Does anyone remember Costello’s debt truck?

Absolutely I do. Costello would say that he did his bit by solving the Beazley black hole. There were three things wrong with that story. It wasn’t black, it wasn’t a hole of any significance and it wasn’t Beazley’s. What’s more it made the debt funding of necessary infrastructure politically impossible for more than a decade.

But magically debt for consumption doesn’t seem to be a worry to some of the political class, and those for whom it is a worry aren’t talking about it.

If we accept that our national debt is too high and the balance of payments should be nearer par, we’ve got to export more things, services or even ideas…

Brian that’s simply not going to happen when every day imports become cheaper, and Aussie exports become less competitive overseas.

Its the dollar stupid!

Oh BTW, has anyone noticed that the balance of payments, current account and trade deficits, have become a total non-issue in recent years? Does anyone remember Costello’s debt truck? Nope, didn’t think so.

There was a further element that I recall. It was said that in employing Asians especially to work in Asian countries, their loyalty was not trusted. Companies seemed to feel more comfortable with having ‘ordinary’ Australians bumbling around, or not as the case may be.

I don’t know the reasons behind it, but I have noticed an unusually high percentage of ex-pats from western countries at management levels in asian countries. I think in the past I’d assumed it was the remnants of colonialism. Or maybe its just that white people stick out more in asian countries so you notice them more.

I was hoping that someone here might know more.

There was a further element that I recall. It was said that in employing Asians especially to work in Asian countries, their loyalty was not trusted. Companies seemed to feel more comfortable with having ‘ordinary’ Australians bumbling around, or not as the case may be.

If true, it’s a worry, but I simply don’t know.

PinkyOz, an alternative approach would be to survey job seekers. I think it would be difficult to screen out other factors, though, to ensure you were comparing like with like.

There’s another aspect to this. I believe that all things being equal being Asian ethnically reduces your chance of getting a job. (I hope I’m wrong).

Brian - I’m rather curious as to why you think this. I don’t think this is true for white collar jobs. Can’t really say for blue collar jobs. In most places in Australia I think racism against Asians is generally very subtle.

Hmmm… Not sure about that, starting to fall out of my research area. I guess it’s not unreasonable to think that that might be happening, due to language/cultural barriers and underlying levels of racism but I have a feeling that it might be a bit hard to measure and not well covered in the lit (Think about it, a management researcher going to a large organisation asking for access to recruitment records to check if management is screening on race, which is both morally objectionable and illegal).
As for value, well you could be right there, but the innovation gains probably start to become a bit more defined, Multi-lingual people with an understanding of local cultures in foreign countries would be prime targets for support in finding export markets for new products, and relaying new ideas back, but its a bit harder to tell. There is still a lot of researchers out there that are going down the narrowing (local) focus rather then a broad (global) focus in understanding innovation.

PinkyOz

Good point, there is plenty of research on skill sets and the viability of clusters, but it’s a bit of a catch 22. Skilled Australian workers aren’t finding the positions they need here, and are taking up better positions overseas (Brain Drain) which in turn leads to weaker cluster activity, which slows the growth of the number of skilled positions on offer.

It’s an economy of scale problem, but we can look to India for possible solutions. If we can convince companies to set up shop and graduates to study particular fields, we could market employees in that field as moderately priced and High Quality, which could become a base for a stronger Industry sector and in turn better ability to capitalize on innovation, but it requires a certain investment of resources and time (Best-practice university courses taking high-attaining students, advertising campaigns) to get working, but it might be a worthwhile investment.

Some of the Smart State Initiatives focus in on that theme, mainly around biotechnology industries, but there is a missing link in education, considerably more funding would be required to encourage more and better candidates into those positions, not helped by a mixed jurisdiction problem (State based policy, but the graduates will be created by Federally controlled universities), and while there is some incentive/funding to improve courses, no federal government is going to give up extended funding to a single state, knowing that the other states will be in line to either criticize or ask where their share is.

I think I might be running a theme here, a lot of problems we have in innovation are our own doing, virtually all our corporate and government organizations are in a perpetual state of war over a scarce number of resources, leading to very guarded and adversarial relationships which the lit tells us is counter-productive in innovative capacity.

PinkyOz

The only other alternative is to save and to buy businesses, or stakes in businesses overseas to repatriate the dividends. We’ve mentioned sovereign wealth funds. The other big one is super. I suspect we’d be better placed if PJK had been able to pull the levers for another term and super had gone to 15%.

On to whether I was contradicting myself about solar, I hope not. My point (if poorly made) was that no matter how much sunshine we have, the other advantages (re population, capital and markets) outweigh our wonderful climate.

Its getting late so I wont try to cover every point - lest I make another lazy argument, but I did want to say I love it that Australia exports its surf culture overseas. I would hope you would agree, though, that boardshorts are a pretty different level of difficulty of commercialisation than solar panels and their ilk?
In particular, I’d expect that the amounts of government funding of such things are way smaller than what you seem to be asking for.

While I’d love it if we had endless resources to poor into such things, the reality is that we have to be very selective, and I would suggest there are more profitable investments of taxpayer funds than chasing an Aussie-made solar miracle.

Once we’ve done a few of them, there might be some money left to buy some cheap solar technology from the Chinese.

Widely spread solar also has the advantage of smoothing things out a bit as well - when its cloudy in Melbourne it may well be sunny in Brisbane.

They say that anywhere 150k in from the east coast in Oz is prime real estate for concentrated solar. So a network that ran north-south and east-west should have considerable flexibility and coverage. I recall Monbiot saying a in 2006 that most energy planners saw renewables going up to 20% OK and he assumed that this could be stretched further with time.

Meanwhile it’s just been pointed out that the dollar has hit 98c as we speak. That’s 98 frikkin cents! I remember about 2000 when it was around 50 cents economists saying that it was a once in a lifetime chance of curing our balance of payments problem. Of course we blew it. I say again it’s not just the manufacturers, it’s killing the farmers and the suppliers of services, including tourism.

Of course, to be fair, it’s the trade weighted index that really counts, which I think has gone from the low 50s to the mid 70s. It’s got to be a big problem, though.

“However, while the 8GW PV is being fed into the grid about 20% of the conventional generation on the East Coast will have to be shut down - only to have to come back on again as soon as the solar peak has passed. This is not a plausible operating scenario, in fact it is impossible.”

I believe it takes 15 minutes for a gas fired power station to be fired up in response to an increase in demand or a decrease in supply from other sources. There is no reason whatsoever why a low capital, high fuel-cost source like gas can’t be turned on when the sun goes down. Robert argues its not the best way to do things, and he may be right, but that’s different from saying it can’t be done.

Widely spread solar also has the advantage of smoothing things out a bit as well - when its cloudy in Melbourne it may well be sunny in Brisbane.

Robert’s right about one thing though - solar on the roofs of large buildings makes more economic sense than smaller systems on individual houses. However, there is no reason why this technology couldn’t be put on every factory, town hall and warehouse roof in Australia if it ever gets to commercialisation.

PinkyOz, thanks also. On clusters, I recall reading some stuff a few years ago by Peter Brain’s outfit which used to do an annual report on the regions for local government (possibly still do). I seem to recall him stressing the importance of a mix of related skills in an area and the need for networking.

Sorry about the late reply, I’ve been a bit on the busy side. Now as for a dot point list of things that can be done, well it’s not quite as easy as that. Fortunately, we have addressed some of the issues around our innovation culture already, and if you were a government ready to spend a little bit of cash, that’s where I’d start.

So we start with the cultural & environmental issues. Lack of available capital, weak links between research orgs and Business orgs, little incentive in commercializing technology due to high risk factors, highly competitive (to the point of being almost adversarial) and risk adverse businesses and small centralized populations with shortages of key skills. As Brian and Andyc pointed out population is an easy comparatively to the rest, thanks to modern technology and export grants. The other problems are a little more systemic, fortunately governments are responding to these to an extent, but for my money I would probably invest in ..

Strengthening research/industry links through formal ties between organisations (traditionally what we do) as well as building up informal links such as technology expo’s and freely distributed information on new breakthroughs between researchers and business, we do this to a certain extent, but the key here is to get business and researchers talking about the ‘next big thing’, the flow of information improves idea generation and better chances of success in commercializing technology.

Support for researchers/inventors that come up with new products in either selling their idea to an Australian company, or in establishing a new business. Once again, government does this, but there is a lack of awareness about it as well as a bit of apprehension about the bureaucracy and what it might do to the product, that’s a bit more difficult to combat, but word of mouth is best here, getting a strong success rate will help a lot.

The last one is the hardest, and the one government tend to do badly. Getting business to take risks and talk to each other. Now at some point or another you would have heard about “clusters”, its the big thing in the research. Think about the way Silicone Valley developed, with a range of competitors in the IT market coming together in a single area, sharing information about new breakthroughs and ultimately becoming more prosperous along the way. This is were criticisms of Australian governments come to head, we spend considerable amounts of money and time setting up clusters, say like the Brisbane Technology Park, and don’t get the same results. We have successes as well, like the Tasmanian shipbuilding cluster, but overall our governments always get swept away in whatever the latest trend in innovation policy is, and tends to miss the point completely.

This is because business here ‘doesn’t play well with others’; we have a very harsh business environment built on a relatively small number of consumers, so cannibalizing another companies market share is par for the course. For there to be success in endeavours like this, you must address that problem in particular, which means that in some cases government is going to need a strong mediator role between companies both in formal (chairing meetings, bringing like-minded companies together, negotiations on technology sharing) and informal linkages (innovation ‘portals’, networking events), the sooner you get the links moving information around the better.

Once you deal with these problems, working out where the grants and incentives go becomes a bit easier and you can start to build a strategy for innovation policy, which should lead to more and better results.

That’s where I’d start at least, it’s a bit summarised (yeah this is long, but there’s heaps more that can be done), but this covers the big issue problems, if only governments were willing to put the effort in the right places we might get somewhere.

PinkyOz

Huggy

Why do we have to keep beating ourselves up about not being able to turn Aussie ideas into Aussie-made, global dominating commercial successes? Has anyone noticed that there are only 20 million of us?

Livewire, let me have a go at you also.

One of my favourite examples is the surfwear conpany Billabong.

Billabong International Limited’s core business is the marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hardgoods under the Billabong, Element, Von Zipper, Honolua Surf Company, Kustom, Palmers Surf, Nixon, Xcel and Tigerlily brands.

The product range consists of 2,200 product lines in Australia, over 1,300 lines in America, and over 1,200 lines in Europe. Their products are sold in more than 100 countries by its directly controlled operations in Australia, New Zealand, North America, Europe, Japan and Brazil and through licensed operations and distributors in other regions.

Their 1750 staff produce an after tax profit of $175 million, that’s $100k for every staff member. I have no direct knowledge, but I’m betting that they make almost nothing here. Their real expertise is in brand management.

We actually have a number of world class companies. Cochlear, CSL, Resmed and Ansell come readily to mind. We lack brands with instant world recognition, like Nokia, Volvo etc. but then Denmark doesn’t own much apart from Lego and they do OK. I don’t know whether we still do, but we used to make the wheels for Harley Davidsons, because we were the best. We sell aluminium boats to the US Navy, but the joke is that they can’t use them at home because of the Jones Act.

It’s just that it doesn’t all add up to a positive balance of payments and debt is a bit of a worry (Alan Kohler said!)

So we need to do more high value smart stuff.

For some years now I believe there is a pattern of companies going global at the outset, which obviates the problem of a small home market.

Anyway, like Roger I wish PinkyOz would tell us what needs to be done if this is his/her field of study.

” ….from what I understand the VC only expect 2-3% of their “bets” to succeed. But they expect those to do so well, they will compensate for the other failures and still get a really good return”

Hmmm. Thought it was a little bit higher - but still, you’ve worked for them ….

“I suspect that the way we pillory businessmen who have companies which fail hurts us. From what I’ve heard VC will prefer to pick people who have previously failed with startups rather than those who have no experience at all as at least the failed ones have some experience in getting companies off the ground, even if its what not to do”.

Bingo!! This is why the Land of The Fair Go, The Clever Country can never never never become truly clever - nor become sustainably prosperous. This is one of the reasons why our best and brightest flee overseas.

We reward the timid and the lazy. We punish the daring and the vigorous. The Clever Country? Pig’s what?

Time for a revolutionary change in attitudes …. or does everyone prefer living in the world’s quarry, brothel, dumping-ground and talent factory? .

Why do we have to keep putting ourselves down on the grounds that we are so few/so far from everyone else, and use this as an excuse for not developing, diversifying, home-growing and exporting?

I remain amazed at how deeply so many Aussies are still conditioned into believing this. This country has been independent for a few decades, now.

Now ideas are one thing, but commercialising them requires access to technology, capital and markets .

Which are a few emails and a bit of freight away, potentially.

Is it any surprise that Europe, US and (increasingly) China, with their hundreds of millions of people can put those things together better than us?

Yes, because most of those people are not involved in the innovation or financing, and Europe in particular is hardly a monolithic entity, with its 50-odd languages, legal systems and ethnic identities.

Is it really any surprise that Microsoft started in California rather than Bendigo?

1. Microsoft was actually founded in Albequerque, New Mexico.

2. Why compare California with Bendigo? California is not a city of 80,000, but a state twice the area of Victoria, with a population of 36 million. Comparing California with Oz as a whole, on the other hand, is quite reasonable.

3. New Mexico is half the size of Victoria, with a population half the size of Melbourne.

Even if you have the best solar technology idea in the world, its actually ridiculous, to me, to think that you could commercialise it in Australia.</I.

We’ve only got 20m people to generate the capitalists, and even more telling, we’ve only got a tiny market of 20m people to practice selling it to.

So we can’t use foreign capital? We can’t obtain any dollars for investment from all these goodies that foreign-owned mining companies keep taking out of the ground? And we can’t export products overseas?

With that attitude, the Swedes (population less than 9 million) would never have been able to sell Volvos or IKEA in Sweden, let alone Oz!

Not that there shouldn’t be some sort of support for innovation in things we might have some sort of advantage in - vis agriculture and mining, where we are actually significant on the world market.

You are contradicting yourself regarding sunshine, where we also have a huge natural advantage.

Honestly, I don’t want any government handouts, or investment incentives. What I need is a currency that isn’t tied to the price of coal and iron ore.

New Zealand beckons then?

Truly Roger, an inspired image.