Published on the 26/08/2020 | Written by Jonathan Cotton

Tech leaders demand better engagement – and R&D reform – from Govt…

Aussie startups are mad as hell (with the Federal Government’s failure to support innovation) and they’re not going to take it anymore (without penning a strongly-worded letter).

Fed-up with the Morrison government’s deprioritisation of the innovation sector, big-name startups have penned an open letter to the Prime Minister calling for better engagement between State and startup.

Signed by such Aussie tech-notables as Airwallex, Atlassian, Canva, Redbubble, Freelancer and StartupAus chief Alex McCauley, the letter calls on the government to better engage with the innovation sector, especially when writing policy that directly affects the tech economy in general and Australia’s ‘fragile startup ecosystem’ in particular.

“Wake up Australia! We must encourage and incentivise innovation and invest in our talent.”

Of particular contention, the Treasury Laws Amendment Bill, which would bring changes to the Research and Development Tax Incentive, currently under review by the Senate Economics Legislation Committee. (The committee was due to release its report on Monday – following several delays caused by the Covid-19 pandemic – but that date was again pushed back this week. The expected reporting date is now October 12.)

The proposed amendments are not popular with the letter writers.

“Now is not the time to reduce the level of government support for R&D in Australia, which already lags behind peer OECD nations,” says the letter.

“While we appreciate that the Bill was born in a different time to achieve different objectives, we strongly oppose it today not only for what it contains but for what it is lacking – measures to actively support and stimulate R&D activity in Australia at a critical juncture as the innovation and tech sector seeks to recover from the global impacts of COVID”.

Given the uncertain current moment, the letter writers insist that ‘doubling down on our investment in innovation now’ will reward Australia ‘10-fold’ in the future. To that end, the consortium offers its thoughts on reform, including a moratorium on ‘clawbacks’ of Research and Development Tax Incentive (RDTI) payments, the earlier payment of refunds, and perhaps even a one-time stimulus to eligible startups and SMEs, delivered through the RDTI scheme.

“While we appreciate that these investments will come at an expense, we propose them with the firm belief that the innovation economy, including the tech economy… will drive the future of Australia’s prosperity,” the letter says.

Critics say shifts in the way the RDTI scheme operates have made it increasingly unreliable for software companies looking for support. That problem has developed, in part, because the model used in the RDTI assessment process is ‘not well adapted to the process of software development’, says StartupAUS.

“A growing number of companies are facing serious financial challenges as a result, breeding uncertainty about the future of the program for startups,” said StartupAUS earlier this year..

“This has led to a situation where, despite support for software R&D being one of the main reasons for introducing the scheme in 2011, it is becoming increasingly difficult for companies to claim for software development activities.”

That dissatisfaction is echoed in the State of Australian Tech 2020 report, a new paper produced by Australian innovation industry event group, Pause Fest.

According to the report, 53 percent of Australian start-ups say they ‘feel ignored by policymakers’.

A quarter of start-ups say Australian regulation has stood in the way of growing their start-up, compared to overseas regulation, and almost one third of those surveyed (29 percent) say Australia’s communications and privacy laws make it harder to start a business in Australia than elsewhere.

“This is the time for the government to embrace and invest in innovation, including subsidising technology courses, supporting startups and scale-ups, encouraging tech talent to live in Australia, and developing the eco-system,” says Zivit Inbar, founder of DifferenThinking, and contributor to the report.

“Wake up Australia! We must encourage and incentivise innovation and invest in our talent.”