“From Hills Hoists to Backyard Millionaires” (CommsDay Summit, Sydney)

“FROM HILLS HOISTS TO BACKYARD MILLIONAIRES”

KEYNOTE ADDRESS

COMMSDAY SUMMIT 2014

THE WESTIN HOTEL, SYDNEY

WEDNESDAY, 9 APRIL 2014

**CHECK AGAINST DELIVERY**

My electorate in Western Sydney is one of the poorest in the country.

It has the highest unemployment in Australia – double the national average.

It also sells more things on eBay than any other electorate in the country. Last year 19 backyard businesses in my electorate grossed more than $1 million – using eBay.

I bet you didn’t expect that. I certainly didn’t.

As you might expect, most are prolific exporters.

It is a great example of the power of this industry to change lives, to change whole suburbs. To change the way our whole country works.

I suspect most of you are sick of hearing politicians abusing each other. Most people are.

They are sick of the bullying and the name calling. They are sick of the pettiness. They want us to work together.

That’s not always possible, but it often is. It’s what I tried to do when I was a Minister, and it’s the approach I am taking in this job.

I am not interested in the old wars still being fought. The old scores still being settled.

I am interested in the future.

We have an enormous opportunity.

We are in the right place – our backyard is where it’s all happening, where the global economy is growing fastest.

Our digital economy is growing twice as fast as the rest of our economy.

Five years ago we were ranked 21 out of 34 OECD countries in terms of our mobile broadband penetration. Today we are No.1.

And as the story I just told shows, the web makes it possible for backyard businesses to become micro-multinationals and for great ideas that might never have been possible before to make millions.

I don’t think anyone, though, really thinks we are doing anywhere near enough to make the most of this.

If we are going to make the most of this opportunity we have to work together – the public sector and the private sector, government and opposition.

And that’s what I want to talk about today – where we can work together and where we should.

Employee Share Schemes and Crowd Funding

The Minister has talked about the need to reform tax arrangements for employee share schemes. I agree.

I think there is a strong case for reform here – particularly for start-ups.

He also mentioned crowd sourced equity funding. He has my support on that too.

A number of start-ups and innovation accelerators have made the point to me that crowd funding helps fill a gap in the market for capital between $50,000 and about $75,000. A lot of prospective businesses can get access to seed capital but find it hard to get access to capital to make the next step. Crowd funding will help.

We can work together on both these things – employee share schemes and crowd funding – and get them through the Parliament. But there is more than that we can do.

Copyright Reform

In January the Minister and I were both in the US and we spoke to a number of companies in Silicon Valley. The Minister wrote on his blog about this when he got back.

He made the point that the companies we spoke to were looking for government to remove ‘obstacles to innovation’ and he gave two examples (the two I have just mentioned) employee share schemes and crowd funding.

They certainly mentioned both of these. But they also mentioned a third – copyright.

There is a strong argument for reform here as well.

In February, the Attorney-General released the Australian Law Reform Commission’s report Copyright and the Digital Economy. Its key recommendation is the introduction of a flexible fair use exemption.

The Commission argued in this report that this reform would:

“Make Australia a more attractive market for technology investment and innovation.”

Other countries have fair use laws, including the US. When I was in the US Amazon, Yahoo and Google all made the case that we should develop the same sort of legal framework.

They made the point to me that laws like this helped facilitate the development of things like search engines and cloud computing.

Others have made the point here in Australia that cloud computing services potentially breach the current Copyright Act, because they are often used to store or share copyrighted material.

How many times have you been listening to a song and can’t remember its name? Like most things there’s now an App to fix that.

It’s called Shazam. It’s really useful, and probably leads to the purchase of more music. But according to the Australian Digital Alliance it also potentially breaches our current copyright laws.

Reform is needed here. George Brandis has said he is not convinced that we need major reform. I suspect Malcolm might have a different view given his commitment to removing ‘obstacles to innovation’.

I think we need a debate.

That’s coming – in the Cabinet Room and in the Parliament. And given how important this is, it is important that the people in this room speak up and make sure your voice is heard – and give people like me and the Minister your advice. If you don’t we could miss out on an important opportunity.

Skills

These reforms are at the easy end of the spectrum. They just require changes to the law. But there are other things that I think we need to do that are much harder. One of those is building the skills we need.

We are failing here at the moment.

Carl Sagan made the point in 1990 that:

“We live in a society exquisitely dependent on science and technology in which hardly anyone knows anything about science and technology”.

Unfortunately that’s still true today, perhaps more so.

75 per cent of the fastest growing occupations in Australia require Science, Technology, Engineering and Mathematics (STEM) skills.

The number of students taking up STEM courses, though, isn’t keeping up with demand.

It has actually dropped by about 36 percent in the last decade or so.

In the last 10 years, there have been 100,000 new jobs created in the tech sector. But, in the same time, only 49,500 students have graduated with technology degrees.

Fixing this is hard. Citizenship ceremonies are not a long term solution. It’s in our interests to build our own workforce.

If we are going to succeed here we have to change the way we teach our kids about technology – from kindergarten up.

The head engineer for Google in Australia, Alan Noble, made the point a couple of few weeks ago at an event in Canberra that our kids are enormous consumers of technology but we need them to become creators of technology.

School plays an incredibly important role here.

A new digital technology curriculum has been developed that introduces computational thinking, logic and problem-solving capability earlier in schools.

It has been approved by the States and Territories. It is currently being held up by Christopher Pyne. We need him to approve and get it implemented.

That’s just the start. We also need to change the way STEM subjects are taught at high school. We need to increase the digital literacy of our teachers. And we need to change the way that we provide career advice.

We also need to get universities to take a more proactive role in encouraging students to take up STEM degrees and get universities to collaborate more with business on research projects. The sorts of things that universities like Stanford and Cambridge do so well.

They’re just a few ideas.

If the government is interested in real reform and removing ‘obstacles to innovation’, then it has to get serious about this. The most valuable assets we have in the country aren’t in the ground they are between our ears, and we are not fully exploiting them at the moment.

The National Broadband Network (NBN)

We can do this. We can build the skills we need. We can change laws to encourage innovation and investment. But we also need the right infrastructure if we are going to make the most of the opportunities I am talking about.

Unfortunately this is where there is a difference between the two political parties and I don’t expect that to change.

I don’t expect the government to change its mind on the NBN, but I do think it is fair enough to expect it to keep its word.

Today is the first anniversary of that famous press conference that Tony Abbott and Malcolm Turnbull did with the life size hologram of Sonny Bill Williams.

That’s the one where the Prime Minister said he was absolutely confident that 25 megs is going to be more than enough for the average household.

It’s also the one where he promised that by 2016 everyone will have access to 25 megs. That promise hasn’t lasted a year.

The government announced it was breaking it just before Christmas – the day after Holden announced it was pulling out of Australia.

This is a serious breach of faith. The people of Australia might not have liked their NBN plan, but they were told they would get it by 2016. They won the election and then broke their word. And they should wear the consequences of that at the next election.

I have been critical of the speed of the rollout of the NBN. At the NBN Rebooted Conference in November I said it was too slow and needs to be fixed. It is still too slow.

Bill Morrow started last week. I hope he makes this his top priority. We need to speed up the roll out of the NBN – and build the NBN not break it.

He’s got a lot of things on his plate.

The renegotiation of the Definitive Agreements with Telstra is taking too long. Much longer than we were told it would.

In Tasmania another broken promise to honour existing contracts has prompted a number of subcontractors last week to threaten to sue the government.

These are small businesses that have bought a lot of specialist equipment on the written promise of four years work. Their equipment is currently lying still. They have lost a lot of money already and risk going bankrupt unless they are put back to work. And that’s what the Government should do.

There is also the issue of using NBN towers to expand mobile coverage. I know Bill has strong views on that and it will be interesting to see what happens here.

And of course, there is the issue of what to do with TPG.

The Minister has an awful dilemma here. He has been a very outspoken supporter of competition in this area. If he stops TPG from rolling out FTTB it will go against almost everything he has ever said. But if he doesn’t stop them – as Ziggy Switkowski has said recently – it could chop up to 10 percent off NBN’s future revenue. Basically undermining the whole business model.

Telstra and Comms Alliance have both called for the Government to act on this sooner rather than later. And they should.

Conclusion

I mentioned at the start the backyard businesses in my electorate. When I was a kid those backyards were full of Hills Hoists. They still are.

It’s a great Australian invention. Created by two blokes Lance Hill and his brother-in-law Howard Ling in a backyard in South Australia about 70 years ago that’s gone on to become a multi-national company.

Today the same company that invented the Hills Hoist is now developing devices that enable you to remotely monitor the health of your elderly relatives. Devices that tell you if mum’s taken her medicine, if she has opened the fridge today or the front door. The next generation will tell you if she’s taken a fall. Other companies are developing devices that warn you your about to have a heart attack or a stroke.

Stop and think for a moment how important innovations like this are. The average stay in hospitals costs thousands of dollars.

The cost of health care is one of the biggest challenges we face in the years ahead. Just think what technology like this could save in the decades to come. More I suspect than the cost to build the NBN.

Governments don’t invent things like this. They also don’t make backyard millionaires in electorates like mine.

People do that. Smart innovative people.

But government does have a role to play. And that’s more than just getting out of the way.

It’s making sure we have the right laws, the right skills and the right infrastructure to help make this happen.

There is only one way to do that – by working together.

And that’s why I am so glad to be here.

ENDS

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