When Prime Minister Turnbull launched Australia’s National Innovation and Science Agenda late last year, he told us that “ It’s never been a more exciting time to be an Australian ”. Since then, the mantra of being “innovative” and “agile” has been used extensively, along with #ideasboom .
But what does it really mean for the average person? Why is there such a focus on the next big thing?
The traditional levers governments have to grow an economy include monetary policy (ie interest rates), fiscal policy (government spending and taxes), and structural reform (eg labour practices, procurement policy, banking regulation etc). For some economies around the world, they have not had to do too much as their economy have been resilient for various reasons. For instance Saudi Arabia has traditionally relied on bountiful receipts from their dominant petroleum industry. Others like Argentina have had to manage debt and inflation with fiscal and monetary policy. Japan has relied heavily on monetary policy with fiscal tweaks… but really needs some structural reform. The balance (or imbalances) can be delicate.
With governments exhausting traditional policy options, it would seem that 2016 is the year that governments around the world are pushing their constituents toward the concept of doing things differently. This includes Saudi Arabia. Structural reform is fast becoming more significant in encouraging greater productivity and economic growth.
Bloomberg released last week the list of the world’s richest people. 50% of the top 10 made their wealth through information and technology related services. Amancio Ortega (Zara clothing), Warren Buffett (Investing), the Koch brothers (Industrialists), and Ingvar Kamprad (Mr Ikea) are the notable exceptions. 70% of the top 10 hail from the USA, and only 2 Australians made the top 200. These were mining magnate Gina Rinehart ($11.4b) and residential property developer Harry Triguboff who ranked 95 and 145 respectively.
What can be taken away from this list is that the barriers to creating wealth are slowly but surely disappearing. Gina and Harry both grew their wealth in capital intensive industries. Bill Gates did it (initially) from his garage.
Structural reform in areas like taxation is helping to encourage greater investment in innovative ideas and companies. An Australian did invent Wi-Fi, so it is not a stretch to think the next leg of innovation coming from this country too. If the new innovation agenda gathers genuine momentum, perhaps next year there might be more than 2 Australians in the top 200 wealthiest people in the world.
