Paul Wallbank – Communications Professional
Comms, journalism and writing
Australia has become too complacent in a competitive world warns one US business leader.
This is worth watching, Dow Chemical CEO Andrew Liveris and Australian Business Council chief Tony Shepherd spoke on Sunday with Alan Kohler on the ABC’s Inside Business.
At 5.40 Andrew Liveris says Australia is suffering a state of economic rigor mortis – “we’ve lost the ability to innovate” – with no plans and a great complacency. It’s something all Aussies should reflect upon, although don’t expect these blokes to be any help.
Community wide sensors promise to change government
National Public Radio’s Parallels program has story on how the Spanish city of Santander is wiring itself as a ‘smart city’ with a network of sensors wiring everything from garbage bins to parking spots.
The hope with the sensors is they’ll will improve local government’s services, allowing things like more efficient garbage collection and better pricing of parking meters.
What’s notable about the story is that smartphones are included as ‘sensors’ with Santander residents being able to submit data from their handsets.
The idea of smartphones as sensors isn’t new — pothole reporting apps were early to the iPhone — the increased sophistication of handsets and improved tracking technology is making them more powerful.
So we have another Big Data problem with local councils being flooded with information.
Processing all this information is going to require the community pitching in so the data is going to have to open.
Once governments make the data open it also creates opportunities for smart entrepreneurs to create new services and technologies.
Creating new opportunities is a hope of government sensor programs around the world, including Tasmania’s Sense-T project .
With factors like water quality and weather being monitored, existing sectors become more efficient and new industries are being created.
Hopefully the urge to hoard this rich, community data will be resisted by governments.
Britain puts on a brave, if false, face for the G8 leaders summit
In the middle of this month the G8 group of world leaders will meet in Northern Ireland when the UK takes their turn to host the annual conference.
With the leaders of eight of the world’s biggest economies – which includes Canada but not China – coming to visit the Northern Irish government is anxious to present a prosperous face to the world, including allocating £233,000 to give Enniskillen’s town centre a ‘facelift’.
It seems a good chunk of the facelift money has been spent on creating fake shops in the distressed town’s centre.
In a little over two weeks they and other leaders will gather for a G8 summit at a golf resort in Enniskillen. And as the date approaches the cleanup is moving into high gear. It includes new coats of paint on houses, tidying up lawns, and putting up fake storefronts on shuttered businesses.
For the visiting dignitaries, their advisors and the media caravans that follow them, Enniskillen’s shops will be looking prosperous when the reality is very different.
“The County of Fermanagh has suffered terribly as a result of the credit crisis and the resulting recession,” says Dan Keenan of the Irish Times.
Fermanagh County’s efforts to present a brave, if false, face to the world is symptomatic of the Western world’s refusal to accept the consumer based economy that drove the Corporatist model of government over the past fifty years is over.
Just as the fall of the Berlin Wall in 1989 signalled the end of the Soviet experiment, the global financial crisis of 2008 marked the end for the big spending, big debt era which had driven the Western economies through the last half of the Twentieth Century.
Unlike the Soviets, we refused to accept the game is up and have kept a failing economic philosophy alive with massive borrowing and money printing. In this respect, we’re dumber the Russian communist leaders who accepted the reality of the world they found themselves confronting in 1989.
All of which will probably amuse Russian President Vladimir Putin as his motorcade speeds past the repainted shopfronts of Enniskillen and no doubt he’ll be thinking of the face Russia will present next year when they host the G8 Summit.
Perhaps its time for the G8 leaders to invite the People’s Republic of China to join their privileged club – at present Japan is the only non-‘white’ nation.
If the G8 decide to let the Chinese join, there’s the South China Mall that would be a perfect counterpoint to the Potemkin Village of Enniskillen and the world’s great leaders can continue to believe that the business rules of the 1980s still hold true today.
Yesterday’s men are still pursuing yesterday’s dreams, dressing up Enniskillen may cater to their fantasies but it won’t help today’s economy.
Picture of a propped up facade courtesy of Ingolfson through Wikipedia Commons.
Does a culture of government secrecy make it hard for innovators and entrepreneurs to flourish?
Earlier this week I interviewed Vivek Kundra, the former US Chief Information Officer and now Salesforce executive, on innovation, technology and government with some of the Australian business perspectives run as a story in Business Spectator.
Something that stood out for me from the interview were Vivek’s views on the effects of governments making both innovations and information freely available.
“Two policy decisions that transformed the future of civilisation – GPS opening and human genome project through the Bermuda Principles.”
While it’s probably too early to draw conclusions on how the opening of the human genome data will change business, it’s certainly true the Global Positioning System has allowed whole new industries to evolve and it’s an important lesson on making technology available to the masses.
The Global Positioning System was, like the internet, a US military technology developed during the Cold War with the Soviet Union.
After Korean Airlines flight 007 was shot down by Soviet fighters in 1983, President Reagan approved civilian use of the GPS – then named Navstar – to prevent similar tragedies.
Such a decision was controversial, this was military technology being given over to the general population which could be used by enemy forces as well as airlines and truck drivers.
No doubt if the GPS technology was developed in the UK or Australia, there would have been demands to monetize the service. It almost certainly would have been sold off to a merchant bank that would have charged for the service and stunted its adoption.
By making GPS freely available, the US gained a competitive advantage which maintains the nation’s technological and economic lead over the rest of the world.
This openness isn’t just an advantage for technology companies. While US governments are no means perfect, the relatively open nature of local, state and Federal administrations is an advantage for the United States economy and society. As Vivek says,
Making data available provides three concrete functions; it allows citizens to fight corruption, it allows you to build the next billion dollar companies and it transforms government functions by breaking down silos.
When the default position of government is to classify everything as secret or ‘commercial-in-confidence’, there’s little chance of an entrepreneurial culture growing in that society – instead you have a business culture that favours connected insiders who can trade off their privileged contacts within government.
A culture of closed government reflects the business culture of a society and the reluctance of both the private and public sectors to openly share knowledge is why countries like Britain and Australia will struggle to emulate the United States.
Can governments kick their habit of supporting the motor industry and focus on 21st Century industry investments?
Today Ford announced the pending closure of its Australian manufacturing operations, bringing to an end ninety years of the company building automobiles down under.
Ford’s announcement is small on a global scale – the Broadmeadows factory built 40,000 cars out of a worldwide supply of sixty-three million – it does illustrate some major structural issues facing both the global automobile industry and the Australian economy.
Over capacity has been the curse of the automobile industry for decades as governments have propped out producers around the world.
KPMG’s 2012 Global Automotive Survey forecast the global industry would be 20 to 30 percent over capacity in 2016.
This doesn’t seem to worry industry executives or their government supporters, as KPMG reported;
Alarmingly, most auto executives still seem to regard the risk of overcapacity and excess production as a necessary evil to remain competitive. As the rapid growth of recent years eventually slows down, manufacturers that fail to address overcapacity could face some tough decisions.
Ford’s Australian executives could at least be credited with facing some of those tough decisions.
Many governments though are still in denial as they continue to subsidise motor manufacturers in an effort to copy the industry model that worked for the US Midwest during the 1950s.
Indeed, the Australian government in 2008 committed 5.2 billion dollars to support their domestic industry through to the end of this decade. Ford’s announcement today coupled with General Motor’s cutbacks last year show that policy is in ruins.
At the Ford and government press conferences, journalists pressed the Prime Minister and the Ford Australia’s CEO about repaying some of the millions of corporate welfare doled out to the multinational over the last decade. Naturally little was to be said about that.
In a stark comparison to Ford Australia’s announcement, US electric car manufacturer Tesla Motors repaid a $465 million US government loan.
While no-one can say Tesla’s future is certain, at least US investors are putting their money on 21st Century technologies instead of propping up declining industries of the last century.
The car industry is just one sector that faces global overcapacity – ship building, real estate and mining are just three with similar excess production.
For Australia, the mining industry is winding down investment as worldwide production capacity expands. At the same time, the blue sky projections of China’s resources demand are being challenged.
While the mining boom comes to an end, Australia now has to face the consequences of the nation’s economic decision to focus on resources and property speculation in the 1990s and early 2000s.
As the Thais and Indonesians found in 1997, and the Irish and Icelanders a decade later, economies based on unsustainable foundations seem to work fine until suddenly they don’t.
It may well be that Australia is about find out what happens when the economic tide suddenly changes.
One bright side is that the government has the best part of five billion dollars to invest in new industry – assuming Australia’s politicians can wean themselves off their 1950s view of the world economy.
Image of Ford Australia celebrating 50 years of Falcon Production courtesy of Ogilvy Communications.
How do cities emulate industrial centres like Silicon Valley and San Francisco
Philip Rosedale, the founder of Second Life and various others startups has an interesting take on why San Francisco and Silicon Valley are the centres of the tech startup world.
He puts the region’s success down to the network effect where like minded groups share knowledge and encourage each other.
If you want to create a vibrant start-up ecosystem somewhere else that is competitive with San Francisco and Silicon Valley (and this is starting to happen right now in places such as Boulder and Austin), you want to do two things: You want to pack the people working together into as dense an area as possible, with public areas and co-working venues where they will see each other constantly, even when they aren’t working in the same company. And then you want to encourage them to let down their guard and be as open as possible about what they are doing.
Of course the network effect doesn’t just apply to the Silicon Valley tech startup model, it’s just as true for China’s manufacturing hubs, South Korean shipbuilding or historical centres like Detroit’s motor industry and the English Midlands during the industrial revolution.
We shouldn’t forget that fifty years ago governments sought to to emulate Detroit’s success and a century ago cities strived to be like Birmingham.
That’s something we should keep in mind when looking at ways to emulate Silicon Valley – in trying to copy today’s successes, we may be mimicking a model that has already peaked while overlooking our own unique advantages and the opportunities in new industries.
For cities striving to become world centres of industry, it might be best to first figure out what they do well and then find a way of attracting the smartest people in that field to move there.
Then again, it may just be that most industrial hubs are accidents of history and the best we can do is try to attract smart people to our communities.
Australian treasurer Wayne Swan’s cap on education expenses is a path to mediocrity
In researching the tech angle of the 2013 Australian Federal budget for Technology Spectator last night one thing kept really bugging me – the government’s cap on tax deductible education expenses.
The decision to cap self education deductions was made earlier in the year by Treasurer Wayne Swan.
The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers’ expense.
So the government is going to save $500 million dollars over the next few years by capping legitimate educational expenses on the grounds they were ‘unlimited’.
We could ask why negative gearing continues to be unlimited where taxpayers claiming the expenses of property speculation cost the Federal government eight billion dollars last year.
So Treasurer Wayne Swan says a salaried worker has effectively no limits on claiming losses from property speculation against their taxes but is subject to a ludicrously low limit for claiming education expenses.
This one comparison – between negative gearing and self education expenses – shows the magic pudding fairyland that Australia’s political leaders live in and their cowardice.
What’s bizarre about this policy is that most industries are undergoing major changes and almost every worker will have to reskill a number of times through their careers.
Many of those workers will be able to get their courses and education expenses under the limit, many others won’t.
As the New Australian points out, Wayne Swan – like most lifetime Australian political apparatchiks – has never to worry about reskilling as the party has nurtured and cared for him all his adult life.
In the real world though, Australia’s economic future will depend on the workforce picking up the skills to operate in rapidly changing times.
That Australia’s politicians and economic policies are focused on encouraging property speculation over skills only guarantees mediocrity.
Although mediocrity might be the world that suits Wayne Swan, Tony Abbott and the rest of Australia’s political classes.
China analyst Patrick Chavonec has a wake up call for Australia’s business and political leaders
Australia’s leaders need to snap out of their China dreamland analyst Patrick Chovanec told the Australian Davos Connection’s China Forum two weeks ago.
What triggered this comment was a speech by Australian Treasurer Wayne Swan to the Financial Services Council in Sydney last September where the Treasurer compared China’s economic performance to sprinter Usain Bolt;
It’s like Usain Bolt easing off a bit at the end of the 100 meters because he’s 10 meters in front and has already smashed the world record.
“My response was that if that’s the way Australia’s leaders are thinking about China’s economy, if that’s the dreamland that they are in, then they need to snap out of it really fast,” Chovanec said in his keynote.
“Because China is facing a very serious and potentially disruptive economic adjustment. A realistic idea of where this adjustment is going is essential to countries like Australia.”
Chovanec’s view is that China cannot sustain current growth rates by “providing the fodder of the consumerist economy.”
This was borne out in the Global Financial Crises where exports fell from 8% of GDP to 2%. To make up for the drop the PRC government stimulated the economy and investment went 42% of the economy to half.
It was this stimulus that drove the soaring commodity prices in recent years and underpins the Blue Sky Vision of Australia’s political and business leaders.
The establishment view is that China will move from infrastructure spending driving the economy to a consumption driven society.
Moving to a consumption driven economy though means a very different Chinese society which means a different group of winners and losers, Chovanec warns.
He also doesn’t see urbanisation as the real driver of the Chinese economy, “If you look around the world, urbanisation has not always driven economic growth.”
“It’s based on a premise that moving people from a rural environment to an urban environment generates productivity gains.”
“Now for China over the past thirty years that has proven largely true,” says Chavonec, “but going forward most of that hanging fruit has been picked.”
“In order to realise productivity gains, China is going to have to discover new areas of competitive advantage.”
The biggest risk that Chovanec sees at present though is the level of bad debts in the economy and the rate of credit expansion with a trillion dollars pumped into the Chinese economy over the last quarter.
“You’re getting less and less bang for the buck from credit expansion.”
Chovanec doesn’t see China’s future as bleak though, “the China growth story doesn’t have to be over.”
“There are a lot of sectors in China where there’s real potential for true productivity gains – agricultural, logistics, health car, services, consumer branding, retail.”
“The challenge for China is not that the growth story is over but the engine of that growth story is going to have to change.”
Dealing with those changes is also a challenge for countries like Australia who have staked all on the current growth story.
Chovanec’s wake up call to Australia’s leaders is timely – the question is how quickly they can wake up to the changes in China.
What does London’s attempt to build a tech city teach others that want to create a Silicon Valley in their own town?
With the apparent success of the Silicon Valley business model, every city seems to want to emulate it. One region that’s probably gone further than most is supporting their local tech sector is London with its Tech City program.
But is it succeeding? The Guardian did an audit on the Tech City project and came away with some findings that aren’t particularly different from other cities.
What I personally find interesting is how the Digital Sydney project which I was involved in setting up during 2009-10 shares the flaws The Guardian has identified in the London initiative.
One key criticism The Guardian has is that too many businesses are identified as being in the technology sector;
of the 1,340 companies, 137 are tech companies, 700 are PR or design agencies and 482 are “miscellaneous” – which includes charities, pubs, cafes and fashion boutiques. The remaining 21 companies were either entered more than once or entries with no information or link to an external site. So just 10% of companies in Tech City actually do technology, 53% are PR or design agencies, and 37% are “miscellaneous”.
This was true of identifying Sydney’s ‘digital hub’ – the vast majority of business surveyed were not actually tech businesses but movie post production, graphic designers and publishers. The technology sector was only a small group and the bulk of employment and investment came from large multinational corporations like IBM and Google.
Now it is possible to argue that businesses like post-production, publishing and broadcast media are ‘tech’, but then almost every industry could be thought of as ‘tech’ if you cast the net wide enough.
The problem is counting those businesses as being tech just on the basis they are heavy users of IT skews the numbers and gives an inflated view of how big the sector really is.
One of the biggest criticisms of the Tech City initiative is that it is too London centric and The Guardian makes a good case about this, looking at cities like Brighton, Cambridge, Newcastle and Manchester.
A similar criticism could quite rightly be made about Sydney’s project, which focuses on the inner city enclaves of Surry Hills and Ultimo while ignoring most of the city or any of the state’s regional centres.
When I started at the New South Wales government I was warned by one old hand that “to these jokers NSW stands for North Sydney to Woolloomooloo.”
And so it proved to be.
Focusing on London’s Silicon Roundabout or Sydney’s Surry Hills also smacks of a ‘people like us’ syndrome where the support goes to nice middle class white folk – just like the politicians, public servants and captains of industry who run these programs.
Another problem, not mentioned in The Guardian story, is the over emphasis on technology startups.
Projects like Tech City and Digital Sydney focus on last decade’s opportunities which Silicon Valley dominated. Governments look at California’s success and think we need to copy that when what we’re seeing is actually the fruits of the previous wave of opportunity.
It may well be that we’re repeating the mistakes of the 1950s and 60s where countries around the world imitated Detroit hoping to replicate the US’ success with the motor industry.
The costs of that error are still a millstone around taxpayers’ necks two generations later.
To be fair to those setting up projects like Tech City or Digital Sydney, they are attempts to harness the energy in their own cities but it may just be that government programs aren’t the best ways to bring entrepreneurs and inventors together.
Hopefully though their efforts will succeed although it’s more likely the next Silicon Valley will be just as much the result of a series of coincidences as today’s is.
Controlling how a stock market receives information is becoming a huge task in the modern economy.
Given the stock market movements following last week’s Associated Press Twitter Hack it may be time to reconsider the way exchanges and listed companies share and control information.
One of fundamental principles of modern stock exchanges is that the market is fully informed – that everybody buying or selling security gets access to the same information at the same time.
In an Australian context, this is covered by a term called ‘continuous disclosure’, should a company’s management become aware of any issue that could affect they must advise the market immediately.
What’s interesting with this principle is the way that information needs to be made public, specifically clause 15.7 of the ASX listing rules.
An entity must not release information that is for release to the market to any person until it has given the information to ASX and has received an acknowledgement that ASX has released the information to the market.
This puts the Australian Securities Exchange, a private company with an almost monopoly position in the Australian investment community, in the position of being the ultimate gatekeeper of knowledge.
While there’s good regulatory and probity reasons for having a central clearinghouse – that the clearinghouse itself has some serious conflicts of interest is another matter – one has to wonder how long its position can be retained in a world where information is moving fast.
It may be however that we’re in a passing phase as the financial of the global economy has reached a stage where no stock exchange, futures market or clearinghouse can manage the data that’s flowing through it.
Time will tell, but the markets themselves are finding other ways to inform themselves.
US laws making online retailers levy state taxes are going to spread internationally as lawmakers look at closing loopholes.
One of the competitive advantages for online shopping has been the difficulty in levying taxes on internet transactions.
This has been particularly true in the United States where individual states, counties and cities have different sales taxes, meaning a consumer in Birmingham, Alabama might pay 10% more than their friends in Billings, Montana.
Amazon in particular has been aggressive in exploiting these price differentials, right down to threatening states where ‘Amazon taxes’ has been proposed.
Now the US Congress looks set to pass a law which would make online sellers responsible for buyers’ state sales tax obligations.
The next stage will be treaties between countries on the collection of sales or value added taxes.
For many retailers though this won’t be particularly good news as price differentials are more than just the 10% GST or VAT and online shopping sites compete as much on product range and customers service.
What the US Congress’ bill really shows is how online retailing is maturing – rather than thinking of companies like Amazon, eBay or niche operators like Shoes Of Prey as being disrupters they are the new normal.
Big events are good for giving a local economy a short term boost, but how does Tasmania build its economic foundations?
“We bring in almost everything,” says V8 Supercars director Mark Perry as he guided journalists around Launceston’s Symonds Plains racing track.
Everything Mark showed us – a fleet of trucks, communications equipment, hospitality tents and the racing teams themselves would be packed up on Sunday night, shipped to Melbourne and flown to New Zealand for the next race.
The V8 Supercar management are very proud of their work, and they should be given the massive task they have, but it exposes a weakness in the Tasmanian economy in that almost all the high value employment and equipment has to be flown in.
Arriving into Launceston on the Friday before the races, it’s interesting how little hype there is around the event. In Sydney, San Francisco or Cannes there would be banners and flags around the city welcoming visitors, in Launceston there’s almost nothing despite the race meeting being one of the state’s biggest events.
It was also surprising how there were no downtown events to complement the main attraction.
Almost every major sporting event from the Olympic Games and FIFA World Cup to the AFL Grand Final and Australian Open has some inner city satellite venues with big screens for the locals who can’t make it to the stadium.
Having those satellite events adds to the buzz and hype in the host city. Something that downtown Launceston needs at 7pm on a Friday night.
That lack of support by the community is notable, particularly in light of the $600,000 per year the cash strapped Tasmanian government pays in subsidies for the V8 Supercars.
I’m against government support for events like these, but if that money is going to spent it may as well be spent properly to maximise the economic benefits.
Subsidies like this would be even better if they were part of some grander economic plan, but like all the payments given to the film production, motor manufacturing and other industries, they are based more on populism than any strategy – the politicians may as well be giving free beer out in Launceston’s main street.
Why the community support is so tepid for the Supercars event is so tepid is something I’m going to be exploring in the next few days as I meet various business leaders in Launceston and Hobart to hear how the state is positioning itself in the 21st Century.
In the meantime, the V8 Supercars “travelling circus” has moved on, hopefully Tassie will have some more long term jobs to show for it.
Paul travelled to Tasmania and the V8 Supercars courtesy of Microsoft Australia
