In a bumper budget for small business and startups, here are eight policies that were missing
Between the digital economy plan, tax relief for SMEs and measures to boost employment, there were a few things missing from budget 2021.
Last night’s federal budget gave us a whole lot to cover, both in terms of small business and startup initiatives. But between the digital economy plan, tax relief for SMEs and measures to boost employment, there were a few things missing.
Here are eight things we were looking out for that just didn’t materialise.
Support for women entrepreneurs
When it comes to encouraging entrepreneurship among women, the Women’s Budget Statement fell short of announcing any new support packages.
The statement discussed but did not expand upon the Boosting Female Founders Fund, which received a cash boost in last year’s budget, and which hasn’t been without its issues.
It also notes changes already made to the government’s Entrepreneurs’ Programme, designed to encourage participation from women, and pointed to $5 million invested in the Future Female Entrepreneurs program.
In short, there was nothing new to report.
Paid parental leave
That said, there was some investment in childcare, designed to encourage more women to rejoin the workforce — self-employed or not.
The budget included a $1.7 billion childcare package offering parents a rebate on childcare fees for second and subsequent children, up to 95%.
As Crikey’s Amber Schultz notes, however, there are no measures to address the fact that childcare centres themselves are struggling to find staff, due to low pay conditions.
It also fell short of making any changes to paid parental leave, including those recommended by business groups including the Business Council Australia (BCA).
The proposed changes would have allowed families to divide 20 weeks of paid leave from the government between each parent, as they saw fit.
One parent would be able to take up to 18 weeks, with the other taking two weeks or more.
Parents who share the leave more evenly would be ‘rewarded’ with an additional week or two of paid leave.
Climate change and renewable energy
We already knew the budget would include some $539 million for investment in ‘low-emissions tech’, including $263.7 million to fund the development of carbon capture and storage projects — but not renewables.
Last night, the budget revealed that would be more like $1.6 billion over ten years.
However, there was also a cash splash for the gas industry. And while there is funding there for drought relief and natural disasters, there’s no acknowledgement of climate change as the cause of such challenges, and no mention of anything concrete to address it.
In a statement, Global Compact Network Australia (GCNA) executive director Kylie Porter called on the government to match the ambitions of the likes of the US and the UK, and invest in renewable energy and emission reduction technologies.
“We recognise the challenges posed for both government and business in a swift and unplanned transition to clean energy,” Porter said.
“However, the focus of the budget allocation towards gas is not a long-term sustainable energy source.”
Fintech
Despite historically being an area in favour, and despite the ongoing Senate enquiry into fintech and regtech, financial technology barely warranted a mention in this year’s budget.
There was $111.3 million pledged over two years to continue the consumer data right rollout in the banking sector. But there was a distinct lack of new initiatives to help support Aussie fintech specifically.
Dirk Steller is the founder and managing partner of Seed Space, an early-stage venture capital firm focused on fintech. For him, Australia is lacking direct investment of sovereign wealth into startups in this space.
“It’s deplorable to me that The Future Fund deploys capital to 14 funds, but all of them are international, and none of them invest in Australian early-stage fintech,” he says.
“If even half of 1% was redirected to Australia, that would make a massive difference.”
Equally, although the budget included tax cuts for venture capital limited partnership programs, others — including finance, provision of capital, banking and insurance activities — are not eligible under the schemes.
Essentially, that means many fintechs will moss out on the benefits here, and the budget made no moves to change that.
Mandate to invest in local tech
There were a whole bunch of measures in this year’s budget that don’t directly benefit startups and tech companies, a broader focus on digital capabilities, AI and job creation could arguably create a knock-on effect of more investment in their products.
However, as our friends at InnovationAus point out, there is no mandate for any of this spending to go towards Australian businesses.
The $1.2 billion digital economy plan focuses on digital adoption, not digital creation. There are no guarantees that the tech adopted will be built locally, or boosting the local tech scene.
R&D Tax Incentive changes
Despite long-standing debate around software startups and the R&D Tax Incentive, this year’s budget did little to abate any confusion around who’s eligible for the rebate, and who’s not.
It also did not heed calls for a whole new, software-specific RDTI scheme, and the incentive warranted just the swiftest of mentions, in relation to the new patent box scheme.
Funding for universities
Pre-budget, we heard a lot about the tech skills gap, and the challenge in finding Aussies with the right skills to fill specialist roles.
Anyone hoping for investment in higher education to help close that gap is likely to be sorely disappointed.
There was effectively no new support for the sector, and with international borders expected to remain closed until mid-2022, revenues are expected to only drop further.
Regtech and incubator support
While the government made much of its bumper digital economy plan, a line in the budget papers revealed that the new strategy will be funded in part by the scrapping of the Incubator Support Initiative and cuts to the Business Research and Innovation Initiative.
The former was a scheme offering grant funding for incubators supporting startups, particularly those with first-generation migrant or refugee founders.
The latter offers grants for feasibility studies of regulatory technology addressing a series of specific challenges. The number of challenges will be reduced from five to three. The department of Industry, Science, Energy and Resources confirmed that existing grant commitments will not be affected.
This article was updated at 4pm on Thursday, May 13, to clarify details around cuts to the Business Research and Innovation Initiative.
