Thank you very much, Ben and Richard – congratulations. There has never been a more exciting time to be involved in FinTech.
You know, this is a 21st century Government and this is a 21st century industry but I have to say, Ben, there was a wonderful retro feel, a real 1980s feel to a bottle of red wine over lunch. That reminds me of the days when the stock exchange was still a partnership, it’s terrific.
But look seriously, we are at the cutting edge, we should be at the cutting edge. The opportunities are limited only by our imagination. It is a penetrating glimpse of the obvious – to quote my esteemed father in-law – that we, in order to remain the high wage, generous social welfare net, first world economy we are today, if we want to do that, then we have to back Australian innovation, back Australian enterprise, back Australian entrepreneurship. It is fantastic to see this huge superannuation fund – First Stage Super – congratulations, on the support you’re giving to innovation because truthfully that is where the growth will come. In the 21st century, post the mining construction boom you know with an economy in transition, the way we drive jobs is by being smarter and more innovative every day.
So, all of my Ministers here today shows you the commitment that we have. The presence of the state minister, Anthony Roberts here today, shows you the commitment that the State Government has.
Australian Governments, the New South Wales Government, the Australian Government in particular, are absolutely committed to innovation and supporting all of your imagination and creativity.
Now I want to just note that this partnership between First State Super and H2 Ventures recognises that there has been to date an insufficient appetite for this type of risk in Australia, but that is changing. There is plenty of money available – $2 trillion in superannuation assets but as we start to see more invested in innovative ventures we will see the fruits of that.
Now we’ve seen this year an explosion in venture capital funding with more than $400 million raised so far, it's expected to grow to $600 million in this financial year – the highest amount raised in seven years and more than triple the amount raised only four years ago.
The FinTech opportunity is gigantic, it's as big as the financial services sector - Ben described how big the, or Richard described how big the banks were alone as a share of the Australian stock market capitalisation. The KPMG report commissioned by the committee of Sydney which I know is a sponsor of this, of Stone and Chalk and very ably chaired I might say, until recently she became the Chief Commissioner, but the KPMG report found that there is $27 billion of banking revenue that is at risk of being digitally disrupted by new innovation, by new technologies, by new approaches to creating or intermediating between ultimately the owners of the capital, families, businesses and the people that want to use it – borrowers, companies that would be finding, seeking investment.
So all of those opportunities are there and the question that you’ve got to ask yourself in 2015 is are you going… everyone is going to be disrupted, that’s for sure, but are you going to be doing some disrupting yourself? Are you going to be the person, the company that is at the forefront of innovation that is taking advantage of these changes that is treating the volatility of our times, the unpredictable of this, unpredictability of this period, this era of rapid change? Are you going to treat that as a time of opportunity to seize or are you going to hide under the doona and treat it as just a mass of threats?
Well I can see looking at all of you here today you see it as mass of opportunities.
Now, in the National Innovation and Science Agenda that Christopher Pyne and I announced yesterday at the CSIRO, there are many measures designed to change the culture of Australian business and Australian Government and believe me, government is part of this change. Government must be an exemplar. I’ve just come this morning from a meeting of our Digital Transformation Committee, a whole of Government subcommittee of the Cabinet, focussed on the way the Digital Transformation Office is going to ensure that you will be able in the future to deal with government as seamlessly as you can with Google or eBay or Netflix. That has got to be the focus and we're setting out to do that. Save a lot of time and money on both sides of the transaction.
And in terms of the business world, the opportunities to transform are absolutely there. But we’ve added some incentives. At the very early start-up stage, we have announced as you would have seen a 20 per cent tax offset for investments in very early stage companies, less than three years old, less than $200,000 of revenue, $1 million in expenses. So these are small companies, these are real start-ups. A 20 per cent tax offset, with a limit up to $1 million investment. So what that means is that if $1 million is invested in a very early stage business like that, there will be $200,000 offset against the tax payable by those investors from their other business or professional income. There is a 10 per cent tax offset for investments in early stage venture capital partnerships.
Now, these incentives are designed to just move us, the Treasurer Scott Morrison was saying a minute ago, just to sort of move the fulcrum, just to tip what is already a trend, where there’s already some momentum, to tip it further along the road of supporting innovation because that is where we secure our prosperity. There is no alternative. We have had phenomenal increase in our national income, we’ve all become wealthier because of the mining boom. The huge lift in commodity prices, a massive investment in mining construction, getting up to 7 per cent-plus of GDP alone – incredible. It was an incredible opportunity but as with all of those commodity booms, they come and then they subside.
The ideas boom that we are ushering in now, not just the government by the way, all of you, 24 million Australians are going to usher in this ideas boom, that can run forever, if we want it to. If we keep on being agile, innovative, imaginative, creative, if we keep on recognising that our greatest assets are not under the ground but in our heads, that it is our intellect and our imagination that will make Australia greater still. If we do that, that ideas boom can last forever and I know there is nowhere more in Australia that the ideas boom is under way than here at Stone and Chalk.
So, I am delighted to be here with so many of my ministerial colleagues to welcome these investments, I congratulate you all and encourage you to more innovation in the months and years ahead.
Thanks very much.
It seems to me that the long term prospects of Australia to rely on education, study right at the very younger age… is there any effort to actually improve our education system?
Yeah there is. If you look at the National Innovation and Science Agenda, you’ll see that there is substantial new investment in promoting STEM subjects right from the early stage, to promote coding in schools, greater computer literacy, to encourage more women and girls to undertake STEM subjects. One of the more disturbing statistics is that the percentage of girls studying, for example, mathematics at the High School Certificate level has been declining quite significantly. Look, this is not a problem – not just a problem – in Australia. I was discussing this in Silicon Valley not so long ago with Sheryl Sandberg. It’s an issue even there, that the percentage of women undertaking, for example, computer science subjects at university is less than it was 20 years ago. So, there’s a lot to be done with education, promotion, encouragement, mentoring – very important. And I’d say this, particularly to the women here who are working in tech, working in technology - reach out to a school near you – a school near you has probably reached out to you already. But you are phenomenal role models, you are great role models and the more young girls can see that there are opportunities for them in technology the better because women hold up half the sky, they’re half our population, but they are very under-represented in this industry.
Prime Minister, the Government is about 30 or 40 per cent of the economy so therefore it’s a really big buyer in its own right. There are sometimes very subtle ways that government doesn’t buy from small business because it’s risky or the definition of an SME is 200 people or less, things like that. How do we ensure that, despite companies like ours getting…?
I know exactly how you feel an Lucy and I, more than 20 years ago started a digital business, a digital audio, recording and management technology business whose customers were governments and governments all over the world, so I know from experience the reluctance of Australian governments, at least in the past, to deal with smaller firms. So, I’m very keenly aware of that. This is what we’re doing. Modelled on the UK approach – the government cloud – we are establishing a similar platform that will make it much, much easier for governments to procure from small and medium size business and above all much easier for you to sell to government. The cost of getting on these panels, getting on these lists is very high. So we’re going to bring all of that down, we’re going to make it easier for you to sell, easier for government to buy, and you’ll see all of the details of that set out in the Innovation and Science Agenda. It is a very, very important part and it’s been a big issue for a long time and we are tackling it.