Griffin on Tech: The stark contrast between Aussie’s innovation-heavy budget and our own
This week’s federal budget in Australia delivered modest tax cuts to Australians, which is probably about as far as similarities with our own government’s Budget, set to be delivered on May 30, will go.
Australia expects to deliver a budget surplus of A$9.3 billion in the year to June 30, following on from a A$22 billion last year. Then it will slide into deficits for several years as it spends big in areas like defence.
Still, tax cuts are an easier proposition across the Tasman. Our Government is having to slash government spending just to ensure its tax cuts are fully funded, a situation that exposes just how tenuous our national finances, and the case for tax cuts, are at the moment .
Australia faces many of the problems we do at the moment, but is fundamentally a wealthier country, which is why the last few budgets there have seen left and right-leaning governments alike make some big investments in tech and knowledge economy initiatives they hope will lift salaries and high value exports in the longrun.
The most eye-catching line item in this year’s budget has to be the A$470 million the federal government is investing in Palo Alto-based quantum computing startup PsiQuantum, which was founded by a couple of Australian entrepreneurs. The Queensland Government is matching the funding, meaning nearly $1 billion will be going into developing what PsiQuantum is pitching as the world’s first truly usable quantum computer, with a base in Brisbane.
It’s the ultimate case of picking winners, a high risk bet indeed. But Australia has already invested heavily in building a leading position in the quantum space, and I admire the chutzpah. If Queensland can become a manufacturing hub for quantum computers as the Australian government hopes, the PsiQuantum investment will turn out to be money well spent. But its a big ‘if’.
Making Aussie manufacturing great again
Manufacturing in general was the centrepiece of the Aussie budget, with the A Future Made in Australia strategy allocating A$23 billion over the next decade, largely in the form of production tax incentives for green hydrogen, processed critical minerals, batteries, and solar panels.
With the US decoupling its supply chain from China for advanced technologies, Australia sees an opportunity to become a supplier of choice, turning some of its mineral resources into value-added goods destined for America. In comparison, the big business news here this week was that Fonterra is looking to offload its much-loved brands like Anchor, Kapiti, and Mainland, preferring to get back to its core business of processing and selling milk. It seems like a backward step to me.
The contrast in priorities between the two countries is really quite stark, almost as stark as the news that a record number of New Zealand citizens, 52,500 people, left the country in the year to March, 2024. Many of them departed for Australia.
Can you really blame the highly mobile for bailing? The distinct lack of a confident narrative for the future of our country isn’t inspiring millennials who are eyeing up the 20% higher salaries and better job prospects across the Tasman.
Australia’s myGov platform, the heart of its online government efforts gets an additional A$580.3 million over the next five years, including to deliver a digital ID system for Australia. It’s part of A$2.8 billion for various IT projects and cybersecurity initiatives also outlined in the federal budget.
Prime Minister Christopher Luxon’s pre-budget luncheon speech in Auckland this week made it clear that our own budget will be all about the basics, a patch-up job with the main aim of getting inflation under control and containing costs. It’s clear that retooling our economy in the way Australia is doing is for a later date. Our science system is in disarray, investment in cyber, digital skills, and advanced technologies is sorely needed.
A holding pattern
But we just don’t have the funds to invest in anything other than the bare essentials in frontline heath, social, justice, and education services at the moment. We are in a bit of a holding pattern for the next couple of years then, until the government books improves, along with our economic outlook.
In the meantime, I’m drawing inspiration from the likes of Simon Walker, the Auckland tech marketer who on this week’s episode of The Business of Tech outlined his vision for Aotearoa, and incremental steps we can take to build a better future. Walker’s ID2070 vision draws a lot of inspiration from what Ireland has experienced in the last 25 years, as it became a tech hub for multinationals and built a highly-skilled workforce. As Walker points out, it really took 50 years of work, starting with Ireland joining the European Economic Community in 1973, then making deliberate decisions to move away from its primary sector roots.
We have a similar journey to go on. But we are well underway with a healthy tech sector, a thriving startup scene, and world-class scientists and researchers. For the next period, we can’t expect government to steer the way with large injections of funding to kickstart activity. We need to think for ourselves, innovate and incrementally build the sort of country we aspire to be part of in 2070. Luxon should let us get on with it.
