Paul Wallbank – Brilliant Communications

Tag: Australia

  • High hopes for the innovation dreamtime

    High hopes for the innovation dreamtime

    The Turnbull government and its ministers face a big test in the upcoming innovation statement this week and will need to follow through with tangible results.

    In 1976 Clive James visited Sydney fifteen years absence from his hometown. In his book Flying Visits he described the changes that had happened during his time away including some observations on the nation’s thriving movie industry with the comment “premature canonization is the biggest threat facing the young Australian film director today.

    James’ words came back to me at an Australian Israel Chamber of Commerce in Sydney last week where the hosts were gushing over 25 year old Wyatt Roy, the Federal Assistant Minister for Innovation, last week.

    There’s a lot to like about Wyatt Roy, he’s an intelligent and articulate minister with a self depreciating sense of humour and a touch of humility – qualities generally not associated with Australian politicians – though the old guard gushing over his youth and the achievements of his two months in office can be embarrassing.

    In many ways the fawning over Wyatt Roy is emblematic of the general sense of relief in Australian business now the Turnbull government has left behind the nightmare of the vindictive and petty middle aged adolescents who made up the Abbot administration while also being a world away from the backward looking grey Liberal Party stalwarts of the Howard era and the self interested suburban Labor apparatchiks of the Rudd and Gillard years.

    The question though is whether the hopes pinned on Turnbull and Roy can be realised which is why there are so many hopes being pinned on this week’s expected release of the government’s Innovation Statement laying out a policy framework for the nation’s economic pivot.

    For Australia the stakes are high, the resource sector is collapsing and the property market – the real key to the nation’s suburban prosperity – is looking brittle. Policies that encourage new businesses and industries are now essential to maintain the country’s living standards.

    To date Canberra’s policy makers have not managed the economic changes well; the Intergenerational Report earlier this year blithely ignored the effects of technology on the future workforce and its implications to incomes, jobs and government budgets, while three years after the Gillard government’s Australia in the Asian Century report it’s remarkable how dated the document with its underlying assumption of never ending resources demand now looks.

    So the Innovation Statement matters in laying out a strong view for the future of Australia however even if it does prove to be a strong, forward looking document, the Turnbull government will need to follow up with substantial actions.

    The real risk with all the talk of innovation is that it will be siloed, along with IT, as “something the geeks and young kids” do. For the this week’s announcement to be anything more than more fine words from the Innovation Bureaucracy then it has to be backed by strong reform to taxation, social security, immigration and corporate governance regulations.

    While the canonisation of Wyatt Roy and Malcolm Turnbull may well be premature many Australians, including this one, are hoping those hopes are well founded. This week’s Innovation Statement will be the first test.

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  • Malcolm Turnbull and the task of turning around Australia

    Malcolm Turnbull and the task of turning around Australia

    Watching from afar, the reaction to Malcolm Turnbull becoming Australia’s 29th Prime Minister has been remarkable as suddenly the nation seems to have collectively woken up to the fact they are fifteen years into a new century.

    In a few short weeks Australian public servants have started engaging in hackathons and business leaders whose idea of an investment was a property plan disguised as a casino have started raising VC funds.

    The question though for Australia is this too little and too late after three decades of concentrating on property speculation and betting on a never ending Chinese economic miracle?

    New leadership

    In Malcolm Turnbull – who only rejoined the Liberal Party in the early 2000s after careers as a journalist, barrister and banker – Australia for the first time in forty years doesn’t have a party apparatchik as Prime Minister.

    While this wasn’t a problem during the 1970s and 80s under Fraser and Hawke, by the 1990s the shrinking membership base of Australian political parties meant increasingly the ‘talent’ coming up the ranks was lacking perspective outside the narrow factional groupings most of them were beholden to.

    This became brutally apparent with the last three Prime Ministers who were fully hostage to their party factions. In Gillard and Abbott Australia had two party operatives who were no doubt talented in internal party manouvering but hopelessly out of their depths as government leaders – Abbott often seemed to be more interested in settling the battles of 1980s Sydney University student politics than governing the country.

    Describing Prime Minister Rudd would take a thesis in political psychology which is way beyond the scope, or interest, of this writer.

    The consequences of this were an Australian political leadership that was disinterested in the real economy beyond guaranteeing the social compact that property prices would double every decade and ensure their support in the key swing electorates of suburban Australia.

    An insular business community

    For the business community the insular focus of Australian society and its politicians worked well too. As the economy turned inwards in the 1990s under the Keating and Howard governments, so too did Australia’s conglomerates who realised clipping the ticket of a consumer economy was far easier than competing on global markets.

    The best example of this were Australia’s banks which essentially gave up on lending to business unless it was guaranteed by property. This graph from Macrobusiness illustrates just how the nation’s banks focused on property speculation.

    Australian bank lending, courtesy of Macrobusiness.
    Australian bank lending, courtesy of Macrobusiness.

    That focus on housing and consumer spending underpinned on rising property prices distorted the entire business sector and ingrained in the Australian psyche that the key to riches and prosperity was to get a relatively low skilled ‘safe job’ and borrow as much money as possible.

    A good example of this are the regular stories of sweet twenty something wunderkinds who have built multi million dollar property portfolios while working in pizza shops or as administrative assistants.

    Possibly the greatest damage Australia’s property obsession has been on the nation’s youth where the message has been ‘don’t gain a globally competitive skill set or education, just get an entry level job at the real estate agents and buy as much property as the bank will allow you.’

    Turnbull’s challenge

    Like Gough Whitlam, the last Prime Minister not a creature of their party factions, the reform challenge facing Turnbull is immense as 25 years of complacency have left Australia with an uncompetitive economy – as it had for the incoming Labor government of 1972 – with added complexity of having to maintain property prices to keep its economic miracle and social compact ticking over.

    The similarities to Whitlam are also striking in the support Turnbull has from the population. One of the striking things on returning to Australia after spending most of the last three months in the United States has been the sense of relief that the inept horror movie of the Abbott government (Attack of the Clueless Zombies) is over and a realisation that Australia has actually entered the 21st Century and not regressing back into the 19th.

    Agendas for reform

    Entering the 21st Century won’t be easy though for Australia. Completing the reforms of the education sector, started half heartedly by Gillard and then trashed by Abbott in settling the scores of his student politics days, is one major challenge along with reforming tax and social security systems that focuses on asset hoarding and speculation over productive investment.

    Possibly a greater challenge is to wean the Australia business sector off its ticket clipping mentality and rediscover its desire to compete globally. It may well be that encouraging the startup sector makes more sense in rebuilding the economy’s competitiveness as many of the nation’s insular conglomerates and their well fed executives are too used to milking the domestic consumer rather than taking on the world.

    The end of kitchen renovations

    The biggest challenge of all though will be to wean Australians off their property addiction, particularly those under 50 who have neglected their global skills as they focused on renovating their kitchens.

    Given the scope of these reforms, such an agenda will require a clear mandate from an electorate that has been complacently accepting guaranteed good times as long as refugees are turned back, the terrorists among us imprisoned and gay couples prevented from marrying for the last 25 years. Making the argument for change is probably going to be Malcolm Turnbull’s greatest task.

    For Australia the stakes are high. It’s not likely the 21st Century will be as kind to The Lucky Country as the Twentieth was.

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  • Opportunities in broken systems

    Opportunities in broken systems

    “Taxi drivers are good people, they are just treated badly”, Uber founder Travis Kalanick told Salesforce CEO Marc Benioff at Dreamforce last week.

    Kalanick flagged how in most cities around the world the taxi industry is broken. Nowhere is that more true than in Australia and a piece I wrote for Business Spectator about the disruption to the nation’s taxi industry illustrates that well.

    The success of Uber in disrupting those markets – although it should be noted the company is far from becoming profitable – shows the real opportunities lie where existing markets are broken or distorted.

    If you’re benefiting from a broken market then this is a risk to your business. For outsiders, it’s an opportunity.

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  • Winning the global fintech race

    Winning the global fintech race

    One of the things that strikes you when wandering around London’s Docklands district is the sheer amount of advertising for financial technology companies.

    That London has established this position should surprise no-one, its civic and national leaders have been aggressive in maintaining the city’s position as technology has swept through the banking sector.

    One of the notable things when interviewing the Chief Executive of London and Partners, Gordon Innes, two years ago was how engaged both the city’s business and political leaders were in the development of the town’s technology sector and the financial industry was a natural focus.

    An example Innes gave of that engagement was the co-operation between the offices of the Prime Minister and the London Mayor where staffers meet on a monthly basis to agree on business and technology policy, which is then put into action by Westminster and the UK Parliament.

    Poaching the Aussies

    The benefits of that co-ordination and focus are global, with the London fintech sector attracting startups from as far as Australia.

    Australia’s experience, or lack of it, in the fintech sector is notable. As the story linked above mentions, the UK Trade and Investment agency actively scouts out promising businesses while the local state and Federal equivalents sit on the sidelines (disclaimer: I worked for the New South Wales government on its digital economy strategy).

    For Australia, the late entry into fintech doesn’t bode well. The country’s financial sector is overwhelmingly weighted towards domestic property speculation – a structural weakness seen as a strength by most Australians – and the country’s high costs make it tough for startups.

    Defining a competitive advantage

    High costs in themselves aren’t a barrier to a city’s success – London, New York and San Francisco themselves would be among the highest cost places to do business on the planet.

    To justify those costs a city needs a competitive advantage and there’s little to suggest Sydney or Melbourne have anything compelling as a financial centre beyond a bloated domestic banking industry fixated on residential property.

    Two of the arguments used to support Australia’s claims are it is on the doorstep of Asia and it is in the same timezone as the growing East Asian powerhouses.

    Timezone myths

    If timezones do matter in modern business, the sad truth for the Aussies is the powerhouses themselves – specifically Shanghai, Hong Kong and Singapore – are in roughly the same longitudes so any time differentials aren’t great.

    Being on the doorstep of Asia is probably one of the greatest Australian myths of all – it’s actually quicker to fly from Beijing to London than it is to Sydney. London might be on the edge of Europe – one US entrepreneur once told me how they can get Spanish developers into the UK in an afternoon – and New York is the gateway to the United States however there’s little reason to go Down Under for any other reason than to visit Australia.

    The power of history and focus

    Comparing London to Sydney is useful though as it shows the power of history and trade routes. London became a global financial centre because it was the financial centre of a global empire just as New York is today and possibly Shanghai in the not too distant future.

    For the Aussies, the trade routes aren’t so encouraging in indicating the country has a future as a financial sector. Even ignoring history, the commitments of governments and local corporations are at best half-hearted compared to their global competitors – as we see with London poaching Australian businesses.

    One of the strengths in those global centres is a constant re-invention and the ability to adapt to changing circumstances – how China adapts to a rebalanced economy will define whether it remains a global economic power – and in the UK the government is looking at the next big things in biotech and the Internet of Things, two areas where it has strengths and can attract global investment and skills.

    For countries and regions aspiring to be global players, they need not just to be playing to their own strengths but also to where the future lies and not be late entrants into the current investment fad.

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  • Are small businesses too old and slow?

    Are small businesses too old and slow?

    Yesterday I hosted the second day of the CPA Australia Technology, Accounting and Finance Forum that looked at how the accounting profession is being affected by the changing technology landscape.

    There’s plenty to write about from the day and how the accounting profession is facing technological change which I’ll write up shortly but one theme from the day was striking – that older small businesses owners are struggling to deal with adopting new tech.

    Gavan Ord, the CPA’s policy advisor warns older practitioners are opening themselves to disruption and  the Australian business community is in general is at risk as older proprietors aren’t investing or embracing technology at a rate comparable to their overseas competitors.

    Older small business owners

    That older skew in small business operators is clear, in 2012 The Australian Bureau of Statistics found 57% of the nation’s proprietors are aged over 45 as opposed to 35% of the general population.

    Even more concerning is many of those small business owners expect to retire with a 2009 survey finding 81% were intending to retire within ten years – it would be interesting to see how those ambitions changed as the global financial crisis evolved.

    A risk to the broader economy

    This blog has flagged the risks of an aging small businesses community previously, but Gavan Ord’s point flags another risk – that older proprietors being reluctant to invest in new technology means a key segment of the Australian economy is unprepared for today’s wave of technological change.

    A key message from the CPA forum was that the shift to cloud computing is radically changing the business world as sophisticated data management, analytic and automation tools become easily available. Companies, and nations, that don’t take advantage of modern business tools risk being left behind in the 21st Century.

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