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.
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