Why Australia Can’t Compete Anymore

It won’t be news to you that Australia is in a spot of trouble.

You can clearly see things are tough. The economy is struggling. The markets are in a mess. And the government…well best leave that one on your own.

But the simple fact is we’re no longer aggressive on a global scale. We forgot to play the long game. We got stuck celebrating an easy goal, and forgot about scoring more.

Our simple goal was the goods boom. But the long game is making Australia competitive again. It’s just that’s a hard game to play because we’ve got to work for it.

It depends on whether we can shift our thinking from a commodity economy to some tech economy.

A slippery slip down the table

Each year the World Economic Forum (WEF) puts out The Global Competition Report. It’s the most comprehensive competitors study of how 144 countries position against each other.

The ranking is dependant on 12 pillars. And each anchor has sub categories. All of these add up to provide overall competitiveness.

In 2005 Australia ranked quantity 18 overall in the world. Within 2006 it was number Nineteen. In 2008-09 it was number Eighteen. And by 2009-10 Australia had managed to sit up at a lofty number 15.

The spider chart beneath shows the pillars associated with competition. This chart is the current ranking for Australia.

Source: WEF

We’re not as competitive as we had been a few years ago. We’re now 22 on the list. New Zealand is now above us. So are Malaysia, Qatar and Belgium.

The trend here is down. Australia is becoming less competitive. The large question is where will it quit? How far down the list can we fall?

When you dig much deeper into the figures it’s easy to observe what’s causing the fall. The country has become inefficient.

There are a few groups (and sub-categories) Australia ranks amongst the best in the world.

We rank;

• 3rd: Soundness associated with banks (financial market improvement)
• 9th: Quality of scientific research institutions (innovation)
• 4th: Active special broadband subscriptions (technological readiness)
• 7th: Available airlines seat kilometres (infrastructure).

The categories where we’re near the bottom of the list are really telling.

We rank;

• 124th: burden of presidency regulation (institutions)
• 114th: labour marketplace flexibility (labour market efficiency)
• 125th: pay and productivity (work market efficiency)
• 136th: hiring and firing practices (labour marketplace efficiency).

There is a clear trend. Overall Australia ranks 56th in the world when it comes to Labour Market Efficiency.

It’s easy to see the problem in Australia.

Red tape and government intervention are dragging the country down. They generate an inefficient labour marketplace and a less competitive economic climate.

And when you don’t have an efficient labour market, the whole country begins to fall behind. Those that are experienced look elsewhere for better conditions.

There really is only one way forward. It’s to shift to some high knowledge, high ability workforce. I spoke relating to this briefly in Saturday’s Money Morning, talking about the automated future of work. We have to help reskill the workforce to adjust to a high tech future.

But right now that is just not happening.

The brain deplete is on

Atlassian is an Aussie achievement story. Mike Cannon-Brookes and Scott Farquhar started the company in 2002. Past due last year they completed another round of funding. It gave Atlassian a valuation close to $3.3 billion.

They’re an Foreign company through and through. However their patriotism comes with its problems.

Speaking on ABC’s Lateline, Farquhar said:

‘We do a lot for the local industry here. We have about 75 graduates coming in next year to Atlassian. But we just can’t find the older talent that we need in Australia. And so we recruit all of them from all around the world to come and work in Sydney…. Developers, item managers, designers, people in we’ve got the technology industry with five and 10 years’ experience — we don’t have them in Sydney in the figures that we need. Mostly we obtain people from Silicon Area, from Europe, and bring these to Sydney.‘

Founder/CEO of Freelancer Ltd [ASX:FLN], Matt Barrie also brought this point upward. Speaking to Business Insider, Barrie said,

‘At the government level not only is nothing being done to boost the technology industry — because [Atlassian co-founder] Mike Cannon Brookes said: “They seem to be actively avoiding it”.’

‘I’ve lost technical engineers to Facebook, I’ve misplaced them to Uber, I’ve misplaced them to Amazon. I’ve lost them to Silicon Valley startups. I’ve lost them to east coast tech companies. Silicon Area is teeming with Australians now, we were a uniqueness back in the late 90s. Now the brain drain is in full force.‘

A ‘brain drain’ is bad news. It’s a problem that has to change. We must maintain skilled workers in Australia. We should have vision to help the likes of Atlassian and Freelancer. Encourage start-ups. Promote innovation. Build a tech-strong Australia for future years.

That starts with a vision to turn Australia into a country for the future. And it continues through the education program and into tertiary education. It’s a long game, but it’s the only real game we’ve got left to play.

Regards,

Sam