Australia | Paul Wallbank - Communications Professional

Winning the global fintech race

Winning the global fintech race – why history and focus matter

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.

Are small businesses too old and slow?

Does an aging small business population pose a risk to the economy?

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.

Diversifying South East Queensland

Is being designated a ‘smart region’ enough to diversify South East Queensland’s economy?

Australia is one of the world’s most urbanised countries with the bulk of the nation’s population clustering in half a dozen centres mainly strung along the east coast of the continent.

The northernmost of Australia’s population centres is South East Queensland, a sprawling collection of suburbs extending from the upper class enclave of Noosa Heads down to the Gold Coast and the New South Wales state border.

Cisco believe this sprawling region of three million people can become a ‘Smart Region’ with the use of technologies such as intelligent lighting and parking, citizen applications, and smart power metering could add up to 30,000 jobs and $10 billion of value to the community over coming years.

“The residents of South East Queensland told us they want to experience greater convenience and integration of public transport, greater digital engagement and intimacy in their cities, more reliable local government services, and new digital ways to further reduce the cost of red tape,” said Cisco Australia & New Zealand Vice President Ken Boal in releasing the South East Queensland: A Smart Region report.

Local civic leaders in the cities making up the South East Queensland conurbation see this as an opportunity to grow their economies. “The future of cities and regions and their ability to create enduring employment opportunities are entirely linked to their digital capabilities,” says Sunshine Coast Mayor Cr Mark Jamieson while Ipswich Mayor Paul Pisasale said Ipswich was already preparing for a strong future as a digital city.

“We have recognized that building and taking advantage of digital highways now will set Ipswich on a secure and successful path to capitalise on the ballooning digital economy,” said Cr Pisasale.

For South East Queensland, the challenge in creating new industries and jobs is becoming acute. The Australian miracle economy has left the region – like most of the nation – hopelessly uncompetitive and the bulk of employment is in domestically facing service industries underpinned by property prices.

In fact, the residential construction industry has been the mainstay of the SE Queensland economy and the region remains probably the most economically volatile of the Australian conurbations given its high dependence upon the building sector.

The digital economy does hold out hope for diversifying South East Queensland’s economy from building and domestic tourism, but the work is just beginning. Cisco’s smart region initiative is a first step, but there’s much more work to be done by business and civic leaders.

Brisbane image, “Brisbane CBDandSB” by Stuart Edwards. – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons – https://commons.wikimedia.org/wiki/File:Brisbane_CBDandSB.jpg#/media/File:Brisbane_CBDandSB.jpg

Cisco expands its innovation centre network to Australia

Cisco opens its latest innovation centre in Perth to focus on the oil and gas industries

Today Cisco launched their latest Internet of Everything Innovation Centre in Perth, Western Australia. The facility joins the seven existing centres around the globe which includes Rio de Janeiro, Toronto, Songdo, Berlin, Barcelona, Tokyo and London.

As a joint venture with resources company Woodside and Curtin University, the centre will initially focus on the gas industry and will include a state-of-the-art laboratory, a technological collaboration area, and a dedicated space to show the Internet of Things in action.

Oil and Gas is one of the key sectors for targeted by Cisco in their Internet of Everything push with Brad Bechtold, the company’s Energy Lead, telling Decoding the New Economy earlier this year how the IoT is expected to deliver an eleven percent reduction of costs for the $1.5 trillion dollar a year industry.

Bechtold believes remote sensing and operations will be the driver of many of the cost reductions along with detailed analytics enabling more efficient operations.

Many of these technologies will be tested as part of Woodside’s Plant of the Future gas project with CEO Peter Coleman saying the scheme will link company’s knowledge base with artificial intelligence, data analytics, and advanced sensors and control systems.

“We are taking a collaborative approach to enhancing our operations as part of our digital transformation journey. This partnership will create a globally competitive centre for excellence that could be leveraged in our LNG operations, as we progress our remote operations capabilities,” Coleman said.

The Perth centre intends to bring together start-up companies, industry experts, developers, researchers and academics in an open collaboration environment to create a “connected community” focused on cloud, analytics, cyber security and IoT network platforms.

The Australian Commonwealth Science, Innovation and Research Organisation (CSIRO) has also flagged it intend to join the hub as part of its Square Kilometer Array deep space mapping project.

Another branch of the Australian hub is expected to open in Sydney later this year.

The Chinese sock fallacy

Simplistic business assumptions often turn out to be more complex than first appears.

“We have an addressable market of four hundred million dollars a year. It’s a huge opportunity and we could win half of it.”

The business manager speaking – who we’ll call John – was talking about the potential market for his company’s small business product that promises to earn around two hundred dollars a year.

How John came to the four hundred million dollar number was simple. He multiplied the two hundred dollars by the two million small businesses in Australia.

John had fallen for the ‘Chinese sock fallacy’ where a simplistic assumption creates the illusion of a huge market. The idea being that there are a billion people in China all of whom will own five pairs of socks so therefore there’s demand for five billion pairs of socks.

The key part of the fallacy is not knowing whether those billion Chinese or two million Aussie small businesses want your socks or cloud computing services.

Other complications include who are the incumbents currently selling to that market, how many pairs of socks do most Chinese people own, how often do they replace them and what do they pay for a new set?

Suddenly things get complex and the assumptions don’t look so promising as we find with John’s projection of his market.

Looking at the figures for Australia’s small business sector with 61 percent of enterprises having no employees, it’s hard not to conclude most are contractors or consultants who mostly don’t need John’s cloud service.

So the Chinese sock fallacy strikes again.

The pulse that’s barely beating

A survey on Australia’s workforce and ICT education reveals some important questions for the nation’s managers and leaders

Earlier this week Deloitte Access Economics released Australia’s Digital Pulse, an overview of how the nation is responding to the needs for the IT related jobs required in a changing global economy.

Deloitte pointed out that most of the Australian economy’s IT jobs aren’t actually in the IT industry with less than half the sector’s employment being with technology companies and the majority of software writers and engineers employed by everything from finance companies to retailers.

This ties in with results found by recruitment website Indeed.com whose Senior Vice President, Paul D’Arcy, visited Australia last month and pointed out globally three quarters work of software developers work for non-tech organisations an in the US that proportion drops to seven percent.

As technology becomes more embedded in industries the need for workers who understand the tools becomes critical. This isn’t a new thing as we saw word processing and spreadsheet software enter workplaces twenty years ago which required typists, secretaries and accountants to become far more acquainted with the workings of personal computers than they otherwise would have cared to.

Intriguingly in Australia during the twenty-five years that computers and the internet have taken over the workplace interest in IT careers and enrolments in computing subjects has risen and fallen.

Between 2000 and 2008 the number of students doing IT related courses halved as Australian businesses cut back on tech spending, offshored their work and bought in an army of 457 visa workers to replace local workers.

Coupled with an economy where renovating kitchens or driving mining trucks is better rewarded than most technical jobs, it wasn’t surprising that students chose not to study computer science related subjects. In the last few years undergraduate numbers have started to tick upwards as the resources boom has faded and coding has become cool due the successes of people like Facebook’s Mark Zuckerberg.

Interestingly, despite the dearth of entrants into the sector over the last fifteen years, Deloitte found the overall Australian ICT labour market appears to be adequately supplied at present, however the expected increase in future demand for ICT workers means that skills shortages could constrain future economic activity.

With many things Australia has been lucky for the last twenty years and our neglect of ICT training has been one of many fields we’ve been able to neglect. As we’re seeing with the internet of things, cloud computing and big data all becoming a common part of business the skills we’re going to need in our workers are going to change.

The challenge for both companies and our education system is give today’s kids the skills they, and the nation, needs to be globally competitive. We may not stay so lucky over the next two decades.

Australia and Alan Bond

Deceased tycoon and embezzler Alan Bond’s life story provides a good parallel for Australia’s economic development

Last week convicted fraudster and one time Australian national hero Alan Bond passed away. In many respects Bond’s rise, fall and comfortable dotage tells us much about Australia today.

Originally born in England, Bond was a ‘ten pound pom’ – like this writer and two of Australia’s last three Prime Ministers – whose family took advantage of subsidised immigration programs to leave the cold climate and dismal British economy for sunnier, more prosperous parts.

Building the Australian dream

In Australia Bond prospered. On leaving school he became a sign writer and set up a business where he quickly gained a reputation for sharp practices and cutting corners. However as with much of his generation real wealth was to be made in property speculation.

As Australian cities expanded through the 1960s, developers and speculators were at the forefront of the nation’s economic growth. Perth, Bond’s home town, doubled in size between 1961 and 71 and the once dodgy sign maker made his mark as a wheeler and dealer as he traded properties and build his fortune.

As the 1980s began a cashed up Bond was ready to take advantage of the economic orthodoxy of the time that to compete internationally, Australian businesses had to consolidate domestically to gain the scale required to be global players.

Bond added to his claims in 1983 when he wrested the America’s Cup out of the cold dead hands of Long Island’s Newport Yacht Club. Suddenly businessmen were the national heroes and Australians, particularly politicians, fell over themselves to bask in the glow of the nation’s entrepreneurial summer.

Dancing on the world stage

Around the time of the America’s Cup win the newly elected Hawke Labor government deregulated the Australian banking industry providing a ready supply of hungry financiers prepared to fund the global ambitions of Bond and his contemporaries.

The rest of the decade saw Bond leading a wave of Australian entrepreneurs using easy money to build international empires. Bond himself ended up building one of Australia’s brewery duopoly, holding prime Hong Kong property, buying the nation’s most popular TV station and owning a Chilean telephone company.

Naturally much of his money ended up in Switzerland and Lichtenstein, something that would work in his favour early in the 1990s.

The larrikin streak

Bond’s disregard for the law, investors and anyone unfortunate to get between his cronies and a bag of money – politely described as a ‘larrikin streak’ by many – continued as regulators and governments indulged his behaviour.

One good example of the free pass he received from Australian regulators in the 1980s were his insider dealings with his then mistress Diana Bliss, the latter of whom exquisitely timed a purchase of a small energy exploration company stocks in 1988 a week before Bond Corporation announced a take over offer.

Regulators at the time dismissed any claim of insider trading after being assured that neither Bond nor Bliss would ever countenance such behaviour, the Sydney Morning Herald later reported.

When the luck runs out

Eventually the 1980s Australian economic miracle and the entrepreneurs leading it proved to be chimeras based upon property valuations. When the 1990 downturn hit, the rampaging Aussie business heroes all quickly fell as their overindebted empires collapsed.

Bond’s personal fortune however survived thanks to his judiciously salting away assets controlled by loyal advisors. His 1994 bankruptcy hearing ended in farce when he successfully convinced the court he was suffering dementia and couldn’t remember anything of his business dealings.

He couldn’t stay too far ahead of the courts however and ultimately Bond served two prison terms totalling four years for dishonestly pillaging companies to keep his operation afloat.

At the same time Bond was being chased through the courts, Australia’s banks were licking the financial wounds incurred from their irresponsible exposure to the nation’s entrepreneurs. The lessons they learned define modern Australia.

Bearing the brunt

The country’s small business community eventually bore the brunt of the Australian banks’ losses as lenders’ balance sheets were rebuilt through high interest rates, massively increased fees and charges and tightened lending criteria. Many of those high fees and rates continue to cripple Australian business twenty-five years later.

Adding to the Aussie small business sector’s woes, the 1998 Basel I Accords were coming into force favoring property lending over business finance. Increasingly it became harder for any Australian businessperson to raise money from local banks while property speculators were welcome.

Over the next twenty years the result was stark. One chart from the Macrobusiness website illustrates the huge growth in Australian residential property lending and the stagnation of business finance since 1991. Only at one stage, in 2008, has business lending matched the levels of the late 1990s.

That shift to an economy based upon property prices, particularly speculation on residential accommodation, has served Australia well with the nation not experiencing a recession since the 1990s downturn.

The Australian economic miracle

Australia’s success allowed Reserve Bank governor Glenn Stevens to sneer in 2010 that Microsoft founder Bill Gates’ warnings about the Australian economy lack of diversity were misguided and foolish – the mining boom coupled with never ending property price growth guaranteed the nation’s prosperity.

In this respect, all Australians have become Alan Bond. Just as the bold riders of the 1980s boom based their future on property valuations so too have Australian households and the entire economy thirty years later.

Hopefully for Australians in general it will end better than it did for Alan Bond in 1996.

One though should not weep too much for Alan Bond, after being released in 2000 he quietly rebuilt his empire and in 2008 BRW magazine estimated his wealth at $265 million and named him among the 200 wealthiest people in Australia.

Time will tell if Australians share the deceased tycoon’s luck but in a way we’ve all become little Alan Bonds now in our dependence upon the valuations of our real estate holdings and the indulgence of those financing our lifestyles.

It may well be having a few bob hidden away in Switzerland might the best way for Australia’s indebted homeowners to protect their future.

Tech and tax write offs

Last week’s expansion of depreciation allowances for Aussie businesses is an opportunity to refresh your company’s tech

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.

The Inter-Generational Report – Australia’s flawed roadmap

the Inter-Generational Report is of little use in planning for the challenges and opportunities facing Australia over the next thirty years.

“If you don’t know where you are now, you don’t know where you’re heading” says science presenter Karl Kruszelnicki – aka Dr Karl – in the publicity for the Australian government’s latest Inter-Generational Report.

Doctor Karl is part of a glossy campaign based around the report with the grand title of The Challenge of Change. The problem with the report is that it barely identifies any of the changes, let alone the effects, that might affect the economy over the next forty years.

The aim of the IGR is to identify the long term trends in the Australian economy and provide a basis for policy development. The first was delivered in 2001 and one has been produced roughly every five years since, making this the fourth.

An aging population

Much of the 2015 IGR hangs on the observation that Australia’s population is aging; stating the bleeding obvious that became apparent when the nation’s post World War II baby boom came to an end in 1965.

While the fact Australia’s population is aging despite massive immigration in recent years is undeniable, most of the report is a mish mash of motherhood statements that expose the key contradictions – dare one call it schizophrenia – lying at the heart of Australian politics and society.

The motherhood statements are all quite valid; the nation needs to develop better infrastructure, build a more skilled workforce and develop new industries as the mining boom sputters to a messy end.

Cutting education

Sadly the actions of Australian governments at both state and Federal level are in direct opposition to these laudable aims. The discussion on training and education illustrates the contradictions;

Under the ‘proposed policy’ scenario, Australian Government spending on education and training is projected to decline to 1.0 per cent of GDP by 2054-55. However, these figures do not take into account the significant increase in lending to students through the higher education and vocational education and training loan schemes.

Despite recognising the importance of training the workforce in order to keep the nation competitive the Federal government is actually forecasting to reduce spending on education and worker training.

Given the typical government education spending among developed nations is around 5% of GDP – in Australia total government spending is 5.1% for 2014 – this indicates a lot more cost to be pushed onto states to make up the shortfalls, if it is being made up at all.

A lack of investment

Particularly notable in the report is the scant talk about what industries are going to develop over the next thirty years or where the money for investing into them is going to come from.

The little discussion there is around private sector investment revolves around the superannuation system – the Australian equivalent of the US 401(k) personal pension accounts where workers are compelled to contribute into private schemes.

Total Australian superannuation assets have increased strongly since compulsory superannuation was introduced in 1992. At the end of 2013-14, total superannuation assets were $1.84 trillion, around 116 per cent of GDP. As the superannuation system matures and wages grow, total Australian superannuation assets are expected to continue to increase and make a growing contribution to national savings.

This statement ignores how the pool of superannuation funds is going to decline as baby boomers and Generation X reaches retirement age and starts to draw down its savings.

An even more important aspect missed by the authors are the risks Australian workers are exposed to as the only thing guaranteed by these funds are the rich fees charged by the managers.

During the global financial crisis of 2008 both the returns and asset bases of superannuation funds were hit hard with some funds suspended from trading and withdrawals restricted. The risk of similar event happening in the next forty years and its impact on household savings and business investment is simply ignored.

Ignoring the elephant

The key to understanding the Australian economic miracle of the last 25 years lies in the property market where housing lending has been boosted at the first sign of economy trouble.

As a consequence Australian households have become amongst the most indebted in the world and the bulk of domestic savings are in housing assets. Housing is the cornerstone of the Australian economy and the source of its middle class wealth.

Remarkably in the entire document the words ‘housing’ and ‘property’ only appear twice and three times respectively.

In ignoring the effects of housing on both state and Federal budgets, the bureaucrats have ignored the single most important factor in Australia’s wealth.

Given even in the most favorable projections, baby boomers and Generation Xers will be selling down their property portfolios to fund their retirements during the IGRs forecast periods, it is nothing short of amazing there is little mention of such a critical factor.

A flat line future

An important feature of the IGR is its focus on government spending with a strong ideological bent supporting the Australian political obsession with privatisation and currying favours from the deeply discredited and corrupt global ratings agencies.

This blinkered view of the world makes it hard for the authors to give a balanced analysis of the risks presented to the Australian economy and this weakness is exacerbated by poor analysis.

Each of the reports has featured ‘flat line’ projections for growth, unemployments and trade. For example here are the terms of trade projections from the current report.

Such analysis is effectively useless and, because of each of the reports features such lazy forecasting, the projections in each time period end up being distorted by the circumstances of the day; forecast economic growth for the 2020s across the four report has varied between 1.6 and 2.8% over the reports.

Indeed the latest report is possibly the most optimistic with a 2.8% forecast growth rate which is at odds with the comparatively pessimistic view of 2.3% in the halcyon days of the 2002 report.

Lazy analysis

The IGR’s forecasters justify the flat line analysis by claiming long term trends will be due to underlying changes in the economy which will smooth out business cycles.

It is also important to keep in mind that the long-term projections look through business cycles and assume a smooth growth path through to 2054-55. In reality, it is almost certain that any economy will go through such cycles over a 40 year time period. However, the outlook to 2054-55 will not be driven by these cycles, but by the underlying trends in population, participation and productivity.

While this is to an extent true as short term cycles oscillate around the longer term trends, the forecasters do nothing to identify what will drive growth in the Australian economy for the next thirty years.

The IGR’s greatest failure is in not considered the structure of the economy and the workforce over the next three decades is its greatest flaw. How people are working and where they are working is going to shape the nation and government revenues.

Compounding the report’s failure to at least attempt to forecast the workforce’s changing structure, the authors’ projection of unemployment are almost an insult.

As this blog has pointed out constantly over recent years, the workforce is undergoing fundamental shifts in the face of automation, robotics and intelligent systems. While it may turn out five percent is the average rate of unemployment over the period we can expect major fluctuations in the workforce as industries are dislocated.

In turn those fluctuations are going to affect government revenues and expenditures, not to mention their influences on home prices and the superannuation balances of those facing extended periods of unemployment.

A flawed roadmap

Ultimately the Inter-Generational Report is of little use in helping policy makers and the community plan for the challenges and opportunities facing Australia over the next thirty years.

Like the Australia in the Asian Century report it’s a curiously selective document that fails to consider most of the external factors that are going to shape societies over the upcoming decades.

Just as the Australia in the Asian Century paper is a dated and discredited document a mere three years after its release shows the calibre of advice being given to the nation’s leaders.

While Doctor Karl is exactly right that we can’t know where we’re heading unless we know where we are, this report fails to acknowledge how Australia came to be in its privileged position and what the opportunities are in a radically changing world.

It may well be that The Lucky Country stays lucky to the middle of this century and caps off two hundred years of good fortune. If that does happen though it will not be because of this flawed and shallow report.

The authors of the Intergenerational Report ducked the challenge of change.

The risks of government surveillance – how Australia’s data retention laws hurt

The Australian government is about to pass data retention laws which will be expensive and won’t work

This morning I’m speaking on ABC Radio’s Overnights about the risks of the Australian government’s law to force telecommunications companies to retain users’ metadata for two years.

While the act, currently before the Senate having passed the House of Representatives last week after the poorly named ‘opposition’ Labor Party supported it, mandates that telcos and ISPs will have to retain the details of users’ connection times, places and type of device for two years and that government agencies will be able to access this data without a warrant.

The program was broadcast on 26 March 2015 at 4.15am Eastern Time with Trevor Chappell and is can be listened to on the ABC radio website.

Some resources on the data retention bill follow;

Clawing back our data – Telstra makes metadata available to customers

Australia’s Telstra responds to government data legislation by opening metadata to users

Today Australian incumbent telco announced a scheme to give customers access to their personal metadata being stored by the company.

In a post on the company’s Telstra Exchange blog the company’s Chief Risk Officer, Kate Hughes described how the service will work with a standard enquiry being free through the web portal with more complex queries attracting of fee of $25 or more.

The program is a response to the Australian Parliament’s controversial intention to introduce a mandatory data retention regime which will force telcos and ISPs to retain a record of customer’s connection information.

We believe that if the police can ask for information relating to you, you should be able to as well.

At present the scheme is quite labor intensive, a request for information involves a great deal of manual processing under the company’s current systems however Hughes is optimistic they will be able to deal with the workload.

“We haven’t yet built the system that will enable us to quickly get that data,” Hughes told this website in an interview after the announcement. “If you came to us today and asked for that dataset it wouldn’t be a simple request.”

The metadata opportunity

In some respects the metadata proposal is an opportunity for the company to comply with the requirement of the Australian Privacy Principles that were introduced last year where companies are obliged to disclose to their customers any personally identifiable information they hold.

For large organisations like Telstra this presents a problem as it’s difficult to know exactly what information every arm of the business has been collecting. Putting the data into a centralised web portal makes it easier to manage the requirements of various acts.

That Telstra is struggling with this task illustrates the problems the data retention proposals present to smaller companies with far fewer resources to gather, store and manage the information.

Unclear requirements

Another problem facing Hughes, Telstra and the entire Australian communications industry is no-one is quite clear exactly what data will be required under the act, the legislation proposed the minister can declare what information should be retained while the industry believes this should be hard coded into the act which will make it harder for governments to expand their powers.

What is clear is that regardless of what’s passed into law, technology is going to stay ahead of the legislators, “I do think though this will be very much a ‘point in time’ debate,” Hughes said. “Metadata will evolve more quickly than this legislation can probably keep pace with so I think we will find ourselves back here in two years.”

In many ways Australia’s metadata proposals illustrates the problems facing governments and businesses in managing data during an era where its growing exponentially, it may well turn out for telcos, consumers and government agencies that ultimately less is more.

Links of the day – Tesla in Australia

Chinese tourists and Mao’s influence on the US Marines are today’s links

Chinese tourism and Mao’s influence on the US Marines are today’s links along with Tesla’s slow start in Australia.

Tesla rolls out in Australia

As part of Tesla’s Australian launch of its electric vehicles, the company has announced a chain of charging stations along the country’s East Coast, unfortunately not everyone is pleased to see them.

Chinese tourists look to Japan and the US

Japan and the US are the most sought after destinations for Chinese tourists reports the Wall Street Journal. Both countries have relaxed travel restrictions for China nationals in the last year and now they are reaping the benefits, particularly Japan which is only a few hours flight from Shanghai and Beijing.

Interestingly, New Zealand and Australia are also big improvers on the list with them coming in third and fourth on the list.

The US Marines’ Maoist connection

A curious article on Medium describes the origin of the term ‘gung-ho’ and how it was introduced to the US Marines through a Mao sympathising American General. “He may be red, but he’s not yellow” is how his contemporaries described Brigadier General Evans Carlson.