Next Investors logo grey

Four of the start-up challenges confronting Greg Hunt

Published 21-JUL-2016 15:10 P.M.


4 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

There’s never been a more exciting time to be Greg Hunt.

In case you missed it, earlier this week newly-minted PM Malcolm Turnbull appointed his ministry, with Greg Hunt jumping from Environment to Innovation and Science.

He picks up a portfolio crying out for investment at a time when the PM has replaced the phrase ‘we must be an agile nation’ with ‘we must undertake budget repair’ as the key slogan.

The start-up sector will be heartened that the ministry hasn’t been shunted off to a junior minister, but has shifted it from Christopher Pyne to Hunt – both senior ministers in the cabinet.

It will also be heartened by Hunt’s performance as Environment Minister.

While according to Twitter everything he did was wrong while in the portfolio – he was instrumental in setting up the Clean Energy Innovation Fund.

That was a $1 billion fund dedicated to early-stage environmental tech – suffice to say the start-up community would love something even vaguely similar.

The new fund, however, was read in some quarters as actually stripping the innovation out of the funding by focusing on projects which are dead certainties to provide a return to the government.

Greg Hunt with Malcolm Turnbull

Greg Hunt with Malcolm Turnbull

As many start-ups will tell you, you can’t necessarily guarantee a return on investment in the early years.

So, Hunt knows how to set up funding mechanisms for private companies in the scope of his portfolio, at least.

What are the challenges Hunt will confront when he’s briefed by Canberra staffers?

Continuity with change

The first thing the minister will need to do is assure the start-up community that there aren’t any real changes to the previously-announced National Innovation and Science Agenda (NISA).

Are there any changes in store here a la CEIF?

It’s pretty unlikely given that it was a key Turnbull initiative, but given the government’s new mantra of budget repair – there will likely need to be some assurance here.

Look to initial speeches and chats with industry for clues.

Don’t muck with R&D

This is a bugbear of the biotech sector as well, but the government is being urged not to muck with the current R&D provisions.

There’s a review of R&D arrangements currently being led by Australian chair of innovation Bill Ferris, chief scientist Alan Finkel, and secretary to the Treasury John Fraser.

They’re looking at how the system could be implemented, and would normally be concerned about tinkering about the edges rather than wholesale change.

As with the NISA, however, those in the start-up space may be increasingly concerned that the budget repair mantra may become a code for slashing the R&D budget.

Getting super involved

One of the key planks of the NISA was a plan to attract more small-scale capital for start-ups – but what the start-up sector would really like to see is a bit of heft to the funding.

The sector was undoubtedly pleased when key measures passed in the budget – including a 20% tax offset capped at $200,000 per year and a 10 year exemption on capital gains tax when investing in certain start-ups.

This is a question we’ve tackled before on Finfeed, but can the government encourage the superannuation sector to invest in the innovation economy?

It undoubtedly has enough headaches around superannuation already, but it could take investment off the books of the government and put it in the superannuation sector’s hands if done right.

Getting it right on STEM

This is a bit of a broader issue and falls within the education portfolio, but is there anything Hunt can do within the senior ministry to make sure enough funds are allocated to education programs looking at Science, Technology, Engineering, and Maths?

It’s an area that has been crying out for investment, as Australia is producing a surfeit of labour with skills in those areas at the moment.

When you think of the start-up sector you may think about coding, but it’s broader than that.

Start-ups cover a range of sectors, but what they all pretty much have in common is a lack of talent within the domestic scene.

All the talent is being scooped up overseas, but if Australia can create an oversupply then the domestic scene will receive a necessary boost.

It’s one of those things which may require a bit of cash though, so while the government may make pronouncements on STEM will it be able to follow-up with funding?

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.