Australia — Why we need a tech industry

…and why all Australians should care!

In light of recent developments for a proposed sell off of the Australian Technology Park (ATP) to property developers, it has become increasingly apparent to not only myself, but to many other Australians at home and abroad, that the tech industry in Australia has for a while sad to say been in dire straits.

Some say that lack of initiative and support from the government to build and foster a technology ecosystem in recent years in cities like Sydney and Melbourne have all been admirable, but perhaps not enough (with exceptions of course) in stimulating an environment of entrepreneurs, world-class engineers and technological advancement in this country.

So the big question is why are we so far behind the rest of the world when it comes to tech and what can Australia do to better prepare itself for the future?

The following is a piece that explains why Australia and its people (public and private) need to focus more of their efforts in building and nurturing a country focused on technological advancement. And I hope this will provide readers with an understanding of the country’s current state of affairs and deliver some insight into why it is so imperative Australia embrace not only the utilisation, but also the development of innovative and world changing technologies.

Hang on a second! What sell off?

The ATP is currently under consideration to be sold off by the New South Wales government to developers. So what’s going to happen? — who knows. For all we know, it could be converted into a block of apartments or used as an extension arm for banking corporations. Whatever does happen, it probably won’t be able to develop and maintain the innovative rigour and start-up culture that currently occupies the park’s surroundings.

[Image Credit: ecogeneration] Australian Technology Park — Sydney, Australia.

For those who do not know (and I’m sure many don’t), the ATP is a flagship park situated in the heart of Sydney, sharing its proximity between three universities — University of Technology Sydney (UTS), University of Sydney (USyd) and the University of New South Wales (UNSW).

The main building occupying the park grounds was formerly known as the Eveleigh Railway Workshops and its exterior is something itself to admire; still exhibiting its quaint facade from all those decades ago. The interior however, presents a completely different world, with many of the country’s brand new hi-tech start-ups calling the old rail workshop their home.

As already mentioned, the park is nestled in between three main university campuses making it an ideal melting pot for students and graduates to not only attain much needed industrial experience, but help in kick-starting successful spin-off companies transitioning from academia into industry.

ATP Interior — Main Hallway

It is this very environment which has made the park and its vicinity a hub for innovative design and tech for so many years, and one of the biggest reasons why selling off such a complex is unacceptable.

The ATP is more than just a building — it’s a symbol which represents innovation, growth and progress. Selling off the park would signify more than just a blow to the tech industry (whatever is left of it), but also that it can easily succumb to the norm and growing trend of property development in the country. This, for whatever reason it’s worth is totally against the principles of what the industry is all about — pushing the envelope, fostering new ideas and building the future!

As of writing this piece, the park currently stands head-to-head between two Aussie giants; Software company Atlassian and one of Australia’s leading banks ; CBA — a final decision will be made in the coming months…

To understand more about Australia’s current tech situation, the following sections describe where we’re at and where we should and shouldn’t be going for the future.

Where are we at…

• Outsourcing Economy

For a long time, Australia’s manufacturing industry was at its strongest point during the 1960s, contributing around 25% to the country’s Gross Domestic Product (GDP). Unfortunately, over the years, this figure has fallen to about 10% in 2005–06.

The fate of the motor vehicle industry is a perfect example of how the decline in manufacturing has affected Australia’s economy. In the past, companies like Ford, Holden (Australian owned), Toyota and Mitsubishi had at one point established manufacturing plants, but most have since disappeared. Holden announced in December 2013, that they would cease vehicle production by the end of 2017. In addition, Toyota similarly announced that it would stop production of cars and engines by the end of the same period too.

Like manufacturing, the technology scene is currently undergoing a similar transition to not only downsize our automobile assembly sector, but also sees the country driving vital research and development initiatives offshore.

As the world transitions into an economic landscape driven by the ever growing dominance of countries like China and India, it is inevitable that manufacturing is one sector that will succumb to the super efficiency and low-cost capabilities of said countries. But in the context of R&D and innovation, Australia has a choice; to still maintain a stronghold on its intellectual property with support from both private and public levels.

• Downstream Industry

Australia is becoming more of a downstream economy. This means is that whilst the country still currently maintains a strong grip on exports in agriculture and raw materials (for now), it is rapidly becoming an economy of services i.e. finance, tourism and IT — utilising already developed technologies from elsewhere. While this definitely is not a bad thing, it does mean that we actually purchase (import) quite a lot of external upstream products from abroad. These products namely include the influx of electronics and software. For example; pervasive use of Apple’s products i.e. iPad, iPhone, Macbook etc., use of Google’s services i.e. Android, Ads, Maps and Search by countless Australian businesses means that money is flowing out of the country instead of being retained.

Now imagine if Australia decided to become an upstream economy and venture into developing products and services from the ground-up. What would it mean for the economy? — a lot I hope. There could be so much potential for Australia to prosper by investing in Research and Development (R&D) within the sciences and engineering fields. Therefore, instead of being users of such technology, let us be thinkers, builders and creators of it.

Does Australia have what it takes to create its own Uber, AirBnB, Intel, Google, Amazon, Tesla? — I hope it does.

• Mining Boom

Australia is well known for its huge deposits of raw materials — Iron ore, aluminum, uranium, copper, coal etc. And it is these resources which have kept it afloat during tough times like the Global Financial Crisis (GFC) as well as boosted its economy (assisted by the growing demand from China). However there is no denying that these resources are finite and will eventually be depleted. So what happens then? Will we shift the focus more onto our services to cushion the blow? And if so, is it enough to keep Australia competitive in the global market?

Whatever does happen, some serious decisions need to be made about what sectors it needs to focus on for the future in the event the country can no longer rely on its resources.

Who cares right?

Why should I care? I’m not in tech. How could all of this, completely unrelated to me, my interests and what I do affect me in the future?

This of course is not an unreasonable question to ask. I mean after all, there are other problems and issues out there to solve and tech is just one of them. However if you think about it, technology in fact plays a much bigger role than we could anticipate across all industries. Everyday, most of us are engaged in using technology; from using your smartphone to surfing the net, sending an email to a colleague and even driving your car to and from work. So in actual fact, the use of these products affects us more than we could have ever imagined. And it will continue to do so into the foreseeable future. As such, it’s important to keep in mind that society and tech are now inextricably intertwined and so all of us should pay attention to its progress and understand that this will be the driving force in determining the country’s future prosperity.

Here are just a few examples of how tech can play a role in helping a country’s economy;

• Education

It’s not just about us, but it’s about the next generation and what they will do that’s more important. Strengthening tech would undoubtedly motivate children to pursue a career in engineering and the sciences. By slowly ensuring an infrastructure is put in place now, we can help foster and support the inevitable supply of future tech jobs. In addition, it is very likely that with technology, will come a growing base of entrepreneurs in this country. This will ultimately boost job prospects and lower unemployment due to not only the availability of new career paths but also a growing demand of roles offered by these new businesses.

• New Technologies

It’s always nice to be the early adopters of new technology. Whether it be trying out the latest app in transport or being the first bunch to use the newest website in food and restaurants in your area. No matter what you do, we all interact with technology in our lives on a daily basis. So being the first testers of the newest fad is not only pretty cool, but also a privilege for adopters in helping provide constructive feedback in bettering the technology for future users as well as assist in supporting these companies become a global success. A collective initiative by all of us is paramount in helping Australian companies become competitive on both a national and international stage.

• Economy / Standard of Living

The biggest reason to help foster technology in this country is that it can ultimately boost the economy for years to come. With new entrepreneurs and companies entering the industry, comes more job prospects, income and tax revenue. This revenue can be used by the government to help improve its infrastructure, from transport and roadways to education and healthcare. In the end, the overall standard of living is raised for everyone.

The Evidence

Although my thoughts on this topic are my own, there are many others out there who share the same sentiment. Several articles and reports have been published describing the country’s current state of affairs.

Caitlin Fitzsimmons from the Business Review Weekly (BRW) recently wrote a series of articles on this very issue. She describes the need for Australia to focus more of its efforts on nurturing an ecosystem that pays more attention to high-growth tech businesses (termed gazelles) before they decide to leave Australian shores for better opportunities once they’ve reached a mature stage.

It’s about making sure full attention is given to businesses across their entire life-cycle so that our entrepreneurs have access to full resources in helping them grow their companies in Australia.

Furthermore, Fitzsimmons goes on to explain about the lack of venture capital initiatives offered in Australia. She details that too many companies are seeking additional funding offshore, namely the US which inevitably retains these businesses as their own. This ultimately has a detrimental effect on revenue and profits being retained in Australia. Similarly, this drive to seek funding overseas is compounded by their desire to hire foreign talent which Australia simply cannot provide. This talent primarily comes in the form of executives and heads of engineering which is seldom in Australia she explains. It’s easy to hire good engineers and managers in the country, but when it comes to hiring people who understand and have experienced working in and with hyper-growth companies, Australia just don’t have enough “know how”. Hence the need to recruit elsewhere.

The US market for growth-stage investment and expertise is so lucrative, that just about any early-stage company will find it difficult to say no when it comes to funding and incubation respectively.

“If we want Australia to claim a place as a creator of technology, not just a consumer, it’s essential we harness some of the energy around early-stage startups and apply it where it counts.” — Caitlin Fitzsimmons.

Fitzsimmon’s articles can be found on BRW;

1. Gazelles are the key to Australia’s economic future but we are obsessed with mice and elephants
2. How venture capital sucks our best growth companies to the US
3. Skill shortages are pushing high-growth companies offshore

Brenda Aynsley from the Australia Business Review also published a similar article on much needed government support to help build the country’s tech sector. Aynsley notes that the government must take a more active role when it comes to locally produced technology products and ensure that it creates incentives to help them prosper.

The Crossroads 2015 report from StartupAUS revealed, “a concerning trend for our fastest growing technology companies to leave Australia in search of talent, capital and more favourable regulatory environments” — Brenda Aynsley

In August 2015, PricewaterhouseCoopers released a report — Unlocking Sydney’s Innovation Potential. It describes the huge innovation potential for Sydney and for the rest of country. It summarises four key benefits from investing in this opportunity —

1. Demonstrating leadership
2. Driving innovation & competitiveness
3. Acting on policy
4. Reinvigorate the local economy and provide a catalyst for urbanisation

So from all the evidence presented so far, we can be sure of one thing and that is Australia must decide on its path. It can either ignore the writing on the wall or choose to embrace a future of opportunity for not only technology, but for its economy and its people.

Shining Beacons

Up until this point, it may have seemed that all I’ve been doing has been painting a negative picture of the Australian tech scene — but nothing could be further from the truth.

In spite of the current situation, there have been quite a few notable inventions, companies and incubators which have excelled in recent years.

The big players;

• Cochlear — An Australian company founded in 1981. It is a by-product of the research and development conducted by Dr. Graeme Clark at the University of Melbourne during the 1970s which was funded by the Australian government to create a commercial viable product. It was named the most innovative company in 2002 / 03 and was declared one the world’s most innovative companies in 2011 by Forbes.
• Altium — A company founded in 1985 from Tasmania, Australia. It is well known by electrical engineers for providing Electronic Design Automation (EDA) software in helping design Printed Circuit Boards (PCBs) and provide tools for circuit design and simulation.
• NICTA — It is Australia’s Information and Communications Technology (ICT) Research Centre of Excellence. Established in 2002 under the federal government to promote science and innovation, this centre was specifically created to address the weakness in research in the country. Over the years it has merged with various universities to promote and advance research collaboration. Based in the ATP, it’s a prime example of the park’s central role in accelerating technology advancement.
• Atlassian — One of the most successful unicorn tech companies to come out of Australia. Founded in 2002 by Mike Cannon-Brookes and Scott Farquhar, its role in helping companies track software issues /tasks (JIRA) has led the company to gain international attention and popularity. It has since further gone on to develop other products ranging from source control software — Bitbucket, to online enterprise messaging platforms — HipChat. With the company soon to go IPO, it is a perfect example of how Australia could potentially be a breeding ground of many more successful companies like Atlassian.

The Incubators;

• Fishburners — A Sydney based incubator, it is one community where the start-up scene is alive fresh. Founded in 2011, it’s purpose is to shed light and promote the start-up scene in Australia. As host to many international hackathons i.e AngelHack and educational initiatives like General Assembly
• BlueChilli — With offices in Sydney and Melbourne, it started out in 2012 and helps connect investors with a portfolio of high quality early stage startups.
• Pollenizer — An incubator focused on helping the transition process from idea to a validated business model. It also assists in the design and operation of incubation programs for corporations.

The above list just provide a few prime examples of the companies, initiatives and programs that exist in Australia. And such organisations should not be overlooked in showing that there are still people out there willing to help and grow Australia’s technology sector.

How can we get there?

If Australia does decide to go down the path of developing and building itself as a potential technology hub, then a few baby steps in the right direction can mean a lot for it in the long term.

Below are just a few examples of how it can get there;

• Investment (Private / Public)

More investment needs to be placed in honing and fostering small businesses venturing into technology. Funding from across all levels of government as well as from the private sector are needed in not only start-ups but also university research and development. In addition to government funding, with the few existing companies that do currently stand out as some of the shining beacons in Australia, more work could be done by these businesses to help establish their own venture / incubator arm to help in supporting and growing new ideas from all around the country. By building towards such a fund, the private sector can become more self reliant on raising startups.

Another avenue in the provision of suitable investment could be through institutionally backed funds such as superannuation. Currently there is very little initiative taken by such funds to invest in venture capital, but if this changes, then many more small businesses can take advantage of access to early-stage money.

Like all businesses, start-ups need money to survive and the more effort that is placed into the continuing growth of these companies the more likely some of these newcomers can become game changers.

• STEM Education

It is important to understand that regardless of how much money is invested in small technology businesses, these companies need a base for their ideas and their skills — enter STEM.

Science, Technology, Engineering and Math (STEM) are some of, but also the major key areas of education where Australia needs to focus on, starting from school all the way into tertiary education. Inspiring children to develop interest in some or all of these areas will hopefully kick-start their careers as future engineers and technology leaders.

• Immigration

The world is now becoming a collaborative workplace where employees are working with each other from all corners of the globe, and it’s up to industry to begin (if it hasn’t already) opening its doors as well as think about sponsoring migrant workers on a mass scale. The US is slowly transitioning into this paradigm through FWD.us — an initiative backed by a collective consortium of tech pioneers and leaders petitioning for immigration reform.

Attracting top global talent is vital in ensuring the survival of any industry, but more so with tech. Barriers to entry for immigration need to be either removed or minimised if we are to bring in fresh world-class talent from abroad. By increasing our intake quota for skilled migrants, reducing application fees and making it affordable for migrant workers to live and work in the country, Australia will be better able to accommodate and support startups and entrepreneurs with skilled labour for years to come.

• Changing perspectives

The time has come for Australia to shift its mentality on what it can achieve for its future. But this shift can only come about from its people and more specifically, its youth. As much as this may sound cliche, it’s the truth and that is — we need to motivate everyone, from school children to university graduates to start building something for themselves. More importantly, we need to instill a sense of risk-taking in our society and reinforce the notion that it’s okay to fail — it’s how we learn. By altering our perspective in business and especially what it means to be successful, we can achieve much more than we could ever anticipate. Venturing into the unknown is always hard, but if we can keep our heads strong, up high and persevere, who knows how long and how far we can go. Having the guts to come up with brand new ideas and follow them through will ultimately place us in a position to truly make Australia a tech pioneer and all the more reason why we need institutions like the ATP to exist and prosper in help bring up and facilitate the technology industry.

So forget the lack of money, forget the inadequacy of investment and forget all the government regulations stopping us in making this country a tech hub. Sure it’s hindering it, but if we can collectively position ourselves with a never-say-die mentality then we would ultimately be setting a path for this country in heading towards glory!

About Barry: I’m an Australian working and living in Silicon Valley as an engineer. I’m passionate about bringing technology to the masses, especially in the realms of education, renewable energy, healthcare and IoT. A connected and smarter world is a better world and I truly believe that technology delivered and used properly can change the planet for the better.

You can hit me up at barry.winata@yahoo.com