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Tax incentives needed to push entrepreneurial freedom

Tax incentives needed to push entrepreneurial freedom

Wotif.com founder calls for greater focus on digital economy and entrepreneurial activity

Wotif.com founder and executive director, Graeme Wood

Wotif.com founder and executive director, Graeme Wood

Taxation incentives from the Federal Government are required to boost local entrepreneurial activity in the technology industry, according to Wotif.com founder and executive director, Graeme Wood.

Opening the Australian Computer Society’s World Computing Congress 2010 in Brisbane this week, Wood said any form of incentive would boost interest in the sector, particularly for small start-ups and encourage investment from the likes of venture capitalists and larger international companies looking to build garage-based initiatives.

“We’ve seen example where tax policy has transformed industries - think of the film industry back a decade or so, look at the managed investment schemes that have swamped our countries with too many trees and olive groves,” he said.

“If there were tax incentives offered for real entrepreneurial activity I think you would find investors roaming the streets looking for lights on in garages to find the next Bill Gates.

“Where this is a taxation incentive, people will rush in blindly.”

The Government’s planned R&D tax credit system is aimed specifically at promoting such international interest and investment while also combating increasing outsourcing of research and development to other countries. The new system was praised by consultancy KPMG as boosting the country’s attractiveness, but it is yet to pass legislation in Parliament and is facing increasing competition from the Coalition.

A key focus for the industry, Wood said, should rely on the digital economy and how that would encourage entrepreneurs to take risks they otherwise might not have in order to see either success or failure in their ventures.

Wood, an entrepreneur in his own right, founded and built travel booking magnate Wotif.com during the late 90s and, despite the dot com bust, saw success at the beginning of the decade from word of mouth marketing. The travel booking company posted rises in both revenue to $136 million and net profit after tax to $59.95 million in the 2010 fiscal year, but suffered a slump in shares during the closing weeks of August despite the news.

Wood said entrepreneurs would inevitably drive the digital future from now on, as opposed to the accountant-driven innovation led by major conglomerates the likes of IBM, a former employee of Wood’s.

However, in providing the opening keynote, the hospitality entrepreneur was critical of the current approach to the digital economy from the Federal Government, accusing it of being outsourced to incumbent telco, Telstra, as well as outsourcing other government frontbench positions to non-Australians. He also derided the National Broadband Network (NBN) as focussing too narrowly on speeding up existing applications, and encouraged newly instated shadow communications minister, Malcolm Turnbull, to look at balancing broadband and the wider digital economy on a sector by sector basis.

Queensland minister for Public Works, Robert Schwarten - a fierce champion of the NBN - used his own speech prior to Wood’s in order to boast about the project, but conceded more had to be done around education and use.

“We encourage investment in IT, we encourage it in research, and we encourage it as a way of life for younger people but I don’t think we do enough as an industry worldwide to promote how important it is,” he said.

Nevertheless, Wood contended the NBN and other digital economy initiatives were currently gauged too narrowly by the benefit to the country’s GDP as opposed to the wider potential social benefits of such project, such as taxation incentives.

“The first person who stands up in any session here and gives a cogent argument why we should be building a National Broadband Network that is understandable will be immediately appointed minister for the digital economy,” he said.

Communications minister, Stephen Conroy, is scheduled to speak to conference attendees on the second day of the event.

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Tags Wotif.comRobert Schwartenresearch and development tax concessionsWorld Computer Congress 2010Graeme Wood

More about Australian Computer SocietyBilletworkFederal GovernmentIBM AustraliaIBM AustraliaKPMGTelstra Corporation

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