Nobody has admitted it yet. The decline trend is well in its death spiral, the day Iemma resigned. There is no rebirth without change.

“The Governor may…..remove from his office, or suspend from the exercise of the same, any person exercising any office, or place, in the State…”
– The Royal Instructions, Clause 10

NSW, Doomed.

NSW politicians have destroyed Australia’s most prosperous state.

Largely run by factional hacks, and political plotters, NSW is now only a political state.

No one is professionally managing the basics. Economy, jobs, investment, urban planning or infrastructure. No forward-thinking.

Certainly, no innovation in Government.

NSW was under-performing before the boom. And now is in a truly disastrous state. Under-performance will be magnified by entering a severe national downturn.

There is a mid-term threat of NSW facing dire financial defaults.

Competence.

The Mini-Budget represented an incompetent handling of the crisis. It is the exact opposite of economic medicine needed.

Raising taxes & no stimulus was largely how Hoover brought on the Great Depression, according to many economists.

Read Sydney’s respected Ross Gittins here, describing the mini-budget as a “sham”and “will in fact make things worse… produced not because of the downturn, but in spite of it.”

The NSW Government is acting against the long-term interests of its citizens. When leading economists tell them what they are doing is incompetent, why are they doing it?

Self-interest.

Simple. The Rees Government is acting to save its political skin. It’s purely factional. And political. It is no longer acting as a part of the Government. These representatives are not in the interests of those who democratically elected them.

History has shown that once a decline has commenced, even unprecedented economic butchery to arrest a declining credit rating will not cause the decline to halt.

If NSW was a company the management (and board) would have been sacked & replaced. For acting against shareholders interests.

Opportunity.

The 2thinknow View is that NSW is in terminal decline short to mid-term. NSW probably actually hit bottom in late 2006. But the current government is delaying a turnaround.

NSW has an educated hard-working workforce. High profile overseas. Economic infrastructure that requires maintenance. Resources. Assets.

NSW has better assets than other Australian states that are outperforming it. Under-performing the index, in business terms, means the management have failed.

A competent business manager could pull NSW out of its current mess.

Not these stooges…

But to lead NSW out of the crisis it is in, and to prevent a further deepening of the crisis and crash into disaster, the government MUST be replaced.

If the crisis turns even slightly worse, then having the NSW government led by it’s current pack of self-serving idiots is a disaster.

These political hacks & plotters led the state into this mess. They cannot lead the state clear of this mess.

The 2thinknow View is that the Carr-Iemma-Rees team  have mismanaged the state of NSW. Decisions have been taken against the long-term interest of the State’s people.

How?

The Governor of NSW, Professor Marie Bashir, can dismiss the NSW government. As the representative of the Queen in Australia.

Dismissal has been done before. In fact, examples of the dismissal are taught in the NSW school curriculum.

“In the exercise of the powers and authorities vested in him, the Governor shall be guided by the advice of the Executive Council, but if in any case he shall see sufficient cause to dissent from the opinion of the said Council, he may act in the exercise of his said powers and authorities in opposition to the opinion of the Council, reporting the matter to Us without delay, with the reasons for his so acting.”
– The Royal Instructions, Clause 6

“The Governor may…..remove from his office, or suspend from the exercise of the same, any person exercising any office, or place, in the State…”
– Clause 10

Cause to Dissent.

There are numerous legal grounds available for dismissal.

If the Governor, Prof Bashir, believes the NSW government is acting incompetently and against the interest of the State then she should act to dismiss.

In 1932 the Governor waited until the crisis had turned into a depression to dismiss Jack Lang.

Unprecedented Under-Performance

The 2thinknow View is that the NSW Government is damaging the State of NSW.

And acting as a magnifier on any economic downturn.

The Governor can wait and see.

But 2010 elections can cost a lot of NSW citizens jobs and homes.

The key point is the NSW government is acting against its citizens economic interest in a time of crisis. The NSW government is preserving power at all costs.

Dismissal should be used, is intended to be used, when politicians act against the interest of their citizens. It is a matter of time. And losses.

What do you think, how far gone do you think NSW is?

The budget was solid, economically and fiscally-responsible according to ABC commentators like Alan Kohler. The budget was also politically astute, delivering on the promises made in the last election.

2thinknow Building Innovation Textbook

The budget read from the 2thinknow textbook on economic growth in challenging times, and nation-building of innovation cities and regions:

1) Infrastructure investment – ports, rail, institutions, broadband and roads

2) Productivity driven economics – childcare, flexible industrial relations, education

3) Education and Skills – Higher education through university, practical skills through technical colleges (TAFEs)

4) Public Healthcare and Institutions – not solely private healthcare

The creation of Infrastructure Australia, headed by Anthony Albanese, is another strategy called for by 2thinknow, as a global innovation agency. This strategic approach is worth benchmarking in terms of priority setting and could be duplicated, with cultural adaptation, by various cities and Governments around the world.

One area needing addressing is agriculture and food supply, beyond the water plan, to secure Australia’s water supply.

Howard’s Inflation Legacy

In addition, 2thinknow have drawn attention to higher underlying inflation due the last days of the Howard government.

Howard did not count on his reign exceeding 10 years, and running the growth engine too long and too hard, leading to infrastructure, labor, education and productivity short-falls, as there was limited capital investment under Howard’s last days.

Malcolm Turnbull, the right-wing shadow Treasurer takes the view this budget is inflationary, whereas in reality had the prior Government won, they would have continued a policy of not investing in infrastructure.

Turnbull always uses dogma and debate to fight ideas. Turnbull is the most dangerous conservative, one who can argue a case convincingly even when he does not believe in it. Turnbull is a win-at-all costs man, who believes the public will believe what Turnbull tells them.

In the end this first Swan Budget is a good first step, and a priority setting on national economic productivity. This is important.

Why?

Economics solely derives from productivity. Not asset-price bubbles which has been the Howard model, which is non-sustainable.

2thinknow: Sustainable Productivity

It is the 2thinknow view that sustainable productivity derives from 5 main forces:

Effective deployment of labor

Effective increase in national skills,

Effective use of technology to increase productivity,

Containing inflationary wage rises out of step with costs and ,

Containing the cost side of inflation in supermarket, basic services and accommodation.

The 2thinknow view is that the budget delivers on these criteria well for Mr Swan’s first budget for Australia. Intrinsically the budget is economically conservative, according to most Australian economists in initial analysis.

Agriculture and food supply, and which infrastructure needs are addressed first are areas where 2thinknow reserve the right to assess, as well as ICT. And the infrastructure investment must be in the correct areas.

Ports, rail and broadband must be invested in. Roads, to a lesser extent. And these key items of infrastructure must work in Australia, otherwise Australia will continue its rise only as long as China-boom reliance lasts.

The 2thinknow Vision: Australia as Innovation Hub

Australia has an opportunity to build infrastructure and be an innovation hub for the Asian region.

The 2thinknow view is that this is the challenge of the decade.

2thinknow vision is Australia Asian Innovation Region.

This is a good start, although there are many details not yet painted in, the national priorities are correct. The notable admissions were:

Food supply and

Information and Communications Technology (ICT)

Hopefully these will be addressed in future policy initiatives, for this is primarily an inflation-fighting budget.

Well done, Wayne Swan. First Australian Budget, and some vision too.

The 2thinknow scorecard on Rudd and innovation is an 8 out of 10.

Why?

The main reason, is that unlike some politicians he is actually personally championing change. And it’s not change of ideology or dogma, but the sort of practical change Australia needs.

Shortly, I will list the 7 steps Rudd took towards innovation in the 70 days.

But first some background.

The Howard Year’s Innovation not a priority…

Departed Prime Minister Howard’s free-market-at-all-costs attitude has hamstrung infrastructure investment, and is the reason for rampant (previously undiagnosed) inflation.

Inflation in Australia, and globally, has been rampant for some time now, and will only get far worse, as small business and households in Australia strain under rising costs.

Inflation driven by growth. And as a result of the Howard years, many Australian voices had turned against government intervention in the economy.

Which is like ignoring your left arm (government), because you want to practice doing everything with you right (business) only.

The 2thinknow position is that a society functions best with strong private and State involvement in the economy, and smaller countries like Australia should be a ‘middle-way’ between France and the USA.

The Rudd 70 days of innovation

Here’s an initial analysis of what Rudd is doing for innovation.

As we said, first of all it’s coming off a low base. So any PM after Howard (the Great Obfuscator) will look like he is creating change.

And as an increasingly Right-wing government, Howard stifled innovation and focused on conservative business over any form of innovation. Howard could be heard to yawn at the mention of innovation.

But Rudd is making real progress, solid progress, on a national agenda of innovation.

The Democrats in America should look South.

1. Catch-up & Innovation – ratify Kyoto and lead America

Rudd ratified Kyoto Protocol on Climate Change. Largely symbolic, yes. But important. Rudd met with Gore.

Rudd’s team Penny Wong & Peter Garrett, as well as other’s in the room, stood up to the USA representatives and Australia’s role was instrumental to the changed US position on climate change, made more difficult under the current US administration.

Globally significant action on climate change.

2. Catch-up – Apologize to indigenous people

Steal their land and their children, at least, we should say sorry. Other countries did.

And we also need to move forward pragmatically. The devil’s in the detail, but this issue should have been resolved before 2008. Well done to strike a balance.

3. Potential Innovation – New Garnaut Report, (hopefully) authoritative on Climate Change

The Stern Report doesn’t go far enough, although Europe is leading the way. I think Stern had a lot of flawed assumptions. Australia’s potential role for global leadership is potent.

The Jury’s still out on this, but it’s important to get it right. Initial news seems good.

As long as coal, mining and Australia’s heavy vested interests in carbon intensive business and lifestyles don’t dilute the report.

4. Catch-up – Initiatives on homelessness

As written in the Global Innovation Review and in this journal, homelessness, mental health and drug use are endemic issues.

Fix these issues (really about mental health, ostensibly a bi-partisan issue) and fix broader social problems that block positive, healthy societies.

Homelessness is an important component of social justice. Ignored until now by States & Howard.

5. Catch-up – Start to fix Health Care federally

Initial commitments and start towards this. State & Federal co-operation. Big issues after Howard privatized and ‘gutted’ the national health care system.

French State health-care delivers better outcomes than US-style private healthcare. We can hope to see a rise in health care standards, as a minimum.

6. Innovation – Solid Ministerial choices

Whilst Howard had some good ministers, his final 5 years not about doing anything. And Peter Costello and his team did the economic heavy lifting.

In terms of services, Howard’s goal was to do as little as possible and have the free market do all the public services heavy lifting.

7. Innovation and Catch-up – Infrastructure Australia

The single biggest potential problem in Australia is infrastructure.

Transport, roads, ports, rail, aviation and related logistics were identified as major issues to future innovation in Australia within the Global Innovation Review.

Setting up Infrastructure Australia, run by a cross-function national, states, local & business team is a potential solution to the issue.

Sadly, Howard allowed total neglect of infrastructure in Australia and overheated the economy so that infrastructure gaps would become distinctly noticeable.

Rudd now has a chance to rectify it. As always detail is needed.

But the broad direction is sound from the viewpoint of enabling implementation of innovation, and access to overseas markets mid-term & longer-term.

8/10 to date

Well done Mr Rudd.

Soon, we will post an analysis of the major roadblocks to innovation in Australia.

Christopher

But first we have to get over this industrialist mass-produced thinking.

Here’s how the current global model goes:

Produce goods in a large a quantity as possible.

Ensure all production and pollution is outsourced to a developing country.

Ship goods all over the world.

Repeat until planet chokes.

Follow this with:

If goods don’t sell, discount them.

If goods sell well, mark them up.

When goods expire or don’t sell, bury them in landfill.

In this process use all the Earth’s finite resources.

The sad thing is this seems to be the only model of production. It was taught to me in post-graduate business, and is the paradigm of thinking I have discovered in many businesses.

So what’s the alternative?

The innovation is in moving to a model of:

More localised small-scale quality production.

More regional branding.

International shipping using solar sail boats, not oil-based boats.

More efficient point-to-point distribution.

This thinking needs to get out there. I have been noting nascent trends in this area, but their acceleration is sadly waiting for major shock events such as recession, depression, plagues or major weather events.

But the existing free-market laissez-faire economic thinking where we leave everything to the market is hopelessly inadequate without government guidance.

The only problem is that it is a brave politician who does something.

And conservatives, are by nature, conservative.

It’s Up to a ‘Brave New Deal’?

There is a strategy for a New Left here, a new mission instead of capitulating like Tony Blair, and giving into blatant Thatcherism or Neo-Conservative thinking.

At 2thinknow, I have been analyzing global thinking for some time, and there are massive opportunities in the area of a Left based movement to focusing on redefining business and production.

Nationalization is also not a bad word any more.

Privatization merely transfers wealth to corporations from the public hands.

Debate over privatizing is ignorant and in most cases ill-informed and short-term economic balance sheet wizardry, Enron-style.

There are limited circumstances where competition over services can be better (as in Telecoms), but the infrastructure should be national.

And in Australia, it’s time to have the bravery to nationalize public transport. And invest in it.

So New Left, do you want a mission?

Or do you want to slink off in the café, talk of the past, and pretend that being Conservative-Lite is good enough?

Let’s start a Brave New Deal, that’s what I think, and that’s the future 2thinknow see for the world. It’s a huge opportunity.

Take care,

Christopher

Background for our global readers: Rudd is from the Left, although a moderate. Howard was from the Right, and part of a NSW branches of the Right that are increasingly moving far-Right, by Australian standards (although not yet Neo-Conservative).

And Australia generally prefers moderates and punishes radicalism.

The true significance of this win, has been lost on some commentators. Here’s why…

The significance of Rudd win

Australia politics are a barometer of sentiment in global developed English-speaking countries.

A government measured on economic scores of low unemployment, relatively low interest rates, budget surpluses and sustained growth was removed from power.

The Australian voters chose a government promising a plan of action. The exiting Howard & Treasurer Costello were generally still perceived as the better economic managers.

The PM Howard even lost his own seat (almost). It’s down to handful of postal ballots, which may favor him.

In politics there is a saying, oppositions don’t win, governments lose. Yet Howard lost whilst ‘lead indicators’ said people were ‘well-off’.

As we don’t have fixed terms in Australia, Howard had been in power for almost 12 years.

So the incumbent government were ‘kicked out’ whilst the economic party was going on, and the NSW Right were passing around the cocktail umbrellas. Howard should have taken more care in listening to the NSW Right.

Significance to innovation

Globally the significant issue was that the citizens prefer governments who try to deliver services. People expect some ‘care’ from the State.

This fashion for removing ‘all state intervention’ from the economy, and the persecution of Keynesians, has been significantly set-back.

The significance of this victory is a swing back to the State providing some services to the public. And that is significant in a world where the far-Right have ’stolen a march’.

We need more moderation, the market alone is not ‘perfect’, and the State is better at some things. That’s the Wisdom of Crowds, for you.

Conversely, Howard argued the government should only step-in in market failures, if then. Everything should be private.

Under Howard most health-care became private, with more expensive yet highly-decreased levels of service for most patients. Schools became increasingly private. Roads became increasingly toll-ways. Telecoms became private, but we still don’t have world-class broadband internet. Howard also outsourced most tax collection to business owners.

Peoples’ houses tripled in price, and they ‘never had it so good’. And jobs became easy to come by. So they borrowed more and more, paying more and more for the same house.

It seems silly, but if everyone says your house is worth 300% more in 4 years, then it is. And Australians see property as ‘easy-money’.

But significantly they had to work harder and harder. They may have been able to eat in fancy restaurants, but especially for the younger generation (under 30) who voted Howard out, they increasingly realized that it was getting harder every year to get education, home, marriage, kids – which is what most people of all backgrounds want.

3 in 4 young people polled were voting against Howard. Baby Boomers were mostly for him.

Now of course property prices are stagnant in most locations, except WA, where Howard still enjoyed strong support. So some of those battlers and baby boomers turned.

But the catch-22 for the wealth: under Howard everything was ‘user-pays’.

The electorate said, rather than economic indicators, we’re full now and we want to ‘feel better off’ and that means the State taking caring of some basic services.

They would rather have the State take care of healthcare, education and basic services in some instances and pay more taxes. They would like better roads. And there are instances in nation-building where government should foot the bill.

Broadband, world-class universities, some research, childcare assistance.

It’s like the West Wing episode about the man sending his child too college. “It’s should be hard, I like that… but not too hard.”

They told Howard that for those under 30, and some under 60, it was too hard !

Howard dolled out tax-cuts, but it actually worked against him. Polls showed it.

It’s about balance, and ‘ideology’ never fits with balance.

The lesson is ‘State Providing Services’ is back again

And balance between private and public. A moderate position.

Extreme: Under Howard food production in Australia has been partly outsourced to China. We are the foodbowl of Asia, and yet we outsource basic food to China. There have been numerous safety scandals here in food and goods and in the USA. The profits have not been passed onto consumers in lower prices. They have been retained by ever-larger companies. If anything basic good and food prices keep rising.

People know when they are getting a raw deal on basic goods. That is what people talk about at home. They know when quality decreases over time.

And Howard gutted John Button’s great manufacturing /export incentives.

Rudd won primarily on a few issues, but mostly he won on the perception he had a plan to give people services: other than tax cuts.

Howard made the mistake of most Right-wing economics true believers — he forgot how well off is about how people feel, and that people fear losses more than they appreciate gains.

You have been informed, this is a nascent 2% stage trend. Expect to hear more. Services are important to tax-payers.

Good bye Mr Howard, perhaps we can get some balance back and remove some of your extreme-economics.

And Mr Rudd, congratulations, and we hope you stay moderate.

PS> MORE POSTS ON RUDD HERE (including our accurate predictions of the victory)

Take care,

Christopher

Australia needs new ICT policies.

Why we don’t have an ICT Export industry!

According to the AIIA, domestic production of ICT is worth between 4 and 5% of GDP.

ICT exports were once around $7.8 billion per annum, in 2000, according to AIIA.

Now, under Howard, these have declined to $5.4 Billion according to Austrade.

There’s no reason we cannot more than double ICT exports in 5-10 years through government policy.

Canada is a country closes to Australia in size and population.

A single city in Canada, exports along $6.2 Billion Canadian (around 6.4 Billion in todays dollars), according to the Toronto City government.

1 city in Canada exports more IT than Australia!

Surely Australia with a population 450% greater than Toronto can double one city’s exports?!

Canada is also ahead of us in broadband and ICT infrastructure, despite our recent resources boom. Howard does nothing about ICT policy, and doesn’t even like IT.

I believe we can have a $13 Billion per annum ICT Export industry by 2015.

But it will need innovation. It will need ideas from overseas. it will need education.

It’s not that hard with the right leadership.

That is a huge opportunity, and a shelter against any forthcoming recession. A back-up plan to the resource boom. And ICT can be grown through utilization strategies without inflationary pressures on the economy, by government policy that aids global ICT exports.

It would be the start of making us part of an Education Nation, instead of a nation looking to the 1950s, under Howard.

This export of ICT market would position Australia positively overseas as a ‘clever country’ an oft-derided term.

But we can’t take this opportunity by looking inward and more of the same politics of paper-shuffling.

We don’t need the recidivist Howard government deciding ICT policy.

We should form closer partnerships with the USA, Germany and East Europe. In a global world an idea does not always recognize where it is born.

Australian governments should source the best ICT instead of massive roll-outs that damage the industry like the Customs disaster, designed by people who did not understand ICT.

What does the Howard government do? Besides mountains of paper and talk?

The Howard Government: Australian Technology Problem

We should look outwards. Do we?

We should look beyond hardware and ‘box’ thinking. Do we?

We’ve had 12 years of Howard: a supposedly pro-market government? Where’s our broadband? Now?!

The Good news

Australia is a global leader in Mining Software and other niches. Internet technologies have originated here. Software rollouts sometimes start here before going global.

But no thanks to the Howard Government.

Sure the US Free Trade Agreement on the whole is positive for ICT. Exchange of professionals, closer trade ties.

Austrade have done good work, but ICT is down the bottom of their website, 12th link, after many less relevant export industries. It’s symbolic, but…
And where’s the ICT initiatives?

If Rudd gets elected (as I predicted here) we will have decent broadband, according to the pre-election announcements. I have hope.

The Howard Government, is more interested in creating mountains of paper. This is seemingly backed up by our professional body the Australian Computer Society.

The ICT industry needs global innovation, not a bunch of aging professors and baby boomer consultants inflicting outdated curricula teaching outmoded computer ‘programming’ on kids, because that’s all they know.

The future is far more exciting than that.

Technology is so obviously a young person’s field!

If you ask ICT practitioners about what they do in their job, it will bear no resemblance to the actual curricula in most Australian universities.

At an ACS IT Symposium in August 2006 designed to ‘bridge the gap’ the very same professors ridiculed any idea that did not fit their ‘narrow’ view of the world.

I chaired a group of professors and they couldn’t agree amongst themselves on the ‘wording’ let alone any new ideas. Any new ideas were ‘revised out’.
ICT is one industry where age & history is a poor guide, unlike economics.

The Brain Drought in Australian ICT

Yet their is a dirth of people in ICT who understand emerging and even established technologies. Silicon Valley is far ahead. So is Toronto! There is a brain drought.

Instead we have policies driven and advised by ICT people out of touch with the market, a hallmark of Howard’s comfort with people in ICT his own age band.

Whether this is university professors who can’t understand modern ICT or baby boomer consultants who are intensely disliked by many of their younger members. Or aging Telstra executives.

It’s not good enough! Australia deserves better and can be a world ICT power!

Most of these organizations are full of people from the time when computers were a box in a room worked by scientists, and the concept of collaboration was having a meeting.

These people do not even efficiently use the technology they make policy decisions on.

Nor are they in touch with how to recruit Generation Y employees.

What we need is to understand technology, and use it

In a virtual world we need people who understand how to employ technologies like Web 2.0, citizen media, social bookmarking, online career management, agile computing, wikis, collaboration and even conversation in a digital age.

People who can foresee the future beyond a myopic backward-looking nostalgia for the past.

Notice I say employ or utilize, not ‘build’. The same people who harness these systems do not have to be the same people who ‘repair’ them. Do the technicians plan which models of car are released, or is that a broader decision taken in consultation, but with leadership?

An a recent Web 2.0 presentation the content was technical, inadequate and a sneering look down your nose at technology which the Americans are already utilizing.

The Americans (of all ages) say how can we utilize this technology?

Even when approached politely this arguing class is notoriously ‘dug-in’ in ICT. They say what can’t be done not how can we use this for the nation?

What Australia Needs under Rudd

It’s time they moved on and gave the younger (30-40) generation a chance at some real leadership. And innovation.

We need to become a global ICT industry, and we need government policy and policy advisers to reflect that.

We need vision, and leadership.

We don’t need ‘out-of-touch’ old professors and politicians who refuse to allow new talent into the echelons of government in ICT policy.

It’s time for generational change and a global world-view on ICT.

The world clock starts now…

Christopher