Start-up rent-seekers need to stop their whining

Listening to the shrieks and squeals of tech sector commentators over the past few weeks, you’d be forgiven for thinking Joe Hockey’s first budget contained nothing for the industry. A more measured inspection of the budget entrails and you will find the Coalition has delivered a lot.

A lot of pain, and a lot of lessons.

If you accept that a budget is ultimately a statement of direction and a statement of intent, then this government has told the tech sector all it needs to know.

It’s simply not interested and that’s a powerful message from which the Australian tech sector has no choice but to learn. How the industry responds will determine the future for the tech industry in this country.

Whingeing won’t help

Whining and whingeing from the start-up rent-seeker community isn’t going to help much. We know this because the strategy of endless whining about how hopeless government is and how no-one “gets it” has not worked so far.

In fact, this strategy has had the opposite effect.

There is a massive disconnect between what the start-up community says and what the policy-makers hear. Or rather, there is a disconnect between what the start-up sector claims and what policy-makers believe.

Despite having a higher profile than ever and better access to the political leadership, the start-up community could not even get its no-brainer flagship claim for a change in the tax treatment of employee share schemes across the line.

So something is not working and it's important that lessons are learned from this debacle.

Here are some thoughts.

Firstly the Australian tech industry is far bigger than the poorly-defined start-up community that makes claims to its best interests. The industry needs a single, broad-based organisation to provide a voice and to provide political leverage.

The Google-led StartupAus is a ridiculous organisation and entirely unsuited to representing the interests of the local industry. How can any government, any minister, or any ministerial staffer stomach a conversation with an organisation that is an extension of the Google marketing department?

Ignoring this group was perhaps the politest response government could come up with.

Yes I am talking about Google’s overbearing corporate culture and its ludicrous tax profile in Australia, and no, I am not suggesting Google has broken any laws. Nor am I suggesting that everything that has come out of StartupAus is without merit.

It’s recent “Crossroads” was a good contribution to the ongoing conversation despite massive omissions (which will have to be covered in a separate column), but it's the wrong organisation to be putting such a document forward.

The local industry needs its own representation and this industry body needs links into the broader community of foreign multinationals to cover areas of common interest. But anyone who thinks it's productive to ride into meetings in Canberra on the coat-tails of Google is off their gourd. I am singling Google out, but it would be the same problem if it was Facebook, Microsoft, IBM, Accenture, Huawei, Siemens, Hitachi, Samsung, GE, SingTel or any number of other foreign companies.

Medicos trump start-ups

So why does the industry need a representative body if it already has so many working for it? Because the medical research community in Australia was gifted a $20 billion fund by the Hockey budget, that’s why.

In fact, the Coalition government seems determined to endure the opprobium directed towards the $7 Medicare Co-Payment in order to give that $20 billion fund to medical researchers. So what's the medical research community doing right that the IT start-up sector is not doing?

The Australian medical research community is just as poor at commercialising its research as the IT sector and faces many of  the same issues – from a lack of venture capital funding, to access to skills, to poor entrepreneurial culture. As much as the Coalition government has said they are not in the business of “picking winners” – they just placed a $20 billion bet on our local medical researchers.

This is not sour grapes. The fund is good news for Australia (and there will be opportunities to come out of this for our IT sector) but maybe someone should talk to the Association of Australian Medical Research Institutes (AAMRI) and find out what they do that has made them so effective. (This is the organisation that was telling Canberra two years ago that Australians produced 3 per cent of medical research but accounted for less than 1 per cent of medical patents.)

What are they doing that worked? It's a sector that falls between the gaps of different Commonwealth portfolios just like the IT sector (Health, Industry and Education to name three), but it has managed to navigate its way into a gigantic pool of money nonetheless.

No 'Digital Champion' waiting in the wings

There's a laundry list of problems with the budget for the IT sector that have been well documented elsewhere. However, the tech industry needs to properly triage its issues rather than running around simply saying government doesn’t “get it.”

The defunding of Commercialisation Australia is a bitter pill but can the same be said about the cuts to the Industry Innovation Funds (IIF)? To get equally upset about the demise of the IIF program, given that it seems universally accepted that it has been ineffective, comes across as incoherent screeching.

When Tony Abbott told Kerry O’Brien just before the 2010 election that he is not “a tech-head,” we should have taken his word for it. Which is not to sheet the blame entirely to Abbott, but if the prime minister has no interest in this area (and this extends to all of the STEM subjects in the education sector), we will get no-where.

There had been talk before the budget that Malcolm Turnbull would be given additional responsibilities as a “Digital Champion” across government, to provide a single advocacy voice inside the Cabinet and across the Commonwealth.

Well, that didn’t happen. Presumably, Turnbull has been consigned to the job of salvaging the NBN train wreck and the tech sector, with all of its disparate interests, remains divided and conquered as a horizontal industry behaving with no common interest.

James Riley has covered technology and innovation issues in Australia and Asia as a writer and commentator for 25 years.

He has a special interest in public policy as it affects the tech sector and has written for newspapers and trade magazines, including The Australian, the South China Morning Post, InformationWeek and PC Week.

Contact James at james@innovationaus.com