Australia’s startup community had a record-breaking year of achievement but its growth is now being restricted because of federal government changes to working visas.
The fourth annual Crossroads Report by StartupAUS, the sector’s national advocacy group, shows the industry has moved beyond the fledgling stage.
In 2017, a record $1.32 billion was raised in venture capital and there’s been strong growth in the number of accelerators, incubators and coworking spaces.
However, the report says Australia has lost ground internationally because of changes to rules governing entry by skilled migrants, or 457 visas, has made it harder to get world-class talent here.
Less than half as many visas were issued in the third quarter of this year compared to the same three months last year.
“When it comes to talent, we are falling behind,” Scott Farquhar, the co-founder of Atlassian, writes in the forward to the report.
“There is a global gold rush at the moment that is generating intense international competition to attract the best tech talent, and Australia needs to lift its game.”
The federal government in April scrapped the 457 visa which had allowed temporary foreign workers to be employed in Australia.
The prime minister, Malcolm Turnbull, then explained the move was part of his plans to put jobs and Australians first.
However, the the startup sector now says the move means technology companies can’t import talent in business-critical roles such as product managers or user experience designers.
“Tech is a rapidly changing sector, meaning the skills that technology businesses need to draw on also change rapidly,” says Farquhar.
“Access to a high quality, dynamic skilled visa system is therefore of fundamental importance in building a fast-growing company in this space.
“So when the skilled migration system was overhauled earlier this year, it came as a real blow for tech companies across the country.”
Alex McCauley, the StartupAUS CEO and lead author for the report, says the sector’s many successes have been put at risk by stagnation or backwards movement in some areas.
“What we must also recognise is the speed of our global competitors and the intensity with which governments are focusing on supporting startups around the world,” he says.
“It’s clear that by pulling a few big policy levers we could rapidly shift Australia’s startup economy to the next level of maturity and potential — making it one of the best places in the world to build a tech startup.
“But if we don’t act now, particularly on visas, we risk getting left behind.”
Here are the key recommendations from the report:
1. State Governments should continue to build and connect innovation precincts
2. The Federal Government should pay the R&D Tax Incentive on a quarterly rather than annual basis
3. The qualification criteria in the entrepreneur visa should be altered and simplified
4. Options issued under Employee Share Schemes should be exempted from the 20/12 Rule (which restricts the number of retailer investors)
5. The skilled worker visa should be expanded to include digital skills and reflect startup needs
6. Federal and State Governments should work together to expand the school curriculum for digital skills, giving students more options in computer science and computational thinking
7. A copyright safe harbour for all online content providers should be implemented
8. Entrepreneurship programs should be implemented and expanded in high schools and universities
9. Governments should establish dedicated policy teams focused on emerging technologies
The official launch of Crossroads will be held at StartCon 2017 in Sydney on Friday.