From yesterday’s AFR Innovation Summit comes Matt Barrie, CEO of Freelancer.com:
Australia is doomed to become a third-world country unless its government starts “something like the Apollo program” to inspire its citizens into becoming a technology economy, Freelancer.com chief executive Matt Barrie told the AFR Innovation Summit 2017.
“Australia is basically a property bubble floating inside a mining bubble inside a commodities bubble inside a China bubble, and that lucky free ride is about to go pop,” he said.
The government was focused on “new ways to tax things” in reaction to its looming revenue problem, while neglecting education with proposed cuts to university funding of $1.2 billion, the biggest in 20 years.
“Why not try and grow the biggest line of tax, income tax, by encouraging people to study in the right areas like science and engineering, instead of making these cuts which will push the cost of an electrical engineering degree at UNSW above $34,000, while slashing the HECS repayment threshold at the same time,” Mr Barrie said.
…Where is the growth come from? Mr Barrie asks.
Governments have achieved growth from a property bubble “like no other”, says Mr Barrie. To paint this picture he says there are cranes in Sydney right now than in most American states combined and that being in postcodes with restricted lending.
He is trawling fast through a broad range of figures that highlight Australia’s “basket case” economy including figures around low wage growth, unaffordable housing, manufacturing losses.
Mr Barrie [says] we are “delusional” after 26 years of growth based on bubbles: mining, commodities and now property.
Mr Barrie is slamming the economy’s structure (it’s hard to keep up, he’s moving fast). “Our economy is completely stuffed. We can’t rely on property to make us…we need serious structural change.”
He says the government wastes time taxing Australians on having a good time: cigarettes and alchohol when they should encourage citizens to study more useful courses like engineering and science, so students get better jobs and then eventually pay more income tax.
He then questioned Chief Scientist Alan Finkel’s focus on robotics and AI in mining. “Mines are wasting asset,” he said “it’s mind blowing” to focus on mining…. iron ore mine is not a long term scalable asset.
Instead the tech industry is the only industry that can create wealth, he says.
Apple, Microsoft Alphabet and Facebook, are the biggest companies in the world. “These are the kind of companies we should be building,” he said. “There is no other industy that can build wealth on.”
“Instead in Australia our top companies as of last night are: a bank, a bank, a bank a mine….and a telephone company.
We live in a monumental time in the market. Australia is completely missing out,” he says.
On education Mr Barrie raises his concern about the falling number of students studying tech, despite an increase in overall degrees.
“The situation is in absolute crisis. We need to build a world class science in our curriculum.
Mr Barrie’s final take urges Australians to “get their head out the sand”. Because “we are too busy at home paying off mortgages watching Netflix.”
We need serious structural change.
Why are governments so keen to inflate housing prices? Because it stimulates growth, currently the only thing stimulating growth, says Mr Barrie. He says the government “fans the growth, rather than modernising the economy.”
He says the interest-only level of loans at Australia’s biggest banks is the final stage of an “asset bubble about to pop”.
Young people with jobs are not driving up house prices, foreigners are, he says. In 12 months, a total of 57 000 apartments were approved in Greater Sydney. Yet 40 000 was sold to foreigners.
“It’s a by product of central bank madness,” Mr Barrie says.
I’m sure it is hard to keep up for a property-fluffing journo at the AFR. Not if you’re an MB reader.
Give Mr Barrie a cigar.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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