Govt, capital and skills hindering Aussie innovation and growth

Published on the 26/02/2019 | Written by Heather Wright


Westpac report_challenges startup growth

Westpac report lays down challenge for start-up growth…

Regulation and government, immature capital markets and an inability to nurture talent and skills are hindering innovation and growth in Australia according to a new report.

Westpac’s Emerging Industries report, Towards 2030: How emerging industries are reshaping our future economy, says significant change is required to support a new breed of businesses that are transforming traditional industries.

“If Australia is to look forward to a clean, connected and diverse economy by 2030, it’s not government but the current wave of technology innovators in finance, agriculture, education and construction who provide transformative potential,” Towards 2030 says.

“It’s not government but the current wave of technology innovators in finance, agriculture, education and construction who provide transformative potential.”

It says the future of innovation depends to a large extent on the current crop of founders. “If they succeed, we can look forward to 10 to 20 great new companies emerging in the next five years,” says Nick Crocker, general partner at capital venture fund Blackbird Partners.

“In the next decade after that we might then see 20 to 40 companies emerge because there will be increased infrastructure and capital.”

The report says general consensus of those spoken to was that there’s ‘never been a better time to be an entrepreneur’ but says improving the conditions for entrepreneurship by 10 percent could add A$170 billion to the economy and notes three key areas of challenge: Maturity of capital markets, regulation/government and skills.

While the US offers a host of financial lending instruments for start-ups, access to debt funding for entrepreneurs in Australia has traditionally been challenging. The report says Australia’s capital markets are hindered by short-term thinking, making them risk averse, with investor attraction programmes needing to have a better focus on problems that need solving, rather than just the ‘shiny object’ of a specific transaction.

As well as suggesting a different mindset and metrics when it comes to capital, the report highlights the potential of harnessing Australia’s ‘massive’ superannuation pool of A$2.7 trillion to support start-ups.

“At its current size the Australian VC sector doesn’t have the depth of capital to fund networked companies such as the likes of global rideshare giant Uber, but if more of the super pool is directed to the ecosystem, Australian VCs have the opportunity to be global players.”

The launch of the report comes as Westpac launches a new division to help address scale-up funding issues.

The report says regulation and government are impacting the digital and low-carbon sectors’ ability to accelerate growth and advocates more grants and tax incentives, and improved visibility and access to existing grant and loan programmes ‘most of which are seen to have onerous requirements and application processes.

“Grants, in particular, will go a long way to help fund companies in the early stages.”

Westpac also highlights the removal of the temporary skilled 457 visa and its replacement by the temporary skilled shortage visa, which tightened requirements as a potential handbrake for innovation and growth.

The report also calls for governments to reassess their procurement policies in order to do more to promote and encourage innovative businesses.

Australia also needs to lift its game when it comes to equipping people with the skills relevant for the job market in 2030.

“What is becoming clear is that for Australia to realise its innovative potential to 2030 and beyond, all parts of the economy have important roles to play,” Westpac says.

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