Gold has no employees, no productivity, no dividends.
And yet it’s outperformed most of the ASX 200 for 20 years.
That’s not quirky. That’s a systemic failure.
Australia rewards comfort over courage, homes & holes over invention & ideas. Australia has built a capital market that punishes risk, favours rent-seeking, and treats innovation like a hobby.
The Strategic Examination of Research and Development is a chance to change that; if Australia is brave enough. I wrote a submission that doesn’t address the specifics of R&D at an executional level. Instead, I sought to address the culture of innovation (or lack thereof) at it’s broadest level.
Here’s my submission:
Australian R&D Submission
Constantine Frantzeskos
con@c20s.ventures
Australia’s innovation system is broken – not because we lack ideas or talent, but because we’ve built an economy that rewards lifestyle over effort, comfort over courage, and homes and holes over innovation and entrepreneurship. Our national economic story has become one of incrementalism and squandered potential. Too many of our top companies underperform gold – a lump of inert metal with no productivity, no dividends, no employees. That is not a quirky anecdote. It’s a damning indictment of a system that prioritises dividends over discovery, and oligopoly margins over original thinking. We’ve engineered a capital market that punishes long-term risk and rewards yield-chasing mediocrity. We’ve created incentives for firms to play not to lose, rather than to win. The ASX 200, riddled with companies riding the coattails of housing booms or commodity surges, is not a launchpad for the future – it’s a museum of missed opportunities. We have all of the hallmarks of a Banana Republic.
And yet, the few companies that have rowed ahead – CSL, ResMed, Atlassian, Xero, Canva, REA Group, VGW, Afterpay, Intrepid Travel, Airwallex, CultureAmp, just to name a few – prove what’s possible. These are not miracles; they are models. They reinvested, innovated, went global, took risks. What sets them apart isn’t luck. It’s strategy. It’s courage. It’s leadership. It’s embracing ideas and technology. If Australia wants to remain prosperous, if we want to lead in the industries of the future, we must overhaul our national mindset. We must shift from a culture of distribution to a culture of creation. That means a tax system that rewards reinvestment, a capital market that favours long-term growth, and a Government that gets out of the way while building enabling infrastructure and reducing risk for those who dare to build. Innovation isn’t a buzzword – it is the only path to escape our present-day malaise and ignite an era of prosperity. The Lucky Country must become the Smart Country. It’s time.
Where are we?
Australia, despite immense potential and a proud history, finds itself at a critical crossroads. Our economy is heavily dependent on two sectors: property speculation (homes) and mineral exports (holes). Donald Horne famously captured this predicament decades ago in his book “The Lucky Country,” describing Australia as a nation blessed with natural resources but managed by second-rate leaders content with enjoying luck rather than building sustained prosperity. Today, this description remains painfully accurate. Australia’s economic growth continues to rely primarily on selling natural resources & inflating property values and immigration-based population and GDP growth rather than cultivating innovative, globally competitive businesses.
Why does this matter?
This heavy reliance is not just theoretical – it impacts the everyday lives of Australians. Over the past twenty years, simply holding gold – an inert, unproductive asset – would have delivered better total shareholder returns (TSR) than investing in the vast majority of Australia’s largest listed companies. Gold has consistently returned approximately 9.8% annually over the past two decades, cumulatively about 543% total. By contrast, several prominent Australian firms have barely matched or even fallen short of this benchmark. Telstra, for instance, delivered an average TSR of approximately 7% annually over the same period, primarily driven by dividends rather than genuine growth or innovation. Major banks such as Westpac and ANZ similarly struggled, with annual TSRs averaging around 8% and 7.5%, respectively, often driven more by dividends than by meaningful capital appreciation.
Companies that failed to surpass gold typically exhibit strategic complacency, risk aversion, and short-termism. High dividend payout ratios – around 70% of profits – illustrate a preference for immediate shareholder returns over reinvestment in growth. Myer Holdings and AMP exemplify this issue, delivering average annual TSRs of approximately -4% and 0%, respectively, due to severe declines in share prices stemming from strategic missteps and inadequate responses to digital disruption and market evolution. These failures highlight the critical need for systemic changes in corporate governance, cultural attitudes towards innovation, and incentive structures.
The table below highlights 25 of the largest ASX-listed companies whose TSRs have not kept pace with gold (as at March 7th 2025):
| Company | Industry | Avg Annual TSR (%) | Gold TSR (%) | $1,000 invested in company (20 yrs) | $1,000 invested in gold (20 yrs) | How much better off if you invested in gold |
| Telstra | Telecommunications | 7.0 | 9.8 | $3,870 | $6,430 | 1.66x |
| Westpac | Banking | 8.0 | 9.8 | $4,660 | $6,430 | 1.38x |
| ANZ | Banking | 7.5 | 9.8 | $4,291 | $6,430 | 1.50x |
| Myer Holdings | Retail | -4.0 | 9.8 | $439 | $6,430 | 14.65x |
| AMP | Financial Services | 0.0 | 9.8 | $1,000 | $6,430 | 6.43x |
| Qantas Airways | Aviation | 5.5 | 9.8 | $2,917 | $6,430 | 2.20x |
| Origin Energy | Energy | 6.0 | 9.8 | $3,207 | $6,430 | 2.01x |
| Suncorp Group | Insurance | 6.5 | 9.8 | $3,526 | $6,430 | 1.82x |
| AGL Energy | Utilities | 5.0 | 9.8 | $2,653 | $6,430 | 2.42x |
| Newcrest Mining | Mining | 6.8 | 9.8 | $3,710 | $6,430 | 1.73x |
| Woolworths | Retail | 7.2 | 9.8 | $4,073 | $6,430 | 1.58x |
| Coles Group | Retail | 6.9 | 9.8 | $3,779 | $6,430 | 1.70x |
| BHP Group | Mining | 8.5 | 9.8 | $5,060 | $6,430 | 1.27x |
| Rio Tinto | Mining | 8.2 | 9.8 | $4,833 | $6,430 | 1.33x |
| Commonwealth Bank | Banking | 8.7 | 9.8 | $5,226 | $6,430 | 1.23x |
| NAB | Banking | 7.8 | 9.8 | $4,599 | $6,430 | 1.40x |
| Santos | Energy | 6.2 | 9.8 | $3,368 | $6,430 | 1.91x |
| Woodside Energy | Energy | 7.1 | 9.8 | $3,973 | $6,430 | 1.62x |
| Fortescue Metals | Mining | 6.7 | 9.8 | $3,610 | $6,430 | 1.78x |
| Insurance Australia | Insurance | 5.8 | 9.8 | $3,048 | $6,430 | 2.11x |
| Medibank Private | Insurance | 6.3 | 9.8 | $3,287 | $6,430 | 1.96x |
| Transurban Group | Infrastructure | 7.4 | 9.8 | $4,187 | $6,430 | 1.54x |
| Stockland | Real Estate | 6.1 | 9.8 | $3,265 | $6,430 | 1.97x |
| GPT Group | Real Estate | 5.9 | 9.8 | $3,149 | $6,430 | 2.04x |
| Brambles | Logistics | 7.3 | 9.8 | $4,120 | $6,430 | 1.56x |
Damningly, more than 60% of ASX 200 companies have underperformed gold over the past two decades, a notably higher percentage than comparable indices in the United States and Europe.
In contrast, data from the US S&P 500 and European FTSE 100 indicate only about 30% and 45%, respectively, of their listed companies underperforming gold during the same period. This stark difference highlights a uniquely Australian complacency and lack of competitive dynamism.
How Immigration Artificially Inflates Business Performance
Immigration, while beneficial culturally and demographically, has inadvertently acted as a crutch, masking the failure of Australian businesses to innovate, improve productivity, and compete globally. Supermarkets, banks, retailers, and utilities have benefited from steadily rising populations, driving revenue growth because more people are showing up, not for any other reason of their making. When adjusted for immigration-driven population growth – averaging 1.5% annually over the past two decades – the true picture is alarming. Australian businesses haven’t thrived through innovation or global competitiveness; they’ve simply gained more customers each year. Subtracting this artificial boost, the underperformance compared to gold becomes even more stark, highlighting a hidden crisis and the urgent need for genuine innovation and strategic reform.
These companies’ failure to surpass an inert asset like gold underscores an alarming cultural preference for short-term safety and dividends over long-term strategic investment and innovation. This trend urgently calls for a dramatic re-evaluation of corporate strategies, governance models, and investment cultures within Australian businesses, with a renewed emphasis on fostering innovation, customer-obsession, export competitiveness, and genuine value creation.
Conversely, a select group of Australian companies have significantly outperformed gold. These standout performers share these common traits that are not common in the Aussie businesses that have failed to keep up with gold; these successful business shared: substantial investment in R&D, long-term strategic planning, customer-obsession and aggressive global export focus.
Let’s start with some of the obvious ones: Australia’s startup unicorns. From Canva to Atlassian, Airwallex, Culture Amp, SafetyCulture, and others – they share a common DNA: they are product-led, globally ambitious, and culturally distinct. They prioritise long-term value creation over short-term gains, focusing on technology, innovation, customer-centricity, and scalable business models.
These companies are founded by visionary leaders who combine technical expertise with a deep understanding of customer needs. Atlassian’s Mike Cannon-Brookes and Scott Farquhar bootstrapped their company with a $10,000 credit card debt, focusing on building quality software that addressed real-world problems. Similarly, Canva’s Melanie Perkins identified a gap in the design market and created an intuitive platform that democratised graphic design.
A key trait among these companies is their commitment to continuous innovation. They invest heavily in research and development, ensuring their products evolve with changing market demands. Atlassian, for instance, has consistently reinvested profits into product development, leading to a suite of tools widely adopted by teams worldwide. Canva has expanded its offerings to include video editing, website design, and AI-powered tools, maintaining its relevance in a competitive market.
These companies also cultivate strong organisational cultures that emphasise autonomy, collaboration, and purpose. Canva, for example, offers employees opportunities to engage in social impact initiatives, aligning work with personal values. Atlassian promotes a culture of openness and continuous learning, encouraging employees to contribute ideas and challenge the status quo.
Moreover, these firms understand the importance of global scalability. They design products with international markets in mind, ensuring adaptability across different regions and cultures. This global mindset is evident in their rapid international expansion and diverse customer bases.
In essence, Australia’s leading tech companies succeed by combining visionary leadership, relentless innovation, strong organisational culture, and a global outlook. They serve as models for how Australian businesses can achieve sustained growth and international success.
There are some other non-startup business that have shown a similar mentality – CSL Limited, for example, has delivered an impressive annual TSR of around 15% over the past decade, consistently reinvesting over $1 billion annually into research and development (R&D). Cochlear and ResMed have also surpassed gold’s performance, with annual TSRs averaging approximately 12% and 13%, respectively, driven by robust innovation pipelines and proactive global market expansion. Many privately listed companies and startups that share the same focus on innovation, customer-obsession, export competitiveness and long-term strategic planning have been remarkably successful as a result. It is done. It can be done. However in Australia it’s rarely done.
How does this affect Australians?
This corporate stagnation directly affects living standards. Australian living standards have stagnated over the past decade. Temporary COVID-19 stimulus created a brief artificial peak, but real wages and household purchasing power have since fallen approximately 9.9%. Productivity growth – a crucial driver of improved living standards – has averaged just 1.2% annually since 2010, below the OECD average of 1.8%. Without productivity improvements, Australians face stagnant wages, diminished purchasing power, higher living costs, lower job security, and reduced access to quality healthcare, education, and infrastructure. And despite our many trillions of dollars in superannuation money, major funds are now boosting their overseas investment teams in cities such as New York, London, Singapore and Dubai, seeking better investment returns outside of Australia. We can infer from this that Australia is “fully priced”, and that there are very few great investment options left here. This signal is dangerous and in the long term, extremely destructive to Australia’s prospects.
Government: Part of the problem.
Australia has failed to use good times to mask the pain of hard decisions. Increased government size, spending and Government debt (at Commonwealth, State, and Local Government levels) over the past two decades reflects a directionless, meandering, outdated, bureaucratic, short-term approach to policy rather than creating a lean, innovative platform for sustained productivity. Rather than facilitating success through essential infrastructure, education, and innovation, Australian governments increasingly encroach into sectors better served by private initiative. This inefficiency diverts resources from productive investment, stifles creativity and innovation, and limits Australians’ ability to thrive in a rapidly evolving global economy.
Moreover, this growing tax burden acts as a disincentive to endeavour, risk-taking, small business creation, and investment. As taxes rise, entrepreneurs and investors face diminished returns for their efforts, discouraging them from starting businesses, exploring new ideas, or expanding existing enterprises. High taxation penalises innovation and risk-taking, precisely the qualities most needed for economic revitalisation and global competitiveness. Small businesses, often the engines of innovation, local communities and job creation, become less viable and struggle under excessive financial pressures, hampering the nation’s entrepreneurial spirit. To genuinely encourage and reward enterprise, investment, and innovation, radical reform is necessary to transform governments into smaller, smarter entities that tax less, and empower private enterprise more – leading to genuine economic success.
Why are we here?
We are here because Australia urgently needs to confront its economic stagnation and deep-seated complacency. The current trajectory threatens long-term prosperity, resilience, and quality of life – Australia’s only true and enduring asset outside of our natural resources. This examination aims to propose actionable reforms to foster innovation, productive investment, and systemic structural change in both corporate and governmental sectors. Transitioning from reliance on natural resources and housing investments to proactive cultivation of globally competitive industries is essential to securing a prosperous economic future for all Australians.
Where could we be?
While the “American idea” is a powerful, symbolic, and practical touchstone that has driven remarkable and enduring success, igniting generations of dreamers and innovators over more than two centuries, Australia has yet to crystallise such a compelling vision. Australia stands at the edge of possibility, yet without a shared narrative; a unifying story that calls forth our collective ambition and imagination. Australia needs a cultural idealism that not only inspires but also empowers its people to dream boldly, act decisively, and pursue excellence relentlessly. Only then can we transform our abundant potential into sustainable prosperity, positioning our nation not just as the fortunate inheritor of abundant resources, but as a dynamic, forward-looking launchpad of innovation and global competitiveness.
Imagine an Australia no longer defined by passive reliance on natural resources and speculative property investment but celebrated for its vibrant, diversified economy driven by innovation, creativity, and global competitiveness. Envision a country where strategic investment in education, research, and infrastructure empowers Australians to innovate, create, and compete on the world stage. This future Australia could boast world-leading industries in fintech, biotech, medtech, robotics, agtech, energy technology, AI and services, built on a strong foundation of entrepreneurship, risk-taking, and long-term strategic vision. By fostering this economic transformation, Australia can achieve sustainable prosperity, ensuring enhanced living standards and opportunities for all its citizens.
What are the ideas that will drive a complete, bold shift in Australia?
To shift from reliance on homes and holes to a vibrant, diversified economy driven by innovation, Australia must embrace ambitious, courageous, and transformative ideas. Incremental tweaks are insufficient. Australia needs decisive reforms – ideas that will shock the system awake, fundamentally alter incentives, and unleash entrepreneurial dynamism.
1. Radical Tax Reform: An Even Playing Field for All Investments
Establish a genuinely neutral tax environment that does not disproportionately favour residential property speculation over productive business and innovation investments. Ensure a consistent approach to debt – whether negative gearing on property or any other form of investment, and significantly reduce or remove the capital gains tax discount for residential properties. Shift incentives to reward active, productive investment:
• Radically lower capital gains taxes (to zero after 5 years) for investments in innovative startups, scale-ups, and high-growth industries.
• Introduce tax credits and venture-style deductions for private investment in early-stage companies and R&D-intensive sectors.
This reform directly leverages market discipline, ensuring capital naturally flows towards productive, entrepreneurial endeavours rather than speculative property.
2. Unlock Superannuation Capital for Market-Driven Innovation
Liberate Australia’s $3.5 trillion superannuation pool by removing regulatory barriers and fiduciary confusion that currently constrain super funds from investing in early-stage innovation. Rather than mandating allocations, clarify fiduciary duties explicitly to encourage – but not force – allocation of funds to startups, innovative SMEs, and venture capital. Encourage transparent, voluntary commitments by funds to invest 5-10% into productive, innovative Australian enterprises.
3. Private Sector-Driven Innovation Bonds
Introduce tax-advantaged Innovation Bonds issued by private institutions (banks, insurers, investment firms), explicitly targeting funding for innovation, export-minded and high-growth industries/firms. Offer tax-free interest and preferential capital gains tax treatment to incentivise private investors. Ensure zero direct taxpayer liability or government risk, preserving free-market allocation of resources.
4. Expand Patent Box and Intellectual Property Incentives
Significantly broaden the Australian Patent Box system across sectors including biotech, clean tech, AI, advanced manufacturing, and agri-tech. Offer drastically reduced corporate tax rates (eg, 10%) for revenues generated from Australian-registered intellectual property. This strongly incentivises private firms to commercialise R&D domestically, free from taxpayer-funded handouts.
5. Regulatory Fast-Track and Market Entry Liberalisation
Streamline regulations through a market-friendly “Fast-Track” scheme for highly innovative, globally competitive businesses. Radically simplify approval processes, reducing barriers to market entry, especially in emerging high-value industries like fintech, renewable energy, digital health, and advanced manufacturing.
Additionally, systematically remove competition-limiting regulatory barriers, fostering genuine competitive dynamism. Adopt New Zealand-style deregulation principles to increase market-driven innovation and consumer benefit.
6. Enhanced Depreciation for Productive Innovation
Introduce accelerated depreciation schedules for productivity-enhancing technology, infrastructure, and manufacturing equipment investments. Provide clear, substantial tax incentives enabling firms to rapidly recoup investments, thereby driving capital expenditure, productivity, and global competitiveness without direct taxpayer funding.
7. Innovation Visas and Talent Attraction
Implement market-driven innovation visas offering streamlined, transparent entry for global talent – entrepreneurs, researchers, investors, and skilled specialists. Pair visas with market-based incentives, including a multi-year income tax holiday on earnings from Australian-based innovative startups or technology ventures. This will attract international innovators without direct taxpayer outlays.
8. Investor-Driven Innovation Ratings (Transparency and Market Discipline)
Establish investor-led innovation ratings akin to ESG ratings, transparently benchmarking Australian businesses on innovation investment, global market performance, and R&D outcomes. This market-driven transparency incentivises companies to self-direct capital into genuine, long-term innovation to attract investor capital.
9. “SuperSmart” Programme for Education (Individual Empowerment, Minimal Government Role)
Radically restructure higher education financing by allowing Australians to directly fund their lifelong education and skills development through their own superannuation savings. Under this model, individuals could draw down their own super balances to pay for vocational or tertiary education, with repayments automatically redirected to replenish their super accounts when they begin working.
This removes government from directly funding education demand, allows market forces and individual choice to determine educational outcomes, and incentivises institutions to compete vigorously for empowered, discerning students.
Best practice example: Singapore’s SkillsFuture Credit and France’s Personal Training Accounts, both enabling individuals to fund lifelong education.
10. Free-Market-Driven Special Economic Innovation Zones
Launch Special Economic Innovation Zones (SEIZ) around Australia focused on high-potential sectors. Within SEIZs:
• Remove unnecessary regulatory restrictions and red tape.
• Introduce minimal or zero taxation on productive investments and profits generated from innovative activity.
• Allow full, open-market competition within these zones, ensuring the government provides infrastructure but does not direct market outcomes.
These zones would rapidly spur private investment, talent inflow, entrepreneurship, and global competitiveness in target sectors.
11. Comprehensive Corporate Governance Reform
Australian Boards are, by and large, populated with administrators, not builders. Risk managers and bean counters, rather than people who can grow businesses by creating value.
Reshape corporate governance to align board incentives explicitly with long-term innovation, global competitiveness, and strategic business outcomes – not short-term dividend maximisation. Appoint directors based on proven innovation leadership, entrepreneurial success, global experience, and customer-focused transformation skills, driving free-market-driven value creation.
12. Aggressive Free-Trade and Export Competitiveness
Pursue aggressive free-trade policies and streamline export regulations, eliminating unnecessary trade barriers and tariffs. Shift economic diplomacy to prioritise global technology markets, knowledge-intensive services, high-value agriculture, and advanced manufacturing – sectors that inherently encourage market-driven innovation through genuine international competition.
13. Cultural Shift Towards Entrepreneurial Idealism
Drive a market-oriented cultural transformation through privately funded innovation campaigns, entrepreneurial education programmes, and private-sector role models celebrating innovation and risk-taking. Encourage successful Australian entrepreneurs and private companies to lead these efforts, fostering a powerful cultural narrative around entrepreneurship, innovation, risk, and productive business success.
14. Government – Part of the Solution: Less, But Better
Australia urgently requires smaller, more effective governments that act decisively where it matters most, stepping back in areas better managed by innovative private enterprise. The guiding principle should not be the scale of government involvement, but the customer-obsession, focus, quality and impact of that involvement. LaunchVic, Victoria’s state startup agency, offers a compelling blueprint for how this can work brilliantly.
Since its establishment in 2016, LaunchVic has transformed Victoria’s startup ecosystem. Rather than using billions of taxpayers funds, spreading resources thinly across numerous low-impact programmes, LaunchVic has operated with very modest Government support, strategically targeting initiatives proven to foster entrepreneurial growth.
Lean, High-Impact Programmes
LaunchVic’s targeted, lean initiatives provide a model of limited yet highly effective public-sector support:
• 30×30 Initiative: Identifies, nurtures, and accelerates the growth of Victorian scale-ups, creating 30 globally competitive scale-ups by 2030. It directly responds to the proven market gap of limited long-term strategy and executive management expertise of startup founders.
• VC Catalyst: An investor education programme designed to build a sizeable, knowledgeable, risk-tolerant early-stage investor community. This helps overcome investor risk aversion and builds market capability with next to no government interference.
• Alice Anderson/Hugh Victor McKay Fund: Modest sidecar funds strategically matching private investments into female-founded startups/regional technology. Rather than distorting markets, it corrects a clear market inefficiency (underinvestment in female entrepreneurs and those in the country/agritech), amplifying private capital deployment rather than substituting it.
• CiVic Labs: Targeted, agile support for local innovation within Government and community needs, leveraging market-led innovation rather than government-led decision-making.
These initiatives cost taxpayers only a small fraction of typical government programmes but yield exponentially higher returns in ecosystem value, private capital mobilisation, job creation, and global competitiveness. In less than a decade, LaunchVic has propelled Victoria’s startup ecosystem from approximately $5.6 billion in value in 2016 to >$129 billion in 2025, demonstrating an extraordinary multiplier effect.
Scaling the LaunchVic Approach Nationally
The incredible success of LaunchVic illustrates precisely how limited government intervention can achieve substantial economic outcomes. This approach could and should be systematically scaled and replicated across Australian states, territories, and federally:
• State-Level Scaling: Each state could replicate LaunchVic’s lean governance model, laser-focusing resources strictly on interventions that demonstrably address local market failures—such as investor education, startup mentoring, strategic market connections, and facilitating early-stage capital formation.
• Federal Coordination, Not Control: At a national level, a streamlined federal innovation agency could replicate LaunchVic’s principles—limited direct investment, clear targeting of genuine market gaps, measurable outcomes, and leveraged private expertise. It would facilitate national coordination without supplanting private-sector decision-making.
• Global Leverage: Australia can use this lean, market-sympathetic model to form strategic partnerships globally—connecting Australian startups and scale-ups with global capital, expertise, and markets. Such diplomatic and commercial partnerships would amplify Australia’s global innovation presence without distortionary public funding.
Principles That Define the LaunchVic Model
LaunchVic’s market-aligned approach can be distilled into clear principles:
• Lean and Strategic: Minimal but precisely targeted funding that amplifies rather than replaces private investment.
• Market-Sympathetic: Clear identification and correction of genuine market failures (such as risk aversion or limited startup capital) without crowding out private-sector activity.
• Multiplier Effect: Government intervention explicitly designed as a catalyst to leverage substantially larger private-sector investment.
• Outcome-Focused: Rigorous metrics and transparent accountability for every initiative, ensuring tangible economic results rather than just activity.
The LaunchVic Blueprint: Less Government, Greater Impact
Australia must embrace this “less but better” philosophy: smaller, disciplined, strategically targeted government initiatives that align with free-market principles. By leveraging rather than distorting private investment, fostering genuine competitive market dynamism, and addressing clearly identified market failures, LaunchVic offers not only proof of concept but a compelling path forward.
This model fundamentally respects market disciplines, clearly delineates government’s role, and maximises taxpayers’ returns. By following LaunchVic’s lead, Australia can create a truly entrepreneurial, competitive, and innovative economy—powered by private initiative, guided by limited, effective government intervention, and sustained by vibrant, globally competitive enterprises.
15. Education Revolution: Cultivating a Market-Driven Innovation Workforce
Australia’s education system is one of the most powerful levers we have to drive economic transformation. Currently, the system overly emphasises volume of graduates, government-driven demand funding, and standardised testing rather than genuine market needs, entrepreneurial mindsets, and innovation skills. To fully realise Australia’s potential, we must radically reshape our education frameworks—both at secondary and tertiary levels—to cultivate the skills, mentality, and global competitiveness demanded by a dynamic, innovation-driven economy.
16. Market-Driven Funding: Shift from Funding Demand to Enhancing Suppl
Stop government funding based purely on student numbers and enrolment quotas (demand-side funding), as this incentivises quantity rather than quality. Instead, transition toward funding educational providers based strictly on measurable outcomes: graduate employability, genuine innovation capabilities, entrepreneurship, global relevance, and market responsiveness.
Encourage genuine competition between educational institutions, fostering innovation and efficiency. Redirect funding away from poorly performing institutions, incentivising high performance through clear market signals and accountability.
Best practice example: Singapore’s SkillsFuture and Switzerland’s vocational training model, both of which incentivise institutions through market-responsive funding tied directly to graduate outcomes.
17. Compulsory Innovation and Entrepreneurship Curriculum
Make innovation, entrepreneurship, and critical commercial skills mandatory throughout secondary school and foundational at tertiary levels, alongside traditional literacy and numeracy. Students would learn fundamental business, financial literacy, product development, customer obsession, risk-taking, and commercialisation skills, directly applicable to the innovation-driven economy.
Promote entrepreneurial mindsets, teaching students not merely how to become employees but how to become creators of jobs and ideas. Equip students to navigate global markets, encouraging a genuine global perspective in curriculum design.
Best practice example: Estonia’s “Entrepreneurship Education Programme” which integrates entrepreneurship at all levels of schooling.
18. Expanded Vocational Training and Industry Partnership
Radically expand vocational and technical education, closely partnering industry with secondary and tertiary institutions. Move away from universities acting as isolated silos of academic knowledge and towards vibrant ecosystems closely integrated with industry, startups, and market needs.
Encourage private-sector and industry-led apprenticeship programmes—offering significant tax advantages or incentives to businesses and institutions creating high-quality training, employment, and commercialisation pathways for students.
Best practice example: Germany’s dual education system, linking practical industry apprenticeships directly to education.
19. Market-Aligned University Commercialisation Incentive
Transform how universities are incentivised to commercialise their research, aligning incentives explicitly with successful commercial outcomes and global market relevance. Transition universities from passive patent-holders to active co-creators of startups and spin-outs, incentivised by clear financial participation in commercial outcomes.
Provide clear tax incentives and IP reforms to encourage private sector-university collaboration, significantly increasing the translation of academic research into commercially viable global products and services. Create a franchise model for University commercialisation – maybe three privates company that have the licensing rights to exploit all University IP.
Best practice example: Stanford University and Israel’s Technion Institute, both global leaders in market-driven commercialisation.
20. Global Education Mindset and International Connectivit
Reorient the tertiary education system towards global relevance, ensuring every graduate emerges with strong international awareness, language skills, and cross-cultural competencies necessary for global competitiveness. Make international experience—study exchanges, international internships, and global commercial experience—accessible and strongly incentivised.
This global mindset would prepare Australian graduates not just to participate locally, but to compete successfully in the highly competitive global innovation economy.
Best practice example: Denmark’s and Sweden’s higher education systems, both consistently ranked highest for global connectivity and workforce competitiveness.
21. Transparent Market Rankings for Educational Institution
Create transparent, market-driven rankings for Australian educational institutions based explicitly on innovation capabilities, employability outcomes, entrepreneurial culture, and global relevance. These rankings would act as clear market signals, incentivising institutions towards continuous improvement, innovation alignment, and responsiveness to economic realities.
Institutions that consistently fail to meet high standards would naturally lose enrolments and funding, creating market discipline rather than bureaucratic oversight.
22. Building Entrepreneurial Skills, Ambition and Incentive Pathway
Australia urgently needs a cultural shift from risk-aversion towards entrepreneurial aspiration from top to bottom – starting in schools and extending into career options. Currently, only about one in ten Australian schools offer entrepreneurial education, compared to global leaders like Finland and Israel, where startup culture thrives. Entrepreneurial learning should become standard at every educational level, instilling creativity, problem-solving, and resilience in students.
Further, when they leave school, the idea that people have a primary role and a “side hustle” is growing, but not commonplace. Part of the issue here is education and providing pathways – another is ensuring the tax system rewards and encourages mixed-income earnings, and years of rollercoaster-like profits and losses; multi-year income blending might work here, as could income splitting between couples who might be “breadwinner + startup founder”.
Income sprinkling, income splitting, and labour vs capital income taxation (from income derived from startups or innovative companies) might be an elegant approach to ensuring incentivisation.
A more tax-effective ability for employers to effectively reward staff with tax-friendly equity programs requires further enhancements.
And liquidity events might be taxed less if those receipts are invested back into the “startup flywheel”.
And how might founders and investors be incentivised to be “smart money”? Private enterprise must take a leading role, providing practical mentoring, venture funding, and incubation programs. Silicon Valley and Israel demonstrate that successful entrepreneurs mentoring new founders create a powerful cycle of innovation.
- Strategic Leadership & Bold Governance Reform
Australian corporate strategy suffers from chronic short-termism and a narrow domestic focus, limiting competitiveness and innovation. To reverse this, ASX-listed companies should be required to publish detailed long-term innovation strategies – explicitly outlining plans for R&D investment, global market growth, and future capability building in areas such as technology-driven productivity. Public transparency and investor scrutiny of these strategies would shift accountability towards sustained value creation, enabling investors to better reward businesses genuinely committed to innovation.
Further, governance frameworks and executive remuneration must be restructured to incentivise long-term strategic outcomes rather than quarterly results. Penalising excessive short-termism – through regulatory measures or investor-led initiatives – would redirect boardroom priorities from dividend maximisation to enduring enterprise value. Successful global companies (Japan is the benchmark here) already thrive by aligning incentives to strategic horizons spanning multiple markets and years; Australia must urgently adopt a similar mindset.
- Sophisticated Investor Test should become a “Smarts Test”.
Recognise education, skill and experience in defining the Sophisticated Investor Test, rather than a financial threshold. Set a simple standard such as education attainment using a points system and/or accreditation via a test. This would open up opportunities for more “families and friends” to help get seed capital.
- Cheaper, more plentiful energy is at the heart of compute.
Artificial intelligence (AI) is poised to redefine global economic competitiveness and innovation, with compute power at its core. However, compute is fundamentally constrained by energy availability and cost. The International Energy Agency projects that global electricity demand from data centres will more than double by 2030, driven primarily by AI applications. In the U.S., AI data centres could consume more electricity than traditional heavy industries like steel and cement manufacturing.
To position Australia as a leader in AI, we must ensure an abundant supply of affordable, reliable, and low-emission electricity. Therefore, investing in a diversified energy portfolio including renewables, energy storage, and nuclear – will be crucial. It’s utterly ridiculous that Governments of all persuasions have politicised energy generation assets. This must stop; Governments must set clear, consistent and reliable energy policy that is generation-neutral, and allow the market to decide the generation assets that will best fulfil the need. Nuclear must be part of that mix.
By driving down electricity costs, Australia can attract energy-intensive industries and become a global hub for AI development. This strategic focus on energy infrastructure will not only support technological advancement but also bolster economic growth and resilience.
Conclusion:
Australia stands at a decisive moment. We can continue drifting towards ever-declining mediocrity – sustained by property booms, immigration-driven growth, and mineral exports – or seize this opportunity to ignite a dynamic culture of innovation, entrepreneurship, and global competitiveness. This submission outlines bold reforms: reshaping incentives through radical tax reform, unlocking superannuation capital, empowering private-sector innovation, and radically transforming education and corporate governance. These strategies are not aspirational but essential. The evidence is clear: nations prosper not by luck but by purposeful strategy, courage, and investment in ideas. It is time to choose ambition over complacency, productivity over passivity, and ingenuity over inertia. The Lucky Country must become the Smart Country – and the moment to act is now.
I thank the Commonwealth Government and this Committee for considering this submission and welcome further discussions and ideas. I wish you well in forging a new future for Australia.
Regards,
Constantine Frantzeskos
11 April, 2025.
