“An absolute national imperative”:
Matt Barrie’s epic rant on Australia’s IT investment



news Freelancer.com chief executive Matt Barrie has published an impassioned article on his LinkedIn profile strongly heavily criticising the Government for its underinvestment in the technology sector, which he said had led to a situation where Australia is devoid of good IT talent and “missing out” on the ongoing industry revolution.

In his piece, which can be found in full here, Barrie started out by pointing out that globally, it was technology companies which were driving much of the growth in the international economy, with companies such as Apple, Microsoft, Google and IBM ranking in the top ten companies globally by market capitalisation, and the top 150 companies in Silicon Valley, generating some $620 billion dollars in sales, employing some 1.2 million people and pulling in over $100 billion in profit.


“They are creating this wealth faster and faster; it took Apple about eight years to reach $1 billion in revenue. It took Google 5 years. Today, companies like Groupon and Zynga are doing it in 2.5 to 3 years,” wrote Barrie. “Why? Today there are two billion people on the Internet. That means two billion potential customers. Businesses selling through websites or mobile apps have the ability to reach those customers instantly.”

Citing statistics from US university Harvard, Barrie noted that almost 100 percent of job creation in the past thirty years had come from startups, with “virtually zero” job creation coming from established industries that attract government grants — such as the automotive industry in Australia and in the US.

“Of course, startups are also the great disruptors, being responsible for 70% of job destruction as inefficient industries are reshaped,” Barrie added. “But it’s job destruction in a good way and job destruction that is as inevitable as the invention of the fridge made door to door ice sellers obsolete. The great challenge for countries is to quickly educate and retrain this unlocked labour force into the newer, higher wage paying, more productive jobs and opportunities being created by this disruption.”

In this context, Barrie said, Australia desperately needed to focus on the technology sector, as with our small population of 22 million and labour force of 12 million, there was no other industry that could deliver long-term productivity and wealth multipliers. At the moment, however, he said, the nation was stuck “in the stone age”; focusing on digging up “the byproducts of dead fossils” (mining resources) and “stuff we grow” (agriculture), as well as normal services, which actually made up most of the nation’s economy.

“When global economic growth falters, the wealth from these industries will be destroyed as fast as it was created; it’s the nature of the commodities cycle,” Barrie said. “When you dig stuff out of the ground, costing 90 cents, and you sell it for a dollar, you make 10 cents profit. If the price of that commodity doubles, suddenly you’re making $1.10 (11x). Profits explode. They also implode just as fast when the cycle inevitably falls. It’s all very primitive, if you think about it.”

Barrie’s view is that globally, the world is in the middle of a “technology gold rush”. However, he said, Australia was “missing out” and was suffering “an absolute crisis”, due to the rapidly falling numbers of enrolments by Australian students in IT courses.

“Our technology industry is desperately trying to hire educated technologists,” wrote Barrie. “Desperately. At my company, Freelancer.com, we’ll hire as many good software developers as we can get. We’re lucky to get one applicant per day. On the contrary, when I put up a job for an Office Manager, I got 350 applicants in 2 days. Mike Cannon-Brookes, the Chief Executive of Atlassian, one of Australia’s great success stories, told me the other day that he is trying to figure out where he will hire his next 400 software developers from. He lamented that he would love to do this here in Australia but it’s impossible because we simply don’t have enough good graduates. I face the same problem- while we’re half the headcount of Atlassian globally, we’ve just signed a lease on a second office here in Sydney. I can’t find the people to fill it quickly.”

Despite this, he said, Australia’s schools were focusing on other areas — lumping in “a couple of horrendous subjects about technology with woodwork and home economics”. “Meanwhile, in Estonia, 100% of publicly educated students will learn how to code starting at age 7 or 8 in first grade, and continue all the way to age 16 in their final year of school,” he wrote.

Barrie reserved a particularly scornful set of comments for the Federal Government’s recent moves in the 457 Visa space, where it has sought to crack down on the numbers of those migrating to Australia to take up technology-related roles.

“… you wouldn’t believe what our Prime Minister said. Julia Gillard proclaimed this morning that the IT industry was “rorting” the 457 visa and that she would restrict the number of workers a business can sponsor and make it generally more difficult to hire foreigners. Is she a raving lunatic?!?!” asked Barrie.

“Such desperate vote-mongering shows no understanding of how the Australian IT industry is forced to function today. Here’s one statistic to consider: of the 12,000 IT graduates each year in Australia, 8,000 are overseas students. Yes- two thirds of the graduates in IT are foreign. Our entire industry is powered on skilled foreign IT workers. It says something when 19% of Atlassian’s 320 Sydney based staff are on 457 visas. This the flagship global technology company of Australia.”

Likewise, Barrie said Australia’s venture capital industry for early stage startups had also been undercut by the Government.

“The venture capital industry has been choked by a horrible tax landscape, both for investors and for entrepreneurs,” he wrote. “There is plenty of money available in funds (super funds, mutual funds, overseas investments funds) looking for good investments. The need isn’t for government handouts but for an accommodating investment environment. Australian companies that look to incentivise their employees with a share in the company (not unreasonable in startup environments where the first few employees are taking large risks themselves) pay ridiculous rates of tax before they ever have made any money.”

The news comes as Barrie and other similar IT entrepreneurs have pooled together a number of their resources to start an organisation named ‘Startup Australia’, which has the aim of fixing some of the problems the Freelancer chief executive described in his article.

There are dozens of comments underneath Barrie’s article from notable figures in Australia’s IT industry strongly supporting his views.

I couldn’t agree with Barrie more. It’s been a common refrain from politicians in Australia for decades that the country needs to move away from focusing on obvious advantages in mining and agriculture and move to a more knowledge and technology-based economy. However, when it comes to the punch, very few politicians are willing to put their effort where their mouth is and focus on the technology sector as an opportunity.

What would it take to fix the issues which Barrie is describing? Well, it’s very simple. Firstly, the government needs to set up a very favourable tax environment for early stage technology startups, as well as angel investors and venture capitalists. This would cost it almost nothing — and no doubt it would be repaid down the track as some of the startups grew rapidly and started paying real grown-up person tax.

Secondly, we need to build the National Broadband Network to get this kind of fundamental underlying infrastructure in place to support the technology sector. We’re already seeing in fibre-rich locations such as Kansas City in the US, where Google has rolled out fibre-optic cable to many neighbourhoods, that this kind of infrastructure deployment rapidly attracts early stage technology companies.

Thirdly, we need to address the skills problem. Open up Australia’s migration to more foreign technology skillsets, incentivising those with the top-rank skills to settle here, and give tax incentives to existing medium to large corporations in Australia to develop their employees’ skills bases. Radically overhaul the technology curriculum in high schools and make it a close to compulsory part of university education as well.

Of course, I highly doubt that any Federal Government in Australia is going to follow this path, or at least not yet. Why? Because politicians for the main part are relatively old — their day came about before much of today’s technology was mainstream — and they are also by nature generalists, without a specific interest in the technology sector. This will change eventually, as younger and more forward-thinking politicians such as Stephen Conroy, Scott Ludlam, Kate Lundy and others become more the norm and enter the highest echelons of government. But it won’t change just yet.

It’s a pity; because if we follow the path Barrie and others behind Startup Australia are advocating, we would take a giant step forward as a nation. Let’s hope those in power are listening.

Image credit: Freelancer.com


  1. “heavily criticising the Government for its ..” – Barry
    “I’s been a common refrain from politicians in Australia for decades that the country needs to” – Renai

    Renai, not sure how far you go back, but pretty much every government since the mid 80’s has tried and failed to improve Australias IT industry, failing hardest in promoting a hardware industry.

    “Australia is devoid of good IT talent and “missing out” on the ongoing industry revolution.” – Barry
    He could have said that in 1960 when the government told CSIRO to stop researchign these computer thingys and do something more practical like cloud seeding.

    Its pure goverment bashing to hold this government to a higher standard than others have a achieved, or is simply not realistically achievable.

    • This argument really only holds water if it’s not being done elsewhere. But it is. So it’s possible.

      So why don’t we do it better?

    • “pretty much every government since the mid 80′s has tried and failed to improve Australias IT industry”.

      The perfect response. Been there and seen the big announcements. Each government layer tossing around tens of millions dollars and getting plenty of publictity. Then latter nothing – well a few token examples bought out for photo opportunities with the ministers but even these shining light businesses disappear off the map once the funding is reduced or removed. Worse still, I have watched as countless such incentive schemes have ended up being just a conduit of tax payer money into international companies with elaborate “research” facilities.

      We need to get rid of this mindset that Governments can fix all problems. Governments throwing money at such industries rarely solve any problem they think it will. These startup businesses receiving such funding will just develop a Keynesean dependency on this money. Rather than the funding going towards expanding markets, product, and the like it usually devolves into an income stream to keep the operation afloat. They will fold the moment that money is reduced or withdrawn.

      • The issue with such sweeping generalization is that its based on a flawed program that caters to such a generalization.

        What if the funding/grants weren’t corporate, if you gave individuals who completed the application process, or whatever bureaucratic hoop jumping was chosen, a 6 month equivalent of their previous salary, 6 months to try to make their entire life about the project of choice, with no additional funding. Not talking about dole work here, i mean creative and talented people applying to a competitive pool that like Commercialization Australia selects applicants with valid ideas considered worth pursuing. If they waste the opportunity they are never eligible again, if they succeed, there’s a new startup and job growth to be had.

        How do you tar that kind of approach with the idea that companies would be lazy using the money as ‘easy profit’ ? I don’t see how an innovative program design couldn’t avoid such problems, why knock down the idea without exploring how to do it right.

        • “What if the funding/grants weren’t corporate”

          Most enterprises fail due to lack of business skills not lack of ideas. That is why government and investor funding is biased towards incorporated entities with a focus on the likelihood of the enterprise surviving fiscally. Along with that the IP has to be owned by the entity and assignable – should the worse come about.

          “why knock down the idea without exploring how to do it right”

          It is being a realists and using history. The realty is it HAS been tried before in many variations and with both left and right leaning governments. Everyone has good ideas. Everyone would love to given money with no committments to be innovative. But how does it achieve its goal. How, for instance, would you select the beneficiaries? A committee, a star chamber, a minister? You will get applications from someone who thinks carving a tin can into a chair is the “next big thing” to another who has redefined how object databases should work. If the selection panel are stacked with artists then the bloke with the tin can gets the money. I’m joking but this is the realty and it has been tried before. Many, many, many times. Not just in Australia but around the world.

          But we have seen innovation work and in the IT setting. You have to look at the US for that though. Look at the former startups from the 80s through to the 2000s that now run the world and employ a lot of people. How many incubator, mentoring, and indeed government funds were central to them getting to this position? This is the disconnect. Under what you advocate these companies just couldn’t have achieved what they did unless they had lots of government funding. But they did achieve and it was done through there own endeavours! Back in Australia (and a lot of other Western World countries) we’ve seen the various local governments funding innovation schemes since the 80s whenever the appropriate Tech minister has had a dream (or probably thinks it sounds progessive for the electorate). There are few examples where that has worked?

  2. While the current Govt hasn’t helped (what the heck was that whole 457 thing about, other than being a dog whistle??), any industry who struggles to attract staff really needs to take a look at what they are doing to improve the situation, and how they have gotten there in the first place.

    Now, I am not going to say the below points are all valid, but I think they are a fairly common perception:

    -IT staff are highly casualised on contracts and get laid off once a project is finished/lost
    -Lots of IT jobs are getting offshored
    -IT is for geeks
    -IT is for males
    -IT companies are downsizing (it seems that every second week there is an announcement about one of the telcos shedding hundreds, sometimes thousands of staff).

    Unfortunately a lot of behaviour from both corporations and individuals I think reinforces the above.

  3. If things are this bad under our current government (and I don’t doubt one word of Matt’s piece) just think how bad they’ll be under a Coalition government who will discontinue the NBN and slash government expenditure across the board. The thought of the LNP putting a single dollar more into IT than they absolutely have to, is laughable.

  4. Simple and elegant design on the atmosphere, which I’ll put it for you a great deal of female emperors’calligraphy while using classic model, and is covered with most of water drilling associated with metal ribbonin, taken out on the noble elegance, exhibit different from other’s deckout makingof.

  5. On top of the things Douglas listed (which are all 100% true, at least in perception, by even a vast majority of Gen Y’s);

    “When global economic growth falters…”

    …Does he have no perception of what desperate is? When / if the economy is ACTUALLY in crisis, and the chips are REALLY down; the last thing anyone’s going to give a flying F$%k about is hiring Coders, IT Support and the like. Literally, I can’t think of anything that is a more disposable line of work, except maybe Art related positions.

    ” …the nation was stuck “in the stone age”; focusing on digging up “the byproducts of dead fossils” (mining resources) and “stuff we grow” (agriculture)”

    What a terrible situation. Real world skills, rather than luxury 1st World Skills in the computing space. The US financial crisis was happened 5 years ago, and it’s up in the air about what will happen in the next year or so, due to their crazy debt. What lessons have we learned from this? 47 million people on food-stamps currently…!? They thought it wouldn’t happen too. I’m hearing news stories from the US all the time these days about their high skill graduates with non-essential expertise; and they’re currently waiting tables, paying of an education debt that’s got them nowhere. They’ll be working for most of their youth to break even at this rate.

    Personally I think in such a situation the transition from a hard labor job like mining, and agriculture particularly, to supporting yourself when you don’t know where your next meal is coming from, is going to be a lot easier than coming from an office job.

    Maybe I’m just a bit alternative, but I am a Gen Y working IT support; and I think the collapse was a wake up call and I know some of my friends in my age-group feel the same. We’ve been working to get real world skills that people actually NEED. There is a reliance on the economy to provide luxury jobs like IT for Australians, but much like the US we’re at the whim of morally bankrupt people at the top of the investment chain to keep such opportunities open, and that’s not in our worldview of living free.

    …I may have gone off topic here; but I think generally all the above is seen as discouragement to getting into IT.

  6. How the hell are people going to go into IT when so many companies are offshoring their IT? I’m not talking about call centre help desk stuff, but software development and even business analysis. Before it went “agile”, our company was in deep with InfoSys and Accenture, and now we also have Thoughtworks, who have a branch in China.

  7. “Our technology industry is desperately trying to hire educated technologists,” wrote Barrie. “Desperately. At my company, Freelancer.com, we’ll hire as many good software developers as we can get. We’re lucky to get one applicant per day.”

    I dunno. I joined Freelancer.com about a year back and did a bunch of searches on their site for stuff that I can do: Java, C, C++, perl, IP networking… you know the schtick. What I found was a number of things:

    * The hourly rates for most of the going jobs aren’t that good by Australian standards, so it was more attractive for me to search elsewhere.

    * The payment options are not convenient for Australians, you end up needing to register with a US bank (or worse, with PayPal) and they want a bunch of very personal information (which you have no control over once it goes offshore) and the are international transfer fees, and I don’t think it would be particularly difficult for him to get onside with at least one Australian bank (we are officially a first world nation you know). So the effective hourly rate is lower.

    * Some of the job offers just time-out and withdraw and if you happened to go to some effort to research a quote, then your effort is wasted, as a result the effective hourly rate (when factoring in prep-time, questions, etc) is even lower.

    * I never once saw freelancer themselves popping a message into the search results to say they are looking to hire. Maybe they are looking for something different, but at any rate “desperately trying to hire educated technologists” didn’t mesh with my experience.

    Mike Cannon-Brookes, the Chief Executive of Atlassian, one of Australia’s great success stories, told me the other day that he is trying to figure out where he will hire his next 400 software developers from. He lamented that he would love to do this here in Australia but it’s impossible because we simply don’t have enough good graduates.

    Well I’m responding to Delimiter quoting Matt Barrie who is paraphrasing Mike Cannon-Brookes, so possibly some of the message got a bit mixed up… but I recently applied to Atlassian as well. They have an online Java examination (very cute) where you have to solve some coding problems. I thought I solved all the problems, took me a bit longer than the recommended time but the specification was only a few paragraphs and they didn’t make clear if the recommended time was just a suggestion or a hard limit to I thought I would put a little bit of extra effort into polishing up and testing some of the code. They never told me if I got it right or wrong. As far as I know they never got back to me.

    I will say that iiNet and Telstra cooperatively bolloxed my Internet, email and VoIP phone for two weeks by cutting some copper cable and then being slow about fixing it (disclaimer: I don’t know who really cut the cable, I do know Telstra were working a lot in the area at the time and they regularly had pits open, that was their excuse for not fixing it, they were too busy). Maybe Atlassian sent me an email or something and it bounced. I dunno. The VoIP phone had a working answering machine on it (thanks to MyNetFone) so someone with the initiative required to start a successful business probably would also have the initiative required to leave a phone message, or show the initiative to re-send an email. Maybe I coded with the wrong Java indents… who knows?

    Don’t think I’m complaining for my own sake, I’m just setting the record straight here. I got a good job elsewhere… right now there certainly are IT opportunities in Australia, and the wages are pretty good all things considered. I’m doing OK, many people are worse off, and I’m not greedy for the very last dollar on a contract anyhow.

    Point is, these people call themselves “entrepreneurs” yet they demand the taxpayer subsidise their business. No it doesn’t work that way. The whole idea of an entrepreneur is someone who goes out and makes it happen, because they have an idea and the determination to carry it through.

    Here’s a very quick lesson in economics. You have this thing called supply and you have this thing called demand. Acting as a link between those two is a third thing called price.

    When demand is outstripping supply (as it was 20 years ago when I got into the game) the price goes up, when supply is outstripping demand, the price goes down. Right now, IT wages are under pressure from a lot of extra supply and prices are being pushed down. That’s not shocking, that’s just how any market works. When young people see high wages in one sector they are encouraged to study those subjects and move towards that, as wages rebalance, other sectors look attractive and people move to those instead. It is supposed to work that way.

    You guys want to get paid for your product right? Well I also want to get paid for mine. Sound like a deal?

    From personal experience, I don’t think these people are trying all that hard to find employees, but maybe their standards are just quite high (which is fair enough) if they have high standards they are going to have to spend more money. More money on wages, and more money on searching for employees. You want to buy caviar at the price of sausages? You want to buy platinum at the price of copper?

    The venture capital industry has been choked by a horrible tax landscape, both for investors and for entrepreneurs…

    Look buddy, you aren’t going to get a better “tax landscape” by demanding that government redirect scarce resources to help you run your business. High taxes are high because people insist the government solves all their problems for them. If you want low taxes, start manning up and solving your own problems. Train people, get to know people, offer bonuses, put the same energy into buying as you put into selling.

    Freelancer dot com should be in a singularly excellent position to hire from a totally global talent pool, in a way that just about no other company can do. If this guy wants to hire Estonians, or Indians or Madagascans or anyone else, I’m not standing in his way. I couldn’t stand in his way even if I wanted to, and anyway, I support open markets, I want him to be able to hire those people.

    If he still can’t find what he wants after all that, then why go crying and moaning to the Australian government? Of all places. Ask the Madagascans for a subsidy.

    As for the argument, there’s no talent out there that’s complete piffle.

    In the google AI “Ants” programming competition there were some stunningly good AI programs (all the games and lots of the code are online if you want to search it out, it was mind blowing). The top ranks were (by country): Germany, Ukraine, Spain, Denmark, Russia, Russia, USA, Canada, Canada, UK, USA, USA, Russia, Russia, Ukraine, Japan, USA, USA, Israel, Russia, China, Venezuela, Czech Republic, etc…

    The top Aussie entrants came: 32nd, 56th, 62nd, 111th, 113th, 123rd, etc…

    That’s not too bad for a big competition (over 8000 entrants) and a fully worldwide turnout. Of course I would like to see Australia do better, just like we could do better in the Cricket, the swimming, the Rugby, and what have you. All told we have nothing whatsoever to be ashamed of, and we certainly have no reason to go bending over for the amusement of Barrie or any other whinger.

    • I tend to think that Tel is on the money here. It’s all very well for Matt Barrie to go off on a rant about how awful the local environment is for entrepreneurs and startups, but it would be naive in the extreme to think that he wants to improve the situation out of the goodness of his own heart. His freelancer.com business aggressively seeks to lower the value of the very skills he claims it’s so hard to find, in the name of making him a profit.

      If Barrie is successful in ‘winning’ the race to the bottom for wages for skilled coders, then he’s simply creating or reinforcing a market pressure that will send students and re-trainers scurrying elsewhere for career-path options. In the meantime of course, he stands to make a crapload of money by both encouraging local businesses to outsource coding jobs through his site (to people in emerging economies for whom the rates on offer are still attractive), and by ‘opening up new markets’ that can now afford to purchase (outsourced) coding labour where they couldn’t before. Barrie wins, by making a margin on all transactions, while 1) the wages go offshore rather than circulating in the Australian economy, and 2) the local market for coding talent is locked into a downward spiral of his own making of decreasing wages and commensurate decreasing interest from graduates.

      There may be some nuggets of truth in what he says, but I struggle to find much sympathy for his ‘plight’ when it’s largely a bed of his own making that even so benefits him far more than the people he supposedly struggles to hire.

  8. Says the scum bag with his million dollar scam-website. He structurally steals money from his customers and gets away with it every single time. Just look for some reviews of freelancer.com on the internet and you will see what he is up to.

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