EXTRA >> WHILE the Brisbane G20 Leaders Summit has been hogging all the headlines, many of the changes directly affecting Australian business leaders were announced well ahead of the summit and will play out well beyond.
General media has not covered the Federal Government’s Industry Innovation and Competitiveness Agenda in much other than its political contexts – but it is in the business context that business leaders will be pleased to see some clarity after many moribund years of indecision.
The key questions about the agenda involve what those changes mean, in dollars and cents (and common sense) to the way business is operating now and into the immediate future. At its most basic level, where is the government money going and how do you position your business to gain advantage from such investment?
The Industry Innovation and Competitiveness Agenda is about providing an insight into the Federal Government’s long-term thinking and giving certainty on issues that have plagued Australian business – such as business migration rules, a draconian approach to employee share schemes that have stifled start-up technology ventures, lack of early-stage business funding, over-regulation and education and training
regimes that lag their real markets – to introduce a more collaborative approach to help drive new ventures.
The reason for this shift is that governments across Australia have realised that new and early-stage ventures are where Australia may be able to play to its advantage – and it is also where most job growth occurs.
This has been known for some years – first being pointed out to the US Government by Kauffman Foundation research – but in Australia the command and control ethos that helped the banking sector through the 2008-2010 financial crisis has impeded small business recovery.
Why? Banks still are not lending to business in the way that is required for 21st century fast-moving technology business success.
The venture capital and alternative lending markets that the US has developed are not here (yet). The risk is that when they do come, they will be stifled by the incumbents and lagging regulatory regimes.
The new approach of the Agenda overall – which in some cases, such as with the industry innovation hubs, is simply an evolutionary approach to steering programs already begun under the previous Labor Government and showing promise – aims to let business and industry steer while the public purse provides some vital impetus. The new ethos is based on ‘money well spent’ rather than the ‘money saved’ restrictions of late.
The agenda also aims to speed up business growth by unshackling it from unnecessary regulation. An early announcement has been the move to accept international standards and risk assessments for certain product approvals, rather than impose Australia’s own regime. It is astonishing how quickly the Australian Design Rules were exposed as superfluous once there was no local manufacturing to protect. Goodness gracious, the automotive design standards of some other countries, like Germany and Britain, may have even been higher than ours … but they still had to be checked and tweaked for Australia.
An example of where this has brought Australia unstuck has been in the biotechnology sector where Australian companies have opted to seek approvals through the US Food and Drug Administration (FDA) rather than navigate the punitive small-market Australian Therapeutic Goods Administration (TGA) process. An FDA approval to a giant market has often been easier than TGA’s stamp to a very small market.
The ludicrous nature of this is now shamefully exposed.
For government it is now about trying to drive competitiveness and ‘productivity’. For business, the Agenda is more about providing a stable and less restrictive environment that will favour innovation and encourage collaboration between researchers and industry – an area in which Australia consistently fails.
Of the government’s six initiatives to boost Australian competitiveness, to be implemented over the next 18 months, the first tick from business was the change to taxation legislation to encourage employee share ownership.
Most successful start-ups in the US use employee share plans to drive development where cash for salaries and services is short – but this has not been an option in Australia due to previous governments’ ‘tax first’ approach and the punitive share options rules introduced in 2009.
Many Australian early stage technology companies ended up developing overseas as a result of the taxation approach in which discounts to share value were taxed and capital gains tax applied. The problem for early stage companies is the difficulty in assessing real share value – and the high risk of failure is not well accounted for.
One fascinating adjunct to the Agenda that has received scant media attention is the promotion of science, technology, engineering and mathematics (STEM) skills in schools. One program being developed is a ‘mathematics by inquiry’ program for primary and secondary schools and the government is providing seed funding for an innovation-focused ‘P-TECH’ pilot program, based on the successful US Pathways in Technology Early Career High college system.
But even in this area there is no need to re-invent the wheel, just enhance what’s working now (F1 in Schools, for example). Get back to basics.
After all, in its original Latin form, the word ‘agenda’ means ‘that which is to be driven forward’.
An Agenda like this requires action, for what is only discussed will be met with disgust.