Innovation needs to extend beyond city borders, Labor warns

Labor MP Ed Husic has cautioned that having clusters of startups located in Australia's major cities is a 'system weakness' to creating an innovative ecosystem in Australia.
Written by Aimee Chanthadavong, Contributor

Shadow Parliamentary Secretary for Digital Innovation and Startups Ed Husic has warned that Australia faces the danger of being niche and leaving behind regional Australia if all startup communities remain concentrated in building their business in Sydney -- a city where two thirds of all Australian startups are located, which he cautioned is a "system weakness".

"I have been travelling quite extensively be it through Orange and Mudgee, Bathurst, through to Maitland, Geelong, Launceston, Perth, and Bega; they're all keen to get involved," he told ZDNet.

"In Bega for example, they've now got a network of 150 people from technical to investor skills and building communities there, but they need to have some physical way of bringing people together, and government can play a role in leadership in that regard."

Husic added that those in living in the broader community have an opposing perception around the definition of innovation, saying that while innovation means job growth to many in the city, those living outside the main cities think it will "rip away jobs".

Husic's comments at the InnovationAus.com debate on Thursday reflected the election promise he made on Wednesday, saying if elected next month the federal opposition plans to repurpose AU$360,000 that was promised by the Turnbull government in May to industry group StartupAUS towards innovation in regional Australia.

Specifically, the investment would see Labor and StartupAUS map out a roadmap that would establish up to 20 new accelerators over three years, based on applications to set up self-sustaining innovation hubs within universities and TAFEs that are closely integrated with the local business community.

"I think they realise governments are entitled to where funds are spent, and we believe it's an important investment in the future of innovation in Australia," Husic said.

"They'll obviously have views of maintaining the investment in a particular way but we've got very definite ideas that would urge the investment be directed to bring the best and brightest minds to help startup communities emerge beyond city borders."

Conversely, Assistant Minister for Cities and Digital Transformation Angus Taylor argued stronger policy frameworks will drive greater innovation in the country, pointing out the federal government's AU$1.1 billion National Innovation and Science Agenda (NISA) announced in December is the first stepping stone.

"We don't need a plan, we need to do it. Our NISA is about doing it in regional areas and in capital cities, and we need to get on with it. Labor is obsessed with having a plan," he said.

"The key for us in innovation is to get on with it. It doesn't mean we have completed policies every time but we just need to get moving. Just as entrepreneurs and venture capitalist take the view you've got to get started and you need to build from that, that's how we're approaching the innovation policy."

Within the NISA, the federal government is offering tax incentives to startups, which Taylor said will be drive money flow. He expects the introduction of the "right" policy framework will steer the question away on whether the Australian government is investing enough in innovation.

"Startups are always screaming for funding and that's why we have tax incentives, that's why we're not doubling the capital gains tax. But capital is more available when you have every bit of the system working; collaboration, the culture, the tax settings, the precincts, the people skills all of that has to be right. I'm very confident the capital will follow. We're seeing that already in early stage and later stage companies now," he said.

Taylor did, however, point out that one area the Australian government will provide continued investment to is the Commonwealth Scientific and Industrial Research Organisation (CSIRO), which will receive AU$70 million over 10 years under the NISA. This was despite seeing CSIRO's budget slashed by AU$111 million as part of Budget 2014.

"We do think the CSIRO produces fantastic research, and in that case it makes sense for the CSIRO to have a fund," he said.

Taylor's remarks coincided with a Budget pledge the Turnbull government reannounced this week that if re-elected AU$50.5 million will be invested to modernise myGov, the so-called one-stop shop portal for online identity verification.

"Millions of Australians use myGov to engage with government online across a wide range of agencies," Taylor and Prime Minister Malcolm Turnbull said in a joint media statement.

"We will simplify and streamline the myGov login process. Australians will be able to choose their own unique username, starting with their email address.

"This investment will also enable Australians to sign into participating agencies directly without having to first go through myGov."

In addition, the Coalition government promised it would deliver a digital transformation roadmap for all major government services by November 2016; establish a taskforce within the prime minister's department to reform government IT procurement policies; and expand its Data Start program.

Another point that was raised and agreed upon by both political parties was the need for all levels of government to work together to establish collaboration hubs and districts throughout the country.

"This is not waving a wand and throwing a big pile of money, and all of a sudden shazam, up comes an innovation district. It's hard extensive work with an integrated plan across all levels of government over an extended period of time," Taylor said.

But according to the Australian Bureau of Statistics' latest report, the 2014-15 Summary of IT Use and Innovation in Australian Business, innovation levels are dropping in Australia. The ABS report showed less innovation activity occurred during the 2014-15 financial year than in the immediate prior year.

In fact, of those 45 percent of businesses that were innovative during 2014-15, it was the larger businesses that were driving the innovation versus the 37 percent of businesses with four or fewer employees that were considered "innovation-active".

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