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The Forum > Article Comments > The high-tech brain drain: lobotomising our economy > Comments

The high-tech brain drain: lobotomising our economy : Comments

By Benjamin Brooks, published 18/6/2013

Government must act to end the Dark Ages of Australian high-tech start-ups.

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Yes, well argued!
Our investors seem to have a bricks and mortar mindset! This is because the investment incentives, like negative gearing, seem to be there?
One of the most lucrative pieces of technology, the atomic absorption spectrometer, was invented here, but had to go offshore to be developed.
Ditto numerous other patents. Since then the atomic absorption spectrometer has earned billions for the offshore company that bought the patent.
Lang Hancock approached virtually every Govt. in Australia, for a few miserable million as start up funds, to establish an Australian iron ore mining enterprise in the Pilbra.
He brought with him samples of ore so pure lumps of it could be wielded together. He claimed there were mountains of the stuff!
Eventually he was obliged to sell his prospects to offshore interests, who have since then sent billions offshore, and what's more, a very large portion of what should have been a tax liability as well!
Even today, we are saddled with govts, who believe there is some merit in foreign investment, even after the company starting our iron ore export industry did so on the back of a virtually worthless letter of credit, which still opened Australian banks and sent Australian money to work opening up these projects!
And guess what? Foreign investment is investment in name only in most cases, that simply grows our already record and burgeoning foreign debt?
I have long advocated investing in our own people and their better ideas!
But to do that, we need a better economic model than the one we currently rely on; or a tax collection methodology, that already has a structural deficit and is about to be mugged by the destiny of demography. Continued.
Posted by Rhrosty, Tuesday, 18 June 2013 11:32:27 AM
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If Mohammed won't come to the mountain, then the mountain must come to Mohammed!
We need to reform the tax system quite massively. Ideally, by jettisoning the whole rotten mess entirely.
And replace all that convoluted complexity, with just one single stand alone unavoidable expenditure tax. Which if set at a painless 4.8%, will collect significantly more tax.
And given there is virtually just one unavoidable tax impacting on all companies and enterprise, enable those companies/enterprises to keep the compliance money they currently shell out, minimising/reconciling their tax liabilities. Costs which currently impact negatively on the averaged bottom line by around 7%!
Not too shabby a trade off, eh Ben?
The much larger tax revenue collection, can be used to create endless surpluses, some of which must be invested in an income earning sovereign fund.
Some set aside for a general contingency fund and the rest, around a third, earmarked as venture capital for local cooperative, high tech firms.
After that we need to develop a number of low cost to the consumer, publicly owned and operated, power plants.
Thorium, cheaper than coal is one possible solution, another is the locally invented methane consuming ceramic cell, with a world beating energy coefficient of 72%!
Which is small enough to be located onsite, and provide local, reliable very low cost energy; and, mostly pristine water vapour, as the exhaust.
Another is cheaper than coal example, is 24/7 wave power. One type uses its principle power, to create desalinated water, which is pumped onshore, and then powers a hydro electric power plant.
Clever, in a two for one result from a single outlay!
Another is a locally invented process that turns our own biological waste into endlessly sustainable extremely low cost energy.
The worlds cheapest power coupled to the worlds most efficient, least costly tax system, will have the energy dependant high tech companies of the world, queuing to relocate here.
Which would be a huge boon for own own innovators, and places to enable the commercialisation, of our own peoples' better ideas!
Rhrosty.
Posted by Rhrosty, Tuesday, 18 June 2013 12:12:15 PM
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Oh dear. How sad.

Another consultant-in-the-making, repeating what other consultants have told him, destined to add precisely nothing to the sum of Australian capability in business.

Or worse, a politician-in-the-making. Ditto the above.

So, bottom line: should the Government involve itself in start-ups at all? The author seems ambivalent on the topic, at first suggesting that "Governments should focus on other priorities, leaving the ecosystem to gather its own momentum and 'critical mass'.

But almost in the next breath, asserting that "[t]hey must develop collaborative networks between start-up firms, public research bodies, and incumbent firms", and that "Governments should also accommodate the transfer of workers in established industries into the high-tech start-up community."

Wha'?

The reason that nothing has so far been accomplished on either of these fronts is that Government is positively the last entity that has anything to offer the business world. Governments, both as individuals and collectively, know nothing at all about business. They are willfully ignorant on how business operates, on what are the key conditions that indicate success or failure, or even how to measure success or failure, once either has occurred. When they do get involved, they just create make-work jobs for themselves, and add no value elsewhere.

So far, so wrong. But this is just plain laughable.

"29 per cent of Australian high-tech founders hold computer science degrees, yet less than 2 per cent of students graduated in that field. Science and technology graduation rates in general are declining, and the federal government needs to consider more aggressive incentive strategies to reverse this trend."

That tells me that 71 percent of Australian high-tech founders do *not* hold a computer science degree. Which might, to the casual observer, indicate its irrelevance to the process, as the skills to create a business are so vastly different from those required to score the degree.

The only possible beneficial impact the government might have is in adjusting the tax treatment of genuine seed investment, and removing the iniquitous - and anomalous - tax on unrealized capital gains.

For all the rest, let the market do its work.
Posted by Pericles, Tuesday, 18 June 2013 4:03:24 PM
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Good to see someone bringing up some of these issues, a lot of people, including government, have forgotten the potential this country holds.

Back 10 to 15 years ago I was very excited about the potential for some small Australian agricultural biotechnology companies developing new products and ideas around cutting edge GM technology at the University of Melbourne. There were a few luminaries and Nobel Laureates based in Melbourne at the time all working together on these.

Then, following intense lobbying from Greenpeace, the Victorian state government banned the commercial production of GM foods in 2004/5.

Then about a year later, the Victorian government sponsored an international agricultural biotechnology conference to try and kick start interest in the area... just a year or two after it had kicked those who had been working hard to be world leaders in the head so to speak.

While it would be great to see government implement some of the tax friendly encouragements suggested, it seems like generally it's best when they just get out of the way.

A little more on the aforementioned topic:
http://jennifermarohasy.com/2006/08/victorian-government-sponsors-conference-on-banned-technology/
Posted by Jennifer, Wednesday, 19 June 2013 7:33:16 AM
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But basically it's wasted breath, Jennifer.

>>Good to see someone bringing up some of these issues, a lot of people, including government, have forgotten the potential this country holds.<<

There is an increasing proportion of our citizens who sincerely believe that "the government" is fundamentally responsible for everything, and can solve any problem. Unfortunately, when it comes to business issues, they are as babes in the wood, and can only be relied upon to make the diametrically opposite decision to that which will create a positive and supportive environment. Underlying this is the opinion held by most professional politicians, that investing one's life savings in a private enterprise is merely a carefully-disguised means to rip off one's fellow-citizens, and should perforce be ring-fenced with mindless restrictions and self-serving red tape at every juncture.

The response to this vignette is illustrative of this attitude - a quick skim through, a disinterested nod of the head, and back to raving on about boat people taking over the nation. And while this country is effectively ruled by a coalition of career public servants and opportunist lawyers, nothing is likely to change.
Posted by Pericles, Friday, 21 June 2013 10:22:26 AM
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A very interesting article from a young man who is obviously very talented.

The question really is what makes an entrepreneur? I have started several businesses with more or less success, the most recent an abject failure after 7 years. However, I'm not an entrepreneur. In fact, I only went into business because of government regulation that meant I was excluded from employment. I had significant management experience, but little capital, which was a telling factor at the end. I was also not committed to my business, except insofar as it made it possible for me to eat and to live something approaching a normal life, although it was far from normal in many ways.

It seems to me that an entrepreneur has qualitatively different attitudes and reasons and that those are not readily taught. Either one is built that way or not. That means that any effort to "encourage" entrepreneurs will be a limited success
Posted by Antiseptic, Saturday, 22 June 2013 12:56:00 AM
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