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The Forum > Article Comments > Does Australia have a plan B? > Comments

Does Australia have a plan B? : Comments

By Chris Lewis, published 25/10/2010

High levels of household debt in a world of competitive currency devaluations means the future isn't assured for Australia

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Swan is a dithering fool.Plan A was to borrow $ billions and put us into more debt.He could have done just what the yanks did.Just create more cyber money in our computers.Swan just paid someone else to counterfeit our currency.

Plan B will be more of the same for these economic troglodytes.
Posted by Arjay, Monday, 25 October 2010 8:23:40 AM
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"IF iron ore and coal prices were to drop back to 2002 levels, Australia's budget would be looking as bad as that of Greece.
And the nation's future would be in the hands of the IMF. The deficit would be above $100 billion and approaching 10 per cent of GDP."

http://www.theaustralian.com.au/business/opinion/narrowly-avoiding-our-greek-tragedy/story-e6frg9if-1225911606700

There is no plan B, and the treasury is now becoming more reliant on company tax from a few mining companies.

Take out coal, and Australia would be worse off than many other countries.

Most of the money from the resources boom is going towards paying off the trade deficit, while government departments and education systems continue to spend as much taxpayer funding as they can on imports.

Not good.
Posted by vanna, Monday, 25 October 2010 8:33:04 AM
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ajay...the printing of more..'money'...wont work
since the govt sold the fed..

it only mean's.. govt...borrows more
or can borow/more

[at two percent intrest...on their govt bonds
held by the fed..only to bailout the bankers..with intrest free]

the bankers are doing quite nicely..with this two percent margin
that us tax payers need to..repay..via the next round of higher taxes

[and other revenue raising measures]..in the pipeline
[or rather...'sewer'..to us in the pipe]

but do the sheeple even care?
they dont even KNOW govts USED to..create their own money{intrest free}...in the days before we got wages tax..

HELL they dont even know paying tax is volentary
AND THEN ONLY ON INCOME...not wage

its just the sheeple dont know..[wernt told...wages ISNT income]
heck wernt told only those under the act[ie getting powers under the act...are liable to the act...the only reason they need to pay...is their boss didnt tell them the act only applied to HIS income]

[income is proffit made from no added value]
work is adding value...but dont tell the working serfs

they dont even know a 'person'..is a coorperation
and if your not a person...gaining advantage..[under the powrs of the act]..

your not liable..[under the act]..

read the hansard debates from when...income-tax..was introduced...lol

they should be..teaching this stuff..in school
[read..dumbing down the american education system..to know why not]

the creature of jeckle island..!
or the secret bankers manuel...

[BUT/no..thats too easy...
or the reading iof it..too hard?]
Posted by one under god, Monday, 25 October 2010 1:50:03 PM
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Hardly anybody in the world has a workable plan B.

Although world-wide lots of small groups and organizations are trying to work out and live workable alternatives. Some of which are listed here:

http://www.dabase.org/GCF.htm

We are entirely an unconscious "civilization, to borrow the title of a book by John Ralston Saul.

An unconscious "civilization" that has the momentum of at least three thousand years behind it. A momentum and energy that is patterned to gain total power and control over every one and every thing.

Which is why the essays featured on this site were written.

http://www.beezone.com/news.html

Plus this talk (The Realization of The Beautiful) which was spoken at the time of the Stone Buddhas incident in Afghanistan

http://www.adidamla.org/newsletters/toc-aprilmay2006.html
Posted by Ho Hum, Monday, 25 October 2010 2:28:23 PM
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We'll all be rooned said Hanrahan
Posted by Gorufus, Monday, 25 October 2010 3:05:25 PM
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plan b for many is to claim victim status and expect Government to bail them out of their irresponsible spending. Unfortunately our current Government always has a good 'excuse' for squandering money and racking up debt quickly. Why should Joe Bloe be any different when they see houses going up in smoke due to pink bats debacles and corrupt builders getting huge payments for sheds. This is all with tax payers money and now it will be the NBN. People are happy to believe lies and the surplus to massive debt was not necessary but just an excuse to try and win votes. Unless Government becomes responsible it is unlikely individuals will.
Posted by runner, Monday, 25 October 2010 5:38:32 PM
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OUG,you missed my point.Why borrow from foreign banks and pay interest on phoney money,who just create the money from nothing anyway? We may as well create our own inflation and not have the debt.
Posted by Arjay, Monday, 25 October 2010 7:08:59 PM
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Reintroduce competition into the local economy which labor and the greens prescribed away to fulfill their now failed desired outcomes.
Posted by Dallas, Tuesday, 26 October 2010 2:48:05 AM
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We are being rather complacent, aren't we.

There really isn't much in the locker after the mining boom fizzles out. Our next most successful businesses are the Banks, whose profits depend entirely on our not noticing how much they are gouging from us all. So when the minerals stop flowing, or the prices drop back, they will be in the same boat.

We really should start to shore up our economic defences. My view is that we should look closely at what is happening in Europe, and learn a few early lessons.

In the UK, Prime Minister Cameron is cutting a full 25% out of the public sector over the next four years. There will be weeping and wailing and gnashing of teeth, of course. But I doubt that any of the 490,000 "public servants" will actually be missed. They are only there courtesy of Gordon Brown's ten-year programme to create an unassailable cohort of make-workers, reliant upon a Labour Government for their salaries, and therefore willing Labour voters.

Which was one of the major contributing factors to the $250 billion deficit that he handed on to the Coalition.

We also have a massively bloated bureaucracy here in Australia. One that is constantly inventing reasons for its own existence by imposing ever-greater control over the private sector - especially, but not exclusively, that ever-flowing resource that is small business.

Until and unless we make a serious assessment of the value-add of our overblown, overpaid and over-pensioned public service, we will inevitably hit the same wall that much of Europe has run into.

Our plan B should be to encourage innovation, not stifle it at birth. Find ways to grow businesses, rather than smother them with red tape and pointless regulation.

Sadly, the means to achieve this rests with politicians who haven't a clue how businesses are run, having spent their political apprenticeships either in the sheltered workshop of the public service, or a parasitic enterprise such as lawyering.

It will be a while before we have to face the inevitable. But it will come.
Posted by Pericles, Wednesday, 27 October 2010 8:20:35 AM
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Pericles,

i agree with much of what you said.

However, i am keen to ask you what private industries can be the backbone of innovation to create new wealth and employment. Do you consider renewables as one way to go? If so, should its development have some protection from cheaper imports and so on? If not, what policies do you suggest are needed to promote innovation?
Posted by Chris Lewis, Wednesday, 27 October 2010 1:40:47 PM
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That's the wrong question, Chris Lewis.

>>However, i am keen to ask you what private industries can be the backbone of innovation to create new wealth and employment.<<

That's the standard governmental "picking winners" approach.

The problem with identifying potential areas of innovation is that they are, by definition, innovative.

"innovative adj. using or showing new methods, ideas, etc."

If you knew ahead of time where innovation was going to occur, you wouldn't need it, because you would already have the gift of second sight.

Which is, of course, the biggest single problem with government "support" to innovation in industry - they want you to describe exactly, ahead of time, how any assistance they give you will produce results. Add to this the fact that can only understand new ideas in the context of stuff that already exists.

>>Do you consider renewables as one way to go?<<

Sadly, we don't have the intellectual infrastructure to set ourselves apart from the pack in areas that are already well-trodden.

We do have a few pockets of clever thinking in this area - I saw one the other day that made me go "wow, that's neat" - but then we get to the next hurdle.

You can have a genuinely great idea, but there is no-one in Australia willing to invest in it at the start-up level. They all want revenue track records, which is fair enough, but which comes later in the cycle.

Banks, of course, want you to literally bet your house. Which means that if the business falls over, you're out on the street.

That's a bit of a disincentive for many.

>>If so, should its development have some protection from cheaper imports and so on?<<

No. What would be the point of "innovating" something that another country is already doing, more cost-effectively?

>>what policies do you suggest are needed to promote innovation?<<

Simplify the tax rules for R&D - that's R *and* D.

And find a way to help Banks lend to start-ups, where mortgaging the family home isn't a prerequisite.
Posted by Pericles, Wednesday, 27 October 2010 3:12:36 PM
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pericles,

what about aspects of productivity such as labour costs? How does innovation fit with such considerations in terms of resisting cheaper alternatives that will invetiably come.

Can we encourage R&D and come up with good ideas and encourage banks to lend? A lot of market economists say that key is to produce goods, nut just consume. Is china's success explained by innovation, even though much of its exports is foreign owned?
Posted by Chris Lewis, Wednesday, 27 October 2010 4:05:35 PM
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Pericles,

In other words, I am asking what countries have been the most innovative, did government help them, and did the host country hold on to most of the production?

I think of Nokia, Apple, and so on, but wonder where they are all made.

I know more is made from the sale of the US rather than where it is produced, but how many purchases are bought on debt, and how much employment is created from the industry in the country that came up with the idea.

I don't know the answers, but would like to find out.
Posted by Chris Lewis, Wednesday, 27 October 2010 5:20:48 PM
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Chris Lewis,

There is an organization called Ausinnovation that regularly carries out surveys regards innovation in Australia.

http://www.ausinnovation.org/

It repeatedly finds that “user feedback” provides the greatest boost for development of a product.

EG. If the user wants the product cheaper, lighter, stronger and in the colour blue, then this provides the impetus for the manufacturer to make the product cheaper, lighter, stronger and in the colour blue.

Without user feedback, then the manufacturer doesn’t know what to do to make the product more competitive in the market place.

It also finds that government programs or aid packages don’t really help that much, because the manufacturer is still not getting any feedback, which is the most important thing.

Sounds logical enough, but the greatest problem now in this country as I see it is inertia, and the mentality that import is always best.

This is most clearly seen with government departments and education systems, that import nearly everything. They have no interest in spending taxpayer money on local products, and automatically buy imported goods on just about every occasion.

Percilles has suggested sacking, but that simply puts these people into the dole queue and everyone has to pay to retrain them and get them back into the workforce.

I would suggest instead using them to stimulate innovation. Government employees and members of the education system have to be forced to buy local products AND TO SUPPLY FEEDBACK to the manufacturer. This stimulates local innovation.

Failure to do this, and government departments and schools and universities should simply have their taxpayer funding reduced.

If members of government departments and members of the education system continue to import and provide no feedback even with reduced funding, then the sackings take place.
Posted by vanna, Thursday, 28 October 2010 9:50:47 AM
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Thanks vanna,

more food for thought.

I am constantly weighing up the pros and cons of freer trade, and I am finding it very hard to know what is right or wrong.

I am now working on an article where i want to discuss freer trade in terms of success and failure from an Australian perspective, but one which covers a number of policy domains.

My gut feeling, however, is that Western countries will again shift the balance between production and consumption which means inevitably that something will have to be done about imports.

When I finish the article, in time, i will put forward a short piece on OLO where I can test my thoughts with you, pericles and others.
Posted by Chris Lewis, Thursday, 28 October 2010 9:58:16 AM
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Chris Lewis,
Australia desperately needs to be thinking about the bigger picture, and articles such as yours are very necessary.

I would think that free trade has to be combined with a number of other initiatives. Reduction in tariffs has to be combined with stimulating local manufacture.

It is easy for governments to take off tariffs, but a little more difficult to stimulate local manufacture.

So our governments have taken off tarrifs, and taxpayer money now goes to governments, it then goes to government departments and education systems, and then the money goes straight offshore.

Local manufacturing has actually declined with free trade and reduction of tarrifs, because there weren’t other initiatives put into place to stimulate local manufacture.
Posted by vanna, Thursday, 28 October 2010 10:19:39 AM
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*And find a way to help Banks lend to start-ups, where mortgaging the family home isn't a prerequisite.*

The problem with that Pericles, is that a banks role is to minimise
risk, not maximise it. If somebody does not believe in their own
idea enough to mortgage the house, is it really such a great idea?

The American solve it with venture capital, which is a big industry
in the US. Google, Facebook, Twitter, you name it, all started
by university students backed by venture capital.

I am not sure how the American tax office treats venture capital,
but the fact that the wealthy are so eager to invest in new ideas
in the US, suggests to me that there would be benefical tax
aspects, wether the idea succeeds or fails.

So my first suggestion would be to examine the US venture capital
industry, to understand why their wealthy are so keen to back
new ventures, unlike our own. What are the tax implications
in each country, as they surely play a role in all this
Posted by Yabby, Thursday, 28 October 2010 10:58:44 AM
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Yabby,
I think you will find that there are a very large number of start up companies in the US that fail.

If the ratio of start up companies that fail/ start up companies that succeed is too great, then the banks and eventually the economy fail.

The US also heavily subsides its agricultural industries.

The trick is to reduce tarrifs while stimulating local manufacturing AT THE SAME TIME, which is what our governments have not done.

There will never be much gains at all in this country if taxpayer funding continuously goes offshore, by handing it over to government departments and schools and universities who spend the lot on imports, which is sending the money offshore.

That has been occurring for decades, it has not stimulated innovation or local manufacturing, and now we are totally dependant on what we can dig out of the ground, and without value adding.
Posted by vanna, Thursday, 28 October 2010 11:42:38 AM
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I think we may be talking at cross purposes here, Chris Lewis.

>>pericles, what about aspects of productivity such as labour costs? How does innovation fit with such considerations in terms of resisting cheaper alternatives that will invetiably come.<<

When the topic is innovation, labour productivity doesn't come into the equation.

As far as "resisting cheaper alternatives" is concerned - why should we? If the existence of cheaper alternatives spurs us to develop replacements for them, that is all to the good. But if we are unable to effect that replacement more cheaply still, we are kidding ourselves that artificial mechanisms such as tariff barriers are going to help Australian industry.

>>Is China's success explained by innovation<<

China's current success has little to do with innovation. They have simply been following the path that has been previously trodden by post-war Germany and Japan, building stuff that people want at prices they can afford, and moving from the low-cost-labour environment through to technology-assisted manufacture relatively quickly.

These scenarios were driven by necessity. Post-war rebuilding on the one hand, and the relatively recent acceptance in China of a form of State Capitalism on the other.

We have had no such economic drivers. From the sheep's back to the mining boom, we have been natural-resource driven. We have a population far too small to support any manufacturing economies of scale, and as a result have never made any serious inroads there.

>>what countries have been the most innovative, did government help them, and did the host country hold on to most of the production? I think of Nokia, Apple, and so on<<

I believe the impetus for Nokia came from the infrastructure, NMT, which encouraged their development of car-phones. Whether they had active government support, I don't know. Apple, of course, was famously started in a garage with $1,300 that Jobs and Wozniak scraped together - Jobs by selling his VW van.

And manufacturing is not important to innovation. The economics are chalk and cheese.

We will never become Internationally competitive in manufacturing. Therefore we need to innovate.

As will China, eventually.
Posted by Pericles, Thursday, 28 October 2010 12:13:28 PM
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*I think you will find that there are a very large number of start up companies in the US that fail.*

Vanna, start up companies everywhere fail. Especially those backed
by Govt, who are trying to pick winners.

Venture capital in the US, is commonly provided by innovators,
who have made their fortune, by good judgement, in another industry.

These people have the money and clearly the talent as innovators,
they should be encouraged to risk their own money.

The profits come in terms of intellectual property rights, not
trying to make consumer goods for schools.
Posted by Yabby, Thursday, 28 October 2010 12:33:59 PM
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That's a little unfair, Yabby.

>>If somebody does not believe in their own idea enough to mortgage the house, is it really such a great idea?<<

Your theory would be, then, that only ideas that are small enough to be financed by mortgaging your house are worthwhile pursuing?

I'm pretty sure that isn't what you mean, but you can see how limiting self-financing can be. Let's say you think your idea needs $200,000 of capital to get to production. Along the way, despite the fact that your idea is the greatest thing since mothers' milk, you find it needs another $200,000.

If you are going to lose your house, it isn't a matter of presenting your idea to venture capitalists. It's whether you can explain it to your wife and kids.

The trick with innovation is that it is new. And by definition, when the idea is new, you don't have any benchmarks to work with, or other people's experiences to learn from.

So the lack of enthusiasm to bet your family's future on whether you have sufficiently estimated the development cost - as opposed to the quality of the idea itself - is understandable.

But you are absolutely on the mark re venture capital in Australia.

There is capital, but there's no sense of "venture".

The first thing they ask is your current revenue stream. If you don't have one, or it is embryonic, their eyes glaze over and they drift away.

In the US, they have a high level of tolerance for risk, and a great appetite for potential "ten bangers".

I suspect that tax laws may come into play at some point, they generally do.

A few years back a business acquaintance of mine accepted shares in a US company, in exchange for equity in his local business, that ha'd built up from scratch. The tax department insisted that he pay, real dollars, immediately, on the notional "capital gain", despite the fact that he had received no money.

Iniquitous.

Sadly, the lack of business experience in government and government departments will permanently inhibit any useful tax reform.
Posted by Pericles, Thursday, 28 October 2010 12:41:11 PM
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Sadly, vanna, these type of talkfests are part of the problem, not part of the solution.

>>There is an organization called Ausinnovation that regularly carries out surveys regards innovation in Australia.<<

This particular one was set in motion by a small Melbourne communications company, in order to generate interest in its magazine business. Nothing wrong with that, of course. Very entrepreneurial.

But the "sponsors" - with the exception of a hotel chain (useful for the "events", eh?), a boutique website developer and a graphic design company - are all governments and government departments.

http://www.ausinnovation.org/supporters/support-groups.html

The result being that the government departments all end up talking to themselves, guaranteeing that none of them actually gets to understand the mechanics of innovation at all.

The three non-government organizations are there, presumably, to solicit business.

Again, absolutely nothing wrong with that. But it doesn't actually progress innovation itself, one inch.

Your take on surplus public servants is also quite indicative, vanna.

>>Percilles has suggested sacking, but that simply puts these people into the dole queue and everyone has to pay to retrain them and get them back into the workforce.<<

The general idea is that these folk were already costing the taxpayer real dollars, when it was determined that their position added no value.

It therefore makes perfect economic sense to take them out of non-productive positions, help them retrain, and put them into economically productive positions.

Meanwhile, lowering the tax burden on business - made possible by the slimmer public service - will actually enable those folk to be employed.

Is that so bad?

Incidentally, forcing government departments to "buy locally" will simply increase the cost to taxpayers, and simultaneously encourage local producers to become fat and lazy on government contracts, protected from competition.

The one thing it will not do, is foster innovation.
Posted by Pericles, Thursday, 28 October 2010 1:11:19 PM
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Pericles,

With all due respect, as I am listening to your ideas, I do not think that such debate is wasted.

I do think Vanna makes good points.

While I am keen on the importance of innovation, I would like to see some evidence of how it can work. After all, the US is much more innovative than Australia yet it is struggling. Remember Walmart has been innovative in terms of its work organization, but pays workers pretty low wages.

If you have some info, please post sources. Even better, write an article if you do not already.

I have some doubts that any nation’s future cannot be isolated to innovation. After all, many nations are keen to keep their currencies competitive, including the US. Similarly, manufacturing is indeed the greatest source of global wealth, although the US make more from an ipod than the country which produces it in factories.

As I am concerned primarily with the national interest, albeit as a supporter of liberalism (within reason), I also need concrete examples of nations that succeeds on innovation alone.

My gut feeling is that a number of factors always explain eco success: protection, currencies, labour costs, national cooperation, as well as innovation, efficiency and good organisation. There has to be reasons why some nations are gaining more wealth tahan others

As for our argument the West is finished with manufacturing, I am not so sure. In the end, govts need to provide jobs. Now that financial services has been tarnished, it will be interesting to see what professions emerge to fill the hole.

There has to be a better balance between production and consumption, and between wages and purchasing power. This may mean that societies again pick winners if their observations are that they have no other prospects.
Posted by Chris Lewis, Thursday, 28 October 2010 1:50:42 PM
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Pericles, I guess my main point was, that banks can't be expected to
act as venture capitalists, that is not their role, it is one of
safety and security. As it is, I am always amazed at the tricks
people will play to extract money out of banks, they really are
fair game. That they are cautious and that it pays off, is shown
up in Australian bank figures. Their write offs are far lower
then European or many American banks. At the end of the day,
those write offs are passed on to other customers, as is theft
in supermarkets etc.

As to your tax example, yes that is the sort of thing that is
clearly holding up innovation in Australia.

Chris, if it were not for innovation, America would by now be a
banana republic. I think you underestimate the role that services
can play, in a country's income. I remember when Google was little
more then a house full of computer gear, in the mid 90s. Now
they have 30 billion cash in the bank and have never manufactured
anything.

In fact great manufacturing nations like Germany, Switzerland and
others, rely on constant innovation as well as great engineering,
to achieve their results. But they are less products that you see
in your local Harvey Norman's. They make the machines that others
use to make things. It is a huge market. Much of it protected by
intellectual property rights.

Australia does a bit too, as an extension of what we are good at,
ie farming and mining. We do in fact export some specialised farm
machinery, as well as specialised mining equipment, as an offspin
of ideas that evolved and were developed here. These aren't
machines sold on price, but on an ability to get a job done.
Innovation is the key, all the way.
Posted by Yabby, Thursday, 28 October 2010 3:38:16 PM
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Evidence, Chris Lewis?

>>While I am keen on the importance of innovation, I would like to see some evidence of how it can work.<<

The evidence is all around you.

Apple has been innovating like crazy over the past few years, and has managed to both create, and supply to, a market that no-one actually knew existed before. Or, at the very least, couldn't accurately quantify.

Google, similarly, has grown from being a search engine (a what?) into an information resource the like of which the planet hasn't seen. Did we have the slightest notion, ten years ago, that we would be able to use a search engine to look at a streetscape 10,000km away, simply by entering its address into a browser? For free?

But your question is not about that, I suspect.

You are looking for the signposts that say "this way to successful innovation".

They simply do not exist. You can only create a fertile environment in which ideas can grow to maturity, if they are useful, and die quietly without too much collateral damage, if they are not.

>>After all, the US is much more innovative than Australia yet it is struggling<<

Although I don't believe that the US is struggling *because* it is more innovative. Do you?

Once again, it is important to stress that production (let's call it that instead of manufacturing) is the process that turns the ideas - the innovations - into economic success or failure. After all, lending people money to buy houses was once an innovation. It was successful for many years, due to its production process. And later became toxic, due to a change in its production process.

The idea/concept/innovation itself was never an issue.

The production process is entirely separate from the ideas themselves. You appear to be attempting a linkage which simply isn't there.

>>I also need concrete examples of nations that succeeds on innovation alone.<<

I doubt you will find any. As I suggested, the effective translation of an idea into a product or service is also key.

We are, unfortunately, not that good at either.
Posted by Pericles, Thursday, 28 October 2010 3:45:43 PM
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yabby and pericles,

Yes, I do agree that innovation is very important; I probably should have made that clearer. And yes the US would be a lot worse off without innovation.

I have plenty to think about, so i thank you for that.
Posted by Chris Lewis, Thursday, 28 October 2010 4:13:04 PM
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Just want to address one of my previous points. I meant manufacturing was key component of global exports. Obviously services are the largest component of many domestic economies.

Back to the debate, my article does not wish to just focus on industry job creation. It is also concerned about the need for welfare assistance to be streamlined in the case that the world economy does not go gang busters forever through a reliance on Asia.

Welfare reform, along with other issues, should also be planned for. Such issues would have to be linked to others, such as immigration and housing.
Posted by Chris Lewis, Friday, 29 October 2010 7:00:08 AM
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Chris Lewis,

In reference to Percilies comment "an idea into a product or service is also key"

I remember reading through an article some years ago where a researcher found a very good correlation between transfer of knowledge and an increase in the wealth of a country.

If a discovery had been made, then how quickly information about the discovery transferred through society was key, because that discovery could be capatilised.

If there is rapid transfer of knowledge through a society, the greater the chances that the society becomes wealthier.

Unfortunately this is not our society. Our education systems are stuffed, and someone now has to pay a lot of money to receive a very average or even poor quality education.

There is very little research and development occurring that ever reaches the market. If a company wants some information from a university or research center, they have to pay money for it, and the information they receive is often not reliable or not useful.

Feedback information from the public is hard to get, and almost impossible from members of government departments and members of the education system.

The list goes on, but eventually almost all technology in this country now has to be imported.
Posted by vanna, Friday, 29 October 2010 8:12:08 AM
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Vanna, yes i agree.

i remember the chinese academic and UNSW developing solar panel technology, only for him having to leave Australia for china where now his products have made extremely rich.

http://blogs.crikey.com.au/rooted/2010/08/03/aussie-solar-research-slashed
Posted by Chris Lewis, Friday, 29 October 2010 1:56:22 PM
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Chris Lewis
There is a book on knowledge and wealth creation that has a chapter on Australia.

http://books.google.com.au/books?id=jscSH1-E3pYC&pg=PA298&lpg=PA298&dq=increase+in+wealth+%2B+knowledge+transfer&source=bl&ots=F_FOQ9coIr&sig=__g1ncPx6XxHMj2sL9fFciSwzuY&hl=en&ei=TAPKTMmaO4vmvQOc0bHfDw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBgQ6AEwAA#v=onepage&q&f=false

The solar power case also goes the other way around. Recently the NSW education department spent over $500 million of taxpayer funding on importing software from a German company to run the administration systems of NSW schools.

With some effort, the education department could have formed teams of Australian companies to develope that software and kept the $500 million in the country. The $500 million would have been a massive boost for the IT industry in Australia, but instead it now is a boost to a multinational company operating from Germany.

This type of spending by government departments and education systems has been occuring for many years, and now there is very little connection between government department and education systems and the rest of the country.
Posted by vanna, Friday, 29 October 2010 2:34:01 PM
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yes, govt can be crucial to innovation.

Look at US military. Its air force was instrumental in cleaner fuel aim as private sector was reluctant to bear cost. Now many private companies work with air force towards such a goal.
Posted by Chris Lewis, Friday, 29 October 2010 4:12:18 PM
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*With some effort, the education department could have formed teams of Australian companies to develope that software and kept the $500 million in the country*

Vanna, you miss the point here. The Govt would have been negligent
in its duty, to risk 500 million $ on an experiment. If it went
wrong, taxpayers would have been left with the bill and the
disaster.

You might think it was a good idea, but clearly there was no
entrepreneur or company, willing to risk capital, willing to risk
hiring the labour force, that might or might not deliver the
goods.

If the German company has a trusted record in doing similar projects,
why risk taxpayers funds?

In all these ventures, somebody has to risk their money, so its
a question of bringing together innovative skills, venture capital,
labour
and drive-determination to create something.

As Pericles pointed out, create the environment for those things,
the entrepreneurs will follow. Otherwise they simply won't bother.

A willing workforce helps. In Australia that is a problem. People
have little company loyalty and will flit to the next job if it
pays a bit more, alot of focus is on bells and whistles entitlements,
given that we have close to full employment in this country.

So in Australia entrepreneurs focus on areas, where there is a
comparitive advantage,with much less risk. Develop some real estate
for the increasing population, or develop a mining venture, as
we have abundant minerals.
Posted by Yabby, Saturday, 30 October 2010 5:28:30 PM
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Wrong question Chris.

What I would like to know is, does Australia have a plan A.

We really only need a plan B, once we have some sort of plan to start with.
Posted by Hasbeen, Saturday, 30 October 2010 6:30:14 PM
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Yabby,
In terms of software, Microsoft started in a gargage with two people.

The education system is completely and totally hopeless. After 40 years of teaching computing, they then import all their computer software and hardware from another country.

The continuous amount of money leaving the country each day in the form of imports not only represents a loss of cash, it also represents a loss of intelectual property and intellectual capital, because most productivity and intelligence is being developed elsewhere.

If the money runs out, we are not only in debt, but we also have not developed our intellectual capital and productivity.
Posted by vanna, Sunday, 31 October 2010 10:57:38 AM
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Vanna, anyone in Australia who thinks they have the talent, can
develop software and market it globally.

In fact I gather some software is developed here, MYOB, quite
a bit of farm software, various games, etc. Its a free and open
market.

If not enough is being developed for your liking, then clearly
we don't have the talent, nor the entrepreneurial drive to
do it.

I see no reason why Australian institutions or businesses, should
be forced to buy Australian software, just because its Australian.

Yes, money goes out, but money in competitve industries is also
coming in. Our trade balance is in fact in surplus, not so with
our current account, as we don't save enough, but are the worlds
biggest gamblers.
Posted by Yabby, Sunday, 31 October 2010 11:30:09 AM
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Yabby,

The trade deficit is where it is because of coal exports. Without coal exports the country would be bankrupt.

Look around you and see how much has been produced inside the country.

Innovation occurs when one thing builds from another. The education system is the opposite. It just uses taxpayer money to import, it does not build anything, and stimulates no innovation.

The idea that other countries are ahead because of low wages is a red herring. I can imagine if someone in China used the country's money to import 100's of millions of yen worth of goods from another country, and did not spend anything on local Chinese companies.

I don't think they would ever be released from jail, but in Australia is is common practice to use taxpayer funding to import.

There is much more to it than low wages, and having government departments and education systems working for the country (and not against it) would be a big help.
Posted by vanna, Sunday, 31 October 2010 1:44:18 PM
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*Without coal exports the country would be bankrupt*

Vanna, you seemingly have no idea as to what is happening in WA.
200 billion $ worth of mining developments going on right now.
1 million tonnes or so of iron ore a DAY. The gorgon gas project
alone, is costing 45 billion$ to build. Then we have the woodside
projects and all the rest. Gold, uranium, copper, aluminium,
salt, you name it, we mine it.

Yes, coal is a large export. If we did not have it, we would have
a lower Australian $, more unemployed, so there would be a reason
to develop other industries and workers might be keen. That is not
the case right now.

*I don't think they would ever be released from jail, but in Australia is is common practice to use taxpayer funding to import.*

Well luckily we don't live in China then. In fact they are now copying
our market economy model, for they were starving beforehand.

The role of taxpayers money is not to prop up backward or ailing
industries, that money should be spent wisely. Otherwise all it
does, is drag efficient exporters down, with higher costs and
shoddy goods.

There are plenty of examples of the stockmarket providing mega
millions of $ for developing Australian technology, in things like
biotechnology. Most of the time they land up as dusters.

Ambri, Metabolic, Intellect. Just three of a host of companies
that had huge amounts of investment capital thrown at them to
develop Australian technology. Investors lost their shirts.

Now you want taxpayers to lose their shirts too.
Posted by Yabby, Sunday, 31 October 2010 4:50:48 PM
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Yabby,
If you read my first post you will see that Australia could easily become bankrupt if coal prices decline, and if coal declines, iron ore follows.

The goal should be to reduce tariff protection, AND stimulate innovation and manufacturing in Australia at the same time.

Consecutive governments have failed to do this, they just took away tariff protection.

And now, there are numerous people in government departments and education systems who will not even look at anything made in Australia, because they think it would be inferior.

However, they like to get as much from the taxpayer as possible, because the taxpayer's dollar is still good (for a while).

After 200 years, we are now almost totally dependant on coal, and we now have a mediocre education system, a parasitic public service, very little science base, and a belief that anything made in the country is inferior.

Not a good mix.
Posted by vanna, Sunday, 31 October 2010 11:21:09 PM
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Not this one, vanna.

>>In terms of software, Microsoft started in a gargage with two people<<

Google started in a garage. Hewlett Packard started in a garage.

Bill Gates started his business life much as he has conducted it ever since.

While at Lakeside Prep School, he and Paul Allen found a way to steal computer time from Computer Center Corporation, in order to practice their programming skills.

Far from "starting in a garage", the first Microsoft project was conducted while they both were employed by Micro Instrumentation and Telemetry Systems.

And Yabby, you are absolutely right.

>>...anyone in Australia who thinks they have the talent, can
develop software and market it globally<<

But only in theory.

While there are some exceptions - by the way I'd suggest Atlassian as an example, rather than MYOB - the hurdles facing the translation of software development onto the world stage are astronomic.

For a start, there is very, very little preventing a US company from stealing your idea (assuming it is any good) and exploiting it without you, given the nature and extent of patent protection in this country.

Even if you clear this hurdle, you will find the barriers to entry into overseas markets to be substantial.

To be successful in this environment, the software would need to be highly specialized in a high-value niche market. Which would be enough to make a successful company, but not enough on which to base a local industry.

And vanna again...

>>After 40 years of teaching computing, they then import all their computer software and hardware from another country<<

We tried making hardware here. We simply didn't have the economies of scale necessary to drive down the unit cost. We still don't.

And good luck in finding a software company locally who would have enough spare cash to invest in building educational software, bringing it to market, and foot-slogging their way around the campuses of Australia to sell it to budget-conscious buyers.

Telling them "you're supporting Australian industry" simply won't cut it, unless your product is a) superior in every way and b) cheaper.
Posted by Pericles, Monday, 1 November 2010 7:58:31 AM
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Pericles,
Microsoft may be an example of innovation.

Certain individuals (not mentioning any names) got hold of a basic piece of code that had been put together to test a new chip.

They then transformed this code into something called DOS, which later became Windows and so on.

Very little starts from nothing, and innovation usually involves building on what is currently available.

Unfortunately, Australia is fast losing its ability to develop anything from anything else.

Our governments can’t do much about the private sector, but they can certainly do something about their government departments and education systems that mindlessly and automatically import nearly everything they use, with no thought to developing something inside this country.

We are fast becoming a country of consumers (and consumers only).
Posted by vanna, Monday, 1 November 2010 9:20:56 AM
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Pericles, I was thinking of something like Sausage software.

The way I remember it, these young kids developed a web authoring
tool, flogged copies of it on the internet and did very well.

So its possible, even from Australia.

Vanna, sounds like you have some personal gripe with educational
institutions, so its hard for any one else to comment.

I am sure that if a local product were equal, local institutions would
use it
Posted by Yabby, Monday, 1 November 2010 10:02:45 AM
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Vanna, I’ve mentioned this before but!

In the early 80s I was hired to establish local production for a firm who were importing high quality water saving equipment, from the USA, & Europe. This was quite successful, & they prospered.

In the late 90s I was contracted by the same firm to try to save the company which was rapidly failing.

I found that other companies were now importing competitive products from Asia. Products of good quality, fully finished, in individual packaging, printed to the importers design, for less than the Australian cost of the brass to make the products.

Why brass, made from our zinc & copper, should be cheaper in Asia than Australia escapes me. However while this is the case for very many materials, manufacturing in Oz, except for very small quantities, will not happen.

That company now survives, but as an importer, back where it started from
Posted by Hasbeen, Monday, 1 November 2010 10:29:27 AM
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Yabby,

My issue with education systems is that they are training generations of students to be consumers of imported products (just like their teachers), but not producers or innovators.

In government departments, the mindset has also become “import is best”. As an example: I have personally known of police officers complaining that they were given a Holden to use and not an imported car such as a Mihtsubisi. They said that they had a difficult job to do and deserved better than a Holden.

The excuse that wages are too high is not an acceptable excuse, because wage rates in Australia have now fallen below wage rates in other countries that we import from (and the education system importing software from Germany is an example).

The excuse that population numbers are too low is also not an excuse with over 20 million people now in the country.
Posted by vanna, Monday, 1 November 2010 11:15:46 AM
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*Why brass, made from our zinc & copper, should be cheaper in Asia than Australia escapes me*

Hasbeen, I think you will find that this has alot to do with the
local pricing system and a lack of competition. Companies commonly
don't base their pricing on their costs, but on what the market will
bear. So they sell locally and achieve a higher margin, then
sell internationally at a much lower price, which gives them volume.

Steel is one of those examples. The international price of steel
is around 600 $ a tonne, but try and buy it for that locally.
Unless the locals have some Chinese import breathing down their
necks, they will charge many times that.

Vanna, what you are saying is that Govts should use taxpayers money
to pick winners. We have gone away from that, its too expensive
for taxpayers.

What we lack is entrepreneurs here, to develop things that you
talk about. They need a reason to do it here. There is not one.

We already have close to full employment
Posted by Yabby, Monday, 1 November 2010 12:19:52 PM
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Yabby,
We have 600,000 unemployed. We also have many, many people living off the taxpayer, most of whom have no interest in using local Australia products, but use taxpayer's money to import items from other countries.

Australia could actually cut back completely on its foregin aid, and still be ahead of other coutries in providing funding to other nations, because we import so much.

Our imports could be our foregin aid.
Posted by vanna, Monday, 1 November 2010 3:18:57 PM
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Vanna, some people are simply unemployable. In WA they are
struggling to find restaurant staff, welders, meat workers,
the list is endless.

Today our unemployed have the option of working or not. You
won't force them to work, if they decide not to.

You'll fill the high paying, cushy jobs, with all the perks.
But try filling those lower paying jobs.

I know plenty of people who claim a disability pension. They
will work for cash, but they have no intentions of getting
out of bed each morning, to rush to work.

So at around 5% offial unemployment, it can be considered as
just about full employment. There will always be some churn
of people mobing between jobs, or getting reskilled etc.
Posted by Yabby, Monday, 1 November 2010 4:35:18 PM
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Well Yabby,
The unemployed could be used as a resource for Australia. Go past a Centerlink office and try to find the "Made In Australia" stickers.

There probably won't be any, so Centerlink could start to encourage (or enforce) welfare recipients to buy Australian made products.

Centerlink staff could also be encouraged (or enforced) to buy Australian made products.

That would be using government employees as a resource or asset.

Other government employees and taxpayer funded teachers might eventually follow the lead of Centerlink staff.
Posted by vanna, Tuesday, 2 November 2010 10:27:38 AM
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*so Centerlink could start to encourage (or enforce) welfare recipients to buy Australian made products.*

So Vanna, you want to force already poor Australians, into a massive
drop in their already low standard of living, by being forced
to buy far more expensive and often shoddy products. That is hardly
fair on them. It is in fact the poor, who benefit most from
globalistation.

http://www.innovation.gov.au/section/aboutdiisr/factsheets/pages/australia'sexportsfactsheet.aspx

and

http://www.dfat.gov.au/aib/trade_investment.html

Clearly your assumption that without coal we would be doomed, or
that we don't export manufactured products, is wrong.

Perhaps they are just things that are not in front of your nose
every day, like everyday consumer goods.

Trade benefits everyone. From those whom we buy and those to whom
we sell
Posted by Yabby, Tuesday, 2 November 2010 1:19:19 PM
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Yabby,
The attitude that Australian products are "more expensive and often shoddy" is the attitude of so many public servants, and is just about universal throughout the education system. However they seem to consider the taxpayer's dollar is good, and in the case of teachers, they just can't get enough of that taxpayer dollar.

"ABARE-BRS forecasts export earnings for Australian mineral and energy commodities will increase by 29.9 per cent to around $179.9 billion in 2010–11, compared with $138.5 billion in 2009–10.

ABARE-BRS forecasts that export earnings for farm commodities will be around $31.4 billion in 2010–11, slightly up from $28.5 billion in 2009–10."

Quite a ratio, and it seems to me we have become highly dependent on what we can dig out of the ground, and now also a humble servent to China.
Posted by vanna, Tuesday, 2 November 2010 4:34:03 PM
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*The attitude that Australian products are "more expensive and often shoddy" is the attitude of so many public servants, and is just about universal throughout the education system*

Vanna, for your claim to be valid, you would have to be able to
show a number of real life instances, where this is the case and
where Australian products are being overlooked by Govt depts,
despite being equal in quality and price.

If you did have that real life evidence, then I am sure such
sensation seekers as the tv current affairs shows on 7 and 9,
would love to hear from you.
Posted by Yabby, Tuesday, 2 November 2010 5:10:28 PM
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