Replace tall poppy syndrome with support for budding businesses

The Australian, March 10, 2018, Bernard Salt
Come with me to the United States of America, to the greatest economic and military force in history. I want to show you a list of the 10 biggest businesses in the US today ranked by market capitalisation. This is where you take the share price, multiply it by the number of shares, to get a theoretical market value of a corporation.

If you want to buy the Apple corporation outright it costs $US896 billion ($1.151 trillion), or about 80 per cent of Australia’s gross domestic product, according to Bloomberg. Apple is the Dutch East Indies Company of our time. It was founded in 1976 by Steve Jobs. Beyond Apple there is Alphabet (Google), Amazon, Microsoft, Facebook, Berkshire Hatha­way, JPMorgan, Johnson & John­son, Bank of America and ExxonMobil.

If you want to buy the Apple corporation outright it costs $US896 billion ($1.151 trillion), or about 80 per cent of Australia’s gross domestic product, according to Bloomberg. Apple is the Dutch East Indies Company of our time. It was founded in 1976 by Steve Jobs. Beyond Apple there is Alphabet (Google), Amazon, Microsoft, Facebook, Berkshire Hatha­way, JPMorgan, Johnson & John­son, Bank of America and ExxonMobil.

If you want to buy the Apple corporation outright it costs $US896 billion ($1.151 trillion), or about 80 per cent of Australia’s gross domestic product, according to Bloomberg. Apple is the Dutch East Indies Company of our time. It was founded in 1976 by Steve Jobs. Beyond Apple there is Alphabet (Google), Amazon, Microsoft, Facebook, Berkshire Hatha­way, JPMorgan, Johnson & John­son, Bank of America and ExxonMobil.

It is not the value of these entities that impresses me, it is the year in which they were formed. Bill Gates, born in 1955, was barely 20 when he founded Microsoft in his parents’ garage in Seattle. It is now the fourth biggest publicly listed company on earth.

How is it that the Americans have been able to reinvent themselves like this within a generation? Is it something their government does? In fact, the reason has nothing to do with government; it has everything to do with the core values of the American people. Here is a nation and a people who for 400 years have valued and admired entrepreneurship.

The entrepreneurial ingenuity — the creative corporate force — we see in the US today is the dividend of a grassroots cultural predisposition towards enterprise.

We, too, are entrepreneurial. We, too, are enterprising … and agile. Our Prime Minister tells us so. How do we compare with world’s best practice — with history’s best practice? Now, I do get it that the US is 12 times bigger than Australia, so the biggest companies here will be 12 times ­smaller, or thereabouts.

The biggest company based in Australia and listed on the Australian Securities Exchange is BHP, with a market cap of $US118bn. If BHP were listed in New York it would struggle to make the top 40 businesses. Then come our four banks (Commonwealth Bank, Westpac, ANZ and National Australia Bank), CSL, Wesfarmers, Telstra, Woolworths and Macquarie Bank. Just put Macquarie to one side for a moment. And accept that Telstra came out of the Postmaster-General’s ­Dep­art­ment, which was formed at the time of Federation.

Does this mean that the most recently created, big and publicly listed company in Australia is Woolworths, formed in 1924? Melbourne’s BHP came out of Broken Hill in 1885. The four banks were founded between 100 and 200 years ago. CSL and Wesfarmers were founded around the time of the Great War. Interestingly, three of our 10 biggest businesses started out as government enterprises — CBA, CSL and Telstra — whereas the American entities are the product of private enterprise.

The blunt fact is that we Australians are not particularly entrepreneurial, or at least not at the uppermost end of the business spectrum. We have not created anything of scale — by which I mean bigger than Macquarie — in almost 100 years.

Yet we also rank among the richest nations. We have benefited from complacent prosperity; we’re rich enough; there’s no fire-in-our-belly desire to create anything of scale. Tell the Australian people that they haven’t created anything of scale in a century and they’ll say “that’s terrible … what’s the government gonna do about it?”

I say, what are you gonna do about it?

I think Australians are deeply suspicious of — even contemptuous of — big business. “How did you bastards get to be so rich?”

I like the thinking of the environmental movement — think global, act local — but I’d apply this logic to business. Think about how we can create an overall culture of entrepreneurship and make a start by supporting local and small businesses.

Now, you’d expect the world’s biggest mining company to come out of the Australian continent, and with BHP it does. I mean, we are the only nation on the planet to claim the resources of an entire continent. If we Australians can’t deliver the world’s biggest mining company then we need to give the game away because, well, mining’s our schtick, isn’t it?

Where’s our agribusiness business? That’s our schtick too, isn’t it? Why haven’t we Australians been able to leverage a global agribusiness enterprise that maybe started in wool, then moved into cotton, rice, processed meats, dairy, then expanded into New Zealand, South Africa and Argentina, and that retains its head office in Adelaide? Too hard? No fire in our belly?

Maybe the reason we haven’t done this is because agribusiness businesses can’t be easily scaled up “from the colonies”.

What’s the biggest business in New Zealand? That would be Fonterra, which is a global agribusiness selling Kiwi dairy product into China. Fonterra was formed around the turn of the century by the amalgamation of regional dairy boards.

The Australians could never or would never see the bigger picture. Plus, our in-built parochialism meant that the Victorians would never merge with the South Australians and so on.

We kept our dairy boards small, and they were then duly picked off by sovereign wealth funds and global rivals including Fonterra from New Zealand as well as Parmalat out of Italy and Saputo out of Canada.

There’s only Murray Goulburn and Bega left, and it looks like Fonterra will snaffle MG too.

If an ambitious young Australian wants to run a large and truly global agribusiness they have to move to Auckland.

The New Zealanders have done what we would not do or could not do.

And while I’m on a roll, I will also say that meat processing is now largely confined to the Australian Teys family out of Brisbane, who do a fabulous job, as well as the Cargill group out of Minnesota and JBS out of Brazil.

I’m not anti-foreign investment; I’m pro-Australian development; I want to see more and more Australian businesses developed and supported.

I believe that we have already conceded sovereignty across much of the agribusiness sector to other nations. Why aren’t Australian corporations scouring Canada’s provinces looking for processing plants to snap up?

You think this doesn’t affect you? My word, it does. For there to be jobs of the future there must be businesses of the future. For there to be businesses of the future we need to cultivate a culture of ­entrepreneurship.

Yes, like the US … and, gallingly, yes like the New Zealanders.

Did you know that the fifth biggest business in New Zealand today is software company Xero, which was founded 13 years ago by Rod Drury reportedly in a Wellington garage?

It can be done and it has been done from the colonies.

And before you say “What about Atlassian?”, let me remind you that this software company, founded in Sydney in 2002, is ­listed in New York, not in Australia. Rio Tinto may have mines here but this entity is listed in London. News Corp, publisher of The Weekend Australian, is listed in New York.

For your information, there are only three non-American businesses in the global top 10: Tencent (market cap $US526bn) based in Shenzhen; Alibaba (market cap $US480bn) based in Hangzhou (both technology companies); and the bank ICBC (market cap $US358bn) based in Beijing. All three of these public companies were founded between 1984 and 1999.

And for your further information: the Chinese city of Shenzhen, now with 11 million people, and which accommodates the Alibaba head office and is China’s answer to Silicon Valley — was the same size as Gundagai in the mid-1980s.

Complacent prosperity. We’re rich enough.

Now let me get to the nub of my argument.

Why haven’t we put forward an Australian of the year from the business community for their ability to create a business, to generate prosperity, to employ Australians, to pay tax and to be a good corporate citizen? Ever!

If this is because we think there is no one worthy of this accolade from the business community then that is a damning indictment of the Australian business community.

But I think there is someone … who sadly died four years ago. I am thinking of Paul Ramsay, the entrepreneur-founder of Ramsay Health Care.

Ramsay founded this business — not in big coal, not in big oil, but in healthcare — 50 years ago from a standing start. Ramsay Health Care now operates in five countries and employs 30,000 workers. And on his death Ramsay bequeathed $3bn to medical research. I say, as far as life efforts go, it don’t get no better than Ramsay.

I want more Paul Ramsays to step forward to have a go … and to be supported on that journey by the inherent good will of the ­Australian people. Yet this remarkable man was never put forward even as a nominee for Australian of the Year.

I am going to respectfully ask Paul to again make another contribution to the Australian nation by inspiring a generation of wannabe entrepreneurs.

I want a 16-year-old from Wagga Wagga to be inspired by the ideal of entrepreneurship and to think about eventually creating a business that generates wealth and that delivers prosperity to the Australian people.

Do you really think the 10 biggest businesses in Australia will remain our biggest businesses in a decade? Or is it possible that will we need to create new big businesses in the future?

What’s our track record like on this score?

At the grassroots levels we are in fact quite entrepreneurial. New data released by the Australian Bureau of Statistics shows the number of sole traders (with an ABN) increased by 51,000 in the 12 months to June, up from growth of 34,000 the previous year.

Businesses employing one to four workers jumped 9000 last ­financial year and by 15,000 the previous year. The foundation is there; we just need to nurture the businesses that will provide the jobs, and the security, for the ­future.

It’s time for Australians to let go of the tall poppy syndrome and to understand the world into which we are headed.

As we move towards the middle of the century it’s critical that we remain united behind the new and existing businesses that have the capacity to deliver to all a share of our nation’s common wealth back to the Australian people.

Bernard Salt is managing director of The Demographics Group and is an advocate for Westpac’s Businesses of Tomorrow program. Research by Simon Kuestenmacher.

bernard@tdgp.com.au, simon@tdgp.com.au