Innovation has been high on the government agenda for a number of months, but is funding set to follow? John Riccio looks at some of the ways the 2016 Federal Budget will support the digital economy.
Last night, the government released its much-anticipated ‘ideas boom’ budget. While the concept of an innovation agenda was clearly at the forefront of politicians’ minds, the policies and measures outlined in the fine print were nothing new, having mostly been released earlier in the year and still in the process of being passed by Parliament.
Particularly interesting announcements were the continued promotion of Australia’s fintech sector and an encouragement of exploration into blockchain technology. There was also significant investment flagged for the digitisation of the government’s own processes, including a Digital Marketplace within the Digital Transformation Office and the proposal of an eInvoicing initiative. The removal of the ‘double-taxing’ on digital currencies was also a positive step forward.
While the government is clearly interested in transitioning Australia into a new digital economy, there was still significant investment in ‘old world’ industries. This may lead to Australia being caught between two worlds, making it difficult for the country’s nascent digital industries to be globally competitive. Bolder policies and more ambitious investment may be needed to keep startups and businesses from relocating overseas.
Finally, it would be good to see the additional funding in the health and education sectors lead to the increased digitisation of core services in those industries.
So, how is the 2016 budget pledging
to shape our digital economy?
Advancing the fintech charge
- Perhaps one of the most defining innovation-related elements of this budget is its pursuit of “a strong and vibrant” fintech industry, a follow-on from the March announcement that it is backing Australian fintech.
- A $200,000 marketing campaign will promote Australia to international innovators as a fintech destination.
- The government itself will explore fintech solutions for its agencies – flagging up a forthcoming study into a potential rollout of electronic invoicing (eInvoicing).
Active pursuit of blockchain
- A review of blockchain’s feasibility for deployment across government and the private sector will be conducted by the CSIRO’s research unit Data61, which is Australia’s largest data innovation group.
- A government consultation paper seeks to iron out a key issue with the use of digital currencies: removing the ‘double tax’ consumers currently face when paying using digital currencies such as Bitcoin.
Enabling a regulatory sandbox
- As part of the fintech drive, the notion of a ‘regulatory sandbox’ was floated back in April. Designed to be a safe zone for the testing of fintech ideas, it will be enable entrepreneurs to work on products and services for up to six months with a number of retail clients within limited investment thresholds.
- The Australian Securities and Investments Commission will be releasing a consultation paper on this in the coming weeks.
- As part of the Global Innovation Strategy announced in December 2015, $11 million was pledged towards establishing five Landing Pads in global innovation hotspots. These are designed to provide Australian market-ready startups with a short-term international operational base as well as tap into a network of local support. The 2016 Budget wants to accelerate this plan by providing $2.4 million over two years to bring forward the opening of the Singapore and Berlin Landing Pads from 2018-19 to 2016-17.
- Widening the path to investment capital for startups, the government says it will facilitate the development of crowd-sourced equity funding. This is intended to allow innovative businesses to access equity from a wider pool of investors. The Corporations Amendment (Crowd-Sourced Funding) Bill 2015 was first introduced into Parliament in December last year. The changes propose to create a different regime under the Corporations Act for capital raising via crowd-sourced equity as well as reduce some of the regulatory and compliance barriers.
Continued funding of NBN
- Continuing its commitment to the NBN’s ongoing multi-technology roll-out model, the government has allocated $8.8 billion towards the project for 2016-17 (which includes $400 million moved over from the previous year.)
- The government’s total contribution to the fast broadband scheme is capped at $29.5 billion.
Softening the blow of media disruption
- There was recognition that the move to online and on-demand content is rapidly changing the media market and placing significant financial pressure on commercial broadcasters. To alleviate this, licence fees are being reduced by up to 25% for commercial TV and radio broadcasters with further fee cuts to be considered later this year. This is in light of the fact that broadcasters’ main competitors, such as Apple and Netflix, are online and therefore not subject to licence fees.
- Communications Minister Mitch Fifield says these reforms should “give our traditional media companies the flexibility to compete and adapt in the changing media landscape.”
Kate Eriksson, Head of Innovation, PwC Australia
In December, the government announced its $1.1 billion vision to develop an ideas-based economy. The 2016 budget reaffirms this commitment.
In Australia, growth depends on the commercialisation of research and innovation to a global market. This was partly addressed by the investment into marketing Australia’s fintech prowess offshore, however more will be necessary into the future.
Whilst youth unemployment was addressed with the Youth Jobs PaTH initiative to re-skill and increase opportunities into the workforce, we believe what will be increasingly impactful for Australia’s growth will be to reposition the 11.2m Australians already in the workforce. The current initiatives and STEM focus falls short of addressing the need for technical skills and innovative thinking throughout the nation’s small business and private sector. Accelerating innovation will result in offerings that are better digitised, allowing these enterprises to mobilise and adapt to a fast-changing digital economy.
Ultimately, while there is talk of this budget being a ‘no frills’ budget, I see it as a reaffirmation of previous commitments to innovation, augmented by more specific initiatives into digital growth areas such as fintech and startups. In order for Australia to truly fly, in addition to a dashboard of new innovation instruments, the foundation of the plane itself – such as infrastructure and public services – must continue to be funded.