Chapter 2Key issues
Overall views on the bill
2.1The Education Legislation Amendment (Startup Year and Other Measures) Bill 2023 (bill) was broadly supported by submitters and witnesses.
2.2While the bill also makes changes to the funding arrangements under the Australian Research Council Act 2001 (Schedule 2), and establishes Avondale University as a Table B provider (Schedule 3), evidence to the committee during the inquiry focused on Schedule 1 of the bill and the Startup Year program; this chapter therefore focuses on this Schedule.
Startup Year program
2.3Stakeholders commended the intent of the Startup Year program to build a ‘generation of innovators’ equipped to tackle ‘pressing social, environmental, and community-based challenges’.
2.4Stakeholders concurred that the innovation and entrepreneurial skills promoted by the Startup Year program are crucial for securing Australia’s future. This sentiment was captured by Mr Peter Chesworth, Deputy Chief Executive, Universities Australia:
Our view is that if this country is to really face itself towards the challenges of the 21st century, then this [is] precisely the sort of program we should [be] getting behind, not just in terms of a pilot but in terms of a long-term policy and program initiative.
2.5Stakeholders expressed the importance of startups for boosting the Australian economy through research commercialisation and job creation. The University of Technology Sydney (UTS) supported the bill, saying it would:
… help the next generation of young Australian entrepreneurs bring their ideas to life and [UTS] commends the Government for exploring innovative and long-term solutions to fund and support new startups.
2.6There was also strong recognition that universities would be well-placed to deliver accelerator program courses because of their experience in providing high quality accelerator programs. It was suggested that ‘partnering with universities allows for a robust, transparent program ensuring the highest integrity of both the financial investment and learning outcomes of the program’.
2.7Numerous stakeholders commended the positive changes that had been made to the design of the Startup Year program in response to their earlier submissions to the Government’s Startup Year consultations. University peak bodies variously commented that they were ‘pleased with the level of consultation on this bill’ and described the government consultations to date as ’first class’.
2.8The Department of Education and the Department of Industry, Science and Resources (departments) confirmed that feedback from the Government’s extensive Startup Year consultations had been incorporated into the bill to address most of the concerns raised.
2.9In speaking to the overall intent of the bill and the Startup Year program, the Department of Industry, Science and Resources observed that:
A number of Australian universities have established entrepreneurial centres and programs to equip students with the skills to start and grow new businesses, which many of our international partners have been doing for years. Whilst these efforts are encouraging and much needed, further effort is required to help produce more entrepreneurially-minded graduates from our education system. The Startup Year initiative aims to do just that.
Linkages with the innovation ecosystem
2.10A number of stakeholders highlighted the timely opportunity for the Startup Year program to connect students into the wider innovation ecosystem and promote greater collaboration between research institutions, industry, government, startups, accelerators and incubators.
2.11In particular, stakeholders underscored the value of industry involvement in accelerator program courses, for example through the provision of industry internships and mentoring to students.
2.12Cooperative Research Australia (CRA) suggested that the Startup Year program ‘would be strengthened by mapping its relationship to existing programs inside and outside tertiary institutions, and its relationship to the innovation ecosystem’.
2.13This was also recognised in the Department of Education’s submission:
Industry involvement in the design and delivery of participating Startup Year incubators and accelerators is critical in building connections to and across the innovation ecosystem. These connections and communities are vital to startup success. The skills gained through Startup Year must reflect the current and future needs of industry to add to the current innovation ecosystem.
2.14In addition, the Department of Industry, Science and Resources indicated its commitment to ensuring the Startup Year program would be well-integrated into the rest of the startup ecosystem to ‘complement and leverage the full range of existing programs’.
The value proposition of the Startup Year program
2.15Stakeholders were keenly aware of the need for a strong value proposition for students, given that students could incur debt to undertake accelerator program courses that may not necessarily lead to successful startups. While stakeholders acknowledged that taking on debt was a risk for students, it was widely considered a low risk because of the income-contingent nature of the STARTUP‑HELP loan and the clear benefits that students would receive from undertaking an accelerator program course.
2.16The committee heard that students could benefit from developing a range of skills and attitudes through an accelerator program course, including research, critical thinking, creativity, problem-solving, resourcefulness, willingness to take calculated risks, and persistence in the face of adversity.
2.17CRA commented that accelerator program courses could teach students the ‘value of failure and resilience to recover from it’—a crucial attribute for entrepreneurs, given that failure is an inherent part of the entrepreneurial journey.
2.18Accelerator program courses would be valuable because they would equip students with the tools to deal with failure, and thus the mindset necessary to succeed as an entrepreneur, regardless of whether the courses lead directly to the creation of successful startups.
2.19Similarly, the Department of Education stated that the cultivation of an attitude of entrepreneurial risk-taking would be a key learning objective for accelerator program courses:
The core of this [program] is building a mindset in the students so that they're willing to take risks, they understand what the risks are and they have the skills to analyse risk and understand the pathways to startup firms and commercialisation.
2.20Other stakeholders emphasised the value of the networks that students could build through connecting with mentors, industry practitioners and like-minded accelerator program course students.
Course accreditation
2.21Various stakeholders considered the award of an accreditation for completing an accelerator program course to be a significant incentive for students.
2.22Some stakeholders noted that existing university accelerator programs do not generally offer accreditations, and suggested that further work would need to be done to clarify how an accredited course model would operate.
2.23The Hacker Exchange Pty Ltd (HEX) remarked that accelerator program courses should not simply replicate existing accelerator programs being offered by universities for free. This was echoed by Universities Australia, who stated that in order to justify the HELP debt that students would incur for accelerator program courses, they ‘should deliver more than is currently offered by existing accelerator programs’.
2.24The Department of Education assured the committee that ‘there are a number of layers of protections … for students’ to ensure that the Startup Year program would provide students with a good learning experience.
2.25For example, the requirement for universities to apply to the department for accreditation as part of the STARTUP-HELP scheme would give the department oversight of the design of accelerator program courses.
2.26Mr Dom English, First Assistant Secretary with the Department of Education, told the committee that when the department assesses the propositions put forward by universities for the design of their accelerator program courses, the department:
… will be looking to ensure that universities show evidence of additionality being provided through the course. We certainly won't be simply rubberstamping an existing course being put into a user-pays model in that process.
2.27Further, universities expressed confidence in their ability to provide high quality accelerator program courses. The Group of Eight noted that universities would not want ‘to diminish their offerings or their reputation by offering anything less [than their usual quality of programs] under the Startup Year program’.
Encouraging increased participation in startups
2.28The Department of Education noted that the program’s design aimed to engage underrepresented cohorts in startups. The department submitted that:
A central aspect of program design is a focus on increasing access and engagement for people currently underrepresented in the startup landscape. The program will prioritise support for female entrepreneurship, Aboriginal and Torres Strait Islander participation, participation for people with disability, and community-based startups solving regional and rural issues.
2.29Stakeholders roundly supported the bill’s goal of encouraging the participation of underrepresented cohorts in the Startup Year program. Mr Luke Sheehy, Executive Director, Australian Technology Network of Universities, told the committee:
Diverse backgrounds breed diverse ideas, so Startup Year must reflect our diverse community. The students who will benefit most from a startup year are those who would otherwise normally miss out on the chance to pursue their dreams and access the capital they need to make it happen.
2.30The Department of Industry, Science and Resources noted that the Startup Year program would align with the Government’s focus on supporting underrepresented groups in the startup sector and sit alongside existing initiatives such as the Boosting Female Founders Initiative.
2.31Various stakeholders suggested there could be consideration of additional supports for underrepresented cohorts to encourage their participation in the Startup Year program.
2.32For example, ATSE called for the collection and publication of ‘demographic information about enrolment in and completion of accelerator programs’ to facilitate the identification of underrepresented cohorts and the subsequent development of mechanisms to promote their participation.
2.33Financial support, in the form of scholarships, bursaries, income assistance and debt relief, was proposed by some stakeholders. For example, ATSE submitted that:
… the Government could create a Startup Year scholarship program to target women, Aboriginal and Torres Strait Islander students, and low socio-economic status students who are enrolled in (or have recently completed) STEM degrees.
2.34Professor Mark Evans, Deputy Vice-Chancellor (Research), Charles Sturt University (CSU), called for collaboration between government, universities and the private sector to devise solutions to alleviate the financial pressures on disadvantaged students.
2.35Other forms of non-financial support were also suggested, such as mentoring and access to additional spaces on campus.
The STARTUP-HELP Guidelines
2.36The bill provides for the creation of STARTUP-HELP Guidelines (Guidelines), which, according to the department, will be subject to further stakeholder consultation and will:
… expand on the course requirements, specifying core capabilities that must be addressed in the accelerator courses, including financial literacy, communication, resilience, business understanding and intellectual property management.
2.37Stakeholders overwhelmingly indicated that they were content for much of the detail of the Startup Year program to be dealt with in the Guidelines.
2.38Mr Chesworth of Universities Australia highlighted that containing the bulk of the program detail in Guidelines, which would be more easily amended than the legislation itself, would ensure flexibility of the program going forward:
… if we strive for a particular legislative outcome, we could be constraining the flexibility of the program moving into the future. That's why program guidelines form such an important part of how a program, as described at a high level in legislation, can be transformed into an operational mechanism for the benefit of students and startups.
2.39Indeed, many stakeholders commented that program flexibility would be crucial in order to accommodate a diversity of startups, accelerator program courses and participants.
2.40For example, Ms Jane O’Dwyer of CRA observed: ‘there is a huge variety of what a startup looks like and a huge variety of how they operate and the speed and scale, depending on the sector they are in’. Meanwhile, Mr Rohan McDougall of Curtin University pointed out that there would be ‘many different [accelerator] programs delivered by many different institutions … you have to allow for that and in fact embrace it’.
2.41One witness proposed that the Guidelines could be framed in such a way to afford individual universities the scope to offer bespoke accelerator program courses ‘that suit the student cohort that exists at that university and build on the strengths of the individual institution’.
Intellectual property
2.42The Department of Education indicated that the Guidelines would address the treatment of intellectual property in connection to accelerator program courses. Thedepartment explained that subject to further consultation, it:
… intends to require providers to have clearly enunciated arrangements in place to manage the IP rights of participants including that all IP remains the property of the participant unless otherwise mutually agreed and that all participants are required to sign non-disclosure agreements for IP protection.
2.43There was significant agreement between universities at the hearing that intellectual property generated in connection with the Startup Year program could be dealt with in a relatively straightforward manner.
2.44Mr Rohan McDougall of Curtin University gave evidence that universities have well-established policies for recognising intellectual property ownership in situations like those posed by the Startup Year program:
… there's a pretty clear position on the stance of universities and intellectual property with regard to student teams coming through these programs. The teams own their intellectual property unless there's involvement of a staff member or it's a significant investment from the university over many years in development of some pre-existing intellectual property that might go into a program. But generally speaking it's a pretty clear position that there's no confusion of intellectual property by participation in the program.
2.45This view was echoed by Professor Mark Evans of CSU and Ms Narelle Pearse of CQUniversity, who stated that universities generally share similar policies regarding intellectual property.
Ongoing consultation on the Guidelines
2.46There was a widespread desire amongst stakeholders to work with the Government on the development of the Guidelines.
2.47Dr Matthew Brown of The Group of Eight described the development of the Guidelines as ‘a critical phase’ for consultation about how the Startup Year program would be implemented.
2.48The Department of Education, in its submission, stated that ‘the Guidelines will be subject to further consultation and approval by the Minister for Education’. Mr English, First Assistant Secretary, indicated the department had yet to finalise the timeframe and process for developing the Guidelines.
Program implementation and evaluation
The pilot program and ongoing consultation
2.49There was broad support among stakeholders for the creation of a pilot program and expert working group to advise on issues that may arise throughout the pilot.For example, the University of New South Wales (UNSW) argued that a pilot program would:
… allow for program trials and feedback before larger scale application. The outcome from this pilot can then inform the national standardisation and rollout to ensure equity in learning and value gained by the participants wherever they are based in Australia.
2.50This was echoed by Mr Chesworth of Universities Australia, who highlighted the opportunity, through a pilot program, ‘for government and ministers to obtain on-the-ground advice as to how programs are operating an[d] progressing and how adjustments can be made to ensure their success’.
2.51Similarly, the University of Melbourne noted the importance of a two-year pilot period, as it would allow for assessment and full evaluation of the program, especially given the funding and placement number limitations which would initially be in place.
2.52UTS however, called for a one-year pilot program, rather than a full program rollout, in order to ‘test the underlying assumptions’ of the program and to validate its design. It explained that ‘incurring debt for entrepreneurial support, particularly for young Australians who are at the very beginning of their careers, could be problematic’.
2.53Notwithstanding this view, universities conveyed that although a lot of work would need to be done to develop accelerator program courses, it would be feasible to commence a pilot program in July 2023 as proposed by the Government.
2.54UNSW cautioned that timeframes for the pilot program and broader program implementation would need to take into account the time required for universities to update their student information systems for STARTUP-HELP data storage and reporting.
2.55Other stakeholders argued that an expert working group was warranted given the complexity of the policy area, and that it could provide valuable input by being able to quickly direct the Government’s attention to key issues. It was also suggested that the working group could conduct a ‘thorough and robust consultative review … upon completion of the pilot year’.
2.56The Department of Education stated that in designing the pilot program it had given careful consideration to feedback from the consultation process:
… we have deliberately taken into account the fact that there are a range of universities at different levels of preparation to participate in the scheme. So in the pilot we maybe won't allocate all places in the first year but allow some institutions the chance to ramp up. We'll make sure that there's scope to allocate further capacity over time as those institutions come on board.
2.57The Department of Education also expressed its commitment to ‘giving the sector enough time to respond to the opportunity to propose a scheme and have a chance to do that well’.
Metrics of success
2.58Stakeholders agreed that program evaluation would be important, and a range of different metrics were put forward for evaluating the Startup Year program. CRA, for example, recommended that:
… a qualitative approach, in addition to basic quantitative indicators – such as enrolment vs completion ratios, minimum return on investment, duration of entrepreneurship projects, etc., would better measure the impacts to the Australian economy. These should include student satisfaction and career paths, impact to key national priorities and preparation of skills necessary to become an entrepreneur or businessperson.
2.59Ms Jeanette Cheah of HEX proposed that the number of businesses and jobs created by students of accelerator program courses could be another measure of program success. Additionally, Ms Cheah suggested measuring the ‘entrepreneurial efficacy of the student population in Australia’ through determining, for example, whether the Startup Year program impacted students’ risk appetite or encouraged a more global outlook.
Other issues raised by stakeholders
2.60While welcoming the important progress which would be supported by implementation of the Startup Year program, some stakeholders voiced concerns about some elements of the program, and proposed amendments or advocated for further reforms that were not addressed by the bill, as outlined below.
Access to accelerator programs
2.61There was some concern that students at universities without existing accelerator programs may be unable to participate in the Startup Year program.
2.62Universities Australia claimed that universities with existing accelerators ‘may be the only providers able to afford to run the program’, and that scaling up would be difficult for other universities without the provision of additional funding.
2.63Similarly, the Regional Universities Network (RUN) submitted that since the bill would not provide funding for universities to deliver accelerator program courses, smaller regional universities without existing accelerator programs would not be incentivised to develop their own accelerator program courses. RUN claimed that this would create ‘additional educational attainment issues for students from regional Australia where institutions are less likely to have the requisite existing infrastructure’.
2.64Ms Pearse, Chief Operating Officer, CQUniversity, expressed concern that the Startup Year program could lead to ‘regional drain, where we see students having to move away from home to undertake this type of program’. In addition, Indigenous students, for whom support networks and connection to land are particularly important, may be disincentivised from undertaking an accelerator program course if it would require relocation.
2.65However, Professor Rowena Barrett, Pro Vice-Chancellor (Entrepreneurship), Queensland University of Technology, disagreed that universities with existing accelerators would be more than advantaged than other universities to participate in the Startup Year program. Professor Barrett pointed out that most existing university accelerator programs are not delivered as a course, and thus universities with existing accelerators would still need to work to develop a course that could result in the award of a qualification.
2.66In a similar vein, Dr Matthew Brown, Deputy Chief Executive, The Group of Eight, explained that:
… accelerator activity is not aligned with delivery of an accredited model, so it's not just a matter of rebadging what's already on offer to become accredited courses; it's going to be a lot of work, even by established accelerators, to get up and running with the Startup Year program.
2.67In its submission, the Department of Education made clear that the Startup Year program will ‘drive the creation of new accelerator courses at higher education providers to increase the diversity of offerings’, and that the program will look to ‘fill a gap in the current system and focus on expanding student access to university-based accelerator programs’.
2.68In addition, the Department of Industry, Science and Resources acknowledged that there was:
… still work to be done to strengthen connections between universities and students with the broader entrepreneurial ecosystem and ensure Startup Year participants can benefit from the government’s existing policies and programs.
Limits on participation numbers
2.69Several stakeholders expressed concerns over the initial limit of 2000 students who could access the new STARTUP-HELP loan program.
2.70For example, Professor Barrett of QUT, thought the program should not be spread too widely across the country, as this would deter from the ‘cohort effect which is the key driver of learning in many accelerator programs’. Professor Barrett explained that:
… any startup year program needs to be part of a programmatic design suite of activities that includes and engages students. As part of this, in building a program, we believe the skills transfer, which is a critical part of a cohort program which accelerators operate on—to build quite a diverse cohort you need to have a minimum size. The question of 2,000 places across all Australian universities is somewhat problematic, from our perspective.
2.71Ms Cheah of HEX also suggested that the 2000-place limit could result in competition for places, which would work against collaboration in the sector and result in universities ‘fighting for limited resources’.
2.72The University of Melbourne also pointed to a lack of data on current participation levels in existing university-run accelerators, making it difficult to ‘gauge the extent to which the proposed initiative will help to fill a gap in the market’ and therefore questioned whether 2000 places was an ‘accurate approximation’ of unmet demand.
2.73The Department of Education advised it would engage in an expression of interest process to determine which accelerator program courses will be funded under the first-year pilot, which will go some way to better gauging the level of demand across universities. In addition, the Department argued that:
Running an application and assessment process with participation from an advisory panel will ensure the provider’s course offering gives prospective program participants and Government value for money.
Use of the HELP mechanism
2.74Several stakeholders pointed out that individuals from low socio-economic backgrounds may be more sensitive to the prospect of incurring debt, and thereby disincentivised from participating in the Startup Year program. One submitter mentioned that this would be a:
… particular concern with Startup Year compared with the existing educational opportunities supported by the HELP scheme, given there is a higher risk of students exiting Startup Year with fewer tangible benefits than students undertaking an established qualification.
2.75The Australian Academy of Technological Sciences and Engineering (ATSE) noted that women may be disincentivised from taking on additional HELP debt, given that women are disproportionately disadvantaged by rising loan balances:
The high course fees for accelerator programs – with the maximum level set at the same rate as medicine, dentistry, and veterinary science … may be a deterrent for women’s participation in accelerator programs – despite the potential of these programs to kickstart their careers.
2.76The Independent Tertiary Education Council Australia (ITECA) questioned whether the HELP scheme was the most equitable mechanism to support startups, and instead proposed stipends for accelerator programs and an expansion of income-contingent loans more broadly in the tertiary sector.
2.77UTS likewise suggested that in place of an income-contingent loan, other models for startup support could be explored, such as a Startup Reimbursement Fund for university accelerators.
2.78However, Ms Jane O’Dwyer, Chief Executive Officer, CRA, stated that the income-contingent nature of the STARTUP-HELP loan, coupled with the bill’s provision for students in accelerator program courses to potentially qualify for social security payments, would go some way to ‘remove a barrier for students who might not otherwise have the resources to access particular education opportunities’.
2.79Similarly, the University of Melbourne welcomed the bill’s amendments to social security law to allow access to income support payments for participants in accelerator programs. In welcoming these changes, the University said they would ‘support access and inclusion for disadvantaged cohorts’—which was important because:
In many cases, disadvantaged students face additional barriers to participating in accelerator programs, relating to commitments outside of university, the need to maintain part-time employment etc.
2.80Mr English with the Department of Education expressed that STARTUP-HELP would be part of the ‘world's best student loan scheme’. The department’s submission also made clear that the funding mechanism through HELP was considered as part of the consultation process, with stakeholder views taken on board. The department noted that:
Establishing the Startup Year initiative as an income-contingent loan ensures those who are benefitting from the courses pay for them, but only once their income reaches the threshold for HELP repayments. Extending income support to those eligible for STARTUP-HELP and participating in an accelerator course further supports broad participation.
2.81Further, the Department of Industry, Science and Resources pointed out that STARTUP-HELP would be complemented by a raft of other government initiatives currently underway to support startups, such as grant funding.
Adequacy of funding for STARTUP-HELP
2.82Several stakeholders queried the adequacy of the bill’s proposed amount of funding for STARTUP-HELP.
2.83University peak bodies pointed out that the $11,800 maximum course fee for an accelerator program course (based on 2023 contribution amounts) would be ‘less than the funding required for a university to deliver a one-year program’.
2.84Universities Australia suggested this may result in universities needed to draw on their internal reserves to fully cover the cost of delivering an accelerator program course. Accordingly, Central Queensland University (CQUniversity) questioned whether running accelerator program courses would be financially viable for universities.
2.85The Group of Eight suggested that there should be further discussions between government and the university sector to mitigate this risk to the financial sustainability of the Startup Year program.
Committee view
2.86Submitters and witnesses throughout the inquiry expressed overwhelming support for the bill. The creation of the Startup Year program was welcomed by the vast majority of stakeholders as a means of leveraging the existing expertise and experience of the university sector in delivering high quality accelerator programs, to further support entrepreneurial education, innovation and the emergence of startups in Australia. Additionally, stakeholders roundly commended the bill’s intention of encouraging students from diverse backgrounds to participate in the startup sector.
2.87The committee would like to thank stakeholders for participating in both this inquiry and the earlier Startup Year consultations conducted by the Government. The committee recognises that stakeholders’ ongoing, constructive engagement will be vital to the successful implementation of the Startup Year program. To this end, the committee welcomes the departments’ commitment to a pilot program and further consultations as an opportunity to further refine the design and implementation of the Startup Year program.
2.88The committee acknowledges the importance of integrating the Startup Year program and its participants into the broader innovation ecosystem, as raised in the submissions and at the hearing. The committee is reassured in this respect by the evidence given by the Department of Industry, Science and Resources that a key focus of their work would be connecting students in accelerator program courses with existing support mechanisms. The committee recognises the potential for the Startup Year program to complement and strengthen other government initiatives currently in place to support the startup sector.
2.89The committee agrees with stakeholders who suggested that the Startup Year program would need to deliver value to students over and above the current offerings of university accelerator programs. The committee heard that the Startup Year program would provide a strong value proposition to students through the provision of a university-issued accreditation and the development of essential entrepreneurial skills and attributes.
2.90Though the committee acknowledges the existence of some diversity of opinions regarding the use of the HELP scheme to provide the Startup Year program, the committee also heard strong support for the power of income-contingent loans to reduce the barriers to participate in accelerator program courses. The committee notes that the Startup Year program would not be delivered in isolation, but rather, in the context of a number of government programs and initiatives already available to support the emergence of startups.
2.91The need for flexibility in program design was a key theme that emerged from the evidence received by the committee. The committee therefore concurs with stakeholders’ views that it would be appropriate for the bulk of the program detail to be dealt with in the STARTUP-HELP Guidelines.
2.92The committee recognises that the bill may not address all the concerns voiced by stakeholders as part of this inquiry, or the Government’s earlier Startup Year consultations. The committee notes, for example, concerns raised by some stakeholders regarding the program’s ongoing financial sustainability.
2.93However, the committee received encouraging support throughout this inquiry for the bill to be passed, and observed stakeholders’ enthusiasm to participate in a pilot program and further consultations with Government as the program is rolled out.
2.94Accordingly, the committee recommends that the bill be passed.
2.95The committee recommends the bill be passed.
Senator Tony Sheldon
Chair