Start-ups let down by federal budget R&D cuts

The burgeoning local start-up community will have mixed feelings, including disappointment, as it digests the 2019 federal budget.

Stuart Stoyan is CEO of financial technology start-up MoneyPlace. Picture: Stuart McEvoy

The burgeoning local start-up community will have mixed feelings, including disappointment, as it digests the 2019 federal budget.

That is the view of MoneyPlace founder and chief Stuart Stoyan, who is also the former chairman of FinTech Australia. While he welcomes the federal budget’s proposed individual and business tax cuts, and other measures to stimulate the economy, he sees the cuts to research and development tax incentives over the last two budgets as disappointing.

“With over $4 billion in cuts to R&D tax incentives over the last two budgets, you’ve got to wonder if the Morrison government has any long-term innovation agenda at all,” he says. “It seems as if the innovation agenda of former prime minister (Malcolm) Turnbull has been long forgotten,” he adds. “If data is the new oil then we want to see a commensurate investment.”

Stoyan says start-ups are creating jobs and future local industries and laments the federal government didn’t provide more certainty around research and development tax incentives to help spur further growth in start-up and fintech industries.

“This is critical for the future of innovation in Australia.”

MoneyPlace is an online provider of personal loans where interest rates are determined by the borrower’s credit profile. The fintech industry also features start-up banks and peer-to-peer lenders that use technology to match borrowers with investors.

The 2018 federal budget introduced reforms to research and development tax incentives, including caps on cash refunds.

But the broader tax-cut measures for individuals and business should help the sector at the margin, along with an increase in the instant write-off threshold for assets of up to $30,000. Medium-sized business will also have greater access because the eligibility threshold for the asset write-off proposal rises from an annual turnover of $10 million to $50m.

The budget also provided an additional $60 million for Export Market Development Grants to help small business pursue offshore opportunities.

Separately, $41.7 million was allocated over four years to pilot new programs with industry to develop skills in digital technologies and human services.

Stoyan welcomes more conducive business and financing conditions for the start-up sector, where he says founders and owners often risk having their stakes diluted as they are pressured to seek external funding.

Personal tax cuts and other measures to stimulate confidence and spending in the economy would also have flow-on benefits to small businesses and technology-led companies, he adds.