looking out from down under

Over the last couple of years, I’ve been getting increasingly concerned about the future of our city. Leaving aside the rot exposed through the ICAC investigation, I’ve been mostly worried the future of the city from an economic perspective.

Are we going to be a place where our young people can build careers & families with confidence and a sense of optimistic opportunity?

Or are we going to increasingly be a hollowed out city, with a population that in large part commutes to Sydney for work, or lives off Centrelink, or comes here to to retire?

Are we going to be proud and strong, or are we going to be like Tasmania – a small backwater that everyone looks down upon and only survives because they suck in taxes paid by the rest of Australia living in large part off handouts?

My worries about the future of our city have grown even more acute over the last few months.

Our city has operated with a bit of a handicap in all 31 years I’ve lived here – the downsizing at the steelworks and in the broader manufacturing sector has been playing out since the 1970′s. But while we’ve stoically pushed forward over the years, I’m concerned that rather than just the disappointment of unfulfilled potential that we’ve learned to live with, we’re actually facing some very serious challenges that could threaten the viability of our city.

Our Two Fires – Carbon Pricing & Dutch Disease

In the short to medium term, there are two external forces, more than any others, that are affecting Australia’s entire economy.

The first is the transition to a carbon constrained economy, and while there might be debate around the details and timing of a carbon price, I think most people accept that reducing global dependence on carbon (ie, coal) as an energy source is inevitable.

The second, and much more important and threatening issue in my view, is Dutch Disease, the situation where a high currency value because of exports in one part of the economy – in our case, the mining/resources boom centred around WA – makes it almost impossible for exporters in other parts of the economy to compete.

While Carbon Pricing and Dutch Disease are having a negative economic impact in lots of communities around Australia, there are few, if any, that are threatened as much as our city and region.

In a message to all his staff earlier this year, new Nokia CEO Stephen Elop told a story that I think has strong parallels to the situation our city is currently facing:

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

I believe our city too is standing on a burning platform.

Examples of our industrial decline

Lets have a look at an example, in the form of Bluescope, the region’s largest employer and also responsible for tens of thousands of related and multiplied jobs.

Bluescipe recorded revenue of $4.75B in their Coated & Industrial Products Division (which is pretty much all of Port Kembla), down over 20% from over $6B in sales two years earlier (2008). And this is just sales – during this period, raw material costs went up, and the Australian dollar increased in value by more than 70% since late 2008. This exchange rate movement – the Dutch Disease in action – has made every person on payroll, every megawatt of electricity and other AUD expenses 72% higher now than their international competitors, assuming no increases in wages, power costs and the like.

Little wonder then that Bluescope experienced a drop in profit of 85% between 2008 and 2010 (and in the GFC and the 2nd half of 2009 they actually made sizable losses). While today’s announcement of an additional $300M in industry assistance for the steel sector (read Bluescope and OneSteel) will make some people in the city feel comfortable (and it isn’t tied to the carbon tax legislation, so the Greens would have to support it – good luck with that), $300M isn’t a lot of money compared to the $1.25B per year in revenue that Port Kembla is down compared to 2008. Even a government, with all the resources of treasury, can’t compete with global market fundamentals – just ask George Soros, the man who broke the Bank of England in September 1992.

 

There have been lots of other examples where trade exposed employers in our region have become extinct. We’ll all remember the closing of the Bonds factories in the area last year, the latest in a long line of shutdowns and mass layoffs which in previous years have included brands like Midford, and even more recently, locally owned Poppets. Unfortunately, the ledger is stacked with much more bad news than good on this score.

When it comes to our traditional economic base, our city has been lurching from one crisis to the next, while the rest of the world passes us by. It doesn’t have to be this way.

Recognition, leadership & vision

Facing up to these challenges requires an honest debate, strong leaders and the willingness for our community to come together, face facts, make some tough decisions and put in place a plan to change our economic base.

So, is there a frank debate about these issues at the moment? Are our leaders – both incumbents as well as aspirants – speaking out, being honest, and putting forward a plan? Let’s have a closer look.

Local Government

Our city is going to the polls in just 7 weeks time. I’ve been following the news as more people throw their hat into the ring, and I’ve been really hoping to hear someone out there talk about the elephant in the room.

But, alas, all I’m seeing is an empty and meaningless debate about which group of candidates is going to have better consultation and more inclusive government than the next.

What of debating the big issues, like the future of our city?

On the whole, the candidates have been silent about this, and those that are making noises about anything of substance are currently running on platforms made of platitudes that few would argue with, but which on their own are utterly meaningless.

Sure, you could argue local government is roads, rates and rubbish. I disagree – a strong Mayor and City Hall can act as a very effective leadership and lobbying force with the levels of government that actually have power, not chains – but that raises the question – where are our State and Federal representatives on this?

State & Federal Government

I’m heartened that the State and Federal members I’ve talked to about our burning platform situation are very aware of the issues. My sense from talking to them is that they see the same bleak future if we keep doing what we’re doing. The problem is, changing the nature of an economy isn’t easy, cheap or quick.

Unfortunately, they’re not out in front on the debate, and while I’m disappointed, I can also understand why.

If I was Sharon Bird, Stephen Jones or Ryan Park, I wouldn’t want to come out and scare the horses unless I had a plan to turn fear into hope. To bring up this issue without knowing you can get the support of your caucus and the treasury to make the investments to do something about it would be what Sir Humphrey would call “courageous”.

Sharon, Stephen and Ryan are worldly and smart; while some of the crazier voices in our public life might suggest fixing the exchange rate, putting up tariffs and other failed policies to provide the perception of short-term relief, our members know that going back to the “good old days” isn’t possible without a flux capacitor and a Delorian.

When it comes to bold initiatives and investing in action to transition our regional economy, our members are also hamstrung, even if they have a plan. Our safe seat status at state and federal levels of government means that our members will always struggle to get attention from the party and concessions from Treasury, and the safe seat status owes a lot of the current economic makeup of the city, which doesn’t help create the motivation for change either.

Starting a debate

Our city has been making a gradual transition over the last few decades, but the size and speed of the threats – the intensity of the fire burning under our platform – is stronger than ever before. The Finance and Insurance sector – thanks to the likes of the IMB, Community Alliance Credit Union (formerly Illawarra Credit Union), Oasis Asset Management (now known as a division of ANZ and known as OnePath) – is now the largest employer in the region, and Greg Binskin and the team at Tourism Wollongong have consistently gotten in front and espoused a vision for a strong tourism sector in the region which they’re making a reality with dogged determination.

But, to be honest, what we’ve really got here is a number of disparate actors working to improve the fortunes of the city through their own actions – what we don’t have is any real leadership, debate of vision for the future of the city, which our community can participate in and get behind.

This is a real shame, and while we continue to be mute and complacent, we ensure that by doing what we’ve always been doing, we’re going to keep getting what we’ve always been getting.

Learning from others – a tale of three cities

We’re not the first community in the world to face serious challenges like this – I’ve researched three examples which we can look at as proxies for our situation, so we can learn from their mistakes and successes. There’s a lot we can take away from the way others have faced and overcome the same adversity and threats we’re facing now. Here’s a little information about these three cities below.

• Sheffield in England suffered for decades as the pain of the loss of their manufacturing and industrial economy in the 1970′s led to widespread unemployment and a contraction in their city and population, and have only just started turning things around.
• Detroit, a cautionary tale, is still suffering and shows no real sign of improvement on the horizon.
• Waterloo in Canada, saw the writing on the wall and transitioned their industry very very successfully before they declined, creating a really smooth transition and a great success story.

Sheffield – an industrial twin

The first proxy city to our own is Sheffield. The home of British Steelmaking, Sheffield saw a 10 fold increase in its population in the 1800′s through the industrial revolution, however when international competition on its inefficient sector took its toll from the 1970′s, Sheffield saw its population decline markedly (down over 7% in the 10 years to 1981, and negative each other post-war decade until the last few years).  Anyone who’s seen The Full Monty, set in Sheffield (1997), will have a feel for the bad times that city has seen.

Sheffield has since invested in developing its higher value business services sector, and while accepting the lower job contribution made by the manufacturing sector compared to days gone by, a focus on technology and real innovation has helped to bring prosperity back to manufacturing in this natural cross-roads in the middle of Britain.

None of it would have been possible without a strong, coordinated plan and commitment of various stakeholders – for more information, have a look at this excellent case study on how Sheffield is becoming a knowledge region. For specifics on how their regional governments are working together with detailed plans, check out the “Moving Forward: the Northern Way” website and plans.

Detroit – a cautionary tale

Detroit. Motown. The City of Detroit, which used to be the 5th largest city in the United States, has now shrunk to be 18th, with a population of around three quarters of a million. Only New Orleans has gone backwards further, and Detroit can’t blame a hurricane for its woes – Detroit’s failings are all man made.

The home of the American automotive industry, Detroit has been in decline since the 1980′s. As the Economist details:

Employment has fallen every year since 2000. Even as the carmakers recover, they will not resume their role as guarantors of middle-class prosperity. State leaders have struggled to respond to structural shifts. Unfortunately, rather than reform a collapsing revenue system, they have passed short-term fixes. Attempts to reinvent Michigan have moved fitfully. Grants for college students did little to encourage them to stay after graduation. Tax credits for green manufacturing industries may create too few jobs at too great a cost, according to Don Grimes, an economist at the University of Michigan.

Detroit is what happens when a city faces a series of structural challenges and threats that are as certain as gravity, and then put their head in the sand. The city levies an additional 2.5% income tax on its citizens – this was probably a good idea when the city was prosperous, but now it is a massive disincentive for anyone to live there, especially given its high levels of crime and general decay. Some statistics show their unemployment rates falling, but the reality is, people are leaving the city and its surrounding counties by the hundreds of thousands. Perhaps there is a future for a smaller Detroit, but $50B in Federal bailouts for the 3 big US auto-makers in the GFC seems like it might not have been the best investment that could have been made.

Another American city that I have done a bit of research on is Pittsburgh, the former home of the American steel industry. Pittsburgh has seen a dramatic downturn in its own steel industry, and while their ability to cultivate a high tech and startup sector looks really promising, it is still in many ways early days – the City is still losing around 10% of its population each decade, and has been since the 1960′s. Hopefully, Pittsburgh can achieve the same sort of success as Waterloo, below.

Waterloo – our Canadian doppelgänger

The town of Waterloo, Ontario, has got to be the closest thing Wollongong has to an international twin.

• Waterloo is around 100KM from the largest city in Canada, Toronto, their equivalent of Sydney. Wollongong is 83KM from Sydney.
• The population of the City of Waterloo is around 100,000 people and the population of the region Waterloo is centred in is around 492,000 people. Wollongong, Shellharbour and Kiama LGAs combined have around 300,000 people, with another 150,000 if you include Wollondilly and the Shoalhaven LGA’s, giving an Illawarra total of 450,000.
• Waterloo has a strong and internationally renowned university, the University of Waterloo, which is actively engaged in their city. In addition to being a significant employer in the city, the University of Wollongong is increasingly taking a leadership role in helping to shape the future of our city (such as through the Innovation Campus).
• Waterloo has historically been an industrial town, with strength in tanning and rubber. In the 1980′s the industry suffered a downturn, related to headwinds in their main downstream market, Detroit, and thousands of jobs were lost. From the 1970′s, the Illawarra region has suffered similar frequent retrenchments and large rounds of layoffs in from industrial sectors.

What sets our two cities apart, however, is what Waterloo did the face of its own structural change. Instead of grinning and bearing its fate, a number of civic leaders got together and decided to try and build a new, emerging industry to take up the slack.

The outcome of this effort, which recognised the opportunities an innovative and engaged University could provide when combined with relatively close proximity to the financial capital of the country, has been nothing short of amazing. The City started focusing on technology, and they managed to grow their industry from a total revenue of C$300M in 1997 to over C$19B (yes, B as in billion!) in 2007. The best known product of Waterloo’s success is undoubtedly Research In Motion, the company behind the successful Blackberry mobile phone.

After spending a week with Tim Ellis, Chief Operating Officer of the Accelerator Centre in Waterloo earlier this year, I’ve gotten a much deeper appreciation of what they’ve been able to do, and I’m firmly of the opinion that we can do something similar here in the Illawarra. The University of Wollongong has signed an MoU with the University of Waterloo – I expect many more beneficial things to come out of these two institutions cooperating.

One part of a vision for our future – creative, high tech & very liveable

I believe our city needs to take strong action to deliberately re-shape our economy if we want to be more than God’s waiting room, a bogan backwater and a place for exhausted commuters to sleep each day.

However, the isn’t a single silver bullet, and there isn’t one industry or sector alone that is going to change everything for us and make for a better, sustainable future.

I do believe, however, that the creative sector, particularly backed by technology, can play a very important part in helping to change the fabric of our city and its economy for the better.

In my recent post on the 5 Pillars of Tech, I reflected on the nature of the IT industry in our city, and put forward a case where a Startup led technology sector could have a massive and positive difference in the future of our city:

A technology Startup is product focused. They’re often developing software, and although hardware is still possibly, it is at least an order of magnitude harder to do, and it requires a lot more capital than you can usually find in Australia. Being software product focused makes you very capital efficient – no need for plant, equipment; just people and ideas and the odd laptop or two.

A technology Startup is globally oriented – they might not be selling internationally, and their first 4 clients might be companies who share the same building as them, but generally speaking, a startup is trying to solve a niche problem in a new way for a global market.

By being product focused, often software-based with a zero marginal cost of production, a technology Startup is also highly scalable. With more than a billion people online now, and the growth in smartphones and their associate app marketplaces, distribution has never been easier or less tied to your geographic location. In this sense, being a city of a quarter of a million, in country with only 22 million (which makes us a flea on the back of a Chihuahua riding on an Frigate - I’ve done the maths, and these are honestly the right ratios) doesn’t have to be a critical disadvantage.

As a foundation investor and mentor in StartMate, and the founder of two technology companies that now employ 16 staff, I’ve seen first hand how powerful and catalytic the Startup sector can be for the wider economy. Also from my 5 Pillars post:

When it comes to the role that Startups can play in contributing to the economy of the region, the best thing about them is that they’re easy to start, they harness the things we have – smart people, lowish costs of living – and their development and cultivation is within our control.

They’re also great job creators – 20 companies with 10 staff creates the same opportunities of one large company imported into the region – and even if these startups fail, the experiences, lessons and skills developed by getting out there and doing it are incredibly valuable, whether the founders choose to do another startup, or join the ranks of the other technology sectors.

I’ve recently come back from spending a month in San Francisco, which for those who don’t know is the “captial” of Silicon Valley. Part of the time I spent there involved talking to investors, and many of them were asking about where we’re based, and whether we’d move the team to Silicon Valley if they invested in us. I told them, no, are you crazy? Why would I do that? They asked for details about what made Wollongong a great place to grow a startup, so I told them the following things:

• Talent – the University of Wollongong produces 1 in 7 technology graduates in Australia. In Silicon Valley right now you can’t hire an engineer for love nor money – I’ve never seen a war for talent like it. Just telling prospective investors the graduate statistic was enough to get them asking how they might be able to look at helping the companies they’ve already invested in – who can’t hire good technology engineers – to come to Wollongong.
• Stability – Wollongong is an absolutely beautiful place to live. Knowledge workers can base themselves anywhere now the world is flat – having a team based in Wollongong is great for the team, and great for the business too. I heard from large multi-national employer in the region that they experience staff turnover of 5%, whereas their Sydney office, which in every other way is identical, faces 50% turnover a year. Even without factoring in soft-costs like the cost to the business of losing all that knowledge each year, the hard recruiting and training costs for this kind of turnover they’re seeing in their Sydney office are crippling, and makes Wollongong a much better place to be.
• Diversity – if the world is flat, it is also now increasingly online. There are billions of internet users, and we’re not far from having more mobile phones than people on the planet. What isn’t changing any time soon though are the needs to speak the language and be connected and comfortable with the culture of your markets, which are increasingly Asian based. Our time zone, our strong cultural diversity and the language skills that that brings us are not insignificant, and I think they’re almost always underrated. My team today includes three people from China, one Canadian, an American, a Kiwi by birth, and doesn’t include the English, Vietnamese, Irish and other cultural heritage we all bring to the table.
• Proximity – we’re an hour from the commercial capital and largest city in Australia. We’re even closer to our main international airport, and then an easy flight to almost anywhere in the world. We’re on the a growth time zone – Asia – for the first time in our country’s history. But we’re still small enough so that more than half of my staff walk to work each day. Less time commuting to work, markets, investors and clients means more time to spend either building a world-class company, or enjoying life with our family and friends.

For these and a litany of other reasons, I think Wollongong stands a great chance of becoming a technology and startup powerhouse, in much the same way that Waterlook in Canada has become a powerhouse on a global stage and reinvented their economy at the same time.

So, how do we make it happen?

Next Steps

The most important next step for all of us is to start to raise the alarm. Unless our city wakes from its slumber to realise the platform it is dozing on is on fire, we’re going to end up like Detroit – so hollowed out, broken and depressed that things will get better only because they really can’t get any worse. If we waken the community now, and start an honest debate about our future, we might be able to pull off a Waterloo; even if we fail, we won’t be any further behind than we are now.

To facilitate this, I’d love to see something similar to Melbourne’s Wheeler Centre here in Wollongong. Imagine something led by the Mercury, which makes use of our newly refurbished Town Hall, to facilitate the debate.

Let’s give our elected representatives some ammunition to take to Canberra and Macquaire St.

Let’s learn from the successes of others. Action, cooperation and agility is much more important than a big overarching plan.

Let’s encourage the University to keep building its relationship with Waterloo so we can benefit from their experience.

Let’s look at ways to supercharge our new and emerging industries. Tourism, financial services, technology, education. We need to focus on the industries that grow the economic base and bring jobs, income and prosperity into the region. Health and Community services, which have grown a lot of the years deserve our appreciation, but they don’t grow the economic base – they exist only if the economic base can be taxed enough to pay for them. When it comes to technology, the closing comments in my 5 Pillars of Tech article provide a bit of a blueprint; I’m sure Greg Binskin can probably provide his own specific advice for the tourism industry.

Whatever we do though, we need to remember, if we want to keep getting what we’ve been getting, we should keep doing what we’ve been doing. We need to do more. We need to do better.

We’ve got so much potential – to rob our children of the opportunity they deserve to have, and consign ourselves to the fate of a slowly decaying industrial town mired in depression, disadvantage and disappointment for merely a lack of action is just not good enough.

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The third #publicsphere event was held in Wollongong yesterday (with nodes in Melbourne and Brisbane joining in). With all things that involve an open forum and public consultation, there will be some good bits, and some bits that don’t quite do it for you.

In terms of contributions to the debate in the form of a paper or submission, you really can’t go past the Silicon Beach Lifeguard paper, assembled by Elias Bizannes along with a small army of contributors and editors from the SiliconBeach community. Here’s a video of Elias introducing the paper:

In addition to the paper/submission approach of SBA’s Lifeguard paper, there were also a lot of other good presentations.

Silvia Pfeiffer from Vquence gave a fairly sobering analysis of the challenges and opportunities facing the Australia startup sector. While much of it wasn’t new information for those of us who do this stuff every day, Silvia’s presentation did a brilliant job of assembling a plethora of issues into cohesive lists and constructs, and while I knew about the pieces already, the way she put them together certainly had me coming away with a much clearer picture of our situation. Hopefully her slides will be up on her Slideshare account soon.

Another stand-out presentation in my mind came from @nambor (Rob Manson). After getting the undivided attention from everyone in the room in Wollongong thanks to the coolest set of chops in the room, he proceeded to share how the challenge of succeeding has less to do with “supply side” factors than the (neglected) “demand side” factors. He wasn’t talking about economics (specifically): he was talking about success in technology. The basic thesis is that tech types want to keep pushing supply side – concepts like ‘building a better mouse trap’, ‘build it and they will come’, ‘lets keep innovating’ – while the demand side – taking the time to show tech users how their productivity and lives can be improved by new stuff is really poorly done and needs more focus. This principle, which played then into his main thesis of Diffusion is the Innovation, was then expanded upon. Rather than me butchering it, I’ll just embed his presentation here.

The day itself wasn’t all geek, however. Towards the end, we had a great presentation from Tim Parsons present from a creative perspective. As you’d expect from a futurist in the creative space, the presentation was exquisite. The content itself was great for stimulating some ideas and discussion, and I really thought the sentiment that “Online Culture is the Mainstream”, and not something reserved for geeks anymore, was a great observation, and something I really agree with (since now I’ve got mum on Facebook, and my girlfriend blogging). Anyway, the slide deck is at embedded below (it still looks great, but Tim’s passion in delivering it made it 10x better)

There were many other excellent presentations through the course of yesterday that I haven’t got the time or enough good quotes to include here in this post, but the good news is that the Senator’s team will be uploading the video (which was already streamed, but probably needs to be cleaned up a little and spliced into talks) next week. I’ll update this post then with a few links (including a link to me own impromptu talk on Skills, Talent and Education).

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While it might be compelling political theatre for the hungry Canberra media gallery, a studio audience at Q&A last week made it clear – enough with Ozcar already.

Compared to the debate over the Emissions Trading Scheme, the (frankly separate, and first) debate over the targets we should be setting to reduce greenhouse gasses, the $300Bn of spending going into “stimulus” across our economy which my generation, and my children’s generation, and possibly more, will be paying off, this is a distraction.

Enough already.

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I’ve been planning to write a post on this for ages, but time has gotten away. Seriously. Since March the 26th. That’s the day I felt politics in Australia be changed by the internet.

It was the day Senator Conroy went on Q&A, the ABC”s live question and answer show, where he was inundated with questions – apparently over 2000 of them – from members of the public raising serious concerns about the proposed compulsory, national filtering scheme that Conroy – whether by choice or hospital pass – is the front man on.

My objection to a compulsory filter is on the record, so I really enjoyed hearing from the Senator – someone I’ve met since – try and defend his policy. From my perspective, it seemed like the Senator really didn’t want to defend it on its (lack of) merits; any time a Government in power invokes the names, acts and policies of their predecesssors, it is pretty clear they’re trying to avoid responsibility for the current state of play.

But this post isn’t just some rehashing of some persons opinion on a political matter – God knows there’s enough of that already.

No, the thing that really struck me during this experience back in March was how real time contributions, combined with the unique Twitter backchannel, opened my eyes to the noise, if not influence, of the digerati.

The speed of posts, quality of insight, and general ability to shape and resolve community sentiment online was truly breathtaking. I’ve never seen anything like it, and it will forever remain with me as a memory, something I’ll either look back on as a start of something, or as a glimpse of what might have been.

After the interview on Q&A and the extensive level of real time participation I shared with others involved in the debate, I started to wonder about what it all meant for our society, and the political process that for a century or two has been forming policy, laws, regulations and getting on with governing based on a representative system.

As I see it, there are three potential scenarios.

Option 1: The Digerati and Representational Politics

The first scenario is that we’re going to continue with a representative political process, but influence will move towards messages that are facilitated by the digerati. In this model, a small number of individuals are going to be elected/empowered to represent us citizens. They’ll be responsible for voting on laws and approving regulation, they’ll promise to consult with us and our general levels of apathy will ensure only a minority will engage with the political process beyond the ballot box. The positive thing about this scenario, however, is that more direct interaction, feedback, campaigning and consultation will happen using interactive technologies, today represented by websites, email and Twitter. It will be much easier for members of the public to make some noise and be noticed through the online environment, but at the end of the day you’ll still be trying to convince a person with 46 chromosomes to make decisions you agree with, with the option every 3-4 years of expressing your displeasure and voting them out.

To see this form of political interaction really take effect, more and more of us will need to become political animals. Our social networks, our digital interactions, our posts on Twitter, and more, will become influences on the perspectives, opinions and voting intentions in a more tangible and effective way than the media currently does. If Channel 9 tell me a movie is good, I’m going to take it with a very large grain of salt. If a good friend makes an impassioned plea that a policy is going to hurt their family or the environment, I’m going to give it a lot more credibility because of the shorter social distance. Is this a good thing? I don’t know. Many of the reforms that have our country in a much better place than most of Europe today – surrounding labour markets, trade, and to a (depressingly) lesser extent, welfare, aren’t popular and even though they’re right, perhaps a digerati backed political process wouldn’t have supported/allowed them…

Option 2: The Digital Revolution & Legislative Democracy

This situation is potentially the most revolutionary of all, and involves us, as citizens, voting directly on legislation, regulation, and the policy that frames these decisions. While the consequence of this sort of change wouldn’t mean the abolition of representative politics, it would change the dynamic; instead of voting for chair fillers who make up the numbers, we’d vote for politicians who are then charged with the responsibility of ‘selling’ their policies (or alternative policies) to their electorates. Their approach will need to be interactive and engaging – a bit shock for a number of politicians who are just making up numbers as pay-back from their party machines until they can make it to their generous pension scheme entry ages and retire – but in principle it could work quite nicely.

Of course, there are many potential problems with this model. While you’d be hard pressed to find an impartial citizen who’d vote down a 90% punitive tax on finance executive & worker bonuses for people who just deal in other people’s money without wearing any of the risk if things go pear shaped (as they did last year), there are numerous bills that are pretty dry and boring, and more disurbingly, you’d probably get pretty good support for a nut-job bill that promoted protectionism and increased tariffs, or, even worse, foolish and frankly racist immigration controls. This model certainly isn’t perfect, but then the current system (below) is hardly a pretty picture.

Option 3: Unrepresentative, 1901 Issue Myopia

More than a few of the 3 of you who read this post are probably thinking, “Hey, not everyone is online, not everyone is going to try and get involved. This digerati participation concept is really unrepresentative”. And you’re be right. But I’d argue, with more than 80% of Australian households now having the internet, the options above are a lot less unrepresentative and skewed than the status quo.

The third option I see is a continuation of a myopia where our political representatives remain wrapped in some of the most unrepresentative systems and irrelevant issues than ever, and we continue to be affected and held back by it.

Our current government is the Labor party, an organisation that until recently had it enshrined that at least half of their voting delegates to their national policy setting conference were appointed/sent by Unions. As demonstrated so dramatically in NSW in 2008, when the Labour Government of Day disagrees with these conferences, the results can be dramatic: effectively, the Union movement in NSW took down a Premier and a Treasurer, and put a multi-billion dollar hole in the State’s finances to protect the parochial interests of their members who like the idea of continuing to be employed by a benign employer who wouldn’t make sure things ran efficiently.

To look at what this means for our democracy, it is important to realise that only 60% of our population are in the labour force  (lets say 12.6m out of 21m in Australia). Of that 12.6m, about 650K are currently unemployed, so we’re dealing with closer to 12m workers. Last time I checked, about 15% of these workers were part of Unions (it has been on a downhill slide for a long time now), which means we’re dealing with about 1.8m Australians, a bit over 8% of the overall population, who control more than half of the Government. If you look at the heritage of many of the members of our Government, you’ll see a a long history in labour relations, focused on a 20th Century fixation on industrial relations and a preference in having all people equal, but of course some more equal than others.

The current prevailing model is where around 8% of the community have a dramatic level of control, and only a small fraction of that 8% actually care two hoots; they are just paid up members who have to vote for someone, and they let others run their political campaigns, often without a lot of consideration for the wishes of their broader constituents (I’ve seen this first hand more than once, and it isn’t pretty to see employees left unemployed by their representatives happy because they managed to estabilsh a precendent for others).

The digerati, through either influence and replacing the media function, or through direct participation, certainly isn’t perfect. There are many potential issues to address, and it isn’t like the current gerrymander enjoyed by groups who think industrial relations is actually the business of government – news flash: its the economy, defence, social issues, and not controlling the minute details of employment relationships that matter the most to our nation – are going to give up their narrow ideology easily.

But on the 26th of March, as thousands had their say, and even more participated online, I saw a glimse of the future where we could actually play a bigger part in shaping the country we live in, and the sooner we move beyond being governed by the narrow interests and ideologies of union hacks and lawyers, and instead harness the participatory power and intelligence of our citizens, the better!

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many of our international breathern would be moritifed at a plan where a national goverment tried to enforce a nation-wide internet filter to block specific content.

they do it in china – at what cost? – and the world cries foul. then they consider it seriously in a modern western democracy – with a lot of political pressure within the ruling party – and the mainstream media barely raise a whimper of concern about it.

ok, so snuff films, child pornography and many other ills to be found online are unquestionably bad news. with the ‘mandate’ of universal public distain for this content (the weirdos who are into it don’t speak up and acknowledge it for obvious reasons) the debate gets legitimacy it does not deserve.

the key question being asked at the moment is “who will pay for ISP level filtering”. the natural answer to this is government – they’ve got a fat war chest of a budget surplus and there’s nothing commercially compelling ISPs themselves to offer server level filtering. so the government pays for the filtering, and then presumably controls it as well (you’d have to be a mug to buy something designed to censor and control and then leave the control of it to someone else).

and all of a sudden you’re china.

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a month or so ago, the federal government quietly announced that it would not be approving singapore airlines application for a licence to operate flights from sydney to the united states. given that australian government is in control of our airspace and responsible for our airports (even though they’re mostly now privately owned by companies like macquarie bank), singapore airlines has to get their permission to start flying another route. sensitive to qantas potentially moving a large part of their aircraft maintenance off-shore (as air new zealand and many other top-tier carriers have done) and sacking a lot of australian workers, and knowing that most australian’s aren’t big fans of singapore after the execution of van nugen, the federal government had a politically easy decision to make, and knocked singapore back.

this is a big betrayal for anyone in austalia who travels to the united states.

singapore airlines (or sia for short) could well be the best airline in the world. a long haul flight in economy is never an outrageously pleasant experience; it is squashy, you get all dried out from the air conditioning, and sitting anywhere for 8 hours or more isn’t much fun. but singapore airlines deliver a level of service for economy passengers that you generally only get in from other airlines in business class.

well, now qantas has announced that they’re going to send their heavy maintenance work to asia for at least one 747-400 check, negating one of the major reasons the federal government decided to continue protecting them from competition with sia even though we’ve got a free trade agreement with singapore. this sort of work is very big – as are 747′s – and using the cover of a shuffling of the deck chairs as the reason for the outsourcing (“just this once, we promise”) qantas has effectively used the (non-organised) travelling public as a pawn whose interests should be weighed against those of the aircraft maintenance union (highly organised).
it’s hard to decide who to loathe more here. should it be the government for ripping off the largest number of people without a voice (travelling public, and by association the tourism sector who badly need american tourists who shudder at the thought of a 12 hour flight even though that’s what it takes to get to europe from california)? should it be qantas for milking the sydney-usa route so mercilessly with high prices and poor service? should it be the unions, who’ve traditionally had a strong bargaining position with airlines (baggage handlers are about as valuable economically as hotel bell-hops, yet they recieve exceptionally good pay and conditions because they can bring an airline to its knees in a snap strike)?

either way, the travelling public is going to continue to get screwed any time the government creates an artificial barrier to competition, and hopefully qantas’ actions in going back on their word means the government comes under pressure from the unions and makes the government less likely to shelter qantas next time sia from sin comes knocking…

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ross gittins in the sydney morning herald has an excellent report on the benefits of early childhood intervention. code for better child raising, this report takes an economic, rather than a social or judgemental view of the benefits to society of better parenting, and discusses the role the government can play in reducing inequality and disadvantage in future generation by supporting programs that get involved before kids turn 8.

ross’ interest in the subject has been piqued by work from james heckman from the university of chigago (oh, and nobel prize winner in the field of economic sciences). basically, he has found that getting involved early with programs to support better parenting has massive oonsequences. using a case study of the perry preschool project from around 30 years ago in michigan (capital city detriot, home to eminem and subject of many negative social sterotypes played out in movies like 8 mile), heckman makes the case that early intevention into the development of children is much more effective in influencing lifetime outcomes than better schooling, etc.
if the study is true – and the first 5 years of a child’s life have profound influence on their intelligence, their likelihood to succeed in life and reduce their likelihood to commit crime and be subject of welfare – would society begin to accept that intervention in parenting – one of the few areas of society to still be treated as a social taboo – or would people continue to take the approach that you can’t tell them how to raise their family (but keep the welfare cheques now and in the future rolling in so we can raise the kids to be bogans the way we want to)?

additionally, what, from a macro or policy perspective, do these considerations have on the legitimacy of the indigenous partnerships programs of the australian government?

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there’s been a lot of talk in the press over recent weeks about the changes in australian cross-media ownership rules. considering that most places in the world don’t have laws like this to start with, much less reform, a bit of background is probably helpful.
as i’ve travelled, people from europe and the usa are routinely surprised to find that australia only has a population of around 20 million people. considering the economy of new south wales is roughly the same size as the whole of indonesia, the 4th most populous nation in the world, it is easy to see how we tend to punch about our weight as a country.
given the power of the 4th estate in any democratic nation the government decided a while ago to limit the amount of inflence any one media mogul could have in a given market, defined at the time to be a capital city. this level of government interaction was fairly justified, as the small australian market still managed to breed a number of media powerhouses, most notably rupert murdoch’s news corporation.
while ownership in the print media is quite concentrated, the behaviour of the television networks over the last 10 years or so has robbed australians of the services many other western nations take for granted.

around the year 2000, australia was deciding between competing standards for digital television. the government had announced the release of spectrum suitable for digital television, and it was up to the government, industry and consumer groups to decide which standard would be adopted. with only three commercial tv networks – and thus very oligopolistic control over the television advertising market – the incumbents had a significant incentive to stop others from joining the tv broadcasting club. through a mixture of successful lobbying, weak politics and the timing of a pending election (as well as the incumbents convincing the govt that they’d need to spend an absolute fortune on their broadcasting equipment to move to digital, so they needed to be protected to make it worth their while), the government announced australia would get the hdtv standard, or high definition television.

the promise of hdtv was that you’d be able to get crystal clear picture with 5.1 surround sound. unfortunately, however, very very few programmes were recorded in a quality that could suppoort hdtv, so the best a viewer would get from this new standard was a widescreen format of picture. honestly, i don’t think a lot of people would have cared too much anyway – who really wants to see who wants to be a millionare in 5.1 surround sound?

the reality – and certainly the intention – of hdtv is that it is very, very hungry for bandwidth. one channel of hdtv uses around 10 times more spectrum than a regular digital widescreen channel. this meant that the networks ensured that there wouldn’t be room for new digital services – including interactive tv and the delivery of a news channel or other content more closely resembling the internet, also known as datacasting – to compete with the incumbents. just in case there was a bit of room – and there still is – the government passed laws forbidding datacasting from looking at all like a tv service; ie, no full motion video for more than a certain length of time.

so, basically, australian consumers got screwed, particularly when you compare it to what the british got from their digital tv service (40+ channels free to air, interactive for things like polling and voting; essentially the innovation you’re never going to get from 3 fairly comfortable players in a market).
fast forward to 2006. a federal government enquiry in late 2005 found that digital tv takeup had been woeful – blind freddy could have told you this, since there isn’t much improvement at all between analogue and digital, with no new services from commercial networks. even the promise of perfect picture quality is false in most experiences, since the picture isn’t crystal clear without improving the infrastructure (read aerial) in their homes. the planned 2007 shut off of the analogue network will now be pushed back to 2012 – no surprise there; it would be a brave politician that took away tv from the masses in a country with compulsory voting – and the incumbents have had their monopoly extended too. thankfully, though, this is all becoming a little academic – the incumbents are in for a big change that the government can’t legislate out of the equation, because this time the media competition is international, it isn’t using broadcast spectrum the government regulates, and its fully interactive with almost millions of channels to choose from.

the answer is the internet.

at the turn of the centry, almost everyone was still connecting to the internet via a 56k modem, at least at home. now most houses in australia can get online 25 times faster. in some parts of the country where adsl 2+ has been rolled out, the speeds are more than 150 times faster than an old fashioned modem. these speeds are enabling full screen video to be sent straight to the home via the internet. and products like google video, and their deal with cbs to allow cheap paid downloads of programmes further drives this trend. in australia, where we get the top shows from the usa 3-6 months after their first air in the states, this model of paid subscription further errodes the australian media outlets, in this case channel nine, with their strong relationship with cbs for content. determined fans of csi will simply set aside $2/week to watch the show 3-6 months ahead of when channel nine gives it – and commercials – to them.
so after being loosing the battle for the best by the incumbents in collusion with the government, the australian consumer is standing to win the war, thanks to the internet. the convergence of tv, internet and telecommunications is going to change a lot of things, but it is hard to see the traditional commercial media business doing well in any scenario that doesn’t involve a time machine. as a consumer who’s missed out for so long, the desire for revenge is palpable – the sweetest thing about this revenge is that it is coming from the world at large, and it completely inevidable.
of course, this isn’t the only battle facing the commercial television sector – personal video recorders, or pvr units, are creating a similarly herculean challenge to the models the sector has been using for the last 50 years. but more on that another time…

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