Paul Wallbank – Brilliant Communications

Tag: Australia

  • When governments misuse data

    When governments misuse data

    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.

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

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

    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.”

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  • Maintaining the home base – why many startups don’t fully move to Silicon Valley

    Maintaining the home base – why many startups don’t fully move to Silicon Valley

    This is the third of four stories I did for The Australian on why local entrepreneurs are making their way to the United States’ Bay Area. 

    For all the benefits of moving to the US, many startup founders want to remain down under. According to last year’s Startup Muster survey of Australia’s tech community, only 18% of local entrepreneurs intend to move overseas, and even those going offshore keep the bulk of their operations Down Under.

    The reasoning for keeping operations in Australia vary, but for those focusing on Silicon Valley costs are a key concern. Didier Elzinga of Melbourne’s Cultureamp decided to keep management and the bulk of operations in the company’s home town due to several aspects. “For us there are many great benefits, including lifestyle, but commercial decisions play into it too,” he says.

    “Our engineering team is based in Melbourne, and we are happy not to be competing for talent in the bloodbath that is Silicon Valley. In the longer term we also believe the world is moving to the East – and Australia has the opportunity to be the eastern most tip of the West, or the western most tip of the East.”

    Needing a US presence

    Having a North American presence proved essential for the sentiment measurement company, “for us a US office was an easy decision as most of our clients were tech companies based in the Bay Area” says Elzinger.

    “We had someone working in customer success there from fairly early on, and then we officially beefed up our presence when one of our co-founders Jon Williams moved to San Francisco in 2014.” Since establishing a San Francisco base, Cultureamp has raised six million dollars in capital raisings and opened offices in New York and London.

    Running a global business from Melbourne can be demanding but Elzinger believes it is worthwhile, “other than timezones we’ve yet to run into any major obstacles,” he says. “For me as CEO, it can mean a lot of travel, I try and get to the States at least once a quarter, most times more. But overall, we feel we’ve made the right decision, and are proud to grow a global company from Melbourne.”

    The travel can be demanding for an Australian based business and Temando’s CEO Karl Hartman found the demands of regularly flying across the Pacific left the company at a disadvantage. “Previously when I was flying here once a quarter, things moved gradually,” he recalls. “Being here means we can move much more quickly, some things need to be face-to-face.”

    The expense of Silicon Valley

    A San Francisco base comes at a cost though, “it’s very expensive here.” Hartman warns, “we have a focused team here in the US that is largely focused around partnerships, project management and go-to-market. But we keep our developers largely in Australia.”

    “I’d caution any Australian company looking at coming here to fill engineering jobs that coming here is very expensive, I’d argue you can find very good talent in Australia,” he says. “I’d also argue it’s easier for Aussie companies to raise seed investments in Australia.”

    Holding costs down is particularly critical for earlier stage companies points out Affinity Live’s Geoff McQueen. “It’s about a third less to employ a developer in the Illawarra than the Bay Area,” says McQueen who has kept his development team in the company’s home town of Wollongong. “Saving those costs gives a startup with limited funding a lot more time.”

    Keeping the skills base

    Data analytics startup Instaclustr is another keeping most of its operations in Australia while opening offices in the United States, Europe and Japan. “We established a leadership team and sales office in the US, but all of our engineering and support services are located in Australia, at the University of Canberra,” CEO Peter Nichol explained to The Australian.

    Instaclustr, which recently raised $2 million in seed funding for its data analytics service running on the open source Apache Cassandra system, chose to maintain operations in Australia to avoid having to compete with the salaries and expectations for high-tech staff in the US.

    A favourable Australian dollar and a relationship with local education institutions were also key factors says Nichol, “the skill sets that we are chasing are rare, so we have decided to built a knowledge base and big data experts through a partnership with the University of Canberra.”

    Keeping close to customers

    Like most tech companies having a US presence, if only for management and sales, has proved essential for Instaclustr. “The main reason,” Nichol says, “was to be to near our customers and partners from a physical and time zone perspective. Over 60% of our customer base is located in North America and 100% of ecosystem partners.”

    Despite the benefits of remaining in Australia, the movement of Australian entrepreneurs overseas is increasing. While only eighteen percent of the 602 startups surveyed for the 2015 Startup Muster report intended to move overseas, it was an increase of fifty percent over the previous year.

    That many heading overseas want to keep operations and employment local should be encouraging for those trying to Australia into a global startup centre and has to be a factor in developing a local ecosystem and government policies that support it.

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  • Breaking the small business drought

    Breaking the small business drought

    In most developed countries the small business community is shrinking. What can governments and communities do to grow what should be the most vibrant sectors of their economies?

    What happens when a whole industry shuts down overnight? Australia is about to find when its motor industry effectively comes to an end this week.

    The fallout for the workers is expected to be dramatic with researchers reporting the soon to be laid off staff being totally unprepared for their predicament.

    So worrying is the predicament of those auto workers that Sydney tech incubator Pollenizer is offering small business workshops for laid off workers.

    Those workshops will be needed. One of the striking things about the research is just how few of the workers are interested in launching their own ventures despite their poor employment prospects in other industries.

    australian_ford_workers_employment_intentions

    While the auto workers are a group with relatively low levels of education and work experience, their reluctance to starting a business is shared by most Australians with the nation’s Productivity Commission 2015 enquiry on business innovation reporting the number of new enterprises is steadily falling.

    australian-business-exits-and-entries

    Despite Australia’s population increasing twenty percent since 2004, the number of new business is falling. The country is becoming a nation of risk averse employees, something not unsurprising given the nation’s crippling high property prices which puts entrepreneurs at a disadvantage.

    Australia’s reluctance to set up new ventures isn’t unique, it’s a worldwide trend with most countries not having recovered since the great financial crisis.

    The tragic thing with this small business drought is that it’s never been cheaper or easier to set up a venture as  Tech UK and payment service Stripe show in their list the software tools being used by ventures.

    Accessibility of tools or even government taxes and regulation isn’t the barrier in Australia. As the World Bank reports, the country is the eleventh easiest place in the world to start a new venture.

    In United States experience shows there’s a range of other factors at work dissuading prospective small business founders – interestingly the United States comes in at a mediocre 47th as a place to start a venture in the World Bank rankings.

    A healthy and vibrant small business sector is important to drive growth and diversity in the broader economy. The challenge for governments and communities around the world is to find a way that will spark the small business communities, in a world awash with cheap capital that shouldn’t be impossible but we may have to think differently to the ways we are today.

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  • The limits of how governments can help startup businesses

    The limits of how governments can help startup businesses

    Over this week I’ve been posting a series of interviews with the candidates for this week’s Sydney Lord Mayoral election. All of the teams have interesting schemes and ideas on how they can improve the city’s profile as a global tech centre.

    While each team’s plans are worthy, it’s worth asking exactly what governments can do to make their communities more attractive to businesses and whether short term subsidies and incentives can help.

    There is some evidence they can, prior to San Francisco changing its tax rules the city took second place to Silicon Valley in the southern Bay Area. In the last ten years, the city has become the focal point for the tech industry.

    However there is a counter argument that San Francisco benefited on a generational shift of lifestyle preferences away from the leafy suburban lifestyles of Palo Alto and San Jose to the grungy but walkable communities of the Mission and SOMA.

    The Bay Area though is a special case, Silicon Valley’s success as a tech hub is based upon massive Cold War tech spending that drove the region’s industry and its that high level support that probably tells us more about government support.

    In the case of London and Singapore, the successes have been due to the national governments putting in broader economic reforms and incentives. Also their proximity to Europe and East Asia respectively has made both cities attractive.

    On balance it’s those broader economic factors that make regions attractive as industries clusters – local incentives count little compared to access to factors like markets, capital and skilled labour. Taxation is, at best, a secondary issue.

    The biggest challenge for Sydney, and most Australian cities, is the the crippling cost of property. In 2013, staff.com released a survey showing Sydney to be second only to Zurich in the cost of establishing a startup.

    In many respects, the cost of property doesn’t really matter to prosperous industry hubs – San Francisco, London, Singapore and New York are all eye wateringly expensive and yet they still thrive – however all of those cities have better access to capital and markets, if not labour, than Sydney.

    Addressing Sydney’s chronic shortage of affordable accomodation is firmly in the state and Federal governments’ remit and beyond giving property developers a green light to build high rise apartments neither level of government has shown any interest in addressing it.

    Similarly, the tax structures which penalise Australian employees of high growth businesses and dissuade investment in early stage ventures are totally the responsibility of the Federal government and it’s hard to see that changing in the term of the current dysfunctional administration.

    The relative powerlessness of local governments leaves initiatives by the City of Sydney limited in scope and schemes to promote the city or offer incubator space are peripheral to the factors that encourage the development of a global industrial centre.

    Ultimately though, the question has to be how much any government can do to create a Silicon Valley, factors such as labour availability and access to capital come down as much to the community’s attitudes and business’ risk tolerances.

    So perhaps we focus on what governments can do for business. Maybe just providing a level playing field can be the best we can hope for.

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