What Does The Budget Mean For Tech and Innovation?
Parliament House, Canberra.
Tuesday night’s federal budget focused on the centrist policy ticket items, the big banks’ tax (or levy depending on how you spin it). There was also a logical increase in the Medicare levy to secure funding for the National Disability Insurance Scheme (NDIS).
Simply, treasurer Scott Morrison (ScoMo) applied a band-aid formula to fixing Australia’s national debt and balance the deficit by 2021, but kept it friendly enough to appease Australian voters.
The big banks will cough up around $4.6 billion of taxes in the future. No doubt, they will mostly feel compelled to pass this onto customers, which is why many are calling it a “stealth tax”.
But scratch beyond this tax, and it appears that fintech was a big winner. The tech sector also has some practical gains and the National Science and Innovation Agenda received some _ but not much _ new blood with fresh budget dollars and reforms. But there was no mention of the “ideas boom” or how small-medium-large business can innovate for our future with agility.
We’ve highlighted some of the best aspects of the government’s spending in the budget:
To create new competition and encourage disruption in the banking sector, the government will make it easier for new banking entrants through fintech, relaxing the 15 per cent ownership cap. The following announced reforms will also help Australia become globally competitive and can only be a step in the right direction for the sector.
Reduced barriers for new banks
Less regulation makes it easier for new entrants to apply to the Australian Prudential Regulation Authority (APRA) to become a “bank”. More financial providers in the industry increase competition, with consumers able to reap the rewards.
Removing double taxation of digital currency
Products purchased using digital currency won’t pay GST twice.
Enhanced regulatory sandbox
The government is inviting players to use Australia as a testing ground for new products and services.
Extending crowdsource equity funding
The government will give ASIC $4.5 million to implement a funding framework that allows individuals to make financial contributions to startups and companies in exchange for equity. “It is pleasing to see that the government has clearly used the budget to reaffirm its commitment to Australia’s fintech industry, and sees this industry as a driver of increased consumer choice and jobs growth in financial services”, says Fintech Austalia boss Danielle Szetho in The Australian.
The Cyber Security Advisory office is likely motivated by problems such as last year’s Census hiccup. Operating under the Digital Transformation Agency (formerly known as the Digital Transformation Office) it will receive $10.7 million over four years. The Bureau of Meteorology and CSIRO’s Data61. Also are also getting funds to improve their digital security platforms and research new solutions. The Australian Public Services (APS) will have $350 million over three years to modernise the way it uses data.
The Turnbull government acknowledges that technology will help solve the important energy security problems being faced in each state. It’s set aside $3 billion to support new emissions technologies.
The 2017 budget is a game changer for banking, especially as fintech grows and innovative, disruptive products and services enter the market. These reforms may change the way consumers invest and bank, along with how new agile businesses become players. The levy on the big banks will see a protracted debate over the coming months – expect to see communication campaigns from the Australian Banking Association.
The budget, in effect, is a people’s budget designed to win back the centrist and swinging Australian voters. The government hopes it will be judged as fair, creating opportunity and guaranteeing our future security.
Carrington Brigham is Spectrum’s Head of Digital and was a guest at the Federal Budget Dinner in Parliament House.
For more on the federal government’s budget, you can visit their website www.budget.gov.au