In the Media: Atlassian CEO calls for Sydney tech hub; gov’t launches new innovation strategy

From Communicatiions Day, 15/10/14 by Richard van der Draay

Atlassian co-founder and CEO Scott Farquhar has called for Sydney to be turned into a tech startup hub, as well as for a greater general government focus on technological skills, particularly software, in the classroom. Parliamentary secretary to the Communications minister Paul Fletcher, hosting Farquhar’s JJC Bradfield Institute lecture in Sydney, expanded on the Commonwealth’s current direction in the startup space – and shortly afterwards, the government also announced the launch of a new innovation strategy.

“I argue that we can build a technology centre in Australia and I would say that Sydney is best placed to have that hub,” said Farquhar. “Australia has a choice; we can either lead the world, or be led by it.”

He added that while previously Australia had suffered from a tyranny of distance, this had all changed. “Software liberates us from distance,” said Farquhar, adding that from day one his startup company had been global and that this had been made possible by the fact that Atlassian’s proposition was software-based. “Every company is becoming a software company or is one already, even if they don’t know it yet.” 

To boost the local startup scene, Farquhar’s main thrust centred on a need to bring more technological skills like programming into educational curricula, and on the need to import talent. 

He said that cost of living pressures in Australia were having an adverse effect, calling for the Living Away From Home allowance program – which had previously offset these cost of living pressures – to be reinstated. In addition, Farquhar noted that the bureaucracy around the processing of 457 visas had become Byzantine, adding that in many cases it was now easier for a startup to just move to the US instead.

The Atlassian co-founder railed against the tax regime which was implemented during the previous Labor federal government. He argued that these tax rule changes had discouraged Australian startups from offering share options to employees as under the new legislation employees are taxed on the value of the share option at the time when it is issued, rather than when any actual payments are made. This aspect, said Farquhar, was much better organised in other countries where employees are only taxed when options are executed. 

Farquhar also urged for a review of Australia’s superannuation policies to encourage super funds to boost investment in venture capital, saying that currently just 0.0006% of superannuation funds was invested in local venture capital. By contrast, the US notched up about 350 times as much in similar investments. 

However, Farquhar was positive about other aspects of the tax regime towards Australian startups, noting that the Australian Taxation Office offered lenient timeframes for specific tax obligations of tech startups. In addition, he said the government’s research and development tax concessions were a godsend to startups.

He also praised the Export Market Development Grant which allows Australian-based companies to export and sell their wares anywhere around the world. 

Farquhar emphasised that the need for action was urgent. “We need to do something now,” he said, noting the relative success of countries like China and the US – and even less populous nations like Israel, which boasts the second largest number of NASDAQ-listed companies despite only having a population of some eight million. “Their recipe is great universities, large companies, startups and an ecosystem that connects them.” 

He noted that the same conditions existed in Australia. “Once we get up to speed we’ll be in great position to be self-sustaining,” he added. “Talent attracts talent but people want to live where there is a critical mass in jobs in their industry and that requires a critical mass of people.”

GOVERNMENT INNOVATION FOCUS: In his response, Fletcher hailed the success of Atlassian as an example of the burgeoning technology sector in Australia. “The technology startup scene has started to blossom in the last decade,” he noted, adding that Atlassian’s co-founders had also been strong mentors, advocators and investors in fellow startups. 

In terms of public policy settings Fletcher touched upon the need to ensure the right skills were in place to service the right workforce and highlighted the Coalition’s focus on specific skills programs such as encouraging the take-up of the so-called STEM subjects of science, technology, engineering, and mathematics. In addition, Fletcher took up Farquhar’s point around tackling red tape around the processing of 457 visas. “There is [also] a [government] re-prioritisation towards employer-sponsored visas,” he said. 

Meanwhile, following closely on the JJC Bradfield Institute lecture, the federal government launched a new innovation strategy which includes a AS500,000 pilot program called Pathways in Technology Early College High School. 

“There’s no reason why… in our country we couldn’t have a number of schools that specialise in science, technology, engineering and maths in conjunction with particular businesses,” said prime minister Tony Abbott. 

He added that the government would also provide an extra A$7.4 million for new maths resources in schools, A$3.5 million for computer-skilled teachers, and travel and accommodation subsidies to help girls and remote students attend science summer schools.
In addition, a new Commonwealth Science Council, which will meet twice a year, will oversee the new programs and offer wider advice on how to get industry and researchers to work more closely.