Federal laws have ‘hurt the reputation’ of Australian technology

Australian companies will bear the brunt of this year’s heavy-handed technology laws as they attempt to compete on the global stage, a report has found.

Legislation including the Assistance and Access Act-- known as the anti-encryption law -- and the Abhorrent Violent Material Act contained flaws that have “have hurt the reputation of Australian technology”, according to StartupAus’s Crossroads report.

The start-up advocacy group claimed the laws may have had “noble goals”, but were passed in a “flurry of activity prior to the election”, which also included the live-streamed Christchurch attacks.

The first law compels tech companies to provide access to encrypted information, while the latter sets down harsher punishments for companies hosting violent material online.

“Taken together, these sorts of measures tend to make it more costly and risky to build a successful tech firm,” the report said.

“Established multinational technology companies have vast resources available to meet those costs and risks, while new firms will be disproportionately burdened. Perversely, laws aimed at clamping down on the behaviour of the biggest global tech firms may actually entrench their market dominance.”

As Australia was later to the digital boom than its international counterparts, during which time a number of overseas companies became “entrenched global behemoths”, local tech firms will find it harder to scale beyond national borders. 

“Those circumstances present a difficult challenge for an Australian industry that is still in its relative infancy: how to continue scaling rapidly in an environment where governments are looking to reign in tech companies,” the report said. 

This week, Labor introduced an amendment to the Assistance and Access Act which would alter the definitions of ‘systemic weakness’ and ‘systemic vulnerability’. The Act includes a prohibition on requiring a service provider to introduce a systemic weakness or vulnerability into its systems. The bill is not expected to be debated until 2020.

Additionally, the report raised concerns about the federal government’s R&D Tax Incentive, calling it “still in turmoil”.

In 2018, the government said it would introduce a $4 million annual cap on cash refunds for companies with turnover of less than $20 million in an effort to tighten the $3 billion blow-out, according to the AFR. 

“Despite Australia being one of only a handful of OECD nations reporting falling R&D spend, the R&DTI continues to be a target for cost-saving,” the Crossroads report claims. 

“The tightening approach to supporting software development under the scheme continues to leave startups in limbo as to what they are entitled to under perhaps the single most important government support mechanism for start-ups.”