The federal government's sweeping budget cuts to Australian startup, innovation and research and development funding are short-sighted and will hamper the country’s long-term economic growth, according to shadow treasurer, Chris Bowen.
Bowen, who delivered his 2014 budget reply address to the National Press Club in Canberra today, said the government's move to abolish funding from a number of programs supporting technology innovation and startup commercialisation in Australia were a "counter-productive assault" on the economy.
"Among all the cuts in this budget, all the ideologically-driven meanness, there is one area that is particularly short-sighted policy," said Bowen. "The treasurer [Joe Hockey] has felt obliged to follow up his 'age of entitlement' rhetoric with a counter-productive assault on government programs that encourage innovation, venture capital, commercialisation and start-ups.
"Ultimately, the best way to return the budget to surplus is economic growth — growth through new jobs for the future, through innovation, through science and entrepreneurship.
"Together with the cynical decisions to make university degrees more expensive and saddling aspiring students with more and more debt, the government has chosen to undermine innovation and research and development," he said.
Bowen's comments come after Hockey revealed a number of cuts to research and innovation funding in Australia during budget night last Tuesday. These included the dismantling of startup supporter, Commercialisation Australia, and the national Innovation Investment Fund, which connected startups with venture capital.
A number of other programs designed to support local innovation and development were also abolished, including Enterprise Solutions, Industry Innovation Councils, Enterprise Connect and Industry Innovation Precincts.
"These programs, each successful, have not just received a shave in funding, they have been completely abolished," said Bowen. "Funding for Cooperative Research Centres has also been slashed. These are the centres that supported the development of some of the greatest innovations of the modern era, including the Cochlear Ear Implant, a device now bought by millions of hearing impaired people all over the world."
Bowen also slammed the government's decision to cut AU$111 million in funding to the CSIRO, along with funding cuts to the Defence Science and Technology Organisation.
"The Australian Academy of Science regards these cuts as symptomatic of a substantial weakening of scientific research across the country," he said.
Bowen questioned the government's introduction of a new AU$484 million Entrepreneurs' Infrastructure Program designed to support SME innovation and development, echoing widespread stakeholder sentiment immediately following the budget delivery last week.
"A vague new one-size-fits-all Entrepreneurs' Infrastructure Program has been established with around half of the funds previously allocated to the abolished programs," he said.
For Bowen, the budgetary hit to innovation, startup support and R&D in Australia is a backward step for the nation's economic growth.
"The treasurer calls this a 'growth' budget. He and I agree that we need to generate jobs and investment to replace those involved in the mining construction boom, but far from helping this transition, his budget makes it harder," he said.
"A government truly concerned about creating jobs, about diversifying the economy and about generating new opportunities for those affected by the decline in mining construction as well as the pressures of manufacturing would be embracing the need for innovation, for high technology jobs, for venture capital and the need to encourage startups.
"Australia does not need a carbon copy of Silicon Valley, but we can find our own niche, our way to create thousands of good, well-paying jobs. We can do much, much better. High growth technology companies currently generate less than 0.2 percent of our GDP," he said.
Referencing a recent PricewaterhouseCoopers report estimating that the technology startup sector could deliver AU$109 billion — or four percent of GDP — and half-a-million jobs to the local economy by 2033, Bowen said that the Australian government was allowing Australia to fall behind its international peers in the innovation and development stakes.
"The potential is huge, but we have a lot of catching up to do," said Bowen. "Our venture capital industry starts off a low base and is not growing as fast as that of comparable countries. We do badly when it comes to the important 'angel funding' with only one dollar invested for every Australian each year. In New Zealand, the comparable figure is AU$6, AU$15 for the United Kingdom and AU$85 for the Unites States.
"In the land of the free, the United States, every dollar of government investment in high-tech incubators generates an additional US$30 of tax revenue. Perhaps the treasurer might have thought about this before he engaged in his ridiculously short-sighted cost cutting regime," he said.