Back in 1996 one of the incoming Howard government’s core promises was to reduce their expenditure dramatically, specifically with regards to their IT. The resulting policy was dubbed the IT Initiative and promised to find some $1 billion dollars in savings in the following years primarily through outsourcing many functions to the private sector. It was thought that the private sector, which was well versed in projects of the government’s scale and beyond, would be able to perform the same function at a far reduced cost to that of permanent public servants. The next decade saw many companies rush in to acquire these lucrative IT outsourcing arrangements but the results, both in terms of services delivered and apparent savings, never matched that which was promised.
For many the reasons behind the apparent failure were a mystery. Many of the organisations involved in providing IT services to the government weren’t fly by night operations, indeed many of them were large multi-national companies with proven track records, but they just didn’t achieve the same outcomes when it came to the government contracts. After nearly a decade of attempting to make outsourcing work many departments began insourcing their IT departments again and relied on a large contractor workforce to bring in the skills required to keep their projects functioning. Of course costs were still above what many had expected them to be, result in the Gershon Report that recommended heavy cuts to said contractor workforce.
This all stems from the one glaring failure that the government has still yet to realise: it can’t negotiate contracts.
I used to work for a large outsourcer in the Canberra region, swept up while I was still fresh out of university into a job that paid me a salary many took years to attain. The outsourcer had won this contract away from the incumbent to provide desktop and infrastructure services whilst the numerous other outsourcers involved in the contract retained ownership of their respective systems. After spending about 6 months as a system admin my boss approached me about moving into the project management space, something I had mentioned that I was keen on pursuing. It was in this position that I found out just how horrible the Australian government was at contract negotiation and how these service providers were the only winners in their arrangements.
My section was dedicated to “new business”, essentially work that we’d be responsible for implementing that wasn’t in scope as part of the broader outsourcing contract. Typically these would be small engagements, most not requiring tender level documentation, and in all honesty would have been considered by any reasonable individual to fall under the original contract. Of course many of the users who I came back to with a bill detailing how much it would cost to do the work they needed often responded with much surprise and often would simply drop the request than try to seek approval for the cost.
The issue still exists today primarily because many of the positions that handle contract negotiations don’t require specific skills or training. This means whilst the regulations in place stop most government agencies from entering into catastrophically bad arrangements the more subtle ones often slip through the cracks and it’s only after everything is said and done that oversights are found. All of the large outsourcers in Canberra know this and it’s why there’s been no force working to correct the problem for the better part of 2 decades. It’s why Canberra exists as a strange microcosm of IT expertise, with salaries that you won’t see anywhere else in Australia.
The solution is to simply start hiring contract negotiators away from the private sector and get them working for the Australian government. Get contract law experts to review large IT outsourcing arrangements and start putting the screws to those outsourcers to deliver more for the same amount of money. It’s not an easy road to tread and it won’t likely win the government any friends but unless they start doing something outsourcing is always going to be seen as a boondoggle, only for those with too much cash and not enough sense.
We’re a country of polluters, there’s no question about that. In terms of world ranking we seem to hover around 11th in per capita pollution, beating other big polluters like China, India and even the United States. Whilst we can lay the blame for a good chunk of that on our resources sector it doesn’t mean that we, as a country, aren’t responsible for it and are obligated to do as much as we can to reduce the amount of carbon and other pollutants that enter our atmosphere. The previous government made some headways into this however our current representatives seem intent on undoing the small amount of good they managed to get through, even if it makes absolutely no sense to do so.
Yesterday it was announced that the Renewable Energy Target (RET), which was revised under the previous government to a larger figure, was going to be reviewed. Now typically this wouldn’t be something to fret about, especially considering that reviews like this are supposed to be carried out by the Climate Change Commission, but since Abbott disbanded them it’s now being led by Dick Warburton a confessed anthropogenic climate change denier. To make matters worse it’s also going to be done in the context of an apparent oversupply of electricity in Australia, something which the current rhetoric from the Abbott government seems to pin wholly on the rapid uptake in renewables.
Are you fucking kidding me.
The Small Scale Renewable Energy Scheme (SRES) and the Large Scale Renewable Target (LRET) schemes have been responsible for a massive increase in the amount of grid connected renewable energy in Australia. Indeed it’s been so successful that we’ve even had some regions revise their own targets above what they initially planned, meaning a very healthy percentage of Australia’s energy now comes from renewable resources. The argument being made now is that the incentives provided to those renewables is costing Australia too much and is leading to a glut of energy production, driving prices lower. Whilst I’d argue that the cost of the program (~$1.6 billion according to Warburton) is worth it I can’t understand the thought process behind people complaining about lower electricity costs.
The source of this rhetoric is somewhat understandable; it’s because Warburton doesn’t believe that we’re responsible for the climate change. Thus, when you take that view, renewables get an unfair amount of treatment with their subsidies and feed in tariffs. However if you take the rational scientific view where we are responsible then the picture becomes far more clear and the paltry price we pay to have such a large percentage of renewable energy is a sound investment. Indeed should we lose both the carbon tax and the RET there’s no telling how much further up the global polluter ranks we’ll climb and I don’t think any rational Australian wants that.
We’re seeing the results of electing a government that is packed with representatives who are running with an agenda that clearly runs opposite to the facts. Whilst I’d love to believe that a review of the RET would show that everything should continue as planned I’m afraid I lost all trust in reviews commissioned in this manner after the total farce that was the NBN strategic review. With Warburton at the helm it’s guaranteed that we’ll see cuts to the RET which will have a strong, negative impact on the state of renewable energy in Australia. Unfortunately that will just be the first hit to soften us up before the real hit comes: the abolishment of the carbon price.
Growing up in a rural area meant that my Internet experience was always going to be below that of my city living counterparts. This wasn’t much of an issue for a while as dial-up was pretty much all you could hope for anywhere in Australia however the advent of broadband changed this significantly. From then on the disparity in Internet accessibility was pretty clear and the gap only grew as time went on. This didn’t seem to change much after I moved into the city either, always seeming to luck out with places that connected at speeds far below the advertised maximum that our current gen ADSL lines were capable of. Worst still they almost always seemed to be at the mercy of the weather with adverse conditions dropping speeds or disconnecting us from the Internet completely.
My current place of residence never got great speeds, topping out at 6Mbps and only managing to sustain that connection for a couple hours before falling over. I can expect to get a pretty stable 4Mbps connection most of the time however the last few days have seen Canberra get a nice amount of rain and the speeds I was able to get barely tickled 1Mbps no matter how many times I reconnected, reset my modem or shouted incoherently at the sky. It was obvious then that my situation was caused by the incumbent weather, filling my local Telstra pit with water which sent the signal to noise ratio into the ground. Usually this is something I’d just take on the chin but this situation was meant to be improved by now if it wasn’t for the current government.
Prior to the election my area was scheduled to start construction in October last year however it became one of the areas that disappeared off NBNco’s deployment map shortly after the Abbot government came into power. This meant I would then come under their revised plan to bring in FTTN through VDSL which has the unfortunate consequence of leaving me on the known-bad infrastructure in my street. So my speeds might improve but it’d be unlikely that I’d get “at least” 20Mbps and I could guarantee that every time it rained I’d be in for another bout of tragic Internet speeds, if I could connect to it at all.
The big issue with the Liberal’s NBN plan is that my situation is by no means unique and indeed quite typical thanks to the aging infrastructure that is commonplace throughout much of Australia. Indeed the only place that I know gets speeds as advertised for their cable run are my parents who still live in a rural area. The reason for this is because the copper is new out there and is quite capable of carrying the higher speeds. My infrastructure on the other hand, in a place where you’d expect it to be regularly maintained, doesn’t hold a candle to theirs and will continue to suffer from issues after we get “upgraded”.
A full FTTP NBN on the other hand would eliminate these issues providing ubiquitous access that’s, above all, dependable and reliable. The copper mile last run that the majority of Australia will end up using as part of the Liberal’s NBN just can’t provide that, not without significant remediation which neither Telstra nor the government has any interest in doing. Hopefully the Liberal government wakes up and realises this before we get too far down the FTTN hole as it’s been shown that the majority of Australian’s want the FTTP NBN and they’re more than willing to pay for it.
Canberra is a strange little microcosm. If you live here chances are you are either working directly for the government as a member of the public service or you’re part of an organisation that’s servicing said government. This is especially true in the field of IT as anyone with a respectable amount of IT experience can make a very good living working for any of the large department’s headquarters. I have made my IT career in this place and in my time here I’ve spent all of my time lusting after the cutting edge of technology whilst dealing with the realities of what large government departments actually need to function. As long time readers will be aware I’ve been something of a cloud junkie for a while now but not once have I been able to use it at my places of work, and there’s a good reason for that.
Not that you’d know that if you heard the latest bit of rhetoric from the current government which has criticised the current AGIMO APS ICT Strategy for providing only “notional” guidelines for using cloud base services. Whilst I’ll agree that the financial implications are rather cumbersome (although this is true of any procurement activity within the government, as anyone who’s worked in one can tell you) what annoyed me was the idea that security requirements were too onerous. The simple fact of the matter is that many government departments have regulatory and legal obligations not to use overseas cloud providers due to the legislation that restricts Australian government data from travelling outside our borders.
The technical term for this is data sovereignty and for the vast majority of the large government departments of Australia they’re legally bound to keep all their services, and the data that they rely on, on Australian soil. The legislation is so strict in this regard that even data that’s not technically sensitive, like say specifications of machines or network topologies, in some cases can’t be given to external vendors and must instead only be inspected on site. The idea then that governments could take advantage of cloud providers, most of which don’t have availability zones here in Australia, is completely ludicrous and no amount of IT strategy policies can change that.
Of course cloud providers aren’t unaware of these issues, indeed I’ve met with several people behind some of the larger public clouds on this, and many of them are bringing availability zones to Australia. Indeed Amazon Web Services has already made itself available here and Microsoft’s Azure platform is expected to land on our shores sometime next year. The latter is probably the more important of the two as if the next AGIMO policy turns out the way it’s intended the Microsoft cloud will be the defacto solution for light user agencies thanks to the heavy amount of Microsoft products in use at those places.
Whilst I might be a little peeved at the rhetoric behind the review of the APS ICT Strategy I do welcome it as even though it was only written a couple years ago it’s still in need of an update due to the heavy shift towards cloud services and user centric IT that we’ve seen recently. The advent of Australian availability zones will mean that the government agencies most able to take advantage of cloud services will finally be able to, especially with AGIMO policy behind them. Still it will be up to the cloud providers to ensure their systems can meet the requirements of these agencies and there’s still every possibility that they will still not be enough for some departments to take advantage of.
We’ll have to see how that pans out, however.
If it wasn’t for the HECS/HELP system I definitely wouldn’t be in the position that I am today. Whilst I didn’t come from an exactly poor family we were definitely on the lower end of the middle class and the prospect of going to uni meant that I’d have to start paying my way. Thankfully I was able to defer my HECS debt until I was able to pay it back through tax allowing me to attend university without having to fork out the $25,000 or so which I simply did not have. After 4 years of an accelerated career that was directly attributable to my university experience the debt was fully repaid back to the Australian government with a little bit of inflation added on top for good measure.
In other countries this same situation probably wouldn’t have been possible. In the USA for instance I would have had to secure a student loan with a bank, something that probably would have seen me paying exorbitant interest rates on top the much higher cost of education. Even if the loan amount remained the same I would’ve been repaying the debt for at least another year just because of interest and I would have been much less inclined to take the risks that I did knowing that I’d have to make those monthly repayments regardless of my current employment situation. The couple percent interest I paid on my HELP debt to curb the deflation on the debt seems like nothing in comparison to that.
The difference between the two systems is the motive behind the loans. HECS/HELP is made by the government to encourage people to go into higher education in the hopes that, because of said education, they will get higher paying jobs and will then be able to contribute more to the economy as well as repaying their debt. Loans made by banks on the other hand, regardless of their intended purpose, are done purely for the motive of generating a profit and they will do anything to maximise the return on them as such. This is why the Liberal’s proposal to securitise (read: sell off) student debt is an inherently bad move.
Should such a deal go down the government would likely have to sell the debt for a fraction of its current value, usually on the order of 40%~60%. This would mean an instant cash windfall of approximately $11 billion or so with the annuity streams being collected by the new owners of the debt. If your government is strapped for cash (which we really aren’t at the moment) then this would seem like a good move however it would only account for 3% of our total budget and only for the year in which it happened. For comparison HECS/HELP revenue was around $1.4 billion back in 2009/2010 financial year meaning that the $11 billion windfall would become a shortfall in 8 years (probably less considering that repayment rates would have likely increased in the interim). It’s a short term cash grab that will make the budget its in look a lot better but at the cost of making every budget that follows it look a lot worse.
The real problem though is the transfer of government owned debt to a private company, one that will inevitably look to make the most out of their investment. Whilst HECS/HELP is one of the few things you can’t discharge through bankruptcy you’re under no obligation to repay it should you not have the means to, a key to encouraging people to at least attempt higher education to further their careers. Should the debt be owned by a bank however there’s no guarantees that the same structures will hold and it’s almost inevitable that the banks would look to squeeze delinquent loans for all they’re worth. Don’t believe me? Just look at the student loan situation in the USA.
Whilst the Liberals may have said that such a plan is not current policy the fact that it’s under consideration should ring alarm bells. It’s an incredibly short sighted move, one that favours short term gains over long term losses which is something that a “fiscally responsible” government should be doing everything to avoid. Selling off national assets, especially one that provides as much value as HECS/HELP does, will only hurt us in the long term no matter how warm and fuzzy running a surplus makes you feel now.
There’s been little doubt in the tech community that Malcolm Turnbull had it out for the FTTP NBN. He’s been quite critical of the program since its inception and has taken every opportunity to point out that it’s behind schedule (even though it’s 3 months in a 10+ year project). The FTTN policy which they campaigned with was universally derided yet Turnbull fervently defended it at every possible opportunity. Whilst I was somewhat optimistic that it was all campaign blather just to secure votes from some select parties, especially considering its non-core status, I still couldn’t shake the feeling that Turnbull really thought his policy was worthwhile, especially when he said FTTP had superseded FTTN.
Turns out that my predictions have largely turned out to be correct.
In a stark reversal on his previous positions about the NBN Turnbull has now instead opted to conduct a full review to ascertain how long the current rollout will take and if there’s anyway that can be reduced. Whilst on the surface this would appear to be just the next logical step in taking the axe to the FTTP program however it’s been shown that FTTP would end up costing about the same so any cost benefit analysis would conclude it would be the better option. Of course this also opens the door for Turnbull to take credit for the whole program by only making some superficial changes to it. Whilst this is probably the best outcome I could hope for, especially considering that current fibre rollouts will continue until the review is completed (expected to take 6 months), it doesn’t make up for the fact that Turnbull has taken every opportunity to blast the NBN and now wants to take credit for it.
Of course there’s every chance that he’d could still do a lot of damage to it without fundamentally changing the technology that underpins it. Now that the entire NBNCo board has resigned at his request Turnbull has apparently tapped former Telstra CEO Ziggy Switkowski to head the new board. Anyone who lived through Ziggy’s tenure as CEO of Telstra will tell you that he’s bad news for a telecommunications company as he proceeded to run Telstra into the ground and was ousted late in 2004. He has not been involved in the telecommunications industry since then so any cred he had has long since lapsed and would be far more likely to give a repeat performance of his time with Telstra. This could be made up for somewhat by the fact that NBNCo is still on the government’s leash but I’d rather not have to get them involved every time Ziggy makes a poor business decision.
Talking this over with my more politically minded friends it seems like this will be the only avenue in which we will be able to get the FTTP NBN we want: by letting the Liberals claim it as their own. Personally that gives me the shits as it shows that politicians aren’t interested in continuing large, multi-term infrastructure projects unless they can somehow claim ownership of it. Of course the tech community will always know it was Labor’s idea in the first place but the larger voting public will likely see it as a beleaguered project which the Liberals valiantly fixed, something which is provably wrong. In the end I guess I don’t care what the public perception is as long as it gets in but I’d rather not have to argue the point to convince people otherwise.
So hopefully 6 months from now I’ll be able to write a post about how the review has come back and magically convinced Turnbull of what we all knew: the FTTP NBN is the way to go. Whilst I’m struggling to figure out how NBNCo could do what they’re doing faster and more efficiently I’m sure they’ll be able to find a few percent here or there that will be enough to ensure the overall structure doesn’t change dramatically. With that Turnbull can claim victory that he’s able to do the exact same thing better than Labor and I’ll write another angry rant, albeit from behind a nice, fat 100MBs pipe.
If you’re a person who lives in Australia who has the Internet then chances are you know of the vast disparity in prices between goods available here in Australia and those overseas. For some things a small gap is reasonable, I mean it does cost a bit to ship things here to Australia, but when it comes to things that don’t require shipping (like software) the price gap makes a whole lot less sense. Indeed this point was highlighted when the price difference between Australia and the USA was enough to cover the cost of a flight and still come home with change to spare. For those of us who’ve been dealing with this for years now (thanks Steam!) we have a term for this sort of thing.
We call it the Australia Tax.
We’ve found our ways around it though like using DLcompare for finding cheap games and doing all my major purchases online from overseas retailers. This does mean that we sometimes have to resort to slightly devious ways in order to get things sent to us but the savings we can make because of it are usually worth the effort. I had honestly given up on this situation ever changing as the word from those distributing their products here was essentially that we were willing to pay more and, therefore, should pay more (which, strangely enough, only happens because we used to have no other way of getting the product). It seems that a few people in power have noticed this however and last year they launched an investigation into the reasoning behind the huge price disparity specifically centered on IT goods and the results have just come in.
The Australia Tax is very real and it is quite unjustified.
Most of the recommendations from the investigation are then what you’d expect, mostly more government action and increasing public awareness of the issue. However there were 2 points that seem like absolute gold to Australians, if they ever manage to get through parliament:
Getting around geoblocking is a pretty trivial exercise these days, if it can’t be done via the use of a Chrome extension then you’ll need to spend a few dollars on a VPN service although that can sometimes lead to issues of its own. Enacting a law preventing companies from geoblocking in Australia might stop some of the less than savy companies from doing it but realistically I can see most of them hiding behind the cover of “currency conversion” or something similar to achieve the same effect. The last round of inquiries into price gouging were enough to get some of the big players to drop their prices in response so maybe just the threat of that will be enough to get them more in line.
The second point is something we’ve heard a little bit about before although not within Australia’s borders. There’s a few cases in the EU looking to establish this exact legal framework, opening up the opportunity to resell digital only content. Indeed that was one of the better features of Microsoft’s restrictive DRM policies for the Xbox One, something that I’m sure not too many gamers were actually aware of. As someone who’s got dozens of spare game keys due to Humble Indie Bundles and whatnot this is something that I wouldn’t mind having although it ever getting through isn’t something I’m counting on. What the outcome is in the EU will likely heavily influence such a decision.
So it’s great that the government is now aware of the problems facing Australian consumers but now they need to seriously considering the recommendations so that some pressure can be applied to these retailers. Whilst the outcome of most of the recommendations won’t affect the savy consumers much (we already know how to get our way) I know that not all consumers want to do those things and, honestly, they shouldn’t have to. Whether the more out there recommendations get implemented though will be really interesting to see although I get the feeling we’ll be seeing Gerry Harvey in the news ranting about them sooner or later.
Australia has one of the best education systems available as evidence by our top 10 rankings for literacy, science and mathematics as well as our overall education index of 0.993, tying us for first place with countries like Denmark and Finland. While our system isn’t exactly unique in its implementation I do believe schemes like HECS/HELP are one of the main reasons that the majority of Australians now pursue tertiary education and whilst this might bring about other issues (like a lack of people in trades) it’s clear that benefits far outweigh the costs. Indeed as someone who couldn’t have afforded university without the help of the government and now has a great career to show for it I’m something of a testament to that idea.
Recently however there’s been some criticism of the HECS-HELP system, mostly focused on the amount of student debt owing to the government and the sizeable chunk of that which is never expected to be repaid:
The Grattan Institute’s annual Mapping Australian Higher Education report finds that students and former students have accumulated HECS-HELP debts of $26.3 billion.
This is about an extra $10 billion owing, in real terms, than in 2007.
The interest bill on the income-contingent loan scheme, formerly known as HECS, is nearly $600 million a year, the institute estimates.
And it says HELP debt not expected to be repaid rose to $6.2 billion in 2012.
The report makes for some intriguing reading and does indeed state that there’s a good 25% or so of the current student debt that’s likely to never be repaid. The reasons behind it though are interesting as whilst some would have you think that it’s due to students skipping out on their debts in way or another (ala Liberal MP Steve Ciobo) it’s in fact primarily due to students either dying or moving overseas. Now there’s not a whole lot we can do about the former (except maybe investing more in the health care sector) but the latter is a problem that’s been around for decades and I’ve yet to see a solution proposed, either from the government or the private sector.
Australian graduates, especially in some sectors, suffer from a distinct lack of choice when it comes to finally finding a career once they’re done with their university studies. Whilst I might have managed to make a decent career without looking too far you have to appreciate the fact that my degree isn’t in IT, it’s in engineering, and such is the case for many graduates who try to find something in their chosen path. Usually they can get close but the chances of landing an opportunity directly in their field of study are usually pretty slim and that leads them to look overseas. I myself did exactly that not too long after I graduated and was pretty staggered at the number of opportunities available abroad that I was more than qualified for.
Another point that the report makes is that student debt is seemingly sky rocketing when compared decades prior. The graph above demonstrates that quite clearly but it doesn’t give you any indication as to why this is happening. For starters Australia’s population has increased by about 5.8 million in since 1989 or about 35%. At the same time participation in tertiary education has well over doubled in this time with the vast majority having some form of tertiary qualification and 27% of all Australians now carrying a bachelor’s degree or higher. Essentially there’s been a major cultural shift over the past 2 decades towards pursuing an education through universities rather than other avenues and this is what is responsible for the increase we’ve seen. This isn’t exactly an issue considering our GDP has quadrupled in the same time frame and whilst I won’t say there’s a causative link there I’d say you’d be hard pressed to uncouple higher education rates from improved GDP figures.
Realistically the issue of unpaid student debts isn’t much of an issue for the Australian government considering the wide reaching benefits that our high quality and freely available education system gives us. We still need to do something about our best and brightest moving overseas to greener pastures but it’s clear that the economic benefits of free education for anyone who wants it vastly outweighs the cost of providing it. Even if we were to erase all student debt in one year it would still be only a few percent of the total budget, something that could be easily done should there be any burning need for it to happen. There isn’t of course since the cost of servicing that debt is so low (comparatively) and there are much better things to spend that money on.
Canberra is a weird little microcosm as its existence is purely because the 2 largest cities in Australia couldn’t agree on who could be the capital of the country and they instead decided to meet, almost literally, in the middle. Much like Washington DC this means that all of the national level government agencies are concentrated in this area meaning that the vast majority of the 360,000 or so population work either directly or indirectly for the government. This concentration of services in a small area has distorted many of the markets that exist in your typical city centres and probably most notable of them all is the jobs market.
To put it in perspective there’s a few figures that will help me illustrate my point more clearly. For starters the average salary of a Canberran worker is much higher than the Australian average even beating out commodity rich states which are still reaping the benefits of the mining boom. Additionally Canberra’s unemployment is among the lowest in Australia hovering around a staggering 3.7%. This means that the labour market here is somewhat distorted and that’s especially true for the IT industry. However, like the manufacturing industry in the USA, there are still many who will bellyache endlessly about the lack of qualified people available to fill the needs of even this small city.
The problem is, as it always has been, simple economics.
I spent a good chunk of my career working directly for the public service, jumping straight out of university in a decent paying job that I figured I’d be in for quite a while. However it didn’t take long for me to realise that there was another market out there for people with my exact same skills, one that was offering a substantial amount more to do the same work. Like any rational person I jumped at this opportunity and have been continuing to do so for the past 6 years. However I still see positions similar to mine advertised with salaries attached to them that are, to be fair, embarrassing for anyone with those kinds of skills to take when they can get so much more for doing the same amount of work. This has led to a certain amount of tension between Canberra’s IT workers and the government that wishes to employ them with many agencies referring to this as a skills shortage.
The schism is partly due to the double faceted nature of the Canberran IT market. One the one hand the government will pay you a certain amount if you’re permanently employed with them and another if you’re hired as an outside contractor. However these positions are, for the most part, identical except that one pays an extraordinary amount more at the cost of some of the benefits (flex time, sick/annual leave, etc.). It follows that many IT workers are savy enough to take advantage of this and plan their lives around those lack of benefits accordingly and thus will never even consider the lower paid option because it just doesn’t make sense for them.
This hasn’t stopped the government from trying however. The Gershon report had been the main driver behind this, although its effects have been waning for the past 2 years, but now its the much more general cost reductions that are coming in as part of the overall budget goal of delivering a surplus. The problem here however, as I mentioned in the post I just linked, is that once you’re above a certain pay grade in the public service you’re expected to facilitate some kind of management function which doesn’t really align with the requirements of IT specialists. Considering that even outside of Canberra’s arguably inflated jobs market such specialists are able to make far more than the highest, non-managerial role in the government it comes as no surprise that the contractor market had flourished the way it did and why the implementation of the Gershon report did nothing but decimate the government’s IT capability.
Simply put the skills/labour shortage that’s been experienced in many places, not just Canberra, is primarily due a disconnect between the skills required and the amount organisations are willing to pay for said skills. The motivation behind the lower wage costs is obvious but the outcome should not be unexpected when you try to drive the price down but the supply remains the same. Indeed many of the complaints about a labour shortage are quickly followed by calls for incentives and education in the areas where there’s a skills shortage rather than looking at the possibility that people are simply becoming more market savy and are not willing to put up with lower wages when they know they can do better elsewhere.
I had personally only believed that this applied to the Canberra IT industry but in doing the research for this post it seems like it applies far more broadly than I had first anticipated. In all honesty this does nothing but hurt the industry as it only helps to increase tensions between employers and employees when there’s a known disconnect between the employee’s market value and their compensation. I’d put the challenge to most employers to see how many good, skilled applicants they get if they start paying better rates as I’d hazard a guess their hit rate would vastly improve.
It may come as a surprise to you to find out that Australia is a predominately service base industry. Whilst it’s hard to argue that we’ve enjoyed the benefits of the current mining boom Australia’s GDP is still predominately derived from our service industry, to the tune of 69% (pg. 134). Still the current prosperity and insulation from global economic crises that Australia has received from the growing mining sector won’t last forever and now is the time for us to start looking towards the future so we can ensure future economic prosperity. I strongly believe that we’ve already undertaken the first steps towards achieving this with the implementation of the National Broadband Network.
Australia as it stands today suffers from an incredible amount of skill drain to other countries. Well over half of the Australian residents who leave Australia for over a year or permanently were skilled workers and whilst the trend has gone down in recent times (thanks wholly to Australia’s isolation from the global economic turmoil) that hasn’t stemmed the flow of talent leaving our shores. For the high technology sectors at least there is the potential to recreate the hot bed of innovation that led to the creation of Silicon Valley on the back of the NBN. This would not only stem the brain drain overseas but would produce large and sustainable gains to the Australian economy.
Right now the public view of the NBN varies wildly. Businesses by and large have no idea what benefits it can bring them, public opinion is mixed (although Senator Conroy says differently) and even the federal government seems at a loss to what it could mean for Australia’s future, doling out cash to local governments in the hope they’ll be able to sell it for them. To combat this the government should instead provide incentives and seed capital to high-tech start ups who are looking to leverage Australia’s upcoming ubiquitous high speed Internet infrastructure, in essence building an Australian Silicon Valley.
Doing this requires co-ordination with entrepreneurial communities, venture capitalists and the willing hand of the government. They could easily make investment in these kinds of companies more desirable by extending tax breaks that are currently enjoyed by other asset classes to investment in NBN based high-tech start ups. This would also make Australian based startups incredibly attractive for overseas investors, pumping even more money into the Australian economy. As the sector grows there would also be an increasing amount of ancillary jobs available, ones that accompany any form of corporation.
Australia would then become a very desirable location for both established and aspiring businesses looking to expand into the Asia-Pacific region. It also works in the reverse, giving Asia-Pacific businesses (and nations) a more local launch pad into the western business world. Establishing Australia as a high tech hub between our strong local ties and western allies abroad would provide a massive economic boost to Australia, one to rival that of the current mining boom.
Of course it’s not like this hasn’t been tried before in Australia, indeed many have tried to recreate the success of the valley with little results. Indeed I believe this is due to a lack of co-operation between the key players, namely the government, entrepreneurs and investors. The NBN represents a great opportunity for the government to leverage the industry not only to ensure Australia’s future economic prosperity but also to establish Australia as a leader in technology. I believe that the government should be the ones to take the first steps towards fostering such an environment in Australia as once the industry knows they have the support they’ll be far more willing to invest their time in creating it.
Not leveraging the NBN in such a way would leave the NBN as a simple infrastructure service, woefully underutilised given the capabilities that it could unlock. Make no mistake the NBN puts Australia almost at the top in terms of ubiquitous, high speed Internet access and that makes a lot of services that are currently infeasible to develop attractive targets for investigation. Indeed since the same level of broadband access is almost guaranteed throughout the country it is highly likely that benefits will stretch far past the borders of the CBD, even as far as regional centres.
As someone who’s group up on and made his career in technology it’s my fervent hope that the Australian government recognizes the potential the NBN has and uses that for the betterment of Australia. As a nation we’re well positioned to leverage our investment in infrastructure to provide economic benefits that will far exceed its initial cost. Creating a Silicon Valley of the Asia-Pacific region would elevate Australia’s tech industry to rival those throughout the rest of the world and would have massive benefits far beyond Australia’s borders.