2018-19 Budget steady for Australian fintech – but the big news is yet to come

Australia’s fintech industry will benefit from a number of important support measures in last night’s 2018-19 Australian Budget but will be forced to wait for the big news about the details of Australia’s open banking framework.

FinTech Australia chair Stuart Stoyan said he welcomed a number of funding measures outlined in the budget. These included:

• $44.6 million over four years from 2018-19 to help Australian consumers to more easily access and use their own data, with the banking sector to be the first Australian industry sector to be subject to this consumer right.
• $700,000 in 2018-19 for the Digital Transformation Agency to investigate areas where blockchain technology could ‘offer the most value for government services’.
• $29.9 million over four years to strengthen Australia’s capability in artificial intelligence and machine learning
• $100,000 to help promote Australia’s fintech sector to the world.

In addition, the government announced it would impose a $10,000 limit on cash payments to businesses from 1 July 2019, which is designed to clamp down on the ‘black economy’ but also has the potential to drive fintech innovation through the increased use of electronic payments technology.

Mr Stoyan said it was hoped that the budget would unveil the government’s policy platform for open banking, including the data sets which would be released under the reform’s first phase, and when this phase would begin.

Disappointingly, no announcement was made in the budget, although FinTech Australia understands further policy details will be revealed in the very near future.

“FinTech Australia broadly welcomes the measures in this budget, which continue this government’s ongoing support for our industry,” Mr Stoyan said.

“We thank the government for setting aside funding for fintech industry promotion and outlining investments into blockchain and artificial intelligence. These are emerging and important technology areas which are complementary to fintech innovation.

“However, the big news will really be whether the government has stood up to the big banks and will introduce a world-class open banking framework next year that empowers consumers to receive improved and better-priced financial services.”

Mr Stoyan said FinTech Australia would be carefully examining government’s announcements on the Research & Development Tax Incentive scheme, which is an issue which affects the broader startup sector including fintechs.

The government has decided to impose a $4 million limit on cash refunds claimed under the scheme by smaller and startup businesses with a turnover of less than $20 million. This limit is less than the $2 million limit flagged in the 2016 review of the scheme.

The government has also not introduced a proposed $40 million company lifetime limit to claim the refund, which was suggested by Innovation and Science Australia last year.

However, the government has not supported advocacy by startup industry group StartupAus and FinTech Australia to reward collaboration between startup businesses and large corporations through the scheme.

“Our EY FinTech Australia Census found that making the research and development tax scheme more accessible for startups is the number one policy priority for fintechs,” Mr Stoyan said.

“To this extent, we are relieved that the changes are not as bad as originally proposed, but still feel that more work needs to be done to make this scheme a game-changer for Australia. We will be further discussing our position with our members.

“Our suspicion still remains that the scheme is very focussed on science-based innovation and not innovation which flows from business-to-business collaboration or startup technology development.

“Australia’s startup industry is not going to grow to its full potential if the view remains that innovation can only flow from a petri dish.”

Mr Stoyan said FinTech Australia was also eagerly awaiting the government’s decision on an expansion of Australia’s fintech regulatory sandbox, including whether additional resourcing would be given to the Australian Securities and Investments Commission to run the sandbox. There was no announcement about this in the budget.