Budget and Federal Government meddling: just how screwed is Australia’s tech sector?
Australia’s tech and science sectors have long been disappointed by the government’s failure to support it or grasp the concept that it could help fill the gap left by heavy industry leaving the country and the end of the mining boom. The release of this week’s budget didn’t change that.
While the sciences have faired slightly better, the Federal Government scrapped eight technology programs starting January 2015, saving it $850 million over five years.
Here’s a run-down of who got screwed and who got to keep their pants on for the time being:
The NBN has been abandoned by the government, or will be by 2017.
Communications Minister Malcolm Turnbull announced on Tuesday that government equity contributions to the NBN will cease after the 2017-2018 financial year, after which time it is expected to be handed over to the private sector. But over the next four years the government will contribute equity up to the $29.5 billion funding cap announced by the Communications Minister last year. The NBN will also receive $3.4 billion in equity this year, and $13.3 billion over the next three years. After that, it’s on its own.
The private sector will have to pick up the slack, as the government extricates itself from the fibre-optic network, leaving behind the risk of higher prices and continued monopolisation of Australia’s telecommunications sector.
This excellent cartoon by Canberra Times political cartoonist David Pope pretty much sums it up.
— David Pope (@davpope) April 10, 2014
One of Australia’s only competitive assistance programs Commercialisation Australia, which has provided more than AU$200 million in funding to local startups has been scrapped.
Innovations Investment Fund
Australian Industry Participation
Industry Innovations Councils
Industry Innovation Precincts
$111 million in funding was slashed from the CSIRO. This comes less than a year after Prime Minister Tony Abbott failed to appoint a science minister to his cabinet, and implemented a jobs freeze affecting 1400 CSIRO employees, 11 research divisions and 11 national research projects last year. Don’t forget, the CSIRO invented key technologies including key WiFi algorithms, extended-wear soft contact lenses, the cochlear implant, plastic bank notes, and many more innovations. This is worse than robbing Peter to pay Paul; instead, it’s stripping money from a service that brings huge benefits to Australia and the world, keeps Australia’s smarts working in the country, and creates a lot of money from their inventions.
The Australian Renewable Energy Agency
The clean technology and energy agency didn’t just get defunded it got killed, scrapped, knocked off, abolished, saving the government $1.3 billion… and the future of Australia’s environment
Australian Nuclear Science and Technology Organisation
Lost $27.5 million in funding.
Australian Institute for Marine Science
Lost $7.8 million.
The Australian Research Council
Lost $75 million.
Cooperative Research Centre
Current funding levels of $148 million were frozen and will decline to $138 million by 2017-18.
Not so screwed:
One of the highlight’s of the budget was the announcement that the government would be setting up a new $20 billion Medical Research Future Fund, which will be created by the revenue from the controversial $7 GP co-payments. There’s a certain irony that the suffering of the poor will help fund medical research.
Once its profits reach $20 billion it will be invested in medical research, though it has not been made clear how projects will be chosen, who will choose them or even whether the MRFF will be an independent body.
Future Fellowships scheme
The FFS survived the cull, earning $140 million in new funding.
Australia’s Antarctic research will receive $68 million in funding, much of which will go to supporting an air link to the icy desert, and scientific research.
The Australian Nuclear Science and Technology Organisation
More money for nuclear research via $31 million in new funding which will go towards operating the Open Pool Australian Lightwater nuclear research reactor.
Philip Andrews director of Liquid State, a multi-platform digital publishing system was a recipient of funding from Commercialisation Australia told Techly that his company probably wouldn’t have survived if not for government funding.
“We have ten full time and part-time staff who wouldn’t have been employed if it wasn’t for commercialisation funding,” he said.
The director said the new budget is a massive threat to Australia’s start-up community and that if it becomes any harder to conduct business in this country, he’ll have to take his company somewhere else.
“We were in Berlin, Germany for a while because of its start-up ecosystem but we purposely came back because of funding arrangements offered by bodies like CA and the promise of stuff like the NBN,” he said. “If those things curtail the fledling start-ups in Australia, we’ll do what we’ve always done, go overseas to Europe or Silicon Valley.”
The director said he was pretty baffled by the budget, especially because “Australia desperately needs to build industry to replace the manufacturing industry that we all see declining”, not to mention the hole that will soon be left by the mining industry as its peak comes to an end.
CA will eventually be replaced by the new Entrepreneur’s Infrastructure Program which connects start-ups with venture capital and will receive $484.2 million in funding over five years (roughly half of what CA used to receive in funding) but the fact is we still know very little about how the program works, except it seems to focus more on small to medium enterprise rather than the tech sector. The government is keeping us deliberately in the dark and without more information we cannot assess the relevance or usefulness of the program to Australia’s start-up community.
“It worries me if something like CA – which was a well defined and well supported program with strong commercial outcomes – is being replaced with something we know very little about,” Mr Andrews Said. “Will there be consultation with the tech community? What are the outcomes? How is it going to be administered? Start-ups should be worrying about an all singing all dancing fund that ends up funding the big guys in town and ignoring the little guys. We have very little information except grandiose goals laid down on paper about supporting entrepreneurship but the fact is we have very little information to work with. We can only surmise. Will it be as good? Will it be worse? Will we get a look in? We don’t know.”
What is most disappointing is it’s not like the government didn’t have plenty of information at its disposal which it could use to assess the degree to which the local start-up industry could support the local economy.
A recent study by PricewaterhouseCoopers suggested that Australia’s start-up industry could provide up to AU$109 billion and 540,000 jobs to the Australian economy by 2033.
A study by StartupAus also backs this claim.
This budget is shameful and inexcusable. The Government’s continued apathy towards the tech sector will only exacerbate the brain drain already occurring and ensure both local money and intellectual property relocate to countries whose governments aren’t so short-sighted and bullheaded about the digital economy.