The 2015 Federal Budget could be one of the few remaining opportunities for Australia to avoid falling behind the rest of the world in terms of innovation and investment in technology.
That's according to the 2015 StartupAUS Crossroads report, which makes the case that Australia has an unprecedented opportunity to transition from an economy based on resources, primary industries and domestically focused businesses to one based on high-growth knowledge-intensive businesses that can compete globally.
According to the report, a growing number of governments are launching programs to invest in the creation and support of high-growth companies.
"Australia has not kept pace, and has under-invested in catalysing and supporting its high-tech industries, as evidenced by the fact that we now have one of the lowest rates of startup formation in the world, and one of the lowest rates of venture capital investment," the report says.
Last year's budget also saw the Federal Government cease funding to research bodies National ICT and the CSIRO. It also abolished the $300 million Innovation Investment fund and the axed eight startup programs.
In contrast, China has just launched an $8.3 billion seed-stage National Venture Capital Fund, while South Korea is implementing its $4 billion Creative Economy initiative. In the UK there is now a multi-billion pound suite of pro-startup programs, and New Zealand is extending its network of government supported startup incubators, innovation precincts and funding programs for startups.
The recent Startup Economy study undertaken by PwC and commissioned by Google Australia projected that high-growth technology companies could contribute 4 per cent of GDP (or $109 billion) and add 540,000 jobs to the Australian economy by 2033 from a base of about 0.2 per cent of GDP today -- but only if action is taken to address several areas of market failure relating to culture, skills, markets, funding and regulation.
Australian technology industry leaders are calling for the government to provide budget incentives to boost international investment and competitiveness, but are prepared for the worst.
Distribution Central managing director, Nick Verykios, said: "It's a far cry to expect anything that would make any serious impact on the degenerated fiscal plan the government currently has to minimise critical investments in anything, let alone technology and, in particular, those investments that would assist the channel," he said. "I'm afraid to say we are on our own."
He said what mattered today was significant investment by government in IT Infrastructure which would allow the country to be competitive against other developed countries. "We need government-led investments in partnership with private sector to upgrade the country's infrastructure to be at least competitive. But we also need venture capital [VC] funding of private enterprise software start-up projects and applications, so that the IP and the investment stays here."
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