Malcolm Turnbull’s elevation to Prime Minister and comments about Australia becoming more innovative and agile is music to the business community’s ears. We might finally have a government that understands the difference between entrepreneurship and small business.
Turnbull has much work to do. Australia has the world’s second-highest rate of entrepreneurial activity, according to the Global Entrepreneurship Monitor, but we suck at turning start-ups into global powerhouses. We’re relatively weak at innovation commercialisation, and collaboration between business and universities is poor.
Here are five entrepreneurial priorities Turnbull should address:
Scrap the Capital Gains Tax on start-ups
New South Wales backbencher David Coleman says the Federal Government should introduce a Capital Gains Tax (CGT) exemption for investments in early-stage companies. If you take the risk by investing in private companies less than two years old, with less than $1 million in revenue, you get the reward by not paying CGT on shares when sold. This sensible idea could unleash a wave of new investment in start-up ventures. Better still, it wouldn’t cost much.
Get equity crowdfunding up and running
The Federal Government has dithered for too long on rules that allow investors to back start-up companies via equity crowdfunding platforms. Thankfully, new Innovation Minister Christopher Pyne is on the job and says equity crowdfunding rules and tax breaks for angel investors in tech companies are in the wings. Make it happen, Minister, and find your “inner revolutionary”. These changes are badly needed to help start-ups raise capital.
Funding should incentivise companies to get to market, not endlessly tinker with research in a laboratory.
More on commercialisation, less on research
Governments pour billions into research each year, much of which never leads to commercial products, and far less by comparison on commercialisation. Funding should incentivise companies to get to market, not endlessly tinker with research in a laboratory. What about giving eligible start-ups a rebate on a proportion of their sales, instead of yet another research grant? You get to market, you win. You don’t, you lose. Makes sense.
Help the university sector
It’s shameful that collaboration between Australian universities and business is among the lowest in the developed world. In the US, business and academic researchers work much closer together and many great entrepreneurial ventures come through the US university system (think Facebook). Some Australian unis are trying hard to do the same, but much more is needed. The Goverment should link more uni funding for the number of start-ups created on campus and commercialised. Unis need better incentives to turn ideas into companies.
Teach entrepreneurship at school
Get it into the national curriculum. Teach it from primary school on. Show kids there is another option beyond working for someone else (it’s called self-employment). Give them the tools to create their own job or apply for it, and more options to do either. Employ career counsellors at schools who understand entrepreneurship and start-ups. Don’t let our best and brightest talent learn about entrepreneurship by accident. It’s too important.
Tony Featherstone is a former managing editor of BRW and Shares magazines.