Out with the Bogannaires, in with the Brainiacs

I don't know about you, but for the last few years, I have had a nagging feeling that something was seriously broken in Australia. The malaise has affected not only the Federal Government (which in terms of coming up with long term policy on anything has been dysfunctional for the last 8 years) but the business community as well. Throughout 2009 and 2010 there was a lot of rhetoric in the media about how well Australia had weathered the Global Financial Crisis and how we had technically avoided a recession. However the raw economic figures are to my mind an inaccurate reflection of just how badly the GFC has affected the country and the way we now undertake business.

My line of work is in the property industry, so I can speak directly from experience here. However when I talk to other people who work in sectors like telecommunications, banking and construction, the feedback is pretty much the same. Prior to 2008 when the economy was booming, confidence was high and most importantly, the money tap was turned on, doing business was generally a positive experience. People for the most part seemed to know their job, if they undertook to do something then they would generally deliver on their promises and negotiations took place in a very collegiate and courteous manner.

From October 2008 onwards, however, it has been a very different story. Rudeness, ignorance, laziness and dishonesty have become the new norms, and as a result the degree of difficulty to conclude even the most simple business transactions has gone up enormously. It's one thing for banks like the NAB to measure business confidence and the effect this has on the economy, but to my mind the thing they ought to be measuring is business competence, as the current lack of it is having a much more debilitating effect and everyone would be shocked by the results. The fact that very few sectors of the economy are expanding and the Reserve Bank has had to drop interest rates to record lows to try and kickstart something - anything - are but 2 symptoms of this worrying state of affairs.

While the property industry is not traditionally known for its overabundance of towering intellects, nonetheless the problems some of my colleagues and I have had trying to explain and sell business propositions of only moderate complexity has been simply mind boggling. These days, to get anything done a proposal has to be dumbed down to the point that where even a dim-witted 2 year old could understand it. If this can't be done as is often the case with more complicated propositions, then transactions just don't get done because very few organisations now possess the intellect or work ethic to bother trying to undertake them. This is despite the fact that the transactions in question are often very lucrative and by exercising even the slightest amount of intellectual rigour to understand and undertake the proposition, the organisation concerned could have profited quite handsomely.

Why did things change so badly for the worse? That's a question that's been occupying my mind for some time now and I think it is due to a few factors.

First, whenever difficult times hit, companies tend to panic and cut costs for short term gain even though that invariably damages their long term prospects. As a result of this short term focus, senior employees who know what they are doing get let go and junior employees who cost less but who aren't up to the job get promoted. Often the way people who are out of their depth react is to behave in a difficult manner so as to avoid having to make any decisions and potentially looking like an idiot when a deal goes bad.

Secondly, in the aftermath of the GFC a lot of venture capitalists and fund managers who understood and were prepared to back more adventurous business concepts were wiped out and most of the money available for investment either wound up with the trading banks or superannuation funds. Neither of these groups are known for their flexibility or entrepreneurial flair, and the effect of the Rudd government's backing of the 4 major banks in the wake of the Lehman Brothers collapse meant that these organisations now dominate the market and don't have to undertake anything than other the most basic lending transactions to rake in exorbitant profits. Although that may now be changing, so watch this space.

Thirdly, those people that did in fact have some cash for investment from late 2008 onwards (often due to dumb luck rather than astute investment timing) got full of themselves and decided to behave like twats to anyone presenting them with a proposal. I can pinpoint any number of these groups who behaved deplorably during the worst of the downturn and now when things have stabilised can't get anyone to work with them. In business as in life you reap what you sow.

Fourthly and finally, the influx of money out of Asia and into Australian property and mining assets has protected even the worst investors from themselves. Why would anyone with a bit of money and a predisposition to laziness bother to try and manage their affairs and conduct business properly when regardless of what they do, the market is going to do the heavy lifting for them?

This last point is particularly true of the mining boom that came hot on the heels of the GFC and temporarily (and falsely) gave the impression that the Australian economy was bulletproof. The way money was made over that period was not from developing new technology or a exporting a devilishly clever product, but rather holding mining leases over land where there was an abundance of iron ore, coal or whatever else the Chinese might want you to dig up from the ground. You hardly need to be an intellectual giant to do that now, do you?

As a result of all this, the last 7 years in Australia have been particularly baleful for anyone wishing to get ahead by deploying a level of intellect or business acumen to their chosen profession. Funding for any new and innovative idea has been nearly impossible to come by, and even if you could somehow raise the money, the high Australian dollar caused by the mining boom killed off the prospect of exporting your product and reaching key markets overseas.

Also the government over this time has been useless in terms of encouraging new industry.The Rudd government was more interested in not making decisions than making them, the Gillard government was more interested in self-imploding than governing, and the Abbott government was controlled by a bunch of arch-conservative ideologues who believed the government shouldn't invest money in anything apart from border control and invading other countries.

However despite all this, the winds of change might be coming. To those of us old enough to remember, today feels a lot like 1983. Like now, we were dealing then with the hangover of a collapsed mining boom and were in a fairly nasty downturn. Like now, we had just installed a Prime Minister with a fairly impressive intellect and a keen interest in the economy instead of trivialities like boat people and gay marriage. Like now, we had a dollar that was retreating quickly against the other major currencies and allowed other sectors of the economy that didn't involve digging up minerals to be competitive internationally and ultimately thrive.

One hopes that the similar set of circumstances leads to a similar result this time, where businesses with good ideas that actually advance the interests of the country thrive ahead of those companies whose only interest is to ship off our mineral wealth and keep the profits for themselves. Certainly the bogannaires whose repellent visages leered out at us from the business pages during 2010-11 seem to be in full retreat right now. Nathan Tinkler is being chased round Singapore by Mick Gatto, Reinhart is down a few billion and failed in her bid to shut down the Sydney Morning Herald, Twiggy Forrest is starting to realise gambling billions on the iron ore price staying high was not a good idea and Clive Palmer finds himself stuck friendless in Canberra and fighting the Chinese in a multi-billion law suit in Western Australia.

Maybe now the conditions are becoming right for a bunch of brainiac entrepreneurs to seize the moment and lead Australian business out of its current torpor and into a brighter future. Already the signs are there that the education sector is turning around due to the lower dollar and is starting to attract funding again, so perhaps in time that will lead soon to the resuscitation of other sectors like technology and manufacturing. I hope in time too that the growing competition for good talent leads to a clean out of all the cretins in the property industry. However perhaps let's deal with one challenge at a time.

Hail to the Chief

What a satisfying few days it has been. Not only has the sun decided to stick its head out after a particularly bleak winter, the ham-fisted Abbott has finally been given his marching orders. Never again will we see his fatuous mug on the TV spouting inane slogans like "stop the boats" or nodding mutely at a perplexed reporter for 2 minutes. Nor will he be able to embarrass Australia again on the world stage like the time when he whinged to a clearly disinterested Angela Merkel about the Medicare co-payment. For the first time since 1996 when Keating got given the boot, we have a prime minister who is worthy of genuine respect and is, well ... prime ministerial.

It's a coup that in the interests of the economy and the country more generally should have taken place a long time ago. However like Rudd before him, Turnbull seems to suffer from the paradoxical affliction whereby he is adored by the public but loathed by his parliamentary colleagues. It's interesting therefore that they have now taken the step of installing their bete noire in the Lodge. One would like to think they did it for the right reasons, but the reality is that with Abbott at the helm many of them would be at severe risk of losing their seats and with it, their generous superannuation entitlements. Far better to have the despised Turnbull running the show than to have to go out and actually find a job outside politics.

For mine Turnbull has always been an interesting case. It's convenient for detractors on both sides to portray him as a typical eastern suburbs toff, but the fact is that he came from quite humble beginnings and his wealth was amassed solely as a result of his own endeavours. Also unlike 90 per cent of his colleagues he has actually worked in the real world and as such, has a sound grasp of business and economics which the country desperately needs in its leaders. It would be difficult therefore to see the first Turnbull budget being derided so roundly as the first Hockey / Abbott budget.

In terms of his motivation for entering politics, clearly he doesn't need the cash so he may be a fairly unique case in Canberra in that he is doing it for all the right reasons. Finally, and perhaps most pleasingly, he appears to be a "Liberal" in the true sense of the word and socially progressive in his thinking. This might be apostasy to some of the hard-right lunatics in caucus who think women should stay in the kitchen, refugee boats ought to be used for target practice and slavery should be reintroduced, however by aiming for the middle ground, he is likely to further enhance his standing with the public not to mention engage more productively with the other parties in a bid to try and find compromise on important policy matters such as the China free-trade agreement.

As someone who for the last 5 years has wanted to throw a brick through the television whenever a politician comes on the screen, I am probably as optimistic as I have been since Howard got the boot in 2007 and Obama ended 8 baleful years of Republican rule not long after. In both those cases the optimism proved to be misplaced as Obama failed to spend his political capital when he had control of both Congress and the Executive, and Rudd did what Rudd does, ie alienate everyone he works with. However, Turnbull strikes me as a more impressive individual than those two put together so things don't have to go down the same disappointing path here.

Malcolm, you are no doubt getting advice from many people at the moment on how to fix the mess that Howard/Rudd/Gillard/Rudd/Abbott have got us into, but for what it's worth I'd like to put the following on the table for your government to consider:

• Prioritise things that matter to most people. The pet obsessions that used to keep Abbott up at night like a few hundred boat arrivals a year, stopping gay people from getting married and reintroducing knighthoods - I'm telling you, no-one could give a stuff about these things. What the public are concerned about is the toxic partisan debate in Canberra which prevents anything from getting done, the severe lack of business confidence, an anaemic economy which can't seem to get going again now that mining investment has stalled and how the hell our kids are going to be able to afford their own house so we can ship them out of ours at a reasonable age. Deal competently with these things and re-election will surely follow.
• Promote Andrew Robb. While he is part of the hard right faction, at least he has a brain and while Hockey, Pyne and Dutton have been making a mess of everything they touch, he has been quietly going about his job as trade minister in a competent fashion and will be an asset to the team going forward. He might also prove useful in keeping the more insane people in the party like Cory Bernardi and Eric Abetz in check in case they get delusions of bringing back Abbott down the track.
• Tone down the ridiculous terrorism rhetoric. If the ultimate objective of spending the obscene amounts of money currently deployed towards hunting down ISIL operatives in Noble Park or Mt Druitt is in fact to save lives, then how about re-allocating some of the dough to tackling some of things which actually kill people. For example, domestic violence, youth suicide and obesity?
• Engage collaboratively with Labor. Apart from enabling you to get things done without relying on the eccentricities of Jacqui Lambie, Bob Katter or the Brick with Eyes, it will make Shorten and his team seem churlish if they refuse to come to the negotiating table. It may also have the happy effect of making Shorten come up with some actual policies as opposed to just relying on the fact that he isn't Abbott.
• Tread warily on climate change issues for now. Let's be realistic, while you are an intelligent and pragmatic man, most of your colleagues on the hard right are not, and more than likely are creationists who think the world is only 6000 years old and that scientists are an inconvenient distraction sent by Satan to test our religious faith. You won't get anywhere trying to employ science and logic with this lot, so don't die in a ditch over it. 
• I strongly encourage you to make all important decisions via the Cabinet as ultimately this is what brought your predecessor undone. However if you do want to make one "Captain's Call" during your time in office, try and get the Republic back on the table. As former Chairman of the ARM no doubt the issue is somewhere near the front of your mind, and if we frame the question properly this time instead of the manner in which that weasel Howard set it up to fail, I am sure that it would stand a good chance of success this time. And think of the legacy you would leave by guiding Australia to becoming a republic.

So - hail to the chief and I wish him all the best in what is hopefully a productive time at the helm. I just hope in a few years we are still singing that song and not the refrain from the Who's "Won't get Fooled Again", namely "meet the new boss - same as the old boss". However I think Malcolm would need to be partly lobotomised for him to replicate Abbott's performance and I believe as a result there is genuine cause to be positive. Only time will tell I suppose.