Address by Senator Andrew Bragg | Liberal Senator for New South Wales
ACY Securities 8th Gala Dinner | Saturday 26 October 2019
Thank you for inviting me to speak at this the 8th annual ACY Group Gala Dinner. And may I congratulate Tim Cahill on having been appointed an ambassador.
I am delighted to be here because the space you operate in is a space which is very important to me. I note you are a Sydney based FinTech and Financial Services Provider.
I am a Senator for New South Wales, and I chair a Senate Select Inquiry into FinTech. We want more Australian jobs and we want Australian consumers to get a better deal on things like banking, energy and telecommunications. Make no mistake; the Morrison government has an eye to the future. That’s why the Senate established this Inquiry.
As Chair I want to make sure this inquiry delivers products our Parliament can enact: practical, market driven things which will create more Australian jobs. That will only happen if Australia is competitive as a nation. We want Australia to be right up there competing for capital and the best people. And technology will deliver. Technology creates jobs.
In the next twelve months we will examine the size and scope of the opportunity for Australian consumers and business arising from FinTech. We will look at the barriers to the uptake of new technologies in the economy. And I can tell you the response to the inquiry already has been incredibly positive.
Like this from Rebecca Schot-Guppy, the CEO of FinTech Australia:
“This is a watershed moment for FinTech Australia, as it considers every point we have previously raised to law makers. In our eyes, it’s a first step towards a national FinTech agenda. As a result, we support this inquiry … and the points that have been raised. We strongly support the widening of the Consumer Data Right to include other financial services areas, such as superannuation. We believe widening the regime will ensure this policy has a greater impact on competition and will see consumers overall better off.”
This is a ringing endorsement of what I hope to achieve with our FinTech Inquiry.
During the week, we released an Issues Paper which outlines five big issues which we have identified in informal consultation as the challenges we must address as a nation. And if we get it right we will establish a Californian/Israeli style ecosystem.
The big five challenges are:
Capital and Funding
First and foremost, Australia needs to create a base of capital for FinTech and RegTech start-ups to be able to access in order to flourish. Australia has this pool available - we just need to incentivise investment into these areas domestically.
We also need to examine how we can get the policy settings right to encourage further international investment into Australian start-ups. Access to funding and capital can be a life or death issue for an organisation engaging in innovation.
Obviously new start-ups begin as an idea. But as they go into formation phase risks and requirements of business can be discouraging.
We need these fledgling businesses to be able to grow … and grow fast enough to generate returns that justify the investment to allow it to survive. They need stability so they can expand and mature. Australia has relied on foreign capital since the first fleet. Our structures and regulation must be calibrated to attract more capital in the technology race.
Second, we need to create a competitive taxation regime to ensure FinTech and RegTech companies can move from being an idea to becoming a mature business that generates economic activity.
We shouldn’t be afraid to examine new taxation ideas to incentivise investment. Take the Research and Development (R&D) tax incentive system, flagged by EY as ‘a key policy priority’ for FinTech companies in Australia.
The EY FinTech Australia Census found that “providing better access to R&D tax incentives is a key policy priority for FinTech companies’ growth and promotion.” The majority of respondents cited accessibility of the R&D tax incentive as one the biggest sources of funding and growth.
Significant R&D tax changes have been slated following a review during the last Parliament but have not yet been legislated in Australia.
Skills and Talent
Third, skills and talent will be essential to making long-term gains within the FinTech and RegTech industries. Competition for skilled workers is intense in today's knowledge economy. Currently a talent gap exists for many high growth companies, resulting in strong demand for skilled migrant workers in Australia.
That is why the government has embraced skilled migration initiatives such as the Global Talent Sponsored program. But immigration initiatives need to be complemented by continuous investment into education, particularly STEM, to improve the digital literacy of younger generations.
Fourth, Australia currently lacks a “start-up culture” that Singapore, Israel and the Silicon Valley currently have. Promoting a culture of start-up success is a factor that cannot be created by government … but government can promote ingenuity.
Government endorsement of start-ups, including policy settings to encourage start-ups to take risks, and even fail, is essential in fostering an ecosystem of innovation and ideas.
Anthony Eisen, the CEO of Afterpay, recently posted these comments: “Afterpay welcomes a discussion on how Australia can better foster innovation and a start-up culture. There is an opportunity for Australia to be a global leader if we take the right approach in supporting people to take a chance and do something different. When we look at the US, their top 10 companies are now dominated by consumer technology organisations – companies like Amazon and Google that didn’t exist 25 years ago. In contrast, the face of the Australian stock market has not shifted from mining and banking in the past 30 years.”
We want our neighbours to look to Australia for technical innovation.
We want to export our ideas.
Lastly, Australian regulation can make or break FinTech or RegTech innovation. We already know this, which is why the Morrison Government has introduced the Consumer Data Right (CDR) as an example. This is an area where we are ahead of the curve.
The CDR will support better price comparison services that take into account people’s actual circumstances and promote more convenient switching between products and providers. And it could be applied to major sectors like energy, telecommunications and superannuation.
We believe Australian technology companies like ACY know how to win. Just look at Atlassian, Afterpay and Airtasker. They’ve found significant success at home and abroad providing millions of customers with great products and thousands of employees with career opportunities.
One of the most critical components of any world class start up ecosystem is its ability to produce high impact companies. Those successful companies tend to create a virtuous cycle in which their employees are endowed with skills and capital to deploy across the system. That will boost the likelihood that other companies will also succeed.
The “Paypal Mafia” is the most frequently cited example. This group of 13 former Paypal employees went on to create many of Silicon Valley’s most prominent and successful firms … like Linked In, Space-Ex, Tesla, YouTube and Yelp. Here in Australia we have some history of creating high-value digital tech businesses.
In the 90s, companies like SEEK, REA and carsales.com were founded in Australia. These businesses grew into highly successful public companies with global reach. Together they are worth around $20 billion today. But more importantly they’ve created thousands of jobs. And we do have some national champions.
Afterpay has a headcount of 400, Seek employs 997 people, REA has more than 1400 on its books and Carsales 600. I mentioned the most notable, Atlassian a few moments ago. They were founded in 2003 and then the Sydney based software business went public in 2016 … it is now worth about $25 billion … that’s almost three times as much as Qantas and behind only 13 other ASX listed companies.
Afterpay, another Sydney FinTech was founded in 2014, listed on the ASX in 2016 and is now worth more than $4 Billion.
Another is Aconex … a Melbourne based construction technology software company founded in 2000 … it was acquired by Oracle for $1.6 billion.
The rate at which these high value Australian companies are emerging has increased markedly in recent years as the fundamentals that underpin rapid business growth have improved. As they recycle talent and capital back into the system we are likely to see that pace of growth continue to increase. Removing any obstacles to these businesses remaining in Australia is therefore critical.
The charter of this inquiry is simple yet ambitious - to make Australia globally competitive with worlds’ best innovation nations such as Singapore, Israel and the US.
At the end of the day, this inquiry is not about politics - it is about creating a more dynamic, innovative and competitive economy.
And that also means creating jobs.
I wish ACY well in its endeavours.