afr Updated Sep 21 2015 at 12:15 AM
by James Eyers
As Prime Minster Malcolm Turnbull announced his new ministry on Sunday afternoon, he said if Australia wants "to remain a prosperous, first world economy with a generous social welfare safety net, we must be more competitive, we must be more productive and, above all, we must be more innovative. We have to work more agilely, more innovatively, [and] we have to be more nimble in the way we seize the enormous opportunities that are presented to us."
His comments reiterated similar ones made last week after he dethroned Tony Abbott. Australia has to recognise "that the disruption that we see driven by technology, the volatility in change, is our friend if we are agile and smart enough to take advantage of it", Turnbull said, urging us to become "a nation that is agile, that is innovative, that is creative".
While Turnbull was talking about the economy broadly – and it remains to be seen whether the rhetoric will be backed with action – his comments were a symphony to the ears of both financial services incumbents and fintech disrupters.
On Tuesday night last week, around 300 people gathered at the Tyro fintech hub in Sydney for a meet-up and there was a buzz in the room from the events in Canberra the day before. KPMG's global co-head of fintech and national head of banking Ian Pollari spoke with dozens of entrepreneurs that evening and says he received "universally positive feedback from the fintech community, who have welcomed the new Prime Minister's public recognition of the importance of embracing innovation and technology-led disruption".
The big banks are on the same page. At a Trans-Tasman Business Circle lunch in Sydney on Wednesday, Westpac Banking Corp's chief executive, Brian Hartzer, was optimistic that a Turnbull-led government understood the potential for technological disruption to be employed as a driver of growth and productivity – which is how Westpac and other big banks are thinking about it.
"In one of his first statements, [Turnbull] talked about a nation that is agile, innovative and creative, a nation that sees technology-driven disruption as a friend of growth," Hartzer told his 400-strong audience. "We agree."
To help the fintech and other tech industries blossom, it is crucial the right tone is set from the very top of government; this will provide cues for government ministers and, perhaps more important, the bureaucracy, to realise fostering a culture of innovation across the economy requires the attention of many departments, from Treasury, to Education and Immigration.
It is encouraging that bipartisan support for developing policy to turbocharge an innovation, technology-led economy is gathering speed. Earlier this year, the Parliamentary Friends of Innovation and Enterprise Group was established under the guidance of Liberal Tony Smith and Labor's Terri Butler; since Smith moved into the Speaker's chair, Wyatt Roy has taken a leadership role in the group.
The Liberals' Paul Fletcher, a former Optus executive, and David Coleman, the former head of ventures at Nine Entertainment, are also big supporters of the innovation policy push, as are Labor MPs Ed Husic and Jason Clare.
EXCITING TIME TO BE ALIVE
Turnbull addressed the launch of this Friends of Innovation group on March 26 in one of Parliament House's internal courtyards. "This is the most exciting time to be alive," he told the small group of media. "We are living in an age of invigorating, exhilarating disruption driven by technology. Great, well-established businesses are being shaken, government departments are being shaken – everything is in a state of flux, and the game will be won by those that are agile and imaginative.
"There is no shortage of technology as we move into the internet of things, where everything will be connected over the internet ... The technology is there – the critical thing we have to supply is imagination. This is why innovation is so important," Turnbull continued.
"Innovation is just another word for describing creativity, right across our economy and society. We have to change our culture to build on that great tradition, that non-differential tradition, of innovation. We are naturally, an innovative nation ... and we have to be more disruptive and more innovative than ever before."
While these comments can be applied to many parts of the economy, including the ICT [information, communications and technology] and medical sectors, the fintech scene is being spurred by the particular attention being paid to it by several of Turnbull's closest confidants.
Fletcher, who served as parliamentary secretary to Turnbull as minister for communications, has been actively promoting fintech. "Governments in Britain, New Zealand and many other countries have a clear focus in this area, so we will need to work hard if Australia is to capture a fair share of the fintech opportunity," he wrote in The Australian in June. Fletcher attended the opening of the Sydney fintech hub Stone & Chalk last month, as did another close supporter of Turnbull, Arthur Sinodinos.
But no one is more attuned to the fintech opportunity than Turnbull's wife, Lucy, the former lord mayor and prominent director. In her role as chair of the Committee for Sydney, Lucy Turnbull identified the fintech opportunity more than 18 months ago, commissioning KPMG's Pollari to write a research report that provided the momentum for the creation of Stone & Chalk.
Lucy Turnbull understands that developing a thriving fintech scene will have a multiplier effect throughout the economy, and will be able to give a lift to other creative industries including design, engineering and computer science. The Committee for Sydney "will seek to help accelerate Sydney's growing position in the region's financial services industry by supporting its burgeoning fintech scene and the eco-system and environment required to sustain it," she wrote in the introduction to the report.
She also said policy development from the commonwealth was needed "to ensure that we have competitive tax and visa regimes in place to enable Sydney to attract the global talent and investment required to maintain its existing status as the nation's centre for both finance and ICT and indeed to enable it to increase its economic significance in the region."
Last week, as the political machinations in Canberra reverberated around Australia, London was hosting its second annual fintech week, which was attended by a delegation of 10 Aussie start-ups on the invitation of UK Trade & Investment, which is trying to lure innovation talent to London, where an estimated 44,000 people are working in fintech. One member of the delegation was Toby Heap, the managing director of fintech accelerator H2 Ventures, previously known as AWI Ventures – which was launched by Malcolm Turnbull at the start of last year.
"The fintech ecosystem and atmosphere in London is impressive but it is not out of reach for Australia if the Turnbull-led government can get behind it," Heap says from London.
"In Australia, there is a chicken-egg problem, where investors talk of a lack of quality deal flow, and start-ups complain of a lack of funding opportunities. I think that the number one policy that is driving the early-stage tech ecosystem in the UK is the Seed Enterprise Investment Scheme, which gives investors a 50 per cent tax deduction on investments made in early-stage start-ups, as it has led to huge growth in the number of start-ups, which then leads to more deal flow for later-stage investment funds."
Pollari says Turnbull's narrative last week "must be followed up with well-coordinated policy measures, regulatory and tax reforms to support local entrepreneurs and enable Australian businesses to be more innovative, agile and responsive to change."
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