Prime minister Malcolm Turnbull’s “innovation boom” has been a hot topic in Australian business this year, particularly following the government’s National Innovation and Science Agenda (NISA), which committed $1.1 billion over four years.
But despite the government backing, Australia remains well behind the world’s innovation powerhouses and according to a recent report by PwC, the local economy is predicted to drop 10 places world rankings by 2050, putting us behind countries like Bangladesh, Egypt and Pakistan, and out of the G20.
Australia’s underinvestment in developing a knowledge-intensive economy is the main reason behind PwC’s forecast, and that has affected innovation and especially the startup ecosystem, according to the 2016 StartupAUS Crossroads report, released today.
While the report suggests that Turnbull’s innovation agenda helps, further opportunity lies in stemming the flow of startups leaving Australia for other countries, as well as improving the chances of success for local startups.
“StartupAUS welcomes the government’s efforts to encourage greater industry-university collaboration. However, we also caution against succumbing to the view that science and scientific research are a necessary precursor to all innovation,” the Crossroads report says.
“NISA has a clear emphasis on the research sector, and in terms of dollars committed is much more heavily weighted towards science rather than entrepreneurship.
“If we fail to take action we will be relegated to looking on as our core industries are disrupted by startups from other countries.”
The report also references to The 2015 Compass report, which concluded that while the startup ecosystem has grown in the past three years, that growth has been relatively slowly compared to global standards.
The Compass analysis considers Sydney’s startup ecosystem as a proxy for the Australian one.
The Crossroads report makes 14 recommended actions that would have a “substantial impact on the development of the startup ecosystem in Australia”.
Here they are:
1. Support the establishment of innovation districts in major cities
2. Create a national innovation agency
3. Improve the R&D Tax Incentive by making it more favourable to startups
4. Implement a national Entrepreneurs-in-Residence program
5. Make targeted improvements to Employee Share Schemes legislation
6. Implement and improve the Entrepreneur Visa
7. Establish a program to attract promising international startups to Australia
8. Extend the Digital Technologies Curriculum
9. Relax restrictions on 457 visas for startups
10. Implement measures to counteract high cost of living for foreign skilled workers
11. Implement entrepreneurship programs in all Australian primary and secondary schools
12. Implement entrepreneurship programs in all Australian universities
13. Introduce a Startup Scholarship for STEM graduates
14. Immerse Australian university students in Silicon Valley and other startup hubs
PwC says startups have the potential to contribute over $100 billion to Australia’s GDP and create more than 500,000 new jobs by 2033, Crossroads notes.
And while over the last five years Australia has seen strong growth in the rate of startup formation, if the ecosystem is to grow to a world-class level, the report says it is essential an environment conducive not just to the creation of successful technology companies, but also “to the retention of those companies for long enough that we can harness their economic impact” is developed.
Here’s a quick snapshot at Australia’s startup scene as it currently exists.
Read the full StartupAUS Crossroads report here.
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