Hmm, my last post went missing...can't be bothered rewriting the whole thing, but my essential point was that money spent investigating an idea that ultimately goes nowhere is not necessarily "pissed up against a wall" - it's simply the cost of finding that out. If no time or money was ever put into projects with a limited probability of decent short-term profits, we'd still be back in the Dark Ages.

Anyway, I don't think we disagree as much as our posts would suggest - government funding should primarily be towards funding projects that have a reasonable chance of a long-term benefit for a large sector of the econonmy. Specific attempts by particular corporations to take a working prototype product to successful commercial roll-out can generally be funded by banks and venture capitalists, who, I might add, can be just as capable of picking losers as government agencies.

"who, I might add, can be just as capable of picking losers as government agencies."

You are quite correct Wiz, they are. But firstly its their money,
not taxpayers money. Secondly there are lots of them, some
win, some lose. The best will survive in the markets and prove
themselves. With Govt, its some obscure official or academic
who makes the call, with little at stake personally.

My point is, do not tax those with potential extra, to impede
their progress, then wonder why you haven't got an efficient
export manufacturing industry.

The best thing that Govts could do is act as facilitators. For
the amount of red tape bogging down business ventures is enormous.
Its so bad in WA, that one Govt project is bogged down in red tape
by another Department, so nothing proceeds. No wonder venture
capitalists tell Australia to shove it and go elsewhere.

Banks and other lending institutions most certainly do use taxpayer's money - very few of us *don't* have money invested in banks or super funds that put money towards all sorts of projects that we have no personal say in. OTOH, governments risk very tiny fractions of the total money available to them on long-term investments in new technology, so even if they had a bad 10 years, and not a single cent spent saw any return at all, it would have very little effect on the average hip-pocket.

The lack of venture capitalists in Australia is definitely a problem: no doubt excessive 'red tape' is an issue, but is it really that much worse in Australia than most other developed economies? I doubt there is any one single reason behind this, but a commitment by the government to offer a more attractive enviroment for such investors would definitely be welcome.

For those who wish to become even more concerned about our economy and the route we seem to inevitably following visit
http://www.debtdeflation.com/blogs/?p=41
We clearly have to do something other than follow the path that "traditional" economic models and the policy formulated by those that use those models as guidance.
We should not blame those that take advantage of the system to increase their wealth for no productive input but we should blame the system and those responsible for setting the parameters within which our markets operate. There are better ways of organising markets to stop these undesirable outcomes of booms and busts, excessive consumption and unnecessary environmental damage and it is time for economic advisers to lift their game and become part of a market based economic advice industry where the remuneration depends on the results.

"very few of us *don't* have money invested in banks or super funds that put money towards all sorts of projects that we have no personal say in"

Hang on Wiz, you are free to choose your bank, free to choose your
super fund, free to negotiate the terms etc, free to start your
own super fund. You are not free to choose about paying taxation.
Big difference!

As to the reasons for venture capital going where it does, you
are correct, many little reasons make one big reason.

In the end it comes back to comparative advantages, which matter.

Australia has good and bad, when it comes to various decisions,
so do other countries.

What is becoming more common is that some great research can
be done by Govt and other institutions in Australia, but when
it comes to the next step, the whole lot is simply taken off shore
for further development. Companies need good reasons to do it
here, or they won't.

You really think the average guy on the street has the time or expertise to sit around working out which banks or superfunds are investing in the best projects?
And technically, you do have a "choice" not to pay tax, if you choose to earn under the tax-free threshold. Further, we collectively have at least some choice as to how we want the government spending our taxes...although typically it appears this election that neither major party is listening. Ultimately there's no realistic alternative but to accept that the government's responsibility is to invest wisely in health, education, infrastructure, science and technology research etc. etc. They may not always do the best job, but most of us would agree that leaving it entirely to private enterprise is a far more dangerous proposition.
As for the problem of projects being taken offshore for development, absolutely agree that this will be the downfall of Australia if not addressed. But it is essential that the government is involved in this process, by accepting that Australia lacks many of the advantages of the U.S. and Europe, and ensuring that funding and other assistance gives us a chance to remain on a par with the rest of the world.