By Christopher Murphy, current student of the University of Sydney Business School MBA program
There has been much conjecture about the 2014 Commonwealth Budget – with university fee deregulation, Medicare co-payments and changes to fuel excises well reported. One of the biggest losers under the budget, which has so far avoided widespread media coverage, is the Australian entrepreneur.
Close analysis of the budget papers reveals that the Government has scrapped programs such as Industry Innovation Precincts, Commercialisation Australia and the Innovation Investment Fund. This has had the effect of draining almost a billion dollars from Australia’s entrepreneurial ecosystem. Admittedly, the Government has not yet released details of its Entrepreneur’s Infrastructure Program – but this initiative is likely to pump $484 million into Australia’s entrepreneurial ecosystem – far less than the funding removed by the budget scalpel.
In April this year (prior to the 13 May budget delivery) StartupAUS released their Crossroads report. This report outlined that Australia’s entrepreneurial landscape was hopelessly devoid of Government or corporate sector investment. This report merely highlighted widely held views that Australia’s economy is undiversified, and remains exposed to international market shocks. In his 13 May speech, Treasurer Joe Hockey espoused that “complementary investment” was the key to diversifying Australia’s economy. Investment in Australian entrepreneurs can be that complementary investment. As we enter financial reporting season, it is clear that Australia’s heritage industries, such as commodities, mining and banking are a safe bet for investors – but it is time to shift the conversation away from financial return and address how we can work together to future proof the Australian economy.
Notwithstanding huge funding cuts, it is not all doom and gloom for us entrepreneurs. There is speculation that the Government may finally address the Employee Share Option Program (ESOP) in Australia. Well known Australian entrepreneurs, such as Dave Greiner and Ben Richardson from Campaign Monitor; as well as Jodie Fox from Shoes of Prey, and Ash Davies from Tablo have welcomed this news with nervous trepidation. In 2009 the then Labor Government implemented some controversial changes to the ESOP, making company shares issued to employees taxable upon issuance. This made use of the ESOP as a recruitment tool almost impossible for Australian early-stage-startups.
With a high Australian dollar and an almost non-existent appetite for high-risk investment, it is hard enough for early-stage-startups in Australia. Even with an MBA from the University of Sydney (an enviable degree!) it is a tough gig for those of us who want to solve problems and use our technical expertise to develop innovative solutions. The reality is that entrepreneurism is a key driver of economic growth. It creates social prosperity, and promotes innovation. Both the Government, and the business community, need to develop a more in-depth understanding of the realities of entrepreneurial life in Australia. Hopefully, the future leaders of Australia who are enrolled in the University of Sydney MBA program (some of whom are nearing completion) already have, and will continue to develop, a detailed appreciation for the Australian entrepreneurial ecosystem; and will support its growth however they can.