Paul Wallbank – Brilliant Communications

Category: government

  • Japan’s adjustment to a low growth society

    Japan’s adjustment to a low growth society

    As the world worries about whether China is the next Japan, the Japanese themselves are getting on with life in a low growth economy.

    One of the latest ideas is to convert disused golf courses into solar energy farms as manufacturing giant Kyocera proposes a solution to deal with the nation’s power shortage after the closure of the Fukushima power plants.

    Japan’s golf course boom of the 1980s, which they exported around the world, was a classic case of overinvestment driven by easy money and lax lending standards. Something that China has certainly had in spades.

    The aging nation isn’t doing a perfect job however with the Washington Post reporting that the country’s over 65s are convicted of more crimes than juveniles and the sad reason is seniors are shoplifting to survive.

    One of the major mistakes made by Japanese governments through the 1990s was to pour money into corrupt civil projects to stimulate the economy. That money was largely wasted on bridges to nowhere and bullet trains to tiny towns which did little to add to the nation’s productivity or build a safety net for the aging population.

    Japan may well be leading the way for other aging nations, we need to heed their mistakes before our societies follow them.

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  • Creating a new class of worker

    Creating a new class of worker

    With the ‘sharing economy’ becoming more widespread and freelance workers possibly being the norm in the future, the question of how are they defined arises.

    The simple answer is they become contractors after the California Labor Commission ruled for an Uber driver in a dispute over expenses incurred on the job. However it’s still possible that the level of control many of these services exert over workers may see many defined as employees.

    For the ‘sharing economy’, the definition is important as the business model depends on shifting all the costs onto the contractors and customers. The service, like Uber and AirBnB, is only there ostensibly as a platform to match buyers and sellers.

    Buzzfeed’s Caroline O’Connor suggests a third definition of worker, a ‘dependent contractor’. Under this category contractors would receive social security benefits, insurance and other features of permanent employment with the flexibility of being on call.

    In many ways O’Connor’s suggestion is similar to the national insurance schemes of many European countries where workers contribute towards their eventual retirement or for the benefits they may receive should they be unfortunate to become sick or unemployed.

    While the suggestion is worthwhile, it’s still not hard to see how the ‘sharing economy’ companies would want to put their contractors in whatever category reduces their costs and risks.

    The discussion about workers’ protection and social security benefits needs to be had as we enter a period of economic change not dissimilar to the 1920s or late nineteenth Century where work patterns changed and there was substantial dislocation.

    As the 1920s saw the start of concepts like unemployment and sickness benefits, we will need new employment and social security concepts develop to cater for the new economy and modern workforce.

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  • A generation free of poverty and labor

    A generation free of poverty and labor

    How will the future workforce look? A report by Australia’s Committee for Economic Development seeks to give a picture of how employment might look at the end of next decade.

    Australia’s Future Workforce is a weighty tome covering the current structure of the nation’s economy, its trends and the factors affecting employment over the next two decades.

    The report makes it clear the economy will be very different observing 40 per cent of Australia’s workforce, more than five million people, is likely be replaced by automation over the next twenty years.

    In the opening chapter, Reshaping Work for the Future, Professor Lynda Gratton of the London Business School describes the share of the future workforce where roles are more specialised and automation increasingly takes over less complex jobs.

    An important aspect Professor Gratton also flags is the aging population which in a rapidly changing economy will require frequent retraining.

    From a technology perspective Professor Hugh Bradlow, the Chief Scientist of Telstra, suggests the workforce will be more mobile and employed in fields less amenable to computerisation involving skills like social intelligence, creative talents and social intelligence.

    Those without those skills are deeply at risk with Bradlow being the first in the report to cite the likelihood that two fifths of the workforce are at risk of losing their jobs.

    Bradlow concludes his analysis with the observation that if we work to satisfy our basic needs then machines looking after these requirements free up the workforce to address higher intellectual pursuits.

    Rethinking management

    Belinda Tee and Jessica Xu, both of IBM, agree with Bradlow that technologies like IBM Watson will help skilled workers like doctors and teachers deliver their services more efficiently.

    Xu and Tee suggest change in the workforce will need to start at the top with managers needing to enhance collaboration within the organisations and build diverse teams working on open data.

    A two speed economy

    How the effects are distributed across the workforce is probably one of the most important aspects of this report with a team from the soon to be abolished National ICT Australia mapping the regions that will be most affected by automation.

    The news for many of the country’s regions is not good with the survey finding workers in most areas have more than a fifty percent chance of losing their jobs to automation.

    NICTA’s bad news for the regions ties into a recent PwC report that found Australia’s economic power has been increasingly concentrated in the nation’s capital cities.

    A mixed future

    In many respects the CEDA report is disappointing, while it flags many of the issues facing today’s workforce and the forces shaping it, the survey doesn’t identify the industries and occupations likely to benefit.

    Despite not stating the growth sectors, the report’s overall view of the future workplace is optimistic as Telstra’s Hugh Bradlow says: “The change could result in a new generation free of poverty and the burden of labor, thereby unleashing the next wave of human innovation and creativity in directions we can never imagine.”

    This may be the case but the to achieve that will require, as the report later suggests, a new social compact.

    It’s building that new social compact which could be the greatest task ahead of us.

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  • Creating a false divide between startups and small businesses

    Creating a false divide between startups and small businesses

    “We aren’t small businesses” cries Tank Stream Ventures’ Managing Partner Rui Rodrigues in Business Spectator yesterday.

    Rodrigues’ point was tech startups have a very different set of needs to the local small business. “Bob down at the corner shops has been there for 10 years, and he’ll be there for another, he might sell milk, or office chairs, or even fix your watch,” he writes.

    Technology startups on the other hand “have ambitions to become big companies, global empires. They are high-growth technology businesses and they are working on goods and services that you might not yet know you need.”

    Silicon Valley’s greater fool model

    Rodrigues’ comments come from the Silicon Valley Greater Fool mindset where the end game for investors is to flip the business to a bigger company or make out like bandits in a stock market listing. Under that model profitability doesn’t matter, “too early is considered a deterrent for investors looking at a business.”

    Not making a profit is fine for a company promising unlimited future growth to the market or a flipper based on finding a greater fool but for most startups those lack of returns see all but a few spectacularly successful ones shrivel away as the company’s funds exhaust before the founders achieve their objective. For Bob the locksmith who doesn’t have a fall back option of returning to a management consulting job, he needs the income.

    What’s more fallacious in Rodrigues’ piece is the idea today’s tech startups themselves will be great employers themselves. Even the successful ones haven’t proved to be job generators in the way traditional business have been.

    For the traditional small business sector the risks aren’t insubstantial either as the majority of proprietors will barely make a living while risking their assets, time and often health – something understated by the motivational writers urging people to quit their jobs and prove themselves.

    A lack of capital

    For both the startup community and the small business sector the real challenges lie in being undercapitalised. Most startups will fail because of insufficient capital while the majority of small businesses never quite reach their potential because they lack the funds required to invest in the proper tools.

    Much of this comes down to banks retreating from small business lending thanks to the ill thought out Basel rules that treat home mortgages as almost risk free which has discouraged any form of finance not backed by residential property.

    In fact many of the challenges facing traditional small businesses such as high rents, unnecessary regulation and high labour costs are as much a problem for the thirty something renting a desk in a tech incubator as they are for 55 year old Bob who’s been running the local locksmiths for the last twenty years.

    Misdirected government

    Silly schemes like the Australian government’s depreciation scheme aren’t addressing this problem, indeed the Abbott administration’s intention is to provide a brief sugar hit to the nation’s GDP as small business owners buy new laptop computers and toolboxes. It does nothing to address the uncompetitiveness of Australian business or its attractiveness to local investors.

    That Rodrigues wants to create a schism between the tech startup community and the small business sector is regrettable, it only confirms in many people’s minds that technology is for geeks and not ‘ordinary people’.

    In truth a nation’s business community needs a level playing field, one that doesn’t give preferential treatment to one form of activity over others – be it property speculation, tech startups or dog walking franchises.

    While there are genuine differences between the startup sector and the small businesses community – in the same way there are differences between Bob’s locksmiths, Jane’s cafe or Sarah’s dog walking franchise – there is need for businesses divided in asking for equal and fair treatment from government, banks and large corporations.

    Having a united voice for all entrepreneurs, however modest their ambitions, is far more important than single groups pleading for special treatment.

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  • Tech and tax write offs

    Tech and tax write offs

    In last week’s Federal budget the biggest news for business was the expansion of the accelerated depreciation limits where items up to $20,000 can be immediately claimed as a tax deduction.

    While this was a reversal of the previous budget that slashed the previous allowance, it was welcome news for businesses looking at replacing older tools and equipment or investing in new technology.

    One of the notable things about business technology is companies have a habit of holding onto older equipment long beyond what should have been its use by date.

    The consequences of using old technology are real, the older equipment is often not as fast as the newer kit which affects productivity and unpatched software is often the way malware finds its way into a business.

    Point of sale risks

    Earlier this week computer security vendor Trend Micro held their Cybercrime 2015 breakfast in Sydney where the director of the company’s TrendLabs Research division, Myla Pilao, described some of the threats facing businesses.
    One of the top risks were Point Of Sale systems (POS) where Trend Micro’s research had found over a third of US retailers had malware on their cash registers, in Australia it was six percent.

    Most of those infected POS terminals would be older units with many of them being software running on out of date versions of Windows that haven’t been patched or upgraded since they were bought a decade ago.

    Similar problems exist with older workstations, internet routers and even photocopiers where the technology has moved on and security holes discovered. Basically old equipment holds businesses back and exposes them to risks.
    Now the carrot of an immediate tax deduction gives Australian businesses an opportunity to refresh their technology. So what is the technology, smart company managers and owners should be spending their money on?

    Kick out your desktops

    “If it ain’t broke, don’t fix it” is the mantra for most business IT and desktop computers are the best example of this. In most companies as long as the word processing software or accounting package works the PCs continue to be used.

    With the withdrawal of support for the decade old Windows XP operating system last year, many older computers started being a liability in a business so now is the time to replace them.

    Consider tablets

    It may not be necessary to replace the old desktop computer with new ones, for many job roles a tablet computer is often a better choice. With cloud technologies increasingly being adopted there’s less of a need for a grunty PC sitting on each staff member’s desk.

    Upgrade the router

    One of the areas where businesses often compromise is with their internet access. Having an old, cheap router designed for home use is just not good enough for companies who rely upon being connected.

    A new business grade router will improve office internet access along with resolving most of the security issues older equipment is notorious for.

    Going mobile

    If you’re struggling on old mobile phones, now might be the time to upgrade to the latest smartphone. Amongst other things this will improve your office productivity, particularly if you combine the investment with some of the cloud services that make working on the road a lot easier.

    Cloud services are not part of the depreciation rules as they are usually subscription models and this shows the weakness in the Federal government’s thinking.

    Indeed for those vulnerable Point of Sale systems, a cloud based service running on tablet computers is probably a better solution than most server and PC based packages.

    A lack of vision

    The ‘ladies and tradies’ theme of the budget shows the Federal government is stuck in with the vision that Australian businesses are mainly mom and pop service operations in the traditional trades and professions.

    While the depreciation changes are welcome they do little to help startups or companies in emerging industries and for the economy in general will provide not much more than a GDP ‘sugar hit’ for retailers’ cash registers as we buy imported equipment for our businesses.

    For the Australian economy in general, the move really only benefits Gerry Harvey who can buy a few more racehorses from his stores’ and his rich mates who can afford some more expensive wine fuelled brawls in Sydney waterside restaurants.

    Australian businesses owners need to be demanding better thought out policies from a government that claims to be friendly to industry. The economy is changing and 1970s style tax benefit is not the way to prepare for a changing world.

    In the meantime, enjoy your tax write offs.

     

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