Why such a fuss about start-ups? Shouldn’t the Australian government also support other industries? The reason why tech start-ups are so important is because of their impact on society and the economy.

Malcolm Turnbull’s first speech as Prime Minister made it clear he believes that innovation and technology are key to our country’s future success. Innovation combined with agility leads to productivity and competitiveness, allowing us to embrace the ever-changing future.

The Prime Minister reinforced this by appointing senior South Australian Liberal, Christopher Pyne, as Minister for Industry, Innovation and Science and Queensland Liberal, Wyatt Roy, as Assistant Minister for Innovation, saying they would support start-ups and bring together innovation initiatives across the government.

Why such a fuss about start-ups? Shouldn’t the Australian government also support other industries? The reason why tech start-ups are so important is because of their impact on society and the economy.

A recent PricewaterhouseCoopers report, Expanding Australia’s Economy: how digital can drive the change, concluded that the successful adoption of digital change could reduce Australia’s estimated federal budget deficit by $6 billion and contribute an additional 1.5 per cent to Australia’s gross domestic product (GDP) in 2024.

Further, if these efforts could be sustained for another ten years, there’s the potential for a $136 billion increase in GDP and 540,000 new jobs to be created by 2034. The report recommends Australia learns from countries like Sweden, Canada and Singapore.

Sweden has a deliberate strategy to be an innovation-led economy underpinned by research and development and education. Canada’s venture capital market is nearly four times larger on a per capita basis with a thriving ecosystem. Singapore is establishing itself as the Asian innovation destination of choice with a focus on STEM education and investments in start-ups.

Other reports also suggest we have room for improvement. The Venture Capital & Private Equity Country Attractiveness Index 2015, compiled by IESE Business School at the University of Navarra, ranks Australia eighth overall, below countries like the United States, United Kingdom, Canada and Singapore.

In Australia’s favour is the depth of our capital markets and low level of regulations around operating a business.
We do less well on measures of labour regulations, innovation and corporate research and development. If we single out innovation, according to The Global Innovation Index 2015 — compiled by Cornell University, INSEAD, and the World Intellectual Property Organisation — Australia placed seventeenth, below countries like Switzerland, Finland, Ireland and Hong Kong. Factors pulling us down include low numbers of trademark and patent applications, graduates in science and engineering, venture capital deals, and gross expenditure on R&D.

What we should do

The approach needs to be long term, lasting over a decade, with bipartisan support. I suggest we focus on three key areas: education, supporting research and development and venture capital, and attracting the best and brightest to our shores.

Given the amount of competition we face from so many countries, what should we do? What should we focus on over the next few years?
My hope is we have a sustainable and long term approach to developing a thriving start-up ecosystem. The approach needs to be sustainable because, in the long run, we want our industries to stand on their own feet.
The approach needs to be long term, lasting over a decade, with bipartisan support. I suggest we focus on three key areas: education, supporting research and development and venture capital, and attracting the best and brightest to our shores.
Increasing the amount of STEM education within our schools along with lauding the achievements of our technologists and scientists would go a long way in improving enrolment rates in science and engineering faculties at our universities. As the former Minister for Education, Christopher Pyne could make a huge impact here.
Continued support of research and development and venture capital through tax incentives and industry programs will see more local businesses being funded to success by Australian investors.
Finally, we should adjust our immigration programs to attract skilled migrants to our shores. The Economist Intelligence Unit has already ranked Melbourne, Adelaide, Sydney, and Perth in the top ten cities in their Global Liveability Ranking and Report August 2014.
Imagine what we could do if we had a supportive government, great local and overseas talent, and an attractive business environment for tech businesses.

This post was originally posted on Sydney Morning Herald