Billson’s big promise to Australian start-ups

Much-needed reforms to benefit local tech start-ups may finally be on the cards, but supporting the sector from the small business portfolio comes with its problems.

Federal Small Business Minister Bruce Billson added some shape to some of the unknowns in the government’s tech sector industry policy at last week’s G20 satellite conference on small business issues.

But really, until the Tony Abbott-chaired National Industry Investment and Competitiveness Agenda is announced in the coming weeks, we won’t know what the underpinnings of the local tech start-up sector fully look like.

The fact that Billson addressed issues so closely watched by the tech start-up sector is interesting, though. His broad speech included sections on crowd-sourced funding, employee share option schemes and R&D tax treatments.

While few start-ups would characterise themselves as small businesses (although some perhaps should), Billson certainly aligns himself with them. And as he is a cabinet minister from within the Treasury portfolio, it is certainly worth taking the support as it is offered.

Billson was talking up the role of small business in meeting the G20 target of accelerating collective growth by more than 2 per cent in the next five years -- as agreed by the G20 Finance Ministers meeting last February.

Speaking at the G20 Agenda for Growth: Opportunities for Small and Medium-Sized Enterprises conference in Melbourne on Friday, he outlined some of the key preconditions for a healthy SME sector. Things like building infrastructure, enhancing competition, facilitating trade, strong and vibrant R&D -- all the usual suspects.

And the SME story lends itself to the Howard-era Coalition narrative that Tony Abbott has re-embraced -- which explains the Small Business Minister sitting in Cabinet.

However the trouble with Bruce Billson claiming ownership of start-ups in even a small way is that it demonstrates that the Australian tech sector is an industry without a portfolio. We are everywhere and nowhere all at once with this government.

I must say I preferred the old Coalition model under Howard where the IT sector’s industry development responsibility lay with Communications. In this model, because the tech sector was recognised as a horizontal industry critical to the productivity and efficiency of all industries, it was given a special status removed from the Industry department and with a higher priority within Communications.

However Billson told Business Spectator that he sees his role as ‘cross-portfolio’, to bring together the various policies of Industry, Trade, Communications and others to ensure that small businesses -- including tech start-ups -- don’t fall through the cracks.

Unfortunately, it does not work like that. The Department of Industry’s Entrepreneurs Infrastructure Program (which in theory replaced Commercialisation Australia and the Innovation Investment Fund) is so washed out and so non-specific that it is unlikely to be much help to fledgling Australian tech firms. It doesn’t really make a lot of difference that a small business minister is spruiking it -- a generic cookie-cutter program is not enough.

More interesting is what Billson talked about in relation to Treasury responsibilities. This included a range of changes to the tax system to make life easier for small business. This is practical and helpful.

He also restated the government’s review of crowd-sourced funding, employee share schemes and R&D tax concessions -- and painted a positive outlook for each.

On crowd-sourced funding, he said that “while it is not yet used for funding small businesses in Australia, peer-to-peer lending is a promising source of debt finance and the government is exploring the regulatory changes that may be required to accommodate it”.

On employee share schemes: “The Australian tax system currently imposes taxes on discounts on interests granted under an employee share scheme in the year of issue and many have reasonably argued that these tax arrangements are a disincentive for many start-ups to set up an employee share scheme and are inconsistent and out-of-step with global practice.”

And on R&D tax concessions Billson told Business Spectator that the government is looking to develop a better-targeted program and to tighten eligibility requirements so that it has maximum beneficial effect.

These policies will be announced in the coming weeks as part of the National Industry Investment and Competitiveness Agenda, being put together by a taskforce chaired by Tony Abbott, and which includes the Treasurer Joe Hockey, Industry Minister Ian Macfarlane and the Minister for Trade and Investment, Andrew Robb.

None of these men, it has to be said, has ever taken much interest in the indigenous tech sector.

Meanwhile, providing advice to the taskforce is the Prime Minister’s Business Advisory Council, chaired by Maurice Newman -- who has had a lot to say about ‘corporate welfare’ in relation to industry development programs and R&D tax.

Newman’s input will be interesting. The tech industry shouldn’t expect to be showered in largesse when the National Industry Investment and Competitiveness Agenda is announced. But Newman has publicly recognised the need for government involvement in kick-starting local venture capital.

So we all watch with interest.

James Riley has covered technology and innovation issues in Australia and Asia as a writer and commentator for 25 years. Read more from James Riley here or follow him @888riley on Twitter.

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