Category: Australia

Can innovation save Australia?

Keeping the lucky country lucky

This is the prepared version of my speech at the Cloud Crowd “Can Innovation Save Australia” debate. I was on the affirmative team, even though in truth I’m probably close to the negative side.

Australia truly is the lucky country. We entered the Twentieth Century as one of the richest countries on earth and at the turn of millennium we remained so.

The first fifteen years of this century have been equally kind, however that prosperity has been built on a mining boom and an ever growing property bubble.

Now those foundations are slipping – the mining boom is over and Australians have became the most indebted people on the planet as housing loans put an increasing burden on Australian families, a situation that is not sustainable.

The three Bs of Australian Business

Making matters worse, the good years of the last three decades have seen Australia’s business community become inward looking and complacent, as one of my colleagues recently wrote Australian managers are obsessed with their “Three Bs” – Bonuses, BMWs and their Balmoral Beach Club memberships.

Australia though has a fine history of invention and innovation, we’ve seen ideas ranging from the stump jump plough and Hills hoist through to the flight data recorder and Cochlear ear implants change the world.

Cochlear itself forms the centre of an Australian hearing technology hub at Macquarie University which brings together university researchers, private sector R&D and some of the world’s best medical specialists to form a globally competitive centre of excellence. We can do great things.

Starting from behind

However we are starting a long way behind the rest of the world. Not only is Silicon Valley speeding ahead but so too are countries as diverse as the UK, Israel and Singapore. One of the understated stories in Australian media is just how heavily China is investing in its pivot into a knowledge and innovation based economy. Others in our region like Japan, South Korea, Taiwan and Malaysia are already well down the path of moving to economies based on 21st Century technologies.

All of these countries – their governments, their business leaders and the communities – have recognised success in the Twenty-First Century will depend upon investment in education, research, development and businesses that harness the great powers being unleashed by today’s technologies.

This is where Australia’s opportunity also lies. In the 19th and 20th Centuries the country was the beneficiary of technologies like the steam ship, the telegraph, refrigeration, electrification and, at the end of the Twentieth century, the great global financial deregulations. We truly were the lucky country.

Staying lucky

Remaining lucky in the 21st Century is going to take more than riding on the back of sheep, the end of coal train or surfing the wave of easy credit that crashed over our economy in the 25 years after 1990. We are going to have to be smart, canny and adventurous.

Australians though have shown they can grasp opportunities and with government policies that favour innovation over speculation, investment over ticket clipping, a business community that pulls its weight in research and a community that values education at all levels we can do it.

So yes, Innovation can save Australia but we as a nation have to be prepared to work at it and change many of our current ways of thinking.

ABC Nightlife: Beyond the ideas boom

Is Australia facing a brain drain as the Ideas Boom dries up? That’s one of the topics we’ll be covering in this month’s Nightlife.

While Australia talks about innovation, some of our most exciting tech companies are moving to Silicon Valley. For the May 2016 ABC Nightlife we asked why are they moving and what can we do to encourage them to stay down under?

Along with discussing why Australian startups are moving to the United States we also looked at some of the announcements out of the recent Google I/O conference. If you missed the show it’s available for download from the ABC website.

If you’re in Sydney, we’re also debating whether innovation really exists in Australia in a Cloud Crowd debate on June 9. Tickets are free.

Some of the questions Tony and I looked at included;

  • Who is making the move over the US?
  • What reasons do they have for going over?
  • Why aren’t they going to Europe, the UK or SE Asia?
  • Is Australia having a brain drain?
  • It seems the much vaunted Ideas Boom has been lost in the election, is it over?
  • One of the things Google announced at Google I/O was their new Google Home device which listens to your spoken commands to control the house. Doesn’t Amazon already have one of these?
  • Another thing Google announced was they are looking at putting intelligence into every device. How far away is that?

Cloudcrowd innovation debate

On June 9 in Sydney we’ll be debating whether innovation is a myth in Australia, tickets are free and you can sign up through Eventbrite.

Join us

Tune in on your local ABC radio station from 10pm Australian Eastern Summer time or listen online at www.abc.net.au/nightlife.

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Innovation as a safe word

Australia’s political and economic leaders look to innovation as a safe word to avoid the pain of economic reform

After two complacent decades Australia’s pivot away from a mining and housing  based economy is promising to painful. In anticipation of the punishment to come, the nation’s political and business leaders have devised a safe word they hope will ease the pain — innovation.

That safe word was desperately repeated as a group of “innovation rock stars” gathered last week at Sydney’s Knowledge Nation summit, billed as bringing together the nation’s leaders to drive the implementation of the Australian Government’s National Innovation and Science Agenda.

Knowledge Nation showed that despite having a safe word Australia’s Anglo-Saxon, male dominated elites aren’t prepared for an economic pivot and true change in the nation will have to be a grass roots movement led by small business and community groups.

A lack of diversity

Notable in the selection of “key leaders from the innovation, science and technology ecosystem, including entrepreneurs, business leaders, investors, researchers and scientists, and policymakers” was the lack of diversity.

A look of the speaker list showed only four of the fifteen speakers being women and only one of the 15 not being from an Anglo-Saxon background.

One of the baffling things about modern Australian is the how few from non-Anglo groups feature among the ranks of the business, politics or media leaders. Yet Australia’s greatest success has been in integrating the successive immigration waves over the late Twentieth Century.

A visitor to Australia could be forgiven for not noticing the country’s diverse population as the media, politics and business is dominated by those of British heritage. For the country, this is a tragic wasted opportunity and was reflected in the line up of ‘innovation rockstars.’

Disjointed government

The political ‘leadership’ also reflected that lack of diversity with three Federal government ministers — all men and no opposition, state or local figures — lined up to recite the grab bag of thought bubbles that are what now passes as policy in Australian government.

Ministers offered succession of turgid recitals of disjointed programs which do little to address Australia’s structural barriers towards innovative businesses or the wholesale defunding of education institutions although the Innovation Minister’s snarling response to an academic’s question about R&D spending told much about their defensive posture.

The political ‘leaders’ illustrated a key problem in the nation’s pivot. The long term failure of consistent planning across portfolios means no Australian investor, entreprenuer or student can have any confidence in government policies over a five or ten year horizon when policies barely survive one ministerial thought bubble.

Overall though the biggest gap in the Knowledge Nation summit was its focus on government — the real weakness however lies in the corporate sector where inward facing service industries are distributing more on dividends than in research and development.

Inward focus

That inward focus, articulated well by Freelancer.com CEO Matt Barrie who described how almost all of the nation’s twenty biggest corporations are domestically focused service businesses, is the real problem facing Australia as it tries to pivot its economy away from being dependent on the fading Chinese commodities boom and domestic property speculation.

A lack of globally competitive businesses leaves the nation exposed as most employment is in organisations that are unable to survive outside a relatively protected domestic market. It also means these companies don’t see the need to invest in research and development as their fat profits are dependent upon market dominance rather than innovative products and services.

Barrie also had the only challenging idea in a day that promised many of them, the somewhat tired trope of abolishing Australian state governments.

Government focus

It’s quite touching that Barrie sees Australian Federal governments as being havens of intelligent, long term policy making when all the data indicates otherwise. The very idea of Canberra running education given its flip flopping on the Gonski reforms, confused policies on university funding and ideological obsession with funding elite private schools is, quite frankly, derisory.

That the most challenging idea out of the day was the old chestnut of flattening Australian government speaks volumes of the dearth of original thinking coming out of the nation’s business and political leadership.

In truth, Australian business needs to be snapped out of its inward rent seeking focus while the household sector needs to be weaned off speculating on residential property. These require real policy reform and cultural change.

Little leadership

Knowledge Nation showed there no understanding, let alone no appetite for that reform or change from Australia’s elites and as the Australian economy starts to feel the pain from twenty years of complacency we can expect the safe word of ‘innovation’ to be increasingly used by the nation’s elites.

The lesson from Knowledge Nation is Australia’s economic pivot will come from the grassroots. It will be startups, small businesses, community groups and local governments that will lead the change. Australians waiting for government support and corporate leadership will be waiting a long time.

In meantime, squealing ‘innovation’ at every sign of economic pain will be occupying much of the time of Australia’s comfortable Anglo elites.

ABC Nightlife – is the smarthome worth the trouble?

This month’s ABC Nightlife show will look at whether the smarthome is really worth the trouble

Is the smart home worth the trouble? We live in an age of connected smoke alarms, kettles and even egg trays. For this month’s ABC Nightlife we’ll ask if these devices add to our lives or just make things more complex.

Earlier this month Google announced it would down their Evolv home automation platform leaving hundreds of users stuck with useless devices. So what happens to smart gadgets when they are disconnected from the Internet? We’ll also look at the new folding phone and just what a dire state the Australian telecoms industry is in.

Some of the questions we’ll cover include;

  • What was Google’s Evolv system?
  • Disabling the devices is a bit dramatic, why have they done that?
  • Do customers have any recourse?
  • Is this a risk with all connected devices?
  • What about connected cars, could they be turned off?
  • My computer needs updating, what about these devices?
  • What happens when the internet is disconnected, will my internet fridge work?
  • Samsung showed off a new folding phone last week. What exactly is it?
  • When will we see it on the market?
  • The Annual CommsDay conference was held last week in Sydney. Is there any good news for Aussie consumers?
  • Is the National Broadband Network looking any better?
  • How is the global telecommunications industry looking, can we expect anything exciting?

Join us

Tune in on your local ABC radio station from 10pm Australian Eastern Summer time or listen online at www.abc.net.au/nightlife.

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Government in a digital era

What is the future of governments in the digital world

Governments are struggling with the new channels of communication and the structures that will manage our societies are far from certain.

Last night the University of New South Wales’ School of Computer Science and Engineering in Sydney held a panel discussion about Digital citizens and the future of government. The group looked at how the open government movement is progressing and how public servants and politicians are dealing with a data driven world.

The panel featured Dominic Campbell, the founder of the UK’s FutureGov who are currently advising the Australian Digital Transformation office; Penny Webb-Smart, the Executive Director of Service Reform for the NSW Government’s clumsily named Department of Finance, Services and Innovation and Amelia Loye, a social scientist who worked on Australia’s first Action Plan for Open Government.

Centralising decision making

One key question for the panel was how governments use data which gives rise to two views. The prevalent view is information systems tend to centralise power – something that has been a feature of the last two centuries – while access to information is a democratising forces that hands control back to individuals and local communities.

Amelia made the point in some respects we’re already at the point where individuals can take control, “the tools for participatory government are already available, we have to start looking at – and talking about – how to use them,” she said.

That conversation certainly isn’t happening at the moment despite the odd blurting of fine words from ministers and public servants and while in some areas government data is being freed up, in others it’s increasingly being hoarded for political purposes or due to ill thought out privatisations.

Commercial in confidence

Private sector data is another problem for the open data movement as many of the functions carried out by governments are outsourced to companies which generally reluctant to share information with the public. This leaves communities with an incomplete picture of the data affecting them.

The main unanswered question in the discussion was the relationship between local and central governments, the panel’s consensus was central government would become more dominant and in the Australian context the states would become irrelevant. This however may not be true.

Centralised government is by no means a given, as the prevailing corporatist ideologies of Western governments strive to cut services it’s likely communities are going to increasingly find ways of delivering those services independent of national bureaucracies and politicians in capital cities.

Cumbersome central governments

Another unspoken aspect was the increasing cumbersome nature of central government. In fast moving economies it’s hard for the decision making structures based in capital cities to quickly react to societal and political changes. National governments may simply be too big to manage the data flows coming into them.

The main conclusion out of the evening’s discussion is there is great uncertainty about the structure of government in the digital era.

Uncertainty over how governments will be shaped by today’s changes isn’t surprising, increased communications and the change in public finances radically altered the role of government last century – the wars and economic downturns of the first third of the century saw the introduction of central government income taxes which central power in capital cities.

Changing communications

Similarly mass media communications, the radio and television, dramatically changed the politician’s role and how citizens interacted with government.

One great mistake today is many of our political, public service and business leaders think the current models are inviolate and fixed when in actual fact they are dynamic systems which are evolving with technology.

Governments are a reflection of the societies and economies they lead. Just as both the economy and society are changing so too will the structures of the public service and politics. We may not recognise some of those changes until well after they’ve happened.

Telecommunication’s lost tribes

In a changing world, telecommunications executives are struggling to find a clear and profitable vision for their businesses.

This week saw Australia’s telecommunications industry gather for the annual Comms Day Summit at Sydney’s Westin Hotel.

A constant in the telco industry is change and new technology – few industries have had to reinvent themselves in the same telephone companies have had to over the last 30 years.

For telcos, that period of change has been immensely profitable as the switch to mobile networks proved to be a river of gold for the industry as consumers enthusiastically moved away from fixed line networks and into lucrative products like SMS services.

Missing the passion

So it was notable how the Comms Day summit was missing a sense of excitement or vision about the approaching opportunities such as 5G networks, the Internet of Things and other new markets. Much of the conversations were mainly focused on the dysfunctional Australian industry and the flawed regulations that got it to where it is.

As an Australian event it’s not surprising that much of the focus would be on domestic failings – thirty years of misguided policy, political opportunism and schoolboy ideologies have left the nation facing the prospect of the “world’s most expensive broadband”  in the words of Megaport founder Bevan Slattery – however the stasis in the telecoms sector betrays a far deeper uncertainty in the global industry.

That uncertainty was on show at this year’s Mobile World Congress in Barcelona where most of the conference’s buzz was around virtual reality headsets and connected cars, areas where telecommunications providers are, at best, a ‘dumb pipe’.

We are not a utility

Being relegated to being a ‘mere utility’ is the fear of every telecommunications executive, which is why they spend so much on abortive Pay-TV, online and sports rights acquisitions. In the Australian context, Telstra’s acquisition of PacNet and Slattery’s own East Asian ventures are possibly the most interesting developments in the local industry yet they were barely mentioned at the Comms Day event.

While the Comms Day Summit told us much about the insular nature of modern Australian business – and the depressing mess three decades of poor regulation has left the local telecommunication industry – the bigger message is the global communications industry is struggling in a world of commoditised bandwidth where the opportunities to make huge profits is not immediately obvious.

It’s hard to see how telcos can be completely disrupted in the way media companies have been given how regulated their markets are – although the same was being said of the taxi industry five years ago – but it is clear their managements are struggling to find new business models.

Playing Innovation Buzzword Bingo

Can discussion over Australia’s 21st Century challenges move beyond shallow buzzwords?

One of the frustrations of being a technologist in Australia is how the media, and population in general, doesn’t pay much attention to technology stories beyond the latest shiny consumer device or quirky stories from the weird and wonderful internet.

So when one of the nation’s main political TV programs, Q and A, decides to do a program on the government’s Innovation Statement with a panel involved in the tech and startup sectors it’s a must watch.

As usual the Q and A format lets the viewer down with the panel suffering from having an unwieldy six guests of which two are major party politicians who tend to trivialise the discussion with party talking points. Regardless of the topic, the show usually ends up an unsatisfactory experience for anyone wanting to explore the evening’s issue.

Startup focus

In the case of last night’s panel the initial focus of  the discussion reflected the startup obsession of most commentary around the Innovation Statement.

While encouraging Australians to start new businesses and take entrepreneurial risks is worthwhile, it’s concerning much of the thinking is based around the current Silicon Valley startup model which is based on easy access to venture capital and ruthless marketing.

Coupled with that is a surprising hostility towards the research community and education establishment, while there the panel featured no discussion of how little Australian corporations invest in research or development.

Lacking diversity

This little genuine research and development carried out by corporate Australia exacerbates the nation’s poor economic and business diversity. The effects of that are crushing for those studying in high tech fields.

One audience question came from a young woman, Elana Nerwich who is studying mechatronics. She correctly noted in Australia, it’s unlikely she will get a private sector job in that field and some of the panelists advised her to stick with it and build their own startup.

While admirable, that advice overlooks how high level workers can’t advance their skills in the Australian economy. This in turn results in more derivative taxi and pizza delivery apps rather than genuine innovations using cutting edge technologies being applied in the private sector, which are the real drivers of economic growth.

Concentrated economic power

Another issue for the Australian economy is how the nation’s economic power is concentrated in the inner parts of Sydney and Melbourne, something briefly flagged by panellist Holly Ransom. The startup obsession exacerbates that concentration of talent and business in the same way it does in San Francisco, if anything it illustrates the weaknesses of applying the Silicon Valley VC model to other societies.

Sadly a deeper discussion on how the Innovation Statement’s benefits can spread beyond the affluent parts of Sydney and Melbourne was beyond the scope or focus of the Q and A panel. That the challenges of regional Australia are restricted to the occasional token program in a country town illustrates both the limitations of Q and A format and the nation’s Sydney centric media.

The greatest take away from the Q and A innovation panel though was how Australians are dependent upon government. Almost all the discussion around how the nation becomes ‘innovative’ was around government policies and not on how does a nations of complacent conformists create a competitive 21st Century economy.

Explaining innovation

Which leads us to the biggest unanswered question from the Q and A show – what does ‘innovation’ really mean?

For the average viewer watching this program the conclusion would be ‘innovation’ is a meaningless string of buzzwords put together by a group of people lobbying for government support.

Those pleas for government funding illustrates the greatest weakness in the current Australian mindset, the nation’s real problem is the private sector’s reluctance to invest in new industries and technologies. Rather than throwing money at startup incubators, the most important thing the country’s politicians can do is reform taxation and corporate governance rules to encourage productive investment over property speculation and incumbent ticket clipping.

Sadly little of that was discussed on the Q and A program partly as a result of its clunky format.

Australia faces a great challenge in pivoting from a successful late Twentieth Century economy into one that’s competitive in the 21st, sadly the Q and A program format left us with nothing more than more buzzwords while failing to convey the opportunities for the nation.

Australia’s lost dreams of global champions

The tale of regulatory mis-steps and dashed political hopes of telecommunications policy illustrates the failure of Australia’s ‘go big, go global’ policies of the 1980s.

One the notable things about the Australian economy is how most sectors are dominated by a handful of corporations.

The concentration of Australia’s business power has its roots in the 1980s where the then Hawke Labor government decided the nation’s corporations couldn’t be globally competitive unless they had scale in the home markets, and so a wave of mergers and acquisitions started.

An industry that was particularly problematic was telecommunications. At the time Hawke came to power in 1983 there were three government owned telcos; Telecom Australia that operated the domestic network and the Overseas Telecommunication Corporation which handled the nation’s global links along with a small satellite provider, Aussat, intended for remote access and some defense functions.

David Havyatt at InnovationAus describes the late 1980s thinking that lead to Telecom and OTC being merged to become Telstra, the company that dominates the Australian telecommunications industry today.

The then political troika of Prime Minister Bob Hawke, Treasurer Paul Keating and communications minister Kim Beazley decided allowing OTC and Telstra to merge would give the company global scale, as Havyatt quotes from a policy discussion around 1990.

“A strong vertically integrated national carrier which is able to provide a one-stop-shop for Australia’s telecommunications services both domestically and internationally, providing economies of scale and scope and the prospect of a unified and enhanced international profile.”

Despite the lofty ambitions and a few half hearted attempts to grow global business operations, a quarter century on sees Telstra’s international returns at an almost derisory level.

Dodging global bullets

One could argue that Telstra’s shareholders dodged a bullet – Canada’s Nortel followed the same path and, after early successes, failed spectacularly in the early 2000s.

For Australians in general though, Telstra’s insular focus has been a disaster as maintenance and investments were deferred to make the company’s yields more attractive and the Howard government’s compounding the Labor party’s mistakes in fully privatising the business without breaking its monopoly power.

Which lead Australia into the folly of the National Broadband Network – while the original intention of investing in the telecommunication sector and breaking Telstra’s lock on the industry was a good idea and supported by this writer –  it quickly morphed into a massive waste of money and remains so today. If anything, the NBN will only increase Telstra’s market power while delivering more expensive services to the nation.

Missed opportunities

The tale of regulatory mis-steps and dashed political hopes illustrates the failure of Australia’s ‘go big, go global’ policies of the 1980s. Today, Australia is more dependent on mining exports than it has been in more than 50 years while manufacturing and services have actually fallen since the 1980s as a proportion of outward trade.

Australian exports by sector: Department of Foreign affairs and trade
Australian exports by sector: Department of Foreign affairs and trade

Notable in the above graph is how in the 1990s it appeared the ‘go big, go global’ was working but by the turn of the century, the combination of the mining boom and the nation’s business elites – particularly in banking, insurance, retail and media – had starting looking at exploiting their domestic markets rather than competing internationally.

While there have been successes such as Westfield in shopping centres, Lend Lease in construction and Brambles in logistics management, the bulk of Australia’s corporate leaders are inwardly focused on extracting maximum revenue from their captive local companies.

Global ownership

Increasingly, those dominant companies aren’t even Australian. The brewing industry is a good example where locally owned beer producers make up less than ten percent of the market dominated by New Zealand’s Lion Nathan and British based global conglomerate SAB Miller. Australians, it seems, cannot even brew their own beer any more.

Australia’s managers have been the greatest beneficiaries from the nation’s failed business policies as it’s insulated them from global competition, life is good when you’re the biggest fish in a tiny pond.

While good for managers, the lack of business diversity competitiveness and insular focus leaves Australia’s economy deeply exposed. The failure of the 1980’s grand vision where Australia developed a cohort of globally leading businesses is one that will be regretted by future generations as they pay higher prices for poorer products.

Rethinking the media business model

Fading newspapers around the world are showing how poorly planned cuts condemn a struggling business to failure

Last week Australia’s Fairfax Media announced the company will cut another 120 editorial jobs at the Sydney Morning Herald and the Melbourne Age. What strategies beyond cuts can save old media companies as traditional advertising revenues dry up?

For decades, the print and broadcast media was incredibly profitable as they provided an advertising platform for businesses and individuals. While television revenues have held up, the rest of the media industry has seen their income collapse.

In the early days of the web the hope was display advertising would provide revenues for online publishers, however it turns out  readers are blind to the ads and, should the messages become too intrusive or resource heavy, people will install ad-blockers.

One revenue channel for publishers is ‘content marketing’ or ‘branded content’ where advertisers sponsor specific stories. At the Sydney Ad:Tech conference earlier this week Asia-Pacific Regional Advertising Director for the New York Times, Julia Whiting, described what the iconic masthead finds works in this medium.

Whiting says there are five key factors in making branded content work for advertisers.

  • Give something of value. Be entertaining, informative, educative or provide some utility.
  • Tell an authentic story. Make the link between the brand and story as subtle as possible.
  • Produce high quality content. Consider how a newsroom cover the story and what would hook the reader.
  • Choose the right environment. Advertisers have to align with publishers that have the right brand values and audience.
  • Targeted campaigns. Use data to define and find target audiences then use that information to deliver relevant content.

The question with the branded content is how explicit the advertiser’s message or sponsorship can be before readers start losing trust.

Becoming creepy

Another aspect is creepiness. One of the campaigns Whiting showcased was The Creekmores, the story of a young family who travelled the world as the mother was dying of breast cancer that was sponsored by Holiday Inn.

On a personal level, this writer is uncomfortable with such a personal story being associated with a multinational brand and wonders if the family would have been happy for their tale to be part of a branded content campaign for a hotel chain.

For branded content to really work, that ‘alignment’ between the publisher, audience and advertiser is essential and in turn ultimately relies upon the credibility of the outlet.

In the case of the New York Times, that credibility rests upon good writing and strong editorial values, although the paper hasn’t been immune from scandal itself.

Good, well edited writing may turn out to be the greatest asset for today’s media outlets as smaller publications such as The Economist, Punch and The Spectator see readership and revenues increase.

The Guardian, ironically an outlet that itself is cutting 250 staff, reports these publications are succeeding due to well written articles. “If you produce journalism that is not just better but significantly better than what’s free on the web, people will pay for it,” says Spectator editor Fraser Nelson.

Which brings us back to Australia’s Fairfax where a succession of clueless managements have eroded editorial standards. Three years ago former editor Eric Beecher wrote a scathing account of his time at the company where an incompetent and unqualified board flailed in the face of market changes it could barely comprehend.

One of the villains of that tale, board chairman Roger Corbett, was a successful Chief Executive of the Woolworths supermarket chain. That he was so obsessed with a failed business model and protecting margins by slashing costs indicates much about the nature of Australia’s insular corporate world.

A consequence of Fairfax’s cost cutting obsession has been foreign outlets have stepped into the market with The Guardian, Daily Mail, Buzz Feed and a range of other sites setting up in the country – something that further squeezes the incumbent’s market position.

In opening her Ad:Tech presentation, the NY Times’ Julia Whiting noted Australia was the outlet’s fifth largest global market, something undoubtedly driven by the decline in the SMH’s and Age’s output.

The travails of Fairfax and the successes of smaller outlets show what might be an encouraging trend in the media – that a quality product actually attracts an audience and advertisers.

If that’s true, the managements that mindlessly cut costs that hurt the quality of their core product may be accelerating the demise of their businesses.

Australia’s contempt for technology

The contempt shown towards the technology sector by Australian governments betrays a deeper problem in the Australian mindset

“The minister sends his regrets….”

Yesterday I commented how the Australian Tech Leaders event would be a good measure of the state of the country’s technology industry. Instead it illustrated the sheer contempt the nation’s political leaders hold the industry.

One of the government’s key platforms in the upcoming election is its Innovation Statement and the accompanying Ideas Boom so it wouldn’t have been expected that a minister or at least an informed backbencher would address a room full of technology journalists.

Instead the government drafted one of their local MPs, Fiona Scott, to make the short drive up the hill from her electorate to haltingly deliver a poorly written speech that focused on her local electorate issues.

To be fair to Ms Scott, the outer Sydney suburban seat she represents is a bellweather electorate which tends to swing between parties as government changes. It also happens to have a workforce that’s beginning to feel the effects of a shifting economy. Her focus on local issues is understandable.

However as a member of a government aspiring to drive a technology driven jobs boom and the representative of an electorate whose workforce is in transition, it is remarkable that Ms Scott is so poorly briefed on tech issues.

What’s even more remarkable is the contempt shown by the government towards the country’s technology sector, a long standing problem in Australian society but particularly stark with the current administration given the Prime Minister’s fine words on the topic.

One of the saddest things about Australia’s squandered boom is how the nation turned inwards at the beginning of the Twenty-First century and decided to ignore the global technological shifts.

The contempt shown by the current government towards the technology sector shows a much deeper problem in the Australian mindset, if the country is to rely on more than its luck in the current century then it’s essential to shake off that way of thinking.

Cutting through Australia’s innovation rhetoric

Investor Steve Baxter talks about some of the strengths and weaknesses in Australia’s innovation statement

Four months ago, the Australian government launched its innovation agenda with the noble ambition to put the nation “on the right track to becoming a leading innovator.”

The keenly awaited innovation statement was seen as a defining the new Prime Minister’s agenda after two decades of complacent political leadership. At the launch of the paper Malcolm Turnbull said “our vision is for Australians to be confident, embrace risk, pursue ideas and learn from mistakes, and for investors to back these ideas at an early-stage.”

One of the early stage investors currently investing in Australia’s startup sector is Brisbane based entrepreneur, and Australian Shark Tank judge, Steve Baxter who spoke to Decoding the New Economy last week about where he sees the strengths and weaknesses in the proposals.

Beating the rhetoric

“Competitive threats are far more effective than rhetoric from a Prime Minister,” says Baxter in observing what really drives adoption and change while emphasizing that the announcement is a welcome shift,  “the change in messaging from the government has been very important. It’s having an impact and a future looking message has been fantastic.”

While Baxter is positive about much of the incentives on offer and the importance of changes to regulations around bankruptcy and treatment of business losses, he flags the the delay in implementing the tax incentives as being a problem.

Too focused on commercialisation

Baxter though has been a long standing critic of Australia’s research sector and the emphasis on commercialisation of academic work is in his view one of the Innovation Statement’s major weaknesses, “commercialisation is a concept that we’ve failed at. It’s dead. We’ve put so much money into it, it’s actually embarrassing. We need a new mindset towards it.”

“there are seven hundred million dollars of a billion going to the research sector. That’s not entrepreneurship. In fact universities and research institutes are the least entrepreneurial organisations you’ll ever come across.”

“We need more business model innovation, we’re seeing too many people in lab coats with synchrotrons, square kilometre arrays which we have to do,” Baxter states. “What we’re not seeing the Dropboxes and the Instagrams and the Facebooks and the Wayze’s, the cool stuff that doesn’t need a two hundred million dollar building.”

Thin pipelines

As an early stage invest Baxter sees the real challenge for Australia lies in encouraging individuals to launch their own ventures, “I don’t think we’ve done enough yet to prove we have an investment problem when it comes to early stage companies,” he says. “I don’t believe we have a lack of capital”.

For those starting their own ventures, Baxter sees the word ‘innovation’ as being a barrier in itself.
“The entrepreneurs I back aren’t those who say ‘I’m going to innovate’ but those who say ‘I can see a problem’.”

While Baxter doesn’t say this, the real challenge lies weaning Australians off property speculation and encouraging investment and risk taking, something that requires major tax and social security reform.

Sadly, the Turnbull government has abandoned the prospect of any immediate taxation reform and even the Innovation Statement’s more modest agenda is now in doubt as the nation’s febrile Parliament prepares itself for an early election.

Baxter’s views, and his optimistic but guarded outlook towards the Innovation Statement reflect the opinion of many of those in the Australian investment community, it would be a shame for the country if the current opportunities are lost for short term political maneuvering.

Legislating for innovation

Can bureaucrats define innovation? It seems Australia is about to find out as the country’s regulators struggle to decide what businesses will be eligible for taxation concessions under the government’s Innovation Statement.

That bureaucrats are tasked to identify what businesses are worthy ‘innovators’ is worrying for those of us who hoped the new Australian Prime Minister would end two decades of managerial complacency.

Adding to the ‘business as usual’ under the revamped government was a speech by the Minister for Mineral Resources yesterday describing the glowing future of the nation’s resource industry in face of continuing Chinese demand.

While Josh Frydenberg was delivering that speech to Canberra’s National Press Club, the world’s biggest shipping line, Maersk, reported an 83% drop in profits in the face of slowing global trade and collapsing Chinese commodity demand.

Australia’s long term economic policy of riding on the back of a never ending Chinese resources boom is looking shaky, and the luxury of a tax system that favours property speculation over productive investment is increasingly looking unsustainable.

Rather than looking at ways to define ‘innovative’ companies, Australian governments would be better served levelling the playing field to attract investment into new businesses, inventions and productive infrastructure.

Just as a narrow group of tech startups are important so is investment into new plant and equipment for agriculture, manufacturing and tourism. Encouraging workers to attain new skills should also be an objective of the tax system, instead of disallowing school fees and book costs.

The treatment of taxpayers’ education costs versus that of property speculation expenses speaks volumes about the current priorities of the Australian tax system.

For a government wanting to encourage productive, employment generating investment and building a first world economy that’s competitive in the 21st Century, the first priority should be to put all forms of investments on the same footing.

Asking a committee of well meaning bureaucrats to create an artificial group of ‘innovative businesses’ seems unlikely to help Australian workers and businesses meet the challenges of a digital century.