Western Australia Reduces Dependency On Commodities, Diversifies Economy

Siavash Noorbakhsh is an Iranian researcher who moved to Australia three years ago, and recently attended a one-week intensive boot camp in Perth, Western Australia. Noorbakhsh admitted that, prior to attending the camp for entrepreneurs, he never considered that his published papers on trauma and intensive care would be worthy of developing into a business. But that all changed after he was able to identify new pathways to put his theoretical knowledge into practice.

U.S. News reported that the boot camp was held in Perth City on Australia's south-west coast, and today Noorbakhsh has a mentor to help him move forward and develop a business plan to bring his ideas to patients.

"Before, I was thinking that commercializing an idea was only for famous researchers with lots of money, cutting-edge ideas, and connections. But I learned it's not out of my reach. It doesn't require a lot of money, just a proper mindset and a good mentor to help me see the opportunities and avoid dead ends."
The Center for Entrepreneurial Research and Innovation's program is just one part of a broader effort to diversify the economy of Western Australia and reduce its dependence on mining.

The resources and energy sectors have experienced significant job losses over the past five years, so the boot camp is part of a program geared to encouraging more start-up industries in Australia. The aim of the camp is to promote entrepreneurial mindsets, and the program participants come from a mix of fields, such as life sciences, engineering, physical sciences, cyber security, performing arts, and agriculture.

Diversifying the national economy has become a matter of urgency, with the Australian Federal Government reporting that, without the development of new industries, Australia's economy is likely to stagnate over the next 25 years.

The founder of the Center for Entrepreneurial Research and Innovation (CERI), Charlie Bass, is alarmed by the warning. As a man who made his fortune in mining in Western Australia, he's concerned that, if other industries are not encouraged, Western Australia could become a dust bowl in a few generations.

It's true that over the years the mining industry has seen boom-bust cycles, but Bass says he's never seen it as depressed as it's become today in Western Australia, where mining is still the only driver of the economy.

The Australian Government stated that the value of Western Australia's mining and petroleum industry has fallen by 12 percent from the previous year, and according to Commonwealth Securities, a discount stockbroking firm, Western Australia trails the country in eight key economic indicators, including housing, unemployment, and economic growth.

The recent mining boom in Western Australia is credited with helping Australia ride out the global recession, and also helped China's skyrocketing growth. In fact, Australia was one of the few economies not seriously affected by the recession, largely in part to Western Australia carrying the country's economy. Many people moved to Western Australia from other states, causing real estate prices to soar in mining towns.

Today it's a different story, and Western Australia has been severely affected as China's economy reduced from double-digit growth to single digits. Even people who moved to Western Australia from other states are now leaving.

The Western Australian government has been slow to encourage other industries, which Bass calls "the resources curse." He uses Kalgoorlie as an example. In 1978, when he first arrived in Australia from the United States, Kalgoorlie was a depressed mining town. Today, Kalgoorlie is a center for gold mining and nickel, but it still has a one-dimensional economy.

Bass is investing a lot of money into mentoring entrepreneurs by providing start-up office space and matching entrepreneurs with appropriate mentors. He charges nothing for his services, and takes no equity or intellectual property – it's a completely philanthropic effort on his part. When looking at other industries, Bass discovered that Australia has world-class research for entrepreneurs: there was plenty of money for universities and research institutes, but nothing was flowing out.

"Because the university system and research industry is all driven by the Federal Government, there becomes a disconnect between how you take that research and start creating industry. There's a funding gap and a management gap."
He says that an entrepreneurial education on how to think differently is needed to find ways to assist post-doctoral researchers get their research out into the real world.
The federal government is encouraging these high-value industries, and has created an agency designed to put science and innovation at the center of Australia's future economy. A report titled Innovation Australia was released in February, stating that, compared to other nations, Australia compares well in knowledge creation; however, it's weak in transferring and applying that knowledge.

The new agency is led by Bill Ferris, who started the first venture capital company in Australia. According to Ferris, if Australia doesn't learn how to retain its talent and projects, it runs the risk of wasting its potential in the research sector. He also believes there is a case for venture capital in Australia, that the country is beginning to see success with venture capital, and that it's trying to accelerate that new growth.

And creativity is certainly not lacking in Australia. Some Australian inventions include the black box flight recorder, Wi-Fi technology, the world's first anti-cancer vaccine for cervical cancer (Gardasil), the first ultrasound scanner, and the first cochlear implant (bionic ear).

Australia enjoys a very generous social welfare net, a high standard of living, and good wages, when compared to its Organization for Economic Co-Operation and Development peers, but when it comes to collaboration between universities and the business sector, it ranks lowest.

According to the Innovation Australia report, Australia could be globally competitive in industries such as cyber security, advanced manufacturing, medical technologies and pharmaceuticals, food and agribusiness, oil, gas and energy resources, and technology and services.

Initiatives by the Australian Federal Government to encourage innovation include tax breaks for early-stage investors in innovative start-ups, and supporting incubators to ensure start-ups have access to knowledge, resources, and networks. In addition, a new biomedical translation fund has been launched by Innovation and Science Australia targeting biotechnology and medical technology companies, providing $250 million of matching funds to bring these technologies to the market.

[Featured Image by Rob Bayer/Shutterstock]