Dear Mr Morrison: Aussie tech leaders demand better engagement and a halt to R&D reform

A consortium of Aussie startup leaders have sent a letter to Prime Minister Scott Morrison demanding the government engages with the tech sector on policies that could make or break it.

Signatories include Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar; Airwallex co-founders Lucy Liu and Jack Zhang; Culture Amp co-founder Didier Elzinga; Deputy co-founder Ashik Ahmed; and Freelancer chief Matt Barrie, as well as StartupAus chief Alex McCauley.

The industry leaders called for “a greater level of engagement with the government in relation to policy settings that may aid the recovery and growth of Australia’s fragile startup ecosystem and the tech economy”.

Although the COVID-19 economic crisis has led to challenges, the letter suggests that with support and incentives in place, the tech sector “will be key to a strong and enduring Australian economic recovery, driven by innovation and technology in all its guises”.

“In fact, we view the current crisis as a ripe opportunity for Australia to redouble investment in a digital economy and its future prosperity,” it says.

Unsurprisingly, the letter focuses in particular on the proposed Treasury Laws Amendment Bill, which would change the Research & Development Tax Incentive (RDTI).

The controversial changes are currently under consideration by the Senate Economic Legislation Committee, which is due to release its report on Monday.

“While we appreciate that the Bill was born in a different time to achieve different objectives, we strongly oppose it today not only for what it contains but for what it is lacking — measures to actively support and stimulate R&D activity in Australia at a critical juncture as the innovation and tech sector seeks to recover from the global impacts of COVID,” the letter says.

“Now is not the time to reduce the level of government support for R&D in Australia, which already lags behind peer OECD nations in this respect.”

Rather, the group called on the government to treat the RDTI scheme as a way to stimulate innovation.

It echoes demands that Canva and Atlassian made in separate submissions to the committee last week.

In the short term, the tech leaders call for a moratorium on clawback of RDTI claims; early payment of refunds; and a one-time stimulus to eligible startups and SMEs that make use of the scheme.

In the medium term, the letter calls for changes to the program to address concerns around the eligibility of software development, and a general increase in the level of support available through the program.

“While we appreciate that these investments will come at an expense, we propose them with the firm belief that the innovation economy, including the tech economy … will drive the future of Australia’s prosperity,” the letter says.

In a statement, Atlassian’s Scott Farquhar said cutting the R&D incentive now “makes no sense, especially while the government is looking for ways to rebuild our economy”.

“The technology industry is a fast-track to Australia’s post-pandemic recovery,” he added.

“It’s a massive force multiplier for jobs and already makes up 6% of our GDP, a number which could be much higher.”

Culture Amp co-founder Didier Elzinga noted the RDTI allowed his own startup to invest in technology development, which allowed it to grow and ultimately create jobs.

“It is also a critical tool in having great companies choose to continue to stay in Australia rather than heading overseas,” he said.

“Right now our policymakers applying handbrakes to growth, innovation and job creation is a very puzzling move.”

Co-founder of fintech Prospa Beau Bertoli added that startups have been forced to innovate even more than usual during the pandemic. Those efforts deserve support, he said.

“We need to encourage technology innovation, and timing is everything. It’s now,” Bertoli said.

“Some of the world’s leading tech companies emerged from the last financial crisis.

“We urge the Australian government to seize this opportunity and incentivise further innovation in Australia, allowing us to come out of the global pandemic stronger than ever and play a pivotal role in driving future economic growth.”

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