As it stands, the Australian economy remains reliant on (badly behaved) banks and companies that dig stuff up out of the ground. Between them, finance and mining generate $1 in every $5 of Australia’s economic output, Reserve Bank figures show.
Yet the biggest creator of wealth and prosperity in the 21st century will be technology. It’s what will allow us to raise productivity and enjoy economic growth without using up scarce natural resources.
Technology also generates jobs – good jobs.
Take homegrown success story Atlassian. The company was started by two mates in their 20s in 2002. It now employs 1500 people in Sydney, out of 4000 worldwide. In January it will employ 100 university leavers in Sydney in its biggest graduate intake ever.
Four years ago Atlassian’s Sydney headcount was 650. How good is jobs and growth, eh?
Atlassian co-founder Scott Farquhar gave the Australia Oration at the BESydney Global Ambassador Program annual gala dinner on Tuesday night.
He spoke about the important role the technology industry will play in building Australia’s future economy, including its ability to create jobs and also bring in events and business tourism.
He outlined the plans for the Sydney Tech Precinct at Central Station, giving credit to Premier Gladys Berejiklian, and called for governments to retain support for start-ups through initiatives such as the R&D tax grant.
Farquhar’s message was positive but we have a lot of work to do if we want to ensure Australians are creators of technology and not just consumers of inventions made elsewhere. That doesn’t just mean software and e-commerce but also the huge opportunities in renewable energy and the green economy.
We need a bigger pipeline of start-ups but it’s also crucial to nurture the bigger high-growth businesses in our midst – not just Atlassian but companies such as Tyro Payments or Canva.
In 1979 economist David Birch coined the terms “mice”, “gazelles” and “elephants” to categorise companies: mice are businesses that start small and stay small; gazelles are companies that start small and grow rapidly; and elephants are the few large companies that employ a lot of people but do not grow significantly. All start-ups aim to become gazelles but most will not succeed.
In 1994 Birch estimated that gazelles, which he defined as companies whose sales double every four years, made up 4 per cent of all US companies but were responsible for 70 per cent of new jobs. Numerous studies have since backed up this trend around the world.
Research also supports the idea that clustering innovation businesses together is effective and other cities around the world from London to Singapore have made physical hubs a key part of their innovation strategies.
It’s great that we’re finally getting the Tech Precinct at Central but we’ve wasted a lot of time. Sydney could have had a thriving technology precinct at the Australian Technology Park in Redfern, with Atlassian as the key tenant, by now.
That didn’t happen because Planning Minister Rob Stokes (when he was in the job the first time around) awarded the site to Mirvac to develop with the Commonwealth Bank as key tenant. In other words, he backed the elephant over the gazelle.
Farquhar’s speech followed Turnbull’s appearance at StartCon last week where the former PM was interviewed on stage by another technology entrepreneur, Freelancer’s Matt Barrie.
Turnbull said the challenge for government was the speed of change meant “everything has to be reviewed all the time” and “that terrifies Canberra”. For example, politicians and bureaucrats could not assume that a tax regime that was working five years ago “is still going to work today”.
It’s time to dust off ye olde Innovation Statement of 2015 and revise it for the 2020s.
Caitlin Fitzsimmons is a senior writer for The Sun-Herald, focusing on social affairs.