Tech expert exposes the huge problem with Australia that’s making us dumb and why

Tech expert Yaniv Bernstein says high cost of living hurting innovation.

Argued this meant less willingness to give up high salary for a startup.

A tech entrepreneur has blamed Australia’s cost of living crisis for stifling Australia’s innovation – with those on a $200,000 salary no longer able to afford a typical house in Sydney.                                                                                                                              

Yaniv Bernstein, the host of The Startup Podcast, said the fact Australians needed to earn a lot more to pay the mortgage or the rent meant many innovative types were unwilling to quit a high-paying job to try something new with technology.

‘The higher cost of living means you need to bring in more money just to be able to put food on the table, put a roof over your head, so it makes it less appealing to start something,’ he told Daily Mail Australia.

‘Another thing that startups depend on is being able to hire employees who will work for below market salary in return for equity – that’s very common in the tech sector.

‘Quite often you’ll find people who would like to work for a startup but can’t afford the pay cut.

They’re not living extravagantly, they’re not trying to maximise their money before they can blow it on frivolous stuff but they’ve got to pay the rent, they’ve got to pay the mortgage, so that keeps them working for higher-paying, larger companies when really they could be adding more value to a startup.’

Australia is now so expensive a professional needs to earn more than $214,000 a year just to afford a typical Sydney house.

This individual would still be in mortgage stress, despite being among the top three per cent of income earners.

Australia, the world’s biggest exporter of iron ore, is also dependent on resource exports for government revenue as other first-world nations capitalise on the artificial intelligence boom.

Mr Bernstein, who has worked in the tech industry for the past two decades, was previously the chief operating officer at Airtasker and high-end mobile phone and laptop subscription group Circular.

The Sydney-based tech expert and angel investor said startups worked best when someone could work full-time on creating something new, rather than doing it as a part-time side hustle.

‘A lot of these biggest, most ambitious innovations require real focus and obsessive interest in the problem and that’s something you can’t do on the side,’ he said.

‘This is a globally competitive market so when you say, “Why can’t people do it as a side hustle?” and the answer is, yes, they can do it as a side hustle in Australia but the same person might be, in Germany, doing it full-time.

‘So who do you think is going to be more successful at solving that problem?

‘Pretty early on, you want to hire other people; you don’t just want them working for you a few hours a week – you have a lot that needs doing and therefore you want them to be able to commit to that.’

Sydney is even more expensive than New York or big tech California cities like San Francisco and San Jose, that are the hub of the AI revolution.

Mr Bernstein, who grew up in Melbourne, said this meant Australian tech entrepreneurs he knew had moved to the United States to grow their business.

‘They moved to the United States in order to grow the business – they were intending to keep all the rest of their team in Australia and they’ve actually seen that hiring people in places like New York and San Francisco in some cases is cheaper than the equivalent place in Australia,’ he said.

‘People have more experience in startups there – Australia is already losing out because of the higher cost.

‘Higher cost of housing leads to higher cost of labour leads to less competitiveness in this global environment.’

Mr Bernstein argued a less innovative Australia would also be bad for living standards, with Australia in a per capita recession since early last year where output per worker has gone backwards.

‘If we rely on just being a resource economy forever, we’re really missing a trick to raise our standards of living and to create the jobs of the future for Australia,’ he said.

Australia has produced workplace software group Atlassian and graphic design software company Canva.

Their founders Mike Cannon-Brookes and Scott Farquhar, and Melanie Perkins and Cliff Obrecht, are Australia’s richest young billionaires.

But Bernstein said their successes did not mean Australia had a reputation as an inventive nation ‘outside of the country’ when asked about the invention of the ute, Victa lawnmower, Hills Hoist clothesline and WiFi.

‘I don’t believe Australia has that reputation,’ he said.

‘I’m not convinced that we ever punched above our weight.’

Australia’s cost of living crisis is so bad that Sydney’s median house price of $1.395million is well beyond the reach of someone earning an average, full-time salary of $98,218.

RateCity calculates that banks can now lend someone 5.2 times their pre-tax salary, following 13 Reserve Bank interest rate rises in 18 months, taking the cash rate to a 12-year high of 4.35 per cent.

That means a high-paying individual with a hefty 20 per cent mortgage deposit of $279,043 would need to earn $214,649 to pay off a $1.116million mortgage.

By: Stephen Johnson

From: https://www.dailymail.co.uk/news/article-13112141/Tech-expert-exposes-huge-problem-Australia-thats-making-dumb-ticking-time-bomb-Weve-never-punched-weight.html