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Senate innovation inquiry: the same old lines?


There is a saying, “a camel is a horse designed by a committee”. The implication being that each member of the committee advocates their own preferences and wants, compromises occur, and the result is uncomfortable, temperamental and not fit-for-purpose. The current approach to innovation in Australia appears to be something more like a camel than a horse, and things need a drastic change.

At least, this is the view I formed after reading StartupAUS’s and The Australian Private Equity and Venture Capital Association Ltd’s (AVCAL) respective brief, direct, lucid and constructive submissions to the Australian Senate’s Inquiry into Australia’s Innovation System.

The Submissions

Unsurprisingly, both StartupAUS (submission #68) and AVCAL (#63) highlighted tax disincentives to investing in Australian startups, under-investment in translation and commercialisation, immigration barriers to skills entering the country, and Australia’s wasting of its innovation infrastructure. For these organisations and their memberships, all of the above are major issues.

For more detail on R&D and taxation recommendations, see Deloitte’s (#95) or EY’s (#52) submissions.

Interestingly, StartupAUS suggested the Government should not make an “open-ended commitment to supporting the startup sector, but rather it should develop an exit plan for scaling back and ending its support of each part of the ecosystem”. This is thought-provoking given the degree of support governments internationally continue to provide established startup ecosystems, both financially and through policy settings.

A potentially contentious position from AVCAL advocates for the business sector to have greater influence on the strategic allocation of university funding. While this makes sense from the perspective of diversifying the committee makeup of funding bodies and would bring Australia into line with other countries, there has been little suggestion to date Australian universities are performing un-worthwhile research. As AVCAL stresses throughout its submission, there is a shortage of funding from all sides with regard to translation and commercialisation; but, perhaps the relevance of the research being conducted perhaps warrants further investigation.

Addressing the shortage of VC and PE capital

Both submissions focussed heavily on the comparative lack of VC and PE capital in Australia, especially in relation to startups. Given the importance of funding to the membership of both organisations, this is unsurprising. Ways of improving this include improving the environment with tax and migration reform, and improved commercialisation funding.

Improving the tax positon

The tax conditions for Australian startups and VC/PE investors is often raised as barriers. Reform of the legislation governing employee share schemes and the introduction of quarterly tax credits for early stage companies were advocated by both agencies.

Translation and commercialisation funding

In the recent discussions of innovation in Australia, the area of strongest area accord has been that Australia needs to improve its translation and commercialisation of research. As AVCAL note, “One core element of the innovation system that has historically been significantly underdeveloped in the Australian innovation system is the “D” in R&D.”

There is a niche area for a savvy startup that can take advantage of Australia’s underexploited research, provided they can fund their idea!

Migration policy

Encouraging and facilitating easy entry of skilled professionals and capital into the Australian startup and innovation systems received substantial attention, with StartupAUS suggesting the creation of an entrepreneur visa class, relaxing restrictions on 457 visas, and implementing a visiting entrepreneurs program. AVCAL echoed these sentiments, advocating an expansion of complying investments for the significant investor visa, and improvements to the business talent visa program.

Shortcoming in both submissions

The siren call of improved fiscal conditions for founders and investors, quite simply, is not enough to develop a meaningful innovation system. The environment needs to be enhanced and nurtured by all stakeholders. The weakness in both submissions was no explicit positioning how their respective memberships would like to see the broader ecosystem evolve, and more specifically, the interaction between business, investors, startups, tertiary education, government programs and support, and national priorities. These are discussions peak bodies should be having before they submitted to the Senate innovation inquiry, in order to present a united front. Joint submissions, or endorsement of other entities’ submissions, would have been a powerful way to telegraph the coordination needed.

The rub

What became clear, but was left unsaid by both submissions, is that perhaps Australia does not have an innovation system to review. While we are having the debate, other countries actually have innovation systems, and explicit policy around innovation. There is a dearth of three word slogans on this front locally.

The litany of examples in both submissions, especially that of StartupAUS (the Crossroads report was attached as an appendix), about what other countries are doing leave it clear that Australia does not actually have an innovation system, per se. We have reviewed innovation repeatedly over recent years, and yet there is so much discontent from all sides. We have a piecemeal camel that is unreliable and comparatively unattractive.

Calling the camel out for what it is, is a necessary start. One of the advantages of the current Government approach would be to enable a complete overhaul of the system, given it has dismantled so much of what the startup ecosystem and innovators looked to for support.

There is a need for bipartisan support and a proper national debate on issue such as innovation frameworks and the role Australia sees itself playing now and in future. Without an open and honest discussion about what is achievable and whom is to be interested in what, producing a united approach form the major stakeholders, this process I likely to result in another camel of a policy that pleases no one.

Questions, comments, thoughts, retorts?

Dominic Collins is a public affairs professional, specialising in stakeholder engagement, position development, strategy and public policy. He is a consultant at edgelabs, and is currently being an intern for a 12 year old, socially-minded entrepreneur.