Paul Wallbank – Brilliant Communications

Tag: economic development

  • When government support goes wrong

    When government support goes wrong

    Last year the Sydney startup and business communities were stunned by the SydStart startup conference announcing it was rebranding itself as StartCon and moving to Melbourne after the Victorian government had offered to fund the event.

    At the time StartCon’s Matt Barrie and the Victorian government were most certainly in love with Barrie describing how Melbourne was well placed to be Australia’s startup centre and highlighting the lack of support from the City of Sydney and the New South Wales state government.

    Sydney’s shame

    In Sydney, the announcement caused a great deal of hand wringing as the city startup and tech communities worried that government neglect would see the more proactive Victorian government attract businesses and talent.

    Now the friendship with Melbourne is over with Barrie publishing a scathing blogpost on the inertia and duplicity of the Victorian state government.

    The tale of StartCon and its falling out of love with Victoria holds a number of lessons for businesses being tempted by the siren call of government incentives and the risks to taxpayers.

    What can I announce today?

    The announceable culture is endemic in Australian politics. Having announceables is absolutely critical part a ministers’ life and their careers can defined just as much by not having enough good news to announce as being victims of bad press.

    In the last NSW Labor government, ministers had hard KPIs they were held to in cabinet which gave rise to Chatswood-Parramatta railway line probably being the most announced infrastructure project in history.

    While the current Victorian government may not have those formal measures, Small Business Minister Phillip Daladakis is a very good player of the announceable game. He’s a man with a future in state politics.

    The mistake of the StartCon organisers was to agree to public announcement before they had secured the money.

    Public service thinking

    I’d never heard of Dr Pradeep Phillip prior to his appointment to run LaunchVic but his previous position as secretary of Victoria’s Department of Health and Human Services doesn’t seem to immediately qualify him to run the state’s startup development agency.

    His conduct, and that of his staff, in the published correspondence chain are those of classic risk averse public servants. Not a bad thing when you’re dealing hospital procurement practices but when you’re dealing with startups and new businesses it would be nice to have someone with more relevant private sector experience.

    A notable part of the Victorian public service’s risk aversion is the language of the convoluted grant agreement where the state government may provide support. This, along with the classic attempt of shifting all responsibility away from the agencies, opens a lot of wriggle room for the government to get out of paying the publicly stated amounts.

    Equally the use of registered mail after weeks of ignoring emails smacks of institutional backside covering. This underscores the disconnect between public servants and the business world, particularly with smaller organisations, events and startups.

    The futility of government support

    For StartCon’s organisers their embarrassing and terrible Melbourne experience underscores the futility of depending upon government incentives to site your business or event.

    In choosing where to base a business important factors are the access to markets, labour and capital with affordable office space being another key issue. For event organisers, the access to reasonably priced venues and accomodation for the attendees – two factors where Melbourne has a real advantage over Sydney – are equally critical.

    Government incentives are almost irrelevant to those consideration and really only become the deciding factor if the competing locations are equal in the other respects.

    Counting the real cost

    The real damage though is to StartCon’s credibility – having made the public decision to move to Melbourne with much fanfare the climb down is a humiliation – but, more importantly the event is compromised in the eyes of its Sydney supporters. The chase for government money also draws a scent of hypocrisy among a group known for its Libertarian leanings.

    Equally however the Victorian taxpayers should be concerned at how their government is announcing support for businesses and events without real substance. One suspects that a fair proportion of Mr Dalidakis’ announceables have similar backstories.

    More importantly Victorian taxpayers should be questioning the nature of support – with the SydStart announcement there was widespread irritation in the Melbourne tech community that a Sydney based event should get such government backing and similarly funding foreign multinationals to setup Australian sales offices in the southern state’s capital is going to do much to build the state’s tech sector.

    Australian sovereign risk

    Something all Australian taxpayers and businesses should be concerned about is the unreliability of governments of both complexions at state and Federal level. Too frequently promises are broken leaving companies and communities out of pocket.

    The shutting down of the COMET scheme under the new Federal Labor government in 2007 and then the incoming Liberal government replacing the ALPs Commercialisation Australia program in 2013 are good examples of sovereign risk where entrepreneurs spent thousands of dollars and hours only to have the grants pulled without notice.

    Innovation schemes are only one example, almost every program is at risk when a new minister, let alone government, is appointed. It would be a foolish manager or business owner who would base their financial forecasts on any Australian government policy.

    As we saw in the City of Sydney elections, the real key to developing industry is to have an attractive, well serviced location with access to capital, skills and markets. Melbourne may well do that better than Sydney but it won’t be achieved by ministers bearing gifts.

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  • Cheap solar strands coal

    Cheap solar strands coal

    Last week Chilean power distributors signed a contract for solar generated power at the lowest rate ever, half the price of energy from coal powered generators.

    As  the cost of solar panels continues to fall, the need for coal and gas powered facilities continues to dwindle but given solar panels don’t need to be located in a central location, the nature of distribution networks is changing.

    With power generation becoming more localised, communities don’t need expensive connections to power grids. In disadvantaged regions and developing nations, villages that would have to wait decades to be connected, if at all, now have a pathway to dramatically improving their standards of living.

    Distribution companies that exploited their monopoly positions in providing power across wide networks are now having to reconsider the value of their expensive assets and lucrative business models.

    Those countries and companies who thought high coal prices would bolster their standard of living, such as Australia, must be rueing their focus on fossil fuels. The massive investments made by mining companies and compliant governments are now increasingly looking like stranded assets.

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  • Startups become a Sydney mayoral issue

    Startups become a Sydney mayoral issue

    There’s a mayoral election pending in Sydney and the talk of the city becoming a startup hub is becoming one of the issues.

    Over the next few days I’m hoping to interview each of the four major candidates on their policies regarding how they see Sydney competing against the likes of Singapore and Shanghai, let alone San Francisco or London.

    In 2009, I was working with the New South Wales state government on their Digital Sydney project which looked at how the state capital could become a global centre, one of the things we found was that the city had many of the attributes successful creative centres had – diversity, tolerance and access to talent.

    That project died in the face of bureaucratic ineptitude but the idea still kicks around with last week’s launch of the NSW Government’s Jobs For The Future report which, despite its opening thirty pages of buzzwords and waffle, contains some serious analysis of the state’s reliance on inward facing service industry jobs.

    Refreshingly, the NSW Government strategy looks beyond the current mania around tech startups based on the Silicon Valley venture capital model – something the Federal government’s Innovation Statement failed to do – and discusses how to encourage growth and investment in other emergent sectors both inside and outside the inner city startup communities.

    While Sydney can be an attractive place to live for the digital elite, it falls down in a number of areas with property being among the most expensive in the world, telecommunications being costly and unreliable coupled with a complacent corporate sector and a stingy investment community.

    Making the city more attractive is going to take a number of initiatives that including easing the cost of doing business, improving links between academia and industry along with tapping into Sydney’s diverse immigrant populations.

    Some of these factors are within the City of Sydney’s purview but most of them are state or Federal matters. By definition this limits what local politicians can do.

    Which doesn’t mean they shouldn’t try to do them and it’s good to see these topics have become issues in the local elections. For Sydney though, one suspects it’s going to business as usual until The Lucky Country’s luck runs out.

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  • England’s historical mistake

    England’s historical mistake

    A few years ago I interviewed the boss of a US software company. At the end of the discussion he mentioned how his business had moved most of its development operations to London from San Francisco.

    I was surprised at this – while San Francisco is one of the most expensive places in the world to do business, London is even pricier again.

    “We can get labour in the UK,” explained the CEO. “In the US if I want to bring in some developers I’ll be tied up by immigration for months, if not years. In London, I can get on the phone and have a bunch of coders on the plane from Barcelona tomorrow.”

    That ease of access is now threatened by the Brexit vote, should the UK leave the EU and give up on the free movement of workers across the continent then one of Britain’s core advantages is lost.

    Brexit is a historic mistake by middle England that now threatens to see the UK disintegrate as Scotland leaves and the Northern Ireland conflict reignite, the tech industry though will probably be one of the first victims.

    For the EU, this is a warning that reform of its institutions has to be a priority. One of the ironies of Britain’s vote is the monstering of Greece, Spain and Ireland following the 2008 global crisis that cost the EU much of its popular support was partly to protect London’s banks.

    The bigger issue though is the British voters’ distrust of institutions and elites – something that’s driving Donald Trump’s rise in the US.

    We live in interesting times.

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  • Indonesia looks to launch a thousand startups

    Indonesia looks to launch a thousand startups

    Can Indonesia create a startup tech culture? The 1,000 startups movement aims to try.

    The movement looks to encourage tech startups across the island nation with workshops, incubators and hackathons.

    Notably, the program isn’t being supported by the Indonesian government with any money, just an expression of support.

    That in itself may not be a bad thing, a program run to meet the needs of communities and industry is much more likely to succeed than one being supported by bureaucrats meeting KPIs or political objectives.

    A question though is how appropriate Silicon Valley’s ‘unicorn’ model for tech startups is for a developing nation like Indonesia. While the nation has a high level of mobile phone penetration and a young population, it doesn’t have the sophisticated investment community or financial markets that underpin the Bay Area’s or those of other technology hubs.

    Indonesia, like most developing nations, needs to find its own model which may turn out to be very different to today’s Silicon Valley when it reaches maturity later this century.

    That the 1,000 Startups Movement isn’t part of a government department gives it a chance to develop a unique Indonesian identity rather than trying to recreate an officially mandated copy of Silicon Valley. It will be fascinating to watch.

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