A paper (PDF) published this week by StartupAUS has highlighted there is a lack of government support for the technology startup industry and outlined how the nation could turn its economic landscape around and see up to AU$109 billion come from the startup sector.
The organisation’s action plan outlined in the paper suggested that Australia is at a crossroads in terms of industry and that with support, the tech startup industry could alleviate Australia’s dependence on the resources sector.
"We have an unprecedented opportunity to transition from an economy based on resources, primarily industries and domestically focused businesses to one based on high-growth knowledge-intensive businesses that can compete globally in an increasingly technology-driven world," the paper said.
Referring to a report in The Economist, the paper suggested Australia is lagging well behind other countries in terms of tech startup support and funding.
"The startup sector worldwide is undergoing a Cambrian explosion, with the low cost an ubiquity of building blocks necessary for tech startups leading to more entrepreneurs tackling billion dollar markets than at any time in history," it said.
The paper said that a study undertaken by PricewaterhouseCoopers and commissioned by Google Australia, Startup Economy, projected that high-growth technology companies could contribute four percent of GDP (or AU$109 billion) and add 540,000 jobs to the Australian economy by 2033 from a base of approximately 0.2 percent of GDP today.
"But only if action is taken to address several areas of market failure relating to culture, skills markets, funding and regulation," the paper said.
The report pointed out that internationally, a growing number of governments have launched programs to systematically invest in the creation and support of high-growth technology-based businesses, which becoming important drivers of economic growth.
However, it suggested that Australia now has the lowest rates of startup formation in the world and one of the lowest rates of venture capital investment.
"If Australia successfully makes a transition to a knowledge-intensive economy we stand to continue our current economic prosperity well beyond the resources boom," the paper said.
"If we maintain the status quo, however, we will forfeit most of the AU$109 billion in economic impact identified in the ‘Startup Economy’ report and risk an irreversible decline in Australia’s competitiveness.
"It has long been recognised that Australia’s economic dependence on its resources sector has hampered the development of other sectors."
According to StartupAUS, one of Australia’s challenges is to shift away from being a derivative economy and to create high labour productivity jobs that are "not susceptible to being usurped by lower cost-of-labour locations, as has been seen in the case of car manufacturing".
"StartupAUS believes that economic development is an important part of the government’s role, and that this should include creating a suitable economic climate, providing the right stimulus and support for the sector," the paper said.
The report lists eight conditions are required for a successful startup ecosystem in Australia:
1. A pro-entrepreneurship culture
2. Guidance from experienced entrepreneurs
3. A supportive regulatory environment
4. A collaborative business culture
5. Visible successes and role models
6. Risk tolerance
7. Availability of capital
8. Technical skills
The paper also proposed some 'near-term' actions to address the market failures, including the creation of an entrepreneur visa; relaxing restrictions on 457 visas for startups; ensuring foreign workers in Australian startups can access the living away from home allowance; and implementing a national visiting entrepreneurs program.
The medium-term actions that were suggested include the support of a young entrepreneur scholarships program; the launch of a national 'learn to code' promotion program; and the establishment of a seed co-investment fund.
For the long-term, the paper suggested the government could implement and extend the digital technologies curriculum; implement a national program of entrepreneurship education; and support a national program to raise awareness of startups in Australia.
"Australia’s fledgling startup sector has experienced a groundswell of activity over the last three years. There is much enthusiasm, strong growth in the number of accelerator programs, increased media interest and increased awareness of startups," it said.
"However we have also witnessed a concerning trend for fast-growing Australian technology companies to leave Australia in search of talent, capital and more favourable regulatory environments.
"We need to take immediate and far-reaching steps to address market failures that are impeding the maturation and growth of our startup ecosystem."