Wyatt Roy (Longman, Liberal Party) Share this | Hansard source

It is a great honour to speak on these bills because it has been a very long journey to get to where we are today. Members of parliament come from very diverse backgrounds. I am very proud to say that I come from a farming family, and my brothers work in the mines in Queensland. Those are great industries but our nation's future prosperity extends beyond the farm gate or the mine head. Despite how great Australian agriculture is, despite how great our mining sector is, our future prosperity as a nation must extend beyond just the farm gate or the mine head. Our nation is at its best when we embrace the cultural heritage of having a go, when innovation is active in our collective psyche.

There is no doubt that our country faces significant challenges in the future. We have the challenge of an ageing population: today 7½ people are working for every person who is not, but by 2050 that will only be 2½ people. We have an intergenerational debt burden left behind by the former Labor government. We have the resources boom coming off. Despite all these challenges that we face, we should be infinitely optimistic about our potential future prosperity—not because of the resources we have in the ground but in light of the abundant innovative capacity of our people. Critical to harnessing this innovation that we have in our country is creating and fostering a proper start-up ecosystem of innovation that supports the next generation of entrepreneurs.

To develop this start-up ecosystem in Australia we need to do a number of things. We need to have a coordinated approach across government, across higher education and across capital investment, and we need to have a cultural shift as a nation to realise that people going out and taking on a risk by starting a business and trying to create their own future success is something that we need to embrace and champion as a nation. We have the fundamental components to create this new culture, this new start-up ecosystem, in Australia. We have deep reserves of young, bright, talented Australians. Countless numbers of young and intelligent entrepreneurs from across the globe want to come to Australia because of our lifestyle. Sure, Silicon Valley, Israel, Singapore, Hong Kong and South Korea are achieving much in this space, but if you ask somebody of my generation whether they want to live there or in Sydney, Brisbane or Melbourne our Australian lifestyle is a major magnet for some of the brightest entrepreneurs across the globe. I think we as a nation underestimate the importance of being placed at the heart of a new global economic powerhouse, a growing Asia. Australia has the potential to harness that and become the epicentre of Southern Hemisphere entrepreneurship.

I would like to point out what we can achieve if we take hold of these opportunities. The Startup Economy, the PricewaterhouseCoopers study commissioned by Google Australia, showed that high-growth technology companies could contribute four per cent of GDP, or $109 billion, and add 540,000 jobs to the Australian economy by 2033—and that is coming off a base of only 0.2 per cent. Ultimately if we get these policy settings right, there next generation of Australians, as they graduate from high school, will be able to find future jobs in new industries where we have a massive export potential to the globe. Today, services make up about 80 per cent of our economy but only 17 per cent of our exports. If we get this right, we can do so much better as a nation.

There are three areas that I said we need to look at as a nation to get that start-up ecosystem at its best in Australia. The first is capital. Last year, Australians bet $200 million on the Melbourne cup—we love to have a gamble—but venture capital in Australia only invested $100 million in start-up companies. So when we have entrepreneurs looking to grow their businesses through the valley of death, there is obviously a clear need to attract venture capital in particular. I would also say—and the opposition has made some policy statements on this that I welcome and support—that there needs to be an understanding that, as we do that, we need to attract not only the capital but also the talent to put that into businesses in the most effective way. Other countries across the world have not done this on their own. They have attracted the largest and most successful venture capital firms to partner with venture capital firms in their own country to help grow not only the capital pool but also the talent pool.

The second area that we need to address is a shift in culture. Australians are good at being entrepreneurs. But something unique about us is that we like to hold ourselves back and invest in things that have a secure and safe return in the long term. We like to invest in resources, infrastructure and real estate—things where we can ensure we will get a little bit of a return. But if we are to reach our full potential, we need to have a culture shift that says if you go out and start a business you might fail one, two, three, four, five, six or seven times but if the eight businesses is successful you have developed the skill set you need to grow that business and create prosperity. Ultimately what we would hope is that the next generation of Australians would feel as excited about starting a business as they would about going to the mines and driving a truck for $100,000 a year. And while small business start-up rates are now at the highest level they have been at in over 10 years, the rate for people aged under 35 starting in business is actually falling. So we do need to have a cultural shift where we champion success in this country—not attack it, not vilify people who have had success. We need to say it is a great thing that they have taken on some risk; they might have had some failure but they are ultimately helping to create future prosperity not only for themselves but for the country.

The other thing we need to look at is attracting talent from across the globe. We should not say that smart entrepreneurial people coming to Australia from around the world are taking Australian jobs. Too often the debate evolves into a cheap political thing at that point. In my mind, if a smart young entrepreneur or smart scientist or a smart person in the IT sector comes to Australia to help create a business and help develop the Australian start-up ecosystem, that is a great thing for us as a country. We should champion that and, ultimately, if those businesses grow and invest in Australia they employ more Australians and we create more jobs for future generations of Australians.

There are many things that we can do as a country to help attract that talent. That could be entrepreneurship visas when we are looking at the skilled migration system that we have—ensuring that we are getting people with these critical skills to come to our country. The final measure in that, of course, are employee share ownership schemes, which I will come back to and go through in greater detail because that is what this legislation seeks to change here today. They are an important key point in developing Australia's start-up ecosystem.

But, as I said, we need cooperation as well. We need cooperation from government, from higher education and from capital investment to develop the Australian ecosystem. In Australia, we seem to do something very odd: we have some of the best research and science in the world, but we seem to fall a little short when it comes to the commercialisation of those great ideas. We have some of the most amazing research happening of anywhere in the world, particularly in the medical field, but those ideas and the research that has been developed often goes off to places such as the United States or Israel to be commercialised. When you look at the success across the globe of the commercialisation of those great ideas, there is very clear cooperation between higher education, the government and the private sector. If you are in Technion university in Israel or if you are in Stanford University in the United States, there is very clear cooperation. A business is effectively set up at those universities and its sole purpose is to commercialise those great ideas. The KPI on those universities is not research for the sake of research but it is research for the sake of changing the world—making the world a better place and actually commercialising those ideas. I think we have an enormous amount that we can learn from our partners around the world when it comes to cooperation between those different sectors.

But, finally, I want to come to the legislation—what we are seeking to change in the parliament here today. In the bill we are changing the employee share ownership plan for Australians. Employee share ownership is such an important part of developing Australian entrepreneurship and the start-up ecosystem in Australia. Employee share ownership schemes do a number of things. They drive motivation in those companies. If, as an employee, you have a direct stake in that company then you are invested in its own success, and that entrepreneurial spirit is driven not just by those at the top of the company but all the way down. ESOPs allow us to attract the best talent from around the world. As I said before, if we can attract the smartest people from around the world to invest and grow Australian companies—to have a direct stake in those companies—that will help create a much better ecosystem here in Australia.

Ultimately, there is an equity issue here as well: what ESOPs allow is the spreading of those benefits throughout the entire company. So if a company has had great success, that success does not just sit with the boss but everybody in that company who has a stake in the company gets some of the rewards. That is how we can attract someone who is very bright and very talented, and who might come and invest or be part of an Australian company. They may take somewhat of a pay cut, but they take some of the stake in that company so that when it achieves success, collectively, they all enjoy those rewards. If we look to the United States we can see what is achievable. In the United States approximately 28 million employees have an employee share ownership plan—one-fifth of the entire private sector has an employee share ownership plan.

This is correcting a wrong—and I do not want to be partisan in this debate. Perhaps it is political naivety, but I do think that when it comes to innovation and entrepreneurship in this country we do have an amazing ability to have a bipartisan approach or bipartisan policy creation. Perhaps that might not come to pass, but at least we are going to try. But I do have to make the point about what we are fixing. In 2009, unfortunately—perhaps it was an unintended consequence and perhaps it was not so deliberate—when the Labor Party changed the employee share ownership schemes they removed those incentives, simply by taxing an employee at the time of the issue rather than when they received those proceeds. They took away all of these amazing benefits that we can see in the employee share ownership schemes. They took away that motivational connection and they took away that ability to attract the best talent. Essentially, we saw start-up businesses, in many cases—and I have spoken to them myself—moving overseas simply because of this one policy initiative. So today we are correcting a big wrong in history when it comes to developing Australia's start-up ecosystem.

But there is obviously so much more work to do. As I look at the debate that we are having around innovation and entrepreneurship in Australia I am very excited. I feel that through history we have often been a country that has simply been prepared to ride on luck. But for the first time I can feel us sensing something far greater in this country. For the first time—well, not for the first time—we might take a very significant step in history and be prepared to be a nation that starts making its own luck, taking hold of the opportunities that are clearly sitting there for the next generation of Australians.

I very proudly commend the bill to the House.

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