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‘Thousands of jobs’ at risk

These executives say a proposed $2bn cut to the research and development tax break could threaten the future of Australia’s technology industry.

Karl Redenbach, CEO of LiveTiles, at their office at Federal Mills. Picture: Alan Barber
Karl Redenbach, CEO of LiveTiles, at their office at Federal Mills. Picture: Alan Barber

A proposed $2bn cut to the research and development tax break could put thousands of future tech industry jobs in jeopardy, according to Karl Redenbach, whose company LiveTiles has previously benefited from RDTI incentives.

Mr Redenbach said the proposed, so-called tax-tinkering – which was developed before the coronavirus crisis – could mean the cutting of about 4000 future jobs in the tech sector.

“It should be remembered these jobs are in an industry that’s hiring through COVID-19,” Mr Redenbach told The Australian on Thursday.

“Surely Australia should put a premium on job creation at a time like this.

“If the government were to add software development to the mix, well that’d be an absolute gamechanger.”

Technology One founder and chairman Adrian Di Marco disagreed, arguing that the tech companies at the bigger end of town are going to do the same amount of research and development irrespective of any tax incentive.

“I look at the R&D tax incentives we get and I just shake my head,” he said.

“It‘s wonderful, sure, but it’s needless. We’re going to do the same amount of R&D regardless.

“We’ve run our race and this does not make a big difference to us. They should forget about us to be honest.”

Mr Di Marco said the government should be engaging with the start-up community and focusing on future start-ups to foster innovation.

LiveTiles joined at least 13 other tech companies in appealing directly to Scott Morrison in a letter, calling for software development to be added to the tax break, as well as the reverse of the proposed cuts to the RDTI.

In a letter to the Prime Minister, the technology companies, which included Atlassian, Redbuble and Canva, said that a move to cut back the RDTI could deter business investment and job creation.

5/3/2019: Adrian Di Marco, CEO of Technology One, in the companies "Village Green" area of their office in Fortitude Valley, Brisbane. Lyndon Mechielsen/The Australian
5/3/2019: Adrian Di Marco, CEO of Technology One, in the companies "Village Green" area of their office in Fortitude Valley, Brisbane. Lyndon Mechielsen/The Australian

The government proposed implementing the legislation retrospectively from July 1 last year in a move the opposition said would claw back about $2bn in research and development tax incentives being clawed back.

“The R&D Tax Incentive has enabled countless companies, Culture Amp included, to invest in creating world-leading technology, which in turn creates thousands of jobs,” said Culture Amp chief executive Didier Elzinga.

“It is a critical tool in having great companies choose to continue to stay and invest in Australia rather than heading overseas.

“Right now our policymakers applying handbrakes to growth, innovation and job creation is a very puzzling move.”

SafetyCulture chief of staff Kate Pullinger emphasised the role that tech start-ups could play in Australia’s economic recovery, saying the company’s employee base had grown 60 per cent in less than two years.

“We have dedicated 2020 to supporting our customers through the COVID-19 crisis and helping companies to get safely back to business in industries across Australia,” she said.

“We also need to take action to ensure our own sector is stable and strong.”

The chairman of ASX-listed sports tech company Catapult, Adir Shiffman, said he was encouraged by his discussions with the federal government to date.

“The need to broaden our export base to include far more tech in the wake of the current geopolitical challenges also reinforces the need to accelerate innovation right now,” he said.

“I know my views may be contrary to many others, but I hope and expect that when the Morrison government does release an RDTI update there will be some good news for smaller start-ups and scale-ups. I’ve certainly felt an improved sentiment since COVID-19 began. We have a committed Technology Minister, ISA is working hard behind the scenes, the Treasurer understands the space as do some key backbenchers, and the PM championed innovation as Treasurer.

Taken together, I remain optimistic that we will be pleasantly surprised. The next step will then be to provide RDTI clarity to software businesses.”

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Original URL: https://www.theaustralian.com.au/business/technology/thousands-of-jobs-at-risk/news-story/a3c86cafee24252dd0d7b7484ac58b8d