On the first Tuesday of November each year, Australians spend $200 million on a horse race, the Melbourne Cup. That’s $9 per person.
The outcome of the race is uncertain. If it were certain, our $9 would be an investment. It isn’t. Our $9 is a gamble. When the race is over, some of us come out in front. Most of us don’t.
Some say Australians have a gambling problem. That might be true.
I want to talk about something worse. I want to talk about our investing problem.
That $9 per capita bet on the Melbourne Cup is twice our annual venture capital investment in startups.
To put our $4.50 per capita startup investment into perspective, the annual UK investment is $15 per capita. In Korea, it’s $20. It’s $85 in the USA. And it’s $120 in Israel. (Google’s StartupAUS Crossroads Report.)
In the 2014 Global Innovation Index, Israel, USA, Korea and the UK all rank higher than Australia. In fact 16 countries are more innovative than we are. Is it important for a country to rank highly on the Index? It sure is. Innovative countries want to do business with other innovative countries. Innovative companies want to establish headquarters in innovative countries.
There are a few prerequisites for innovation. A core idea is one. Funding is another. Without development money, innovations never see the light of day. They remain ideas. They remain commercially valueless.
Some people with ideas, but no capital, file their ideas away and forget them. Forever.
Others, more determined perhaps, go searching for the capital they need. They move to other countries, states and cities – places with a strong startup culture, a history of investing in ideas and a reputation for innovation.
The result is a brain drain. The brightest, most ambitious minds move away.
So what’s wrong with Australia?
When Donald Horne coined the phrase The Lucky Country, his observation was that our natural wealth was also our national curse. It was too easy for us to dig it up and ship it out. No government needed vision to lead the country to prosperity. We were lucky enough to find ourselves living on a vast deposit of minerals.
In the 21st century things are changing. But we’re not changing with them.
Our leaders still regard Australia as a quarry of good fortune.
In the 21st century we still have governments stuck in the 20th century supporting 19th century industries.
In The Rise And Fall of Australia, author Nick Bryant reckons we’re a blessed country cursed by ordinary leaders.
Our leaders might have a mission. Evidence suggests they lack vision.
The markets for Australia’s dirty coal deposits are closing rapidly. Countries around the world have recognised the urgent need to fight climate change and air pollution and are replacing coal-fired energy with renewables.
Also closing rapidly are Australia’s factories. There’s no way Australia can produce a car as cheaply as can Turkey or Thailand. Our products are too expensive to export. Our population is too small to support our manufacturers.
The traditional response from governments is to prop up frail or threatened industries with subsidies. So it is in Australia. Keeping industries on life support sucks up money that could be invested in the future.
The big opportunities for Australia are in technology, knowledge, clean energy and safe food. These are the valued sectors of the 21st century. So what is our government doing? Cutting science & research budgets, discouraging renewables and ignoring agriculture.
The Lucky Country is doubly cursed.
Our leaders lack the vision to create the future Australia needs.
We lack the investment to turn our ideas into innovations.