There is a need for more coherent and consistent policy and regulation in Australia to allow the tech sector to reach its full potential, a Senate committee has heard.

The Standing Committee on Economics heard from a number of tech representative groups and companies in a public hearing on Wednesday as part of its inquiry into promoting economic dynamism, competition and business formation.

Representatives from Microsoft, FinTech Australia, the Tech Council of Australia and Airwallex, among others, told the MPs what needs to be done to ensure the local tech sector can grow rapidly and contribute to the Australian economy.

Standing Committee on Economics chair Dr Daniel Mulino said the hearing was all about how regulation and policy can keep pace with technological changes and help not hinder the growth of the sector.

“Given the extraordinary pace and scale of technological change and its impact on businesses in this country, we need to hear from those at the cutting edge about the opportunities and risks for competition in sectors such as banking, energy and retail, as well as across the broader economy,” Mulino said.

“We need to fully understand how regulation can keep up with the disruption resulting from technological change while also not stymieing innovation.”

Global tech giant Microsoft told the committee that the complexity of the laws and regulations governing tech companies is holding the sector back.

“The Australian tech sector is affected by many overlapping policy areas overseen by different regulators, ministers and government departments and currently subject to numerous interlinked policy proposals,” Microsoft said in a submission to the committee.

“Notably, inconsistent and unpredictable regulation has been identified as a key barrier to innovation and capturing the benefits of digital technologies.

“Multiple intersecting regulatory reforms bring considerable uncertainty and complexity for Australian businesses of all sizes as well as duplication and dilution of efforts across policymakers.”

Australia’s regulatory framework needs to balance different rights, policy objectives and stakeholder objectives, the tech giant said.

“Cultivating greater coordination between the different government ministers, departments and agencies responsible for tech regulation in Australia would facilitate more comprehensive and considered development of tech policy,” the Microsoft submission said.

Australia’s tech regulations should also be in line with the rest of the world, it said.

“Globally consistent regulations will drive better outcomes across different markets by increasing legal certainty and lowering regulatory burden by avoiding inefficiencies and the creation of a complex web of incompatible standards,” Microsoft said.

Tech Council of Australia deputy CEO Tom McMahon there are still many things in the way of starting a successful tech company locally.

“The size of Australia’s tech sector lags behind other comparable countries - there are major barriers to starting and scaling a tech business here in Australia,” McMahon told the committee.

“There are key areas of policy we need to get right: tax and investment, skills and talent and regulation.”

Among the things that the government could modernise is the research and development tax incentive (RDTI), which the Tech Council said is not fit for purpose for tech companies.

“The RDTI regime was set up a long time ago and the way in which it describes the innovation process perhaps reflects more of an industrial lab process than a modern software company looking to export,” McMahon said at the public hearing.

“We’ve succeeded in spite, not because of those regulations, and we’ve been able to use the RDTI in spite of the fact it is set up in a way that’s relatively archaic.

“I don’t want to suggest it’s not working but I do think it’s worth looking at how we can ensure it is fit for purpose in an economy where innovation happens in different ways than perhaps it might have in the past.”

In its submission to the committee, FinTech Australia raised a number of issues with the current regulatory space, including around the concentration of market power, de-banking and price transparency.

Both FinTech Australia and the Tech Council also said that more focus needs to be placed on the Consumer Data Right and opening it up to startups.

“Organisations, especially small businesses, are finding it difficult to comply with the scheme, while other accredited organisations are yet to be fully compliant or using the scheme,” the Tech Council said.

“This has limited the number of vendors and consumer services offered in the market, and restricted data flows in the Consumer Data Right ecosystem.”