No promises from the NBN – the nation building project that guarantees nothing

Australia’s NBN originally promised much, now it guarantees nothing.

Since Australia’s National Broadband Network has started ramping up its connection, the project has been plagued with complaints of underperformance, culminating in Telstra admitting thousands of its customers were entitled to refunds.

Today the national customer rights watchdog, the Australian Consumer and Competition Commission published a range of guidelines for advertisers, something I covered for Mumbrella.

What’s striking though – apart from the ACCC’s adding a new layer of complexity with ‘minimum typical busy period speeds’ is the regulator’s requirement for ISPs to state maximum evening speeds on the network, with the cheapest plans offering no guarantees of speeds at all.

There is no qualifying minimum speed for a plan labelled as ‘basic evening speed’ given there is no slower speed tier to which a consumer could move.

By the ACCC’s figures, a third of subscribers on the NBN to date are on the lowest speed plan with no guarantee of any speed at all.

The telephone system being replaced by the NBN at least guaranteed a dial tone and data speeds slightly better than an acoustic coupler, now a large proportion of Australians will not even get that.

Australians are spending at least $50 billion dollars on a project that will see a third of the nation going backwards, future generations are going to wonder how we managed this.

Labor’s pitch to repair Australia’s broken technology dreams

The Australian Labor Party makes its pitch to transform the nation’s workforce and technology sector. Cynics have heard this before.

“It’s like we lived through five minutes of innovation sunshine,” says Federal shadow treasurer Chris Bowen about the Australian government’s innovation policy.

Bowen was appearing at the Future of Innovation panel at Sydney’s Stone and Chalk fintech hub with his colleague Ed Husic where laid out the Labor Party’s platform for the tech industry and the changing workforce.

Both Husic and Bowen represent Western Sydney electorates which, along with outer suburban Melbourne, are key election battlegrounds and the districts dealing with most of Australia’s surging population growth.

Uneven spoils

As Bowen indicated in his speech, those regions haven’t shared in the country’s economic growth over the past ten years.

Some parts of the Australian economy are doing well.  Other parts are doing it tough.

Half of all the jobs created in Australia in the last decade have been created right where we are: in a two kilometre radius of the Sydney and Melbourne CBDs.

The economy feels good from this vantage point.

 

Not understanding the mismatch between different parts of the economy was one of the failures of the government’s 2015 Innovation Statement. The multi million dollar advertising campaign was full of fine buzzwords but none of the rhetoric resonated with the broader electorate, something not helped by the Prime Minister retreating from his policies at the first opportunity.

Spreading the gains

Bowen and Husic made a good case for their policies being focused on the wider population as a changing workforce is going to affect all parts of the economy.

So I spend a lot of time travelling to and talking to people in regional economies.  It doesn’t feel as good there.

Regional central and North Queensland. Tasmania. South Australia.

Here, unemployment and youth unemployment are high and show no signs of budging.

So Bowen’s commitment for his party to work on innovation, education and industry policies that help suburban and regional Australia – not just the leafy bits of upper middle class Sydney and Melbourne – is welcome and essential for the nation.

Refreshingly Bowen also acknowledged many of the jobs that currently exist in suburban and regional Australia are very likely to be automated and that education, reskilling and investment are all critical factors in dealing with employment shifts.

A familiar tale

However we have heard this before, the Rudd Labor government came in with high hopes when it was elected in 2007 which it quickly dispelled and then compounded its errors with cancelling the COMET commercialisation program and making a mess of employee option schemes.

Given this history of poorly conceived thought bubbles posing as policy, this writer asked (or rather begged) Bowen to consult with industry and the community before announcing major policy changes – something both parties have become notorious for.

In answer to the comment about consulting with the electorate before substantive policy changes, Bowen suggested a Shorten ALP government will be requiring senior public servants to be more engaged with industry.

Suggesting that senior public servants should engage with the community and industry is a good idea. That the idea is seen as revolutionary illustrates the problem found by former Digital Transformation Office boss Paul Shetler when he arrived in Australia with the country’s top bureaucrats being isolated and aloof from the citizens they deign to rule. This isolation is in itself a challenge facing Australian governments.

Memories of earlier oppositions

 

The Sydney tech community’s lauding Husic and Bowen bought back some memories. Fifteen years ago Australian technologists  were doing the same thing with another Labor shadow spokesperson, Kate Lundy. We ended up with factional warriors Stephen Conroy and Kim Carr when Labor finally won. While both were no doubt wonderful at delivering the numbers to party faction warlords their understanding of the changing economy was marginal at best.

While the Rudd government at least paid lip service to the Twenty-First Century, unlike the Howard government which was firmly focused on taking Australia back to the 1950s – with some degree of success it should be said, the Labor Party did little apart from getting the National Broadband Network underway.

In opposition, the Liberal Party too made similar noises however communications spokesperson Paul Fletcher, like Lundy, has been marginalised since winning power and Paul Keating’s description of Malcolm Turnbull as ‘Fizza’ has never seemed more apt since Malcolm became Prime Minister.

For Australians hoping some of the Lucky Country’s luck would be applied to the nation’s tech sector, government policies from both parties have been a succession of broken dreams.

Husic and Bowen are promising this time it will be different. Many of us hope it will be, it may be the last chance for Australia to have a fair economy fit for the 21st Century.

Crowdfunding the energy revolution

As technology changes so to do business and investment rules. The solar energy market is a good example.

“We have no shortage of investors,” says Tom Nockolds of Sydney community solar farm group Pingala in an Australian Broadcasting Corporation’s report on small business power projects.

The ABC’s report focuses on Bakers Maison, a suburban Sydney bakery that raised 400,000 dollars to extend its solar solar electricity system to slash its power bills and promises investors a seven percent return on investment.

Seven percent is very good in these days of low yields so it’s not surprising investors are lining up for projects.

It’s also an indictment on the modern banking system that smaller businesses like Bakers Maison have to issue debt directly to the market rather than getting a loan, which would have been normal a generation ago but today Australian banks would rather lend to property speculators than productive businesses.

This isn’t to say such fund raising is without problems as there is a real risk of fraud which Australia’s prescriptive fund raising laws are designed to avoid, even at the cost of stopping genuine investments.

“We’ve had to duck and weave our way through the regulations to set up this kind of operation,” says Warren Yates of Clear Sky Solar Investments – another volunteer group – about the laws which were developed after the financial scandals of the 1960s mining boom and the 1980s entrepreneur period.

As a consequence, the ABC story points Australia is lagging jurisdictions like Germany, Denmark and Scotland in developing these schemes.

With the banking system having left the field of funding growing businesses and responsibility largely falling on volunteers to provide services, reforms encouraging community crowdfunding need to be developed to provide capital to industry and local initiatives.

That many of the current reforms in this area such as America’s Jobs Act or Australia’s Innovation Agenda focus on a narrow set of industries – specifically the tech startup sector – which means we’re missing most the value in an evolving economy. A bakery, factory or hotel deserves the same investment advantages as the next potential tech unicorn and they could employ just as many people and deliver even more benefits to the broader economy.

New technologies have always demanded new investment and business rules and we’re seeing those pressures developing today, all of us have to demand regulators and politicians pay attention to the changing needs of our economy.

With investors clamouring for new opportunities and businesses wanting capital, it would be a tragedy to miss the possibilities of today’s technological, financial and energy revolutions.

Sydney’s digital humiliation

Google’s decision to pull out of Sydney’s White Bay startup hub project throws the NSW government’s tech industry plans into disarray.

It’s hard not to see Google’s decision not to move the mooted digital hub at Sydney’s White Bay as nothing short of a humiliation for the New South Wales state government.

The White Bay project is the centrepiece of the NSW government’s startup tech startup strategy and Google were hoped to be the anchor tenant for  the refurbished power station that’s been abandoned for over thirty years.

With Google’s Sydney office currently overflowing and its staff numbers expected to increase from around 1500 today to 10,000 over the next few years, the White Bay precinct with its cathedral like power station made some sense.

For the startup community, having something similar to the London Google Campus would have been a valuable part of the city’s ecosystem.

However the location is in a traffic blackspot served by a woefully inadequate and unreliable bus service with a series of major road projects planned to start in the neighbourhood over the next five years which forced Google to rethink their plans.

Now it looks like the White Bay project getting underway this year is doomed and meanwhile the Victorian state government is spending big to attract tech companies to Melbourne.

This is far from the first time the NSW government has had ambitions for a digital hub and again a project stumbles in the face of poor planning by the NSW government.

We don’t know if the Victorian government has made an offer to Google yet, but it wouldn’t be surprising if they have. It could be New South Wales is about to pay the price for its lack of vision and forethought.

ABC Brisbane on the future of retail

Brisbane’s largest shopping mall reopening is an opportunity to examine the future of retail

This morning I’m talking with Steve Austin on ABC Brisbane about the future of retail as the city’s biggest shopping mall opens.

What does such a huge complex mean to the local economy and is it sustainable as the retail industry evolves?

Having had a massive upgrade, we can be sure Westfield Chermside will have plenty of technology to help customers spend money and we covered some of the ways modern retails have to understand consumer behaviour and predict what individuals will spend.

Prior to the segment (which starts around the 60 minute mark), Steve took calls from listeners about how retail has changed in Brisbane over the past fifty years.  The demise of fondly remembered department stores is a reminder of how the sector changed as consumer behaviour changed over the last half of the Twentieth Century.

 

Surviving Amazon’s onslaught

Some believe Amazon will crush Australian retail, but it’s likely most smart business will survive.

The long awaited launch of Amazon in Australia seems to be finally happening with reports the giant is scouting locations for logistics centres for a late 2018 launch.

While some are predicting a retail apocalypse, not all are convinced Amazon will do well. Australia doesn’t have a catalog culture buying culture like the United States and, as german supermarket chain Aldi found, the nation’s high property prices and restrictive zoning rules makes acquiring sites difficult.

A further impediment for Amazon in Australia is the last mile with Australia Post dominating the delivery business, despite its mediocre service, and the dominance of incumbent retailers in the suburbs where most Australians live means the US giant isn’t guaranteed success.

Whether Amazon’s entry into a market does mean a retail apocalypse is also another question, while its clear the mall era is drawing to close there are plenty of success stores with chains like Ulta Beauty, Sephora and Kiehls – not to mention the Apple Store – thriving despite Amazon’s growth over the past twenty years.

In the Australian context, a bigger question should be around why local equivalents haven’t thrived with Billabong, Pumpkin Patch and Kathmandu all failing while the established majors have barely glanced at overseas markets – Harvey Norman and Westfield being the stand out exceptions, although the former hasn’t been a great success.

Even in Amazon’s original market of bookselling, big chains like Borders have fallen victim but local independent bookshops have survived and grown despite the online threats. So local retailers can weather an Amazon onslaught.

Another benefit of Amazon starting in Australia is to encourage new business, particularly given the US giant is rumoured to be focusing on groceries as it gives new entrants to the market an opportunity to enter without having to deal with the stultifying duopoly that dominates the market.

One thing is clear though, Australian retailers have been slow in moving into online and international markets, probably due to the luxury of catering to consumers in an economy that hasn’t been troubled by recession for a generation.

The year’s warning that Amazon will be opening shop is a warning for Australian business to lift their game and compete. Those who don’t won’t have any excuses.

How to reinvigorate a stale economy

A lack of collaboration is holding Australia’s economy and innovation back, a panel at Sydney’s Ad:Tech believes.

What has gone wrong with Australian innovation? For a nation so wealthy, it’s remarkable how poorly the country performs globally in terms of bringing new products or technologies to market.

At Ad:Tech Sydney yesterday, The Great Australian Innovation Fail panel discussed what has gone wrong and what can be done to get the nation back to a position more in line with its comparative affluence.

Boasting a range of digital media veterans and startup founders, the panel was far from a group of muttering naysayers. Although all but Fleet Systems’ Flavia Tata Nardini were distressed at the failure of Australia’s innovation agenda and the country’s general disdain for new businesses and technologies.

Michael Priddis, the CEO of research and development consultancy, Faethm,  pointed out that automation and artificial intelligence are not the future but the present and the job losses are happening now across industries.

Caitlin Iles, founder of XChange, added that she believes the estimates of nearly fifty percent of Australian jobs being lost to automation are actually understating the effects and it’s more like 90% – “a doomsday statistic” – which is something that Priddis endorsed in observing how the mining industry has automated in the past decade.

The employment shifts are being ignored by governments, says Beanstalk Factory’s Peter Bradd. “They have to get their heads out of the sand. We need to be supporting workers in threatened jobs to reskill. That’s just not happening at the moment.”

Australia’s underperformance is stunning when you consider tech startup exits, says the Information Industry Association’s Tony Surtees. Unsurprisingly Silicon Valley dominates the global statistics with over 47% of the global value with London, Los Angeles and Tel Aviv following. Sydney was at the bottom of the table with only .01% of value.

The value of exits is a problem, but that is more about the capitalisation of startups and may be changing. A bigger problem lies in how Australia’s corporate sector innovates and engages with new technologies.

Corporate Australia’s failure to engage is shown in the OECD ranking the country at 81st globally in ‘innovation efficiency’, while the nation is tenth in inputs it fails dismally in applying those inputs into outputs.

This is reflected in corporate Australia’s failure to compete globally outside the mining sector. Basically Australian executives have little desire in international markets and most have no interest in engaging with researchers, universities, innovators or entrepreneurs.

“People don’t like to collaborate,” says Peter. “They want to keep everything to themselves.”

“The CEOs of Australia’s top twenty companies need to get together with CSIRO and the universities and fix this problem. There’s money on the table.”

Whether Australia’s business leaders are prepared to pick up that money, or they’re happy and comfortable with their lot is probably the question of whether Australia can start to pull its weight in the innovation stakes.

“In ten or fifteen years we’ll be screwed if we don’t,” concludes Michael.

“This is transformation” – the challenge of leading digital change

Former CEO of Australia’s Digital Transformation Office, Paul Shetler, talks about the challenges of leading change in government and large organisations

To say Paul Shetler’s stay in Australia has been controversial would be an understatement.

After leaving the UK’s Government Digital Service in 2015, Shetler was the founding CEO of the Australian government’s Digital Transformation office. He lasted 16 months before being managed out.

In January I interviewed Shetler where he discussed the relative differences between countries, the challenges facing those trying to digitally transform governments and large organisations along with some scathing observations about the management of the Australian Public Service.

Parts of this interview were the basis for separate articles in Diginomica and the Australian Financial Review however the entire conversations is worthwhile publishing.

Some of Shetler’s answers have been lightly edited for clarity.

How do we compare the digital transformation journey of different countries?

In terms of the UK, the Government Digital Service really has done a great job. If hadn’t been for GDS we wouldn’t be having the conversation we’re having in Australia today, much less in New Zealand, the United States and other countries.

Digital Transformation wouldn’t be on the table and an awful lot of the basic ideas on how you fix government IT by looking at structural reasons for behaviour rather than just saying “let’s make a nicer interface.” they were really good at identifying those things.

Britain was the pioneer. Every country in the naughties had their own digital strategy but the UK led the way. The US right now is a mess, they don’t really have a digital strategy.

How does the US look with the new Trump administration?

They do have a lot of potential there. I do think the new administration is more likely to do something big to fix things than perhaps the Obama Administration was, because they are talking about national infrastructure.

If you to the United States it’s shocking, the physical level infrastructure is falling apart and on a digital level things are pretty much the same, if you look at the government websites many of them look like they are from the 1990s and they all look and act differently.

They are very much like the UK before Britain started the digital transformation and they’ve had several years to fix it but there’s been no concerted effort because no-one really owns it.

They do have the USDS which operates out of the White House that gets really great talent in to do fix something but they don’t have the authority across the government.

They have 18F who operate on a cost recovery basis who act like an internal consultancy… they have some extremely talented people there and we’ve learned quite a bit from them.. and they help agencies with individual things, like looking at contracts or procurement or whether it’s fixing a particular service. But there’s no vision or strategy that guides it all.

If you go to New Zealand you’ll see they’ve been doing a lot of great thinking. It really influenced us in Australia on user journeys across governments, where you want to get something done that goes across agencies.

Let’s look from the standpoint of the end user; the end user wants to send a child to school, to emigrate to New Zealand or to open up a business. What do they need to do and how can we map it out for them.

The problem in New Zealand is that the team has no authority, all they can do is propose and it depends upon other people saying ‘oh, that’s a great idea’ although there’s been a lot of great design thinking coming out of there and it difficult for that being translated into practice.

One of the things I learned here was you can have all the great ideas and talent but if you don’t have the political will and authority to drive it then a recalcitrant bureaucracy will not going along with it because their interests aren’t in alignment with their users.

What did you find on coming to Australia?

There was a lot of excitement and enthusiasm on what we could do with the idea of the DTO, particularly among the public there was a lot of goodwill as well as in large parts of the Canberra bureaucracy, generally speaking the lower you got down the ranks there was more enthusiasm.

In the UK you have two layers of governments; you have the central government and local administration.

You have the split between politics and policy, you have the politicians who just don’t spend time in their departments. When I was with the UK Justice Ministry the Secretary of State, Chris Grayling, and his ministers were in the building every day.

As a consequence they were very aware of what was going on. There were in there everyday and they could see things. It made it easier for the ministers to give direction and cover for the civil servants.

In Australia it’s much easier for public service to capture the minister, direction is spotty and politicians are easily manipulated, partly because of lack of information.

There’s also the gap between policy and delivery, the UK Department of Justice, for example, works on legal and constitutional policy but is also responsible for prisons, courts and other services. So there’s a tight feedback loop where if a policy isn’t working, you find out pretty quick.

How important are people and existing processes?

You can’t fight human nature you have to acknowledge it and live with it and make it work for you.

In Australia we did a terrible job of working with human nature. This idea we could get Australian government to magically transform itself because it was told to, that I could come here and put up some pretty pictures and say some nice words and everyone would say ‘hey we never thought of that.’

That’s not going to happen when you have entrenched interests, habits, structures and groups who are committed to doing things a particular way. It’s not going to happen and it’s vary naïve to think you can do it, it’s just not how people work.

In the UK, we didn’t focus on consensus we focused on getting things done. When I first met with Francis Maude he said ‘this is not a change management process – this is transformation.”

When we talk about change management it’s often about appeasing people who are throwing up obstacles, this isn’t about appeasing them, it’s about them doing their job. Too often here there was too much appeasing bureaucrats which I think comes down to a lack of political will and perhaps cowardice.

One of the major reasons why the UK was a successful as they were was because Francis Maude was the minister for five years. It became clear he was going to see this through and if you were going to fight, you were going to lose. People got into line.

Because they understood people were competitive they created a group called ‘Digital Leaders’, the digital leaders were the Director-Generals from various departments who were future leaders – most likely to become Permanent Secretaries – and said, “you guys will be those driving the transformation from the Civil Service side.” Of course because these people were all competitive they’d try to outdo each other.

How does the Australian political culture compare?

“It’s quite a bad culture. In Canberra you have people who think they are the intellectual elite of the nation who aren’t really, it’s a relatively mediocre elite.”

The idea you have a group of people sitting around thinking their Big Thoughts in a bubble and telling each other how great they are who then hand those thoughts down to proles who do the service delivery. It’s a very weird class system that’s been built up – you have the Big Thinkers and then even the proles you give it to, they pass it on to the states or an NGO to deliver it.

There is no feedback loop, there is none. You don’t know how much these policies cost, you don’t know what they’re delivering you don’t know what’s a success. That probably suits lots of people.

We saw that with digital dashboard where citizens and ministers could monitor public services’ performance. There was so much pushback, there were some agencies that worked with us but getting information directly from the systems was difficult.

What are the lessons from the Australian experience and for those trying to drive digital transformation?

When the DTO was set up, they had to make a series of trade-offs. It wasn’t GDS, it didn’t have the powers of GDS. It didn’t have the powers to mandate or block.

GDS had both, the idea you could kumbaya your way to transformation, no-one there believed it. That’s why they set up GDS the way they did. They could stop you from spending money, even if you had the budget approval or not, so that was a massive stake in the heart for a number of zombie IT projects.

It’s particularly hard for IT managers in departments to admit that a long running project was a failure so GDS was great. That ability to do the right thing and to have it sanctioned by authority was brilliant. The years of ass-covering were over.

Some kind of spending controls are good and some ICT procurement reform is absolutely essential. That’s potentially really, really good.

How important is finding the right people?

People coming into senior digital roles in the UK government were hired by GDS and that was massively important to get the right people in.

I was thoroughly vetted as were all the other hires and it was important because it created a community of people who thought the same way. We were all committed to the same mission and we all came in at the same time. It’s not talked about much, but there was also a general clearing out of the old leadership.

Having a common sense of mission was important, we would work together and collaborate with each other.

You need to have political will to see them through because the departments will kick and scream but if their autonomy was working we wouldn’t have this problem.

Why are Australian governments suffering IT problems?

If all major government projects were failing we’d not be having this conversation. That said, there is an unacceptable rate of failure and it has to be fixed. Again, departmental autonomy is not working.

Departments have chosen to deskill, departments have chosen to become dependent upon vendors and departments have chosen to put their own interests ahead of users – as we in the case with Centrelink. Infrastructure failures like the ATO or the Census were easily preventable. The idea you’re building data centres in 2016 is insane and anyone who tells you that should be fired.

These are all predictable outcomes and as long as you have a public service that’s not really comfortable with 21st Century technology and which still views as its own departmental in-group as being more important than its end-users then you’ll end up with these problems.

Public servants have to start operating the way a bank or insurance company would – how do I get onto the cloud, not how do I keep workloads off the cloud? How do I build around the user? It’s crazy to be asking these conversations because it’s an incredibly deskilled when it comes to IT. It’s appalling, much more than in the UK.

That’s the problem, when you talk to actual practitioners in the Australian government they acknowledge it. It’s not the guys doing the designs or those trying to use the technologies, it’s those further up the management chain who don’t have the skills or have too close relationships with certain vendors where you see these anti-social behaviours kicking in.

Where next?

I’ve spent sixteen months banging my head against a wall so I’m not in a hurry, I’m looking some opportunities in Australia and a few elsewhere in the world.

Australia’s changing startup landscape

The 2016 Startup Muster report tells us a lot about the state of Australian business.

Last week, the annual Startup Muster report on the Australian startup sector was released, giving investors, founders and policy makers a valuable snapshot of a vibrant sector of the economy.

The 2016 report had 2711 responses to the online survey which the researchers whittled down to 685 startup founders, 239 potential founders and 474 startup supporters.

Compared to the previous years, the replies are an increase from the 602 in the 2015 survey and 385 the year before. It shows how the Australian scene is growing and evolving.

Still a boys club

A key finding from the 2016 Startup Muster report is the changing gender composition of a group that, quite rightly, has been criticised for being too much of a ‘boys club’. This year’s survey found 24.6% of founder respondents were female, up from 17.4 and 16.1 in the previous two years.

One area where Australia’s startup community does boast diversity is in its industry composition with 17% of the country’s startups in 2016 being focused on the most popular category of Fintech. Notably that sector came in at seventh in 2015.

2015 2016
Marketing Fintech
Content/Media Retail
Retail Content/Media
Big Data Internet of Things
Health Education
Education Marketing
Fintech Social media

Also notable in that list was the disconnect between startups and investors. While 17% of Australian startup founders were focused on Fintech, 42% of investors were. The area most of interest to investors was medical technology (47%) with the Internet of Things second (43%).

Over the next few years it will be interesting to see how investment fashions change, in the UK the bottom seems to have fallen out of the fintech boom while global investments seem to have increased. It’s likely Australia will follow a similar pattern to the wider global trends.

Sydney’s decline

Another interesting shift is the balance between cities and states with New South Wales and Sydney remaining dominant but its position slowly falling,

2015 2016
outside capital cities n/a 23.1
NSW 44 40.9
Vic 17 18.8
Qld 16.5 19.3
WA 8.9 7.3
SA 2.9 6.3
Tas 0.6 2.3
ACT 6.4 6.2

The fall in Western Australia is probably due to the state’s economic collapse in the face of the dying mining boom – many of WA’s skilled and affluent workers are moving out rather than struggling with a declining economy.

Efforts by the Victorian and Queensland governments to promote their startup sectors seem to have had some success although the real winner is South Australia, something underscored by US incubator TechStars’ recent launch in Adelaide.

The big question though is how attractive Australia is as a location for startups and investment capital.

Funding woes

In the 2016 Compass Global Startup Ecosystem Ranking report, Sydney fell four points from the 2012 survey to 16th while Melbourne fell out of the top twenty city rankings.

Due to its position as the second lowest on the Growth Index within the top 20, and its comparably weak statistics around Performance, Funding, and Market, Sydney now ranks #16 (down from #12 in 2012).

Compass’ findings show a critical problem for the Australian sector, regardless of its location, industry or founders’ gender – the lack of later stage investment funds.

That lack of funding means Australian startup founders are particularly sensitive to money issues with Startup Muster finding the most common hindrance to people launching startups is life circumstances requiring a stable income. In a high cost society, the need for a regular salary isn’t surprising.

Startup Muster’s 2016 report is a very useful snapshot of the state of Australia’s tech startup community. It serves as a good guide to what business founders, investors and policy makers should be considering.

Zen and the art of digital disruption

When driving an organisation’s transformation, consensus is the first casualty warns the former head of Australia’s Digital Transformation Office, Paul Shetler.

“You can’t kumbaya your way though it,” says Paul Shetler, the former head of Australia’s Digital Transformation Office, about the task of bringing an organisation or government into the 21st Century.

Shetler, who previously worked for the UK’s Government Digital Service (GDS) and Ministry of Justice, was reflecting on how a brutal approach to change was necessary when confronted by management resistance and a recalcitrant bureaucracy.

I had the opportunity to interview Shetler two weeks ago with part of that discussion being published on Diginomica. One of his key points is when driving a transformation, consensus is the first casualty.

“In the UK, we didn’t focus on consensus we focused on getting things done. When I first met with Francis Maud he said ‘this is not a change management process – this is transformation.’”

However to drive such change forcefully strong leadership is needed and Shetler emphasised that one of the great drivers for digital transformation at the UK’s Ministry of Justice was having a committed and powerful minister.

“One of the major reasons why the UK was a successful as they were was because Francis Maude was the minister for five years… It became clear he was going to see this through and if you were going to fight, you were going to lose. People got into line.”

Ultimately a lack of strong leadership is why the Australian DTO failed, with the country’s political culture seeing ministers rotated out of positions on a regular basis – the Innovation portfolio is seeing its fourth minister in 18 months  – it’s almost impossible for any leader, however forceful, to drive meaningful change.

This raises the question of whether some organisations can culturally handle change, it may well be that some institutions are impervious to change given the nature of their management structures and the people that lead them.

Australian taxpayers may hope that their public service isn’t an institution that resists change but Paul Shetler’s experience is a worrying warning.

When governments misuse data

The Australian government’s misuse of data in harassing welfare recipients is something that should worry all citizens

Last year the Australian Federal government had a smart idea. To fix its chronic budget deficit, it would use data matching to claw back an estimated three billion dollars in social security overspending.

Unfortunately for tens of thousands of Australians the reality has turned out to very different with the system mistakenly flagging thousands of former claimants as being debtors.

How the Australian government messed up its welfare debt recovery is a cautionary tale of misusing data.

Data mis-match

At its core, the problem is due to the bureaucrats mismatching information.

Australia’s social security system requires unemployment or sickness benefit claimants file a fortnightly income statement with Centrelink, the agency that administers the system, and their payments are adjusted accordingly.

Most of those on benefits only spend a short time on them. According to the Department of Social Services, two thirds of recipients are off welfare within twelve months of starting.

Flawed numbers

Despite knowing this, the bureaucrats decided to take annual tax returns, average the individual’s income across the year and match the result against the fortnightly payment.

That obviously flawed and dishonest method has meant hundreds of former welfare recipients have been falsely accused of receiving overpayments.

Compounding the problem, the system frequently mis-identifies income because it fails to recognise employers may use different legal names, leading to people having their wages double counted and being accused of not reporting work.

Shock and awe

Under pressure from their political masters, the aggressive tactics of Centrelink and its debt collectors have left many of those accused shocked and distressed.

I can barely breathe when I think about this. My time period to pay is up tomorrow. I asked them for proof before I pay and I have heard horror stories of debt collection agencies, people being asked to pay so much, people being told there will be a black mark on their credit. I am so terrified. It’s so stupid for me to be terrified but I can’t help it. I am a student, I can’t afford anything!

Reading the minister’s response to criticisms, it’s hard not to come to the conclusion that intimidation was a key objective.

The numbers of people involved are staggering. The department of Social Services reported 732,100 Australians received the Newstart unemployment allowance in 2015-16. Should 66% of those have moved off the benefit during the tax year then up to 488,000 people will receive ‘please explain’ notices.

Nearly half a million people being falsely accused of welfare fraud is bad enough, but that is only last year’s figures – due to a  law change by the previous Labor government, there is no limit to how far back Centrelink can go to recover alleged debts.

The System is working

Claiming the Centrelink debacle is a failure of Big Data and IT systems is wrong – the system is working as designed. The false positives are the result of a deliberate decision by agency bosses and their ministers to feed flawed data into the system.

How this will work out for the Australian government as tens of thousands more people receive unreasonable demands remains to be seen. Recent comments from the minister indicate they are hoping their ‘tough on welfare cheats’ line will resonate with the electorate.

Regardless of how well  it turns out for the Australian government, the misuse of data by its agencies is a worrying example of how governments can use the information they collect to harass citizens for short term political advantage.

Beyond welfare

While many Australians can dismiss the travails of Centrelink ‘clients’ as not concerning them, the same data matching techniques have long been used by other agencies – not least the Australian Taxation Office.

With the Federal Treasurer threatening a campaign against corporate tax dodging and the failure of the welfare crackdown to deliver the promised funds, it’s not hard to see small and medium businesses being caught in a similar campaign using inappropriate data.

More importantly, the Australian Public Service’s senior management’s incompetence, lack of ethics and proven inability to manage data systems is something that should deeply concern the nation’s taxpayers.

In a connected age, where masses of information is being collected on all of us, this is something every citizen should be objecting to.

An entrepreneur’s journey – a conversation with Muru-D’s Ben Sand

From a scrappy and underfunded inner Sydney startup to Silicon Valley and back, Muru-D’s Ben Sand has a fascinating entrepreneurial journey

As part of Telstra’s Muru-D business accelerator opening its latest startup intake this week, Annie Parker and Ben Sand, the organisation’s co-founder and Entrepreneur in Chief respectively, spoke to a small group of journalists on Tuesday about what they were looking for in the next batch of applicants and how the tech startup sector is changing.

Ben’s entrepreneurial journey from a scrappy, underfunded Aussie startup to a hot Silicon Valley property and back to a corporate incubator is an interesting tale in itself.

His first venture, an edu-tech startup called Brainworth founded in 2010, operated out of a dilapidated inner city Sydney terrace. The business acheived traction and Ben’s team won a ScreenNSW interactive media grant two years later.

Failing the Kickstarter test

Ultimately Brainworth petered out after missing a Kickstarter round. As Ben says, “I focused on getting out the maximum viable model rather than the Minimum Viable Model and the money ran out.”

As Brainworth withered away, Ben joined former university friend, Meron Gribetz at his Augmented Reality startup Meta which went onto join the Y Combinator program. The company went on to attract $23 million dollars in investment, primarily from Hong Kong and Chinese investors, and now has 150 employees.

Earlier this year, Ben returned to Australia after seeing Mick Liubinskas’ blog post about moving to the United States. In that article, his predecessor put out a call out for those interested in replacing him at the Sydney office which Ben answered.

Australian advantages

Now firmly settled into his Sydney role, Ben sees computer vision as one of the biggest opportunities in the tech sector. Bringing together disparate technologies like virtual and augmented reality, artificial intelligence and smart sensors, computer vision allows machines such as autonomous vehicles, drones and medical diagnostic equipment to pull together sources of data that lets machines see what is going on in the world around them.

Computer vision is a field where Australia has an advantage, Ben believes. “Adelaide is the second most funded city in the world in computer vision,” he points out with investments like Cisco’s into South Australia’s Kohda Wireless driving the local industry.

Ben and Annie don’t see the next group of Muru-D applicants being restricted to any one field despite Ben’s background in AR and interest in machine vision. “It’s more the psychology of the founders,” he says.

Mentoring the next wave

Three years of experience is also delivering dividends, observes Annie. “I’m starting to see the early cohorts starting to mentor and support the newer ones. That’s part of what Muru-D is part of, creating the ecosystem.”

Over the three years, there’s also been quite a few adjustments to the Muru-D process, Annie observes. “We change the model each year by about thirty percent.” she says.

Another thing that has changed is that later stage startups can apply for the program which will be open until November 4.

“I’m excited and I’m very confident we’re going to get great outcomes for these people,” says Ben of the next Muru-D cohort. “We’ll be working on getting the most confident founders on board and hopefully helping them to aim high.”