The NSW budget, announced tomorrow, includes nearly $80 million of new funding in response to the recently released Innovation Blueprint.
The third Labor budget from treasurer Daniel Mookhey is the first time the Minns government has made a notable, yet modest, investment in the startup and tech sector.
For comparison, the recent South Australian budget included a new $50 million government-backed venture capital fund, $28m for an AI program, and $5m a year for a Research and Innovation Fund.
South Australia’s share of Australian GDP is 5.6%. The NSW economy is more than 5x that at 30.7% of GDP.
Last week’s Western Australian budget put $40m on the table for the New Industries and Innovation Fund.
Last year’s NSW budget allocated $4 million in FY25, compared to Victoria’s $40m for its startup agency, LaunchVic. 2023’s budget was mostly cuts.
Nearly half of the NSW funding, $38.5 million, for FY2026, is allocated towards Tech Central, to create “Australia’s largest technology and innovation hub”, although in an announcement ahead of the full Budget, details of how the money will be allocated is scant.
But you can assume that a slab of that cash is the cost of relocating the Sydney Startup Hub from Wynyard, to Tech Central, a decision innovation, science and trade minister Anoulack Chanthivong blindsiding the startup sector with last December. The move is due five months but a site has yet to be made public.
A quarter of the spend, $20 million, is for emerging technology commercialisation in areas such as housing and energy, priority areas in the Innovation Blueprint.
The focus on housing continues with $4 million – the price of a 4-br house on Sydney’s North Shore – “to promote housing construction through the Housing Innovation Network and the Innovation in Construction Fund”.
There’s another $6m for the popular Minimum Viable Products Ventures program for startups – a program the government froze, then cut to $50,000 when the program returned, six months later.
Women and Western Sydney score $4m – the cost of a 1 br apartment at Circular Quay – “to support tech founder diversity by providing training programs for female founders and our future tech leaders living and working in Western Sydney and regional NSW”.
While the NSW government and minister Chanthivong are keen to nail their colours to the mast of the long-awaited Innovation Blueprint, it’s worth recalling what report author Kate Pounder said: “female founders in NSW receive just 7% of VC funding, less than half the 16% share they receive in Victoria”.
Don’t forget that Labor killed off the $10 million Carla Zampatti VC fund when it came to power. The LaunchVic version, has co-invested in more than 30 startups led by women.
Rounding out the $80 million spend is $6 million “to support manufacturing businesses to adopt innovative technologies” and another $700,000 to extend the operation of National Space Industry Hub at Cicada Innovations in Sydney.
Minister Chanthivong said that $80m “will ensure we nurture, grow, and support the next Afterpay, Atlassian, and Canva from the early stages through the most vulnerable periods of a startup’s life cycle – particularly just before the jump to commercialisation.”
“The funding package will allow Tech Central – the largest tech innovation ecosystem in the country – to flourish as a melting pot for groundbreaking innovation, research, and lifestyle,” Chanthivong said.
“We also understand that the best and brightest tech ideas aren’t just born in the inner city of Sydney, so we are providing startup support to our future tech superstars right across the state.”
There’s a difference between resting on your laurels and investing in them. Canva, founded in Perth, raised $3m for its 2013 seed round, mostly from US investors and plans to list there. Atlassian bootstrapped for eight years before took on $60m from US VC Accel in 2010, going on to list on the Nasdaq. Afterpay sold to US fintech Block.
Governments on both sides of the political spectrum have a cultural cringe that sees them spend millions in taxpayer funding in “please like me” incentives to lure offshore companies to Australia, rather than spending it on local ideas. The next Afterpay/Atlassian/Canva will emerge most likely because international investors get it and local politicians prefer to bath in reflected glory.
NSW is awesome
For perspective on how little support this is, earlier this month the Minns government announced $100 million for a capital fund to look for a second film studio site in Sydney.
NSW treasurer Daniel Mookhey
Perhaps treasurer Mookey is hoping for another Lego Movie to be made by Animal Logic, the Sydney tech company acquired by Netflix in 2022, to be made here, which may explain why he said: “everything in NSW is awesome, except for how long it takes to get major projects done”.
On top of the $80, there’s another $17.7 million in the 2025-26 Budget for a new level of bureaucracy, Investment Delivery Authority, to fast-track project approvals.
The Investment Delivery Authority (IDA) will “help cut through red tape, coordinate across government, and encourage investment” for around 30 large projects a year.
It’s a long way from support for startups – the projects have to be worth $1 billion or more. That’s more than the cost of the new Sydney Fish Market or the rebuilt Sydney Football Stadium. And the government plans to offer financial assistance “to support a proponent if their project is chosen”.
Data centre focus
The government has NextDC boss Craig Scroggie and AirTrunk’s Carly Wishart among industry leaders offering comments on its media release, which makes the IDA’s priority clear: data centres.
In that context, a focus on renewables in the Innovation Blueprint makes sense to supply energy-ravenous data centres, although that’s about deploying taxpayer funds to help the big end of tech get bigger, rather than local startups.
Last week, Amazon Web Services it will invest $20 billion on data centres in Sydney and Melbourne, and a few days earlier, NextDC announced a $2b billion digital tech campus in Melbourne as part of the Victorian government’s Fishermans Bend Innovation Precinct.
The Victorian government gave the Australian Centre for Artificial Intelligence in Medical Innovation $10 million towards a NVIDIA AI supercomputer for medical research.
“The Authority creates a faster path from planning to execution – reducing friction, aligning government, and providing the regulatory certainty private capital requires,” Scroggie said.
“NextDC has over $15 billion in AI infrastructure projects planned across NSW – including AI factories, high-density data centres, and mission-critical operations centres. This reform allows us to build the digital backbone of the future – faster, and at global scale.”
Sydney data centre tech company AirTrunk was acquired by US private equity giant Blackstone last year for $20 billion.
Carly Wishart said streamlining planning and approval processes for development permits and power allocation is essential if Australia is to capitalise on the data centre growth opportunity and become a smart economy.
“If Australia is to be a leading digital economy and build its own artificial intelligence capability, then it must have the necessary digital infrastructure and renewable energy needed to support it,” she said.
“AirTrunk welcomes the NSW Minns Government announcement in recognising that the race to build AI infrastructure is a global one and speed to build is the critical factor. We look forward to working with the Investment Delivery Authority to hasten planning processes, ensuring that NSW and Australia get the productivity boosting benefits of AI.”
Committee for Sydney head of policy and Innovation District Alliance chair Jeremy Gill described the budget funding as “a much-needed shot in the arm for the state’s productivity growth”, adding that the state government is “cementing its intent to supercharge innovation investment”.
“The innovation economy has the potential to transform industry and drive productivity. Governments can’t do everything, but what they are doing here is incentivising business to invest in innovation and growth, supporting research and development,” he said.
“The commitment of $38.5 million to drive the growth of Tech Central as one of Australia’s premier innovation districts is fantastic to see, and we look forward to an ongoing focus on nurturing NSW’s network of innovation districts to ensure Sydney thrives as an innovation city.”
Opposition response
From the NSW Coalition opposition, shadow assistant minister for innovation Jacqui Munro said $80m is “wildly underfunding” the sector.
“The expenditure of this money must have a structural basis in contributing to the growth of the startup ecosystem and the broader economy. With the imminent shut down of the Wynyard Sydney Startup Hub and the shelving of Tech Central rezoning plans to drive private investment, it is difficult to understand how a line item of just $6m to support manufacturing business to adopt innovative technologies is going to make a dent or help the startup pipeline,” she said.
“The announcement of the Investment Delivery Authority appears to be an admission that Minns’ ministers can’t wrangle their own departments to work effectively for the projects that NSW needs. Instead, this government is centralising a secretive new process costing taxpayers $18m and led by top bureaucrats to achieve progress.”
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