Australia’s federal Communications Minister Malcolm Turnbull wrote some reflections over the weekend on his time in California, where he visited some of Silicon Valley’s technology giants.
Turnbull notes that there are “Aussies everywhere” in San Francisco, working for both major tech companies and smaller companies and that many had moved there because of the comparative disincentives in Australia, especially around startups. He writes:
Many of the Australians working in Silicon Valley complained that they had had to move their companies here because of our current laws on employee share and option schemes. Introduced by Labor in 2009 these laws require employees who receive shares and options to pay tax on receipt – even though the shares may never have any value at all and are invariably unsaleable. This made it either impossible or absurdly expensive for start up companies to issue shares and options to their employees and consequently they stopped doing so for the most part. Many moved to the US where the tax laws are more rational – the employee pays tax on the shares when they are sold and he or she has the cash to pay the tax.
The previous federal Labor government had promised a review of these restrictions but, as Business Insider reported in December, the review stalled for months after the election, as key public servants involved in the review were moved into new roles. Some feared the review had been killed off until last week when the government announced it was restarting the process and invited submissions.
Turnbull also made the following observation, which stands in pointed contrast to the types of conversations certain other industries like manufacturing and agriculture have with the government from time to time:
Interestingly nobody, Australian or American, called for Government handouts to promote innovation. They wanted dumb laws, like that relating to employee shares, reformed and made consistent with global best practice and in particular US laws. They wanted smart laws, like those allowing crowdfunding, introduced. But beyond that they wanted Government to provide leadership and inspiration in innovation and to ensure that Government embraces the digital economy in the way that most of business has done.
And as I ground my way back through the Valley in another traffic jam I could only reflect that if we remove the obstacles to innovate in Australia, in a war for talent we cannot help but do better and better.
Technology industry leaders should be knocking on Turnbull’s door. It looks like he’s all ears at the moment. His full column, which originally appeared in Saturday’s AFR, is on Turnbull’s website.