HJ: So what do we have in Australia really? I have looked at EIP (the Entrepreneur's Program) and we are probably going to get involved with EIP here but beyond that, the R&D component here is ok if you qualify, there's nothing in the federal budget for us, no tax element helping us out…
As a business that is export ready, having some operations in India and looking to expand in Asia, there isn't a lot behind you as an Australian company. It's a tad lonely in Australia, given the absence of any strong vision, awareness and leadership here.
I am talking about the need for greater awareness. Australia is a small market. I have a global idea, if I really want to take it global I know about these sorts of programs offshore, but onshore, it's still piecemeal.
I am most impressed by what Singapore has done in support of SMEs. Not just committing $S500 million over three years but covering small to mid-size business – those businesses that are 'export ready'. They have eight or 10 different programs that intersect and harmonise beautifully, covering all sorts of related activities to innovate and boost the economy.
Those sorts of models and examples, we can learn a lot from that - tax deductions across qualifying activities, some capability development grants, boosting R&D efforts with a research fund. They have got a business angel scheme, they have got all sorts of venture debt risk sharing schemes, growth schemes, M&A tax allowances, future credit. I find it all very interesting and it is intricately woven together. I like it and it's working.
I take your point Steve that we are getting further along but there is still a big disconnect between, one, being aware of it, and, two, understanding it and, three, having it led by the government with some really strong vision behind it.
It does need to be more formalised in that way to have the impact in the next two years.
SM: I agree with what you say about Singapore. Singapore is a really good example of a really focussed national strategy to build a brand new sector of the economy.
HJ: And it's probably because almost all enterprises in Singapore are SMEs, they hire 70 per cent of the national workforce, so they have to. But even what's done in Korea, it took them much, much longer but you know their creative economy initiative seems to cover that start-up to exit phase, so even that's interesting to look at. Besides from what's going on in the UK and the US of course.
SM: One of the things that I think we do really well in Australia is the R&D tax refund. The idea that if you're pre-revenue, which is that highest risk phase development phase for an emerging technology company, eligible R&D gets you 45 cents refund in the dollar. I think that's very, very powerful, and I have a number of clients for whom that incentive definitely factors into decisions as to where they should locate their business. I think the refund is working, it's doing what it needs to in terms of keeping people here.
HJ: Still, from my perspective, where I sit, I look at government and I don't necessarily see a lot happening there. Steve sees something else. Starting to participate in forums, that is really, really good, heading down a path of R&D, great, tick.
It just has a slower impact…unless there is really, really good awareness and media focus on this sort of entrepreneurial activity, and that connection is stronger, it takes a while to filter down because it is coming from all sorts of different sources. I can be optimistic hearing about the things Steve is saying and I acknowledge and agree with some of those things, but I think there is still an enormous amount of work to be done to nail it.