However, there is one area we can and must improve upon and it may not seem evident to begin with, but it is important for us if we are to continue growing and improving. I am talking about investing & innovation. As Australians, we love to think of ourselves as having a knack for hard work, but also wealth creation.

However, under the surface of this attitude lies a worrying signal that many international players are trying to highlight to us. As developed nations grow, the economic narrative pushed is generally one of transformation from an industrial heavy economy to one of services and ideas. As labour costs grow in a rising state, capital looks to new avenues of higher returns and greater efficiencies.

Look at Silicon Valley in the US, this is the shining example of the direction developed countries are racing. China provides a great example of this in motion. Most of the labour-intensive projects that were historically based out of China have now moved to Vietnam due to rising labour costs.

It is no coincidence that China is now heavily invested and leads the world in emerging high-tech sectors such as solar photovoltaic panels, Artificial Intelligence, electric cars and rare earth mineral value chains.

China is transitioning its economy as the world evolves and repositioning itself to be apart of the industries of the future. It is not just big players either, many smaller states are realising this change, and rapidly repositioning their economies to take advantage of the latest economic opportunities, countries such as Israel, Estonia, and Belarus have all developed highly sophisticated value-driven tech service sectors.

Remember in 2015 when Malcolm Turnbull came out with his ill-fated ‘Ideas Boom’? This policy was rooted in an understanding of shaping a new economic narrative for Australia as we transition into the mid 21st century.

Unfortunately, like our general appetite for early stage investments, the public reception to this was tepid at best, while outright hostile at worst.

Australia was recently ranked 17th in the world on a global index of innovation, falling behind regional neighbours like Singapore, Hong Kong, South Korea, and New Zealand. Our pivot to an economy supported strongly on digital innovation has stalled.

Since 2009 venture capital (investors in early businesses) has decreased by 21.7% while in only the last four years, going back to 2014, it has decreased by 60%!

This is a worrying sign and one not only policymaker’s need to be aware of but private individuals. You see, private individuals can actually have a much more rapid impact on these industries and many other sectors around our economy than politicians.

Possessing the ability to reposition our personal capital at a moment’s notice stands in stark contrast to politicians wrangling out a budget through parliament.

However, here again, lies another issue under the surface of the Australian economy, we as Australian investors tend to be quite short-sighted, lacking awareness of certain financial instrument aspects, and a conservatism that fails us more often than not.

According to the ASX, 56% of Australians invest by putting their cash in the bank, 55% of those with shares are either not diversified or do not know what that means, and 21% of the most conservative risk-averse investors expect over 10% returns.

In laymen’s terms, half of the population considers letting their money sit in a bank account to be an adequate investing technique and are unaware of the benefits of diversification, while a fifth of our most conservative investors expects returns attributed to risky assets.

Now, this isn’t to say there aren’t quality investors, intermediaries or opportunities out there, because there is, but it is a call to arms to realign our thinking and remove ourselves from an obsession with short-termism and focus on medium to long term opportunities that abound all around us.

Tech need not be the only burgeoning sector with this new-found focus. Us blokes over in property have never been keener to showcase our wears, work for alternative funding, and produce quality products.

As we have seen from the banks tightening their standards, and purchasers slowly dwindling, the market has begun narrowing for all the players. Yet there remain numerous quality projects out there that are deserving of funding and can make an investor or a group of them a very decent return on their equity.

If mum and dad investors, as the industry colloquially labels them, are able to shift their focus away from cash and blue-chip stocks, and look towards managed funds in infrastructure and property, we could see the unlocking of a flood of money into the industry at a time it needs it the most.

Risk will obviously always play a party in any investment decision, however as Australian’s have shown their return appetite is that of a risky investor.

If we can slowly chip away at some of that conservative investing nature, Australia could unleash a wave of private investment on the nation, rapidly building upon our reputation and perpetually elevating us to a level playing field with the best in the world.  

David Tricarico is a director of Adepto Co and the author of davidtricarico.com.au

This is a sponsored post.

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