StartupAus calls for creation of federal department of innovation to boost startup ecosystem

StartupAus is urging the federal government to create a dedicated agency responsible for innovation.

Such an agency is one of a number of characteristics of a successful startup ecosystem that Australia lacks, StartupAus says in a submission to an inquiry into Australia’s Innovation System by the Senate Economics References Committee.

It suggests establishing a dedicated agency, responsible for the development of innovation policy and implementation of programs similar to New Zealand’s Callaghan Innovation, the United Kingdom’s Technology Strategy Board, Sweden’s VINNOVA Governmental Agency for Innovation Systems and Singapore’s Standards, Productivity and Innovation Board.

StartupAus says the absence of such an agency is partly responsible for Australia lacking a coherent vision when it comes to innovation, which in turn is contributing to a wide range of market failures hindering the development of successful startups.

“Australia does not currently have all of the required conditions for an ecosystem that supports successful startups,” the submission says.

“Their establishment has been hampered to varying degrees by market failures spanning education, culture, expertise, access to capital and regulatory environments.”

The submission suggests a number of actions targeting those issues, some of which include; implementing a national visiting entrepreneurs program which would give Australian founders better access to mentors, creating an entrepreneur visa, and developing a variety of programs which recruit young people to entrepreneurship and the ICT sector.

Much has been made of the federal government’s decision to scrap Commercialisation Australia and the Innovation Investment Fund, a decision which StartupAus says is of “grave concern”.

“It is highly conspicuous that the Australian government’s support for the startup sector is decreasing at a time when the rest of the world is increasing investment in this sector,” the submission says.

“…the removal of these two programs will undoubtedly lead to a further reduction in the availability of capital to startups in Australia. StartupAus expects that this will result in an acceleration of the existing trend toward Australian startups leaving Australia in search of more favourable funding environments.”

Shortly before the budget was released, the Commission of Audit recommended that CA and the IIF be abolished on the grounds that “skills and finance can be acquired from the private sector” and there was “no clear reason” the government should provide assistance in competition with the private sector.

“That the Commission should come to such a conclusion, or that the government should accept it, is beyond belief,” the submission says.

However, the submission notes there is reason for optimism, as the Australian startup sector has seen a “groundswell of activity” over the past three years and there is a growing number of Australian technology companies that are reaching meaningful global scale including Atlassian, Freelancer, Bigcommerce, 99designs and Halfbrick Studios.

“We believe that Australia has an unprecedented opportunity to transition from an economy based on resources, primary industries and domestically focused businesses to one based on high-growth knowledge-intensive businesses that can compete globally,” the submission says.

The inquiry is set to report its findings in July 2015.

StartupAus’ full submission to the inquiry can be found here.

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