Treasurer Jim Chalmers. Source: AAP/Mick Tsikas
The controversial Entrepreneurs Programme will be re-assessed again ahead of the next budget, the Department of Industry, Science and Resources (DISER) has confirmed with SmartCompany.
The Entrepreneurs’ Programme was cut by $197.7 million over four years in Labor’s recent federal budget. According to the budget papers, it was being redirected from “uncommitted funding”.
But it could see further cuts or changes in the next federal budget.
“Ahead of the next budget, the government will assess the suite of measures under the Entrepreneurs’ Programme to ensure they’re fit for purpose, align with government priorities; and deliver appropriate support for our small innovative businesses,” a departmental spokesperson said to SmartCompany in an email.
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The department also confirmed that “all existing commitments with small and medium enterprises will be honoured and high-quality applicants will continue to be supported through the program”.
What happened to the Entrepreneurs’ Programme?
The Entrepreneurs’ Programme was initially announced in the 2014-15 budget by the Abbott government. It replaced the previously-existing Innovation Investment Fund and Commercialisation Australia.
It was later included in the Turnbull government’s National Innovation and Science Agenda with a budget of $484.2 million.
Originally, startups and small businesses could apply for grants and mentorship under three pillars: Accelerating Commercialisation; Business Management; and Research Connections. The latter was later renamed Innovation Connections.
Program grants were delivered through government partnerships with large businesses and organisations such as Deloitte, i4 Connect, Ai Group, Business Australia, Business SA and the Darwin Innovation Hub.
In September 2021 the Australian National Audit Office (ANAO) began investigating the contract procurement and management processes. And in June 2022 it tabled a report severely criticising both.
The report found that $160 million worth of these contracts was “deficient in significant respects” and that the design of the procurement process didn’t comply with Commonwealth Procurement Rules.
In pointed specifically to the outcome of a 2019 request for delivery partner tender by DISER. Of the 55 respondents, 10 were incumbents.
Seven contracts worth $144 million were eventually rewarded and five of those were to organisations that had already worked with the Entrepreneurs’ Programme.
The contracts were for three years, with the option to extend.
“The ANAO found that incumbency advantages were not transparently managed, and that these companies were given a competitive advantage as they were provided with information about the redesign of the program,” the ANAO report reads.
Here’s a breakdown of the contracts and the states and areas they covered:
- $49 million for Darwin Innovation Hub (NT);
- $8.5 for Business SA (SA);
- $17 million for the CSIRO as an innovation connector;
- $21 million for the NSW Business Chamber (NSW, ACT);
- $30 million for i4 Connect to manage business advisory for the Accelerating Commercialisation program;
- $31 million for Australian Industry Group (WA, VIC, TAS); and
- $32 million for Deloitte (QLD).
According to the report, the recipients were only assessed against two of the six criteria. Furthermore, only 26% of the 55 applicants were assessed on the ‘value for money criteria’. Within that, the report found that the Darwin Innovation Hub was marked as the best applicant for growth outcome when in reality this was a “significant error” and was actually ranked seventh.
Despite receiving the tender, the ANAO found that its application had been originally considered both non-competitive and non-compliant.
ANAO also found that Deloitte had not been considered the prime candidate for any of the tender regions and that”tailored arrangements” were made due to the “national specialist role” it could provide.
Management of the contracts was also criticised by the ANAO, citing payments being made in cases where there wasn’t an adequate standard of work or deliverables weren’t being met.
While the ANAO recommended that the optional contract extension be removed, DISER only agreed on principle at the time.
“While the department supports this recommendation in principle, the program is being evaluated and decisions about its future, including program design, will be subject to government consideration,” a DISER representative said.
Of course, we now know the outcome of this was the removal of almost $200 million from the Entrepreneurs Programme and possible further changes in time for the next budget.
Trickle-down confusion to Australian startups
The confusion and lack of transparency around the Entrepreneurs’ Programme also, at times, seems to have trickled down to potential grant recipients.
That’s not to say the program hasn’t done an enormous amount of good, and many founders in the Australian startup space speak highly of it.
And according to DISER, 22,000 Australian companies have been impacted since 2014, with an average of 3.5 new jobs created across businesses as well as $1.47 million in turnover.
Still, other Australian founders have been critical of the program, particularly in regard to the application process and its requirements.
“We spoke to a consultant about the Commercialising Acceleration Grant and they essentially told me not to bother applying as there was nothing novel or innovative about what we were building,” Sarah O’Neill, founder of Mys Tyler, said to SmartCompany in an email.
O’Neill has also spoken to other unnamed startups who found the process confusing.
“They assign you a consultant if you get through the first phase, other founders have said it’s too complex and hard to navigate to be worth applying for.”
According to O’Neill, it may be the consultants who benefit the most from the program.
“If I was being brutal, it’s the consultants that are paid to help entrepreneurs navigate government bureaucracy that are the real winners,” O’Neill said to SmartCompany.
“For entrepreneurs, the time, focus and (often) need to change your business operations and spending to make your business fit in the box to qualify can be a huge distraction for the business.
“When you receive the grant it’s worth it, if you don’t you’re left further behind than you would have been if you hadn’t tried to unlock that capital or assistance.”
Skye Theodorou, co-founder and CEO of upcover also says that government grants need to be more accessible.
“They always have these arbitrary boxes you need to fit, which means a lot of good startups and businesses get missed,” Theodorou said in a phone call with SmartCompany.
Speaking about the Commercialising Acceleration Grant within the Entrepreneurs Programme, Theodorou says one of the major roadblocks was a need for protectable IP.
“We had a couple of meetings and were told that we could put the effort into building the grant but the likelihood of being accepted because of the IP issue was below zero.”
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