NEWS FOCUS: Channel challenges

• 2011 ARN Hall of Fame Lunch slideshow

It was a beautiful day in Sydney and it heralded in a beautiful meal, some fine wine and a discussion that went to the heart of working in the channel in 2011. Not everybody agreed – but that is the way it should be. As John Walters said the people in this private room at est were all industry leaders and as such they could and should rock the boat.

It didn’t take long for it to become apparent that the boat was going to be well and truly rocked. Whether it was John Grant's deep concerns over carbon tax or David Dicker and Peter Kazacos bemoaning the lack of Federal Government initiative, this year’s Hall of Fame lunch didn’t lack for insight and imagination.

Two topics stood out as being of most concern: the lack of incentive for young entrepreneurs in the local market, and the Government-led carbon tax which will effect the cost of doing business in Australia. Opinions were divided on the latter. Australia is an expensive place to do business at the moment, and additional costs such as the rise in value to the Australian dollar and the looming carbon tax are not making the matter easier. “How many of us are 27 per cent more productive today than we were a year ago?” Express Data former managing director, Ross Cochrane, said. “Without any other talk about taxes or anything else, the Aussie has appreciated 27 per cent against the US dollar in a year.

“The productivity we’ve been able to achieve in the last 10 years has been poor. We have actually fallen off in terms of competitiveness.”

At the same time, the contentious carbon tax is a cost Australian organisations cannot afford to bear, according to Data#3 managing director, John Grant. “This is in the context of being globally competitive because at the end of the day we now operate in a global marketplace and we need to be globally competitive,” he said.

“We need to have inputs to that economic model that make us as efficient and effective as we can be, and you can draw from that conclusion that the carbon tax is a cost we can’t afford to pay.”

Newly-appointed Westcon Group Australia managing director, David Henderson, sees opportunity amongst these cost pain points, however. Australian companies are lacking for innovation right now, and forced costs would also demand new approaches, and drive innovation, he claims.

“The minerals boom will stop eventually, so what as an economy are we actually going to produce?" he said. If you start to look at smart manufacturing or the smart society there is a view around carbon tax that you can think of it in the context of forcing the country to think about investing into new technologies so the next generation has a chance to build on those technologies and be leaders of it.”

Helping the inventors Despite the ability for Australian individuals and organisations to be innovative, and the drive towards that which the carbon tax might demand, the Hall of Famers were also concerned that the Australian market fails to support the spirit of entrepreneurialship.

Former Dimension Data Australia CEO (now head of its Cloud Solutions global business unit), Steve Nola, highlighted Suntech as an example. One of the world leaders in solar power technology, the company has its roots amongst researchers from the University of NSW. They were unable to secure funding from the Government to the tune of $2 million, and so ended up taking the business to China.

“We need to make sure that there is enough incentive for innovation to occur within this country,” Nola said.

“Ultimately, we should be looking at the issue in terms of IP exports verses whether we exploit the physical building of the technology.

“Today, we’re not competitive purely on a labour basis and were not able to support manufacturing, so we lose everything rather than the asset [IP] that is really important to us.”

It’s a topic that Dicker Data managing director, David Dicker, feels especially strongly about.

“I think one of the biggest problems that we have in this country is that there are no prospects – there is no way on earth in Australia that Australians would support the idea of a company like Apple and a guy like Steve Jobs.

“You pull open an iPad and on the back of the machine is ‘designed in California, made in China.’ Why not ‘designed in Sydney, made in China?’ In my view the setup here just doesn’t want to support people becoming millionaires. If you want to build a strong industry, an industry that is going to export worldwide then a relative handful of guys are going to become very wealthy and I feel that goes against the Australian ethos.”

The other issue that the whole table agreed with was that there’s a lack of opportunity via venture capital for young entrepreneurs. John Walters, who has just started up a new company, Nextgen Distribution, said he was fortunate to be able to do it. Funding opportunities were presented to him, and he has a great deal of industry experience.

“I probably came on with reputation and if I was a 25-year-old, no one was going to throw me money to start a business,” he said.

ASI Solutions co-founder and director, Maree Lowe, agrees and believes more can be done at a government level to support these startups.

“The government doesn’t support the entrepreneurial spirit; and we’re not talking about companies saying ‘give us anything for free,’” she said.

“Australian companies do a great job and are entrepreneurial and we would all be a lot smarter if we worked more in partnerships and alliances. It’s this entrepreneurial spirit that needs more support in Australia.”

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