In recent years Australia has been one of the major destinations for startups, as well as international businesses looking to set up new regional offices. The latest statistics reveal that the number of businesses trading in Australia has risen for a second year in a row. On top of this comes the news that Prime Minister Malcolm Turnbull is implementing additional tax benefits to encourage even more investment in Australian startups.
How the Australian market is changing.
Five years ago I happened to be in Australia and I discovered just how powerful the economy was. Many of my younger Australian friends had saved up the money to launch businesses by spending a year or two in the mining industry. It involved working in remote locations for much of the year, but the pay was incredible. While the mining boom has tailed off the country has come up with new ways to diversify. Prime Minister Turnbull is intent on increasing tech innovation while enticing more investment from outside its shores in a concerted effort to make Australia the next Silicon Valley.
Major changes are afoot.
In recently passed legislation new tax breaks are available for anyone investing in startups up to $200,000 per year. So anyone investing in Australia can expect a 20 percent rebate with a 10 percent rebate with investments for growth. The maximum amount that can be claimed in rebates is $200,000, which is incredible news for startups in the tech industry.
Will it actually make a difference?
In the past Australia has suffered from its geographically disadvantageous position. At the other side of the world from the U.S.. and other Western markets, many westerners had dismissed the idea of beginning a startup down under. Add on the immense costs involved with operating in Australia and employing expensive labor and you had a recipe for people wanting to look elsewhere. But thanks to the digital economy, the issues over geography are a thing of the past. And tax rebates should, in theory, mitigate the cost of labor and encourage big investors to come to Australia. The question is whether it will convince them to invest there instead of growing Asian economies and the recovering US economy. Within a year it should become clear as to whether investors have responded positively.
What makes Australia so attractive?
Despite the high cost of Australian labor, the returns are often worth it. Australia is one of the world leaders in education which produces lot of highly skilled talent which tech companies in particular covet. Australia's largest urban centers Melbourne and Sydney are increasingly catering to the needs of entrepreneurs and small businesses. Those cities have the highest concentrations of co-working spaces in the region, helping startups to reduce their costs. Australia as a country also offers a high and very appealing standard of living. With warm weather all year round and a highly regarded health care system, it’s no surprise to see entrepreneurs flocking to Aussie shores.
Leading Figures Show Faith.
While the main news of the day revolves around the latest rebates, there are other positive changes for entrepreneurs. Turnbull’s board for Innovation and Science, which is part of a major master plan to encourage and rejuvenate the tech industry, has recently appointed Maile Carnegie. She is one of the leading authorities in Australia's tech industry who until recently led Google’s Australian division. She has also taken up a position with ANZ, a joint Australian and New Zealand bank, in order to head their expansion into digital banking. Other big tech names appointed to the board include Bill Ferris, Alan Finkel and Paul Bassat.
The effects of these changes shouldn't’t come into full force for a number of years as it will take time for the injection of funds to really have an impact on the fortunes of entrepreneurs. But most speculators agree that additional changes are sure to be in the offering and taken together they just may revolutionize the global tech industry.