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Politicians and business warned it’s ‘now or never’ for Australian innovation push

Top venture capitalist Daniel Petre has said innovation must be about more than tech start-ups as he warned the country is on its last chance to get to the forefront of global change.

Speaking after the Bill Ferris-led Innovation and Science Australia 2030 Strategic Plan was released on Tuesday morning, Mr Petre and other industry figures warned living standards would drop if short-term political and corporate interest prevented necessary increased investment.

The report makes 30 recommendations, ranging from changes in education, to encouraging more research and development spending and tackling big “national missions” in health and ecology.

Mr Petre, who is an Innovation and Science Australia board member and co-founder of Australia’s biggest start-up venture capital fund Airtree Ventures, said it was essential that bipartisan support was achieved for innovation policy, to avoid the “disaster” of doing nothing for fear of electoral backlash.

He said the government faced a challenge in convincing conservative members of the Coalition that it was “now or never” for Australia to take technology and innovation seriously.

“Particularly in the Liberal Party, there is a group of people that like to say that things will be fine if we focus on what we do well and then add on tech when we can, but that is just wrong. The truth is that if we don’t adapt to this more innovative world then Australia’s standard of living will decline,” Mr Petre said.

“There is no ‘systems normal,’ status quo or ‘she’ll be fine mate,’ and unfortunately there are people within government that genuinely do not understand what is actually going on in terms of the cadence of innovation globally.

“However if we miss the opportunity to address this now and don’t get ahead of global trends then the chances won’t come back around, they are gone and the time to act is now.”

Mr Petre said it was important that innovation was not viewed as an issue only for technology companies and start-ups, saying businesses in all sectors had to change.

He said established Australian businesses had so far done a terrible job of investing in research and development, and the country would suffer if spending did not increase dramatically.

“Our businesses do not invest an appropriate amount of money in research and development compared to their equivalents overseas, and that is a major problem for the country,” Mr Petre said.

“How can it be that an FMCG company in the US will invest 8 to 10 per cent of its revenue on R&D and the equivalent in Australia invests 1 or 2 per cent? It doesn’t work and they have got away with it by focusing on oligopoly profits in a small market.

“We need our leading companies to be building world’s best products and investing in world’s best services, not eking out profits. For decades Australian companies have got away with it without being held accountable and that must change now.”

Chief executive of The Australian Private Equity & Venture Capital Association Limited Yasser El-Ansary praised the planned change to R&D tax incentives, which would see the introduction of a $4 million cap that companies with turnover under $20 million can claim as a refundable tax offset.

Earlier proposals had set this figure at $2 million and received criticism from start-ups and biotechnology companies, concerned it would limit growth.

“The revised proposal will allow early stage businesses that invest every available dollar in the development of new and innovative products and services to continue growing and generating new employment opportunities into the future,” Mr El-Ansary said.

“We encourage the government to now work with industry to further develop the design and timing for implementation of these changes, so that the uncertainty which has existed in this area for more than 18 months can be addressed quickly.”

Paul Naphtali, co-founder and managing partner of Rampersand Ventures, said that while it would be unwise to dismiss the concerns of Australians who are worried about the jobs impact of technology advances, the government needed to address concerns while avoiding protectionism and populist politics that would endanger the future economy.

“We need our political leaders to raise the bar, not cap our innovation potential and ambition, but also proactively address the economic and opportunity disparities that can cause Australians who aren’t part of the innovation economy yet to be fearful for themselves and their kids,” Mr Naphtali said.

“There will need to be a concerted effort on education, transition support and retraining, and understanding for those disadvantaged by the inevitable shifts to innovation-centric economy.”

Mr Naphtali backed the report’s focus on ambitious goals,saying it would help set an example for industry and the general population, of the big thinking that would be needed to reposition Australia in the post-mining boom years.

He said he hoped the report would see innovation return permanently to the government’s agenda, and said he was also encouraged that protectionist immigration policy could be reversed.

“It’s easy to under-appreciate how powerful an example successful innovative companies set for Australians, especially our young people,” Mr Naphtali said.

“It’s great to see the government supporting future tech powerhouses. I want to hear more kids say they want to grow up to be the next Mike Cannon-Brookes or the next Melanie Perkins, rather than the next Mark Zuckerberg or Steve Jobs.”

Article credit – www.afr.com

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