Home Articles Five things the government can do to help Australian startups

Five things the government can do to help Australian startups


Being at the “pointy end” of the Navy for so long I never thought I’d ever be involved in Government policy changes or, be invited to comment on a particular area of interest, but I’m really excited that the startup community is now big enough to attract the interest of Federal MPs.

I was invited, with thanks to AIMIA CEO John Butterworth, to discus potential ways the Government can help grow the technology startup and innovation space by Liberal MP Malcolm Turnbull.

With me, were John and Melinda from AIMIA, Pollenizer‘s Mick and Phil, Ian Gardiner of Viocorp and Innovation Bay Angels, Simon Goodrich of Portable Studios and, of course, myself from BlueChilli.

Over 90 minutes, a range of topics were discussed. However, it was also pleasing to note that a pretty consistent message was delivered by this small posse of representatives from the community. While we are all a long way from the level of support the Singapore or Israeli government throws at the startup and tech community, it has to start somewhere.

Five government initiatives that would rock the start-up world

1. Make it easier to give people equity

We’re talking ESOP here and the insane tax rules that makes it difficult for a founder of a startup to hire awesome talent by giving equity as a package. What’s even worse is that you’re potentially paying tax on equity income in a soon-to-be-failed startup that might be worthless in 2 years! At the very least, the government should provide a break for the first $5 million turnover.

2. Make government procurement “start-up friendly”

The Government has money and likes to spend it. The problem is that startups will never see any of this as the risk profile requirements of government procurement will prohibit anyone who isn’t an ASX100 company from bidding for work.

The simple solution is for the government to rethink how startup companies can be a viable supplier option.

3. Create a crowd sourced procurement model

Each time a government body wants to procure a big piece of technology, it should allocate a small percentage of the budget to run a side-by-side “competition” to encourage people to form startups to “win the prize”.

Imagine if the digital health system had allocated $5 million to for five prizes that were awarded, after 12 months, to five Australian based startup teams that had each built a component?

I’m willing to bet this would work very well to drive innovation. I’d quit my job to work on a challenge like that. (If I wasn’t already doing it!) This might even be a world first if our government chose to go down this path.

4. Provide incentives for early stage capital investment

Right now capital gains tax (CGT) makes it very expensive to invest in startups, unless you’re a fund and have one of the (soon to be decommissioned Pooled Development Funds) or, are one of the few capitalised ESVCLP funds.

All we’re talking about giving successful people the tax incentive to throw a cheeky $50,000 at a startup.

It’s not a revolution we’re asking for here! So, the government should consider a CGT exception on early stage capital investment. It’s a simple as that.

5. Challenge the culture of failing and celebrate our wins

Australia does an awesome job at celebrating our sporting heroes but, we don’t do a very good job at celebrating our startup heroes.

We also don’t like failure very well, which is a systemic cultural issue that we need to overcome.

As a country and a community of startups, we need to celebrate having a go. And if the startup doesn’t succeed, we need to learn from that, but still celebrate that someone gave it a go.

Startups and entrepreneurship needs to be celebrated at all levels.

Sebastien Eckersley-Maslin is the CEO of BlueChilli.