At 3.8 per cent the technology sector's direct share of Australian GDP lags behind the likes of Canada (6.8 per cent), the UK (8.1 per cent) and the US (10.2 per cent), but with the appropriate decisive steps there is potential to significantly scale what is already one of the country's fastest-growing sources of jobs and economic growth.
This is just one of the conclusions reached by the Tech Council of Australia (TCA) in its latest report Turning Australia into a Regional Tech Hub, which highlights Australia's strengths in several areas of a tech sector that currently directly contributes $167 billion to GDP.
The TCA posits this figure could grow by 49 per cent to $250 billion in 2030 by growing the sector, scaling more large companies and encouraging tech investment across the nation. Under this scenario, 1.2 million people would be employed by Australia's tech industry versus approximately 861,000 today.
Most of the growth would be fuelled by large tech firms as well as businesses in other sectors adopting technology, although the target contemplates a 40 per cent jump in GDP contribution from startups to $20 billion and a 21 per cent lift for established tech businesses to $55 billion.
The report draws reference to numerous success stories in Australian technology such as Atlassian (NASDAQ: TEAM), TechnologyOne (ASX: TNE), Canva, Afterpay, WiseTech (ASX: WTC), Airwallex, Nearmap (ASX: NEA), SafetyCulture, Go1, Culture Amp, Employment Hero, Harrison.ai, Envato, Tyro Payments (ASX: TYR), Baraja, Brighte, Swyftx and more.
Australia has also attracted some of the largest global tech companies and investors to our shores, helping to strengthen our local tech ecosystem.
"This report demonstrates how the tech sector can play a major role in the growth of Australia’s future industries, which is a key focus of the Government’s Jobs and Skills Summit," TCA CEO Kate Pounder said.
"2.3 per cent of the world’s tech unicorns ($1 billion-plus companies) have already been founded in Australia, even though our global share of GDP is just 1.6 per cent. By better understanding and focusing on our relative strengths, Australia can create and attract more global companies, create thousands of new jobs, and truly turn Australia into a leading regional tech hub,” she said.
The report finds that five tech sector industries are already each worth more than $30 billion, amounting to around 72 per cent of the Australian originated tech sector’s total value. These “headstart” areas are Business Software, Biotech, Medical Devices, Media & Design and PayTech.
“The strength of these segments show that the software industry has been one of the most successful new industries created in Australia in decades,” Pounder said.
The report also highlights six ‘potential star’ segments that are on track to produce or attract Australia’s next globally successful companies, including Mining Tech, EdTech, Diversified Fintech, Gaming & eSports, Blockchain & Crypto and Augmented Reality / Virtual Reality.
A further 13 areas were identified as having high potential for Australia to become globally competitive, such as quantum, AgTech and Energy Tech, but need improved access to funding, skills or other strategic actions to help them grow.
“The report also sheds new light on which segments of the tech sector are most successful at attracting funding, and creating new companies," Pounder added.
There are 18 segments where Australia’s share of global startups is higher than its share of startups overall. The standout areas are Mining Tech, where Australia has 8.2 per cent of global startups, followed by Quantum Tech (3.2 per cent), Lending Tech (3.4 per cent), AgTech and Food Tech (2.8 per cent) and Construction Tech (2.7 per cent).
Australian VCs invest more in Business Software, PayTech and Diversified Fintech relative to global VC funding allocations. This has contributed to these areas becoming sources of comparative advantage for Australia, building on other factors such as their global sales models, their ability to scale quickly, access to cloud computing infrastructure, and strong local ecosystems and capabilities. Four Australian tech sector segments are also securing a strong share of global VC funding for their industry: Quantum Tech, Lending Tech, Energy Tech and Media & Design.
However, by comparison to global VC funding trends, Australia invests less in key areas such as Artificial Intelligence / Machine Learning and Life Sciences.
The report recommends three key actions to ensure Australia continues to create and attract global tech companies. They include setting a clear vision of Australia’s comparative advantage to drive public and private sector engagement, improving Australia’s foundational policy settings in areas like skills and talent, investment and regulation that will help all segments flourish, and taking action to address sector specific market failures in high-potential areas that are impacting their growth, such funding gaps.
The launch of the report coincides with the announcement of the Australian Quantum Alliance, a new group within the Tech Council. The report shows that the world is betting on the success of Australia’s quantum sector, which attracts a 3.6 percent share of global quantum VC funding, much higher than our 1.6 percent share of GDP. Australia is also home to 3.8 per cent of global quantum startups.
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