historical R&D rebate and asked many companies to pay them back as part of the proceedings, which is harsh for many cash flow tight companies. We believe the best way forward should be by affording greater control in the approval process, not a recoup of the already granted cash.”
Wei said BMYG disapproves of the government’s recent migration policy changes and its decision to abolish the 457 visa for skilled migrant workers which made the skilled applicants the victim of the change.
He explained, “It’s important to note that these skilled workers are the most valuable assets to many of our companies, and particularly for local startups, which are typically in the industries relatively underdeveloped in Australia and therefore quite often rely on having a lot on foreign employees to remain competitive.
A globally competitive super region
Michael Jankie, CEO of social wi-fi company PoweredLocal identified a need for government to pursue more competitive on tax rates to retain companies in – and attract companies to – Australia.
“A lot of Australians see this as a bad thing, but the economic uplift of these companies dumping the expenses side of their operations in Australia will lead to employment, which puts money in individual’s pockets who will spend the money in our economy,” Jankie explained “It’s the idea that having 20 per cent of a much bigger pie is better than 30 per cent of a small pie.
Jankie endorsed a “double-down” focus from the government on small business growth spending and tax cuts as well as increased expenditure on national building exercises.
“I want to see Melbourne, Sydney and Brisbane become a super region to compete globally, rather than each city competing with each other and globally,” he explained. “This is going to mean major infrastructure projects between the cities to link them together and make moving between them much faster.”
Increased awareness of support programs
James Lynch, CEO of blockchain-based, real estate investment platform CastleCoin, said he and his team would like to see government increase awareness of support programs available to startups and small businesses, including details on how to access and capitalise on them.
Noting that the current disparity between real estate licensing and processes limits both scalability and liquidity, Lynch encouraged the Government to provide greater support for the prop-tech space. Specifically, he said he a set of unified regulatory standards across all states would enable prop-tech startups to improve the efficiency of the national market.
“As the values and goals of government become closer aligned with that of the market, I believe that there is a large opportunity to engage directly with both private and educational institutions, in addition to startup hubs such as the Blockchain Centre in Melbourne,” he said.
“In these spaces, there is multitude of great ideas coming through which will serve to drive innovation and development of relevant technology.”