Call for affirmative action on government purchasing from Australian MEs
The government will stunt Australia’s economic growth by ignoring SMEs and failing to support innovation in this highly productive business segment, warns the boss of a growing mid-size tech-company.
Leo Silver is the CEO of Integrated Wireless which delivers emergency wireless communications solutions to large institutions like hospitals and prisons.
He argues medium-sized companies like his are being sidelined by the government, which prefers to buy from larger, more established foreign rivals.
“I want the government to focus on a buy Australia policy, and that doesn’t mean buy from IBM Australia.”
“The government has the biggest purse. It should be incorporating into its buying philosophy the roll-on effects of buying from small Australian based enterprises, in a prejudiced manner. But it virtually fails to buy from SMEs.”
“I don’t want to feel that I lost a deal to an American-based multi-million dollar company that’s going to charge more to do the same solution I could have done, just because it was less risky.” Mr Silver said.
Mr Silver believes the cautious approach threatens the survival of SMEs.
“If governments say, ‘we’re risk adverse, we’re not going to buy from you’, well that’s a certain way to make sure we’re not here tomorrow.” Mr Silver said.
He argues mid-sized companies are a powerful revenue generator for the broader economy.
“The productive capacity is really in the 20 to 200 employee bracket, and they are largely ignored.”
“There’s a fundamental difference between the business that has 5 staff, a mother, father and two sons, and something of our scale with 40 or 50 employees, independent of the boss.”
“The future economy of Australia is very heavily dependent upon those businesses because that’s where genuine productive power exists, as opposed to just creating jobs for yourself.”
English-born Mr Silver was a director at Ericsson and a retail executive before heading up Integrated Wireless.
He believes the agility and ability of medium size organisations to scale up can create changes for the Australian economy at a global level.
“If you look at investment funds, there’s always talk about the boutique fund managers because they can outperform the market. An AMP can’t, because when AMP moves, the market moves. In the same way for Australia to really drive its growth, BHP buying a Canadian Potash might raise the stock price, but it’s not doing anything for the Australian economy.”
“A 50-man company turning into a 100-man company, and possibly on to a global corporation as it grows, actually changes the economic future of Australia.” He said.
Mr Silver attacks the government for failing to create appropriate policy settings to support SME innovation.
About one-fifth of the Integrated Wireless workforce are dedicated to software development, and Mr Silver said this kind of research work is typical of many SMEs.
“The government have never really got their head around software R&D. They think, that’s just writing software, that’s not real R&D.”
“But the fact is that we get phone calls from around the world saying we think you’re might be the only people that can do this, and that we have unique solutions and employ nearly 10 people in software development.” He said.
He wants legislation to acknowledge the Australian SMEs are doing in a research capacity.
“We clearly are doing R&D and innovation, but software development is not considered “real” R&D by the government. And it’s probably the area where SMEs put most of their effort, because you don’t have the capex requirements.” Mr Silver said.
Leo Silver was interviewed by Virginia Harrison for First 5000
