I listened to the radio this morning and the topic quickly flowed to the desperate need for investment into innovation in this country. Halleluiah I say! It is about time we started to seriously look at all forms of investment in this country rather than simply property, superannuation and the stock market; but that is not my key point.
During the interview the interviewee stated that “one of the impediments to innovation in this country is the bankruptcy laws, something needs to be done with them to make things easier.” I was quite offended as it always seems that we grab whatever we can that sounds like a reasonable excuse and then blame that. I do acknowledge that there were other factors that were also mentioned, but the only one I wish to focus on is Bankruptcy.
Bankruptcy deals with someone who cannot pay their debts and the system, which is still substantively the same has worked for many years. Further, I’m not sure that this country is yet at a stage where the manner of dealing with it would simply be to brush it off and say forget about it, life goes on!
The real problem is not the manner of dealing with those that have gone broke, but in fact how we deal with people who have ideas. What should be the case is that a group get together, the idea goes in, some effort goes in and some funding goes in and if it works we all do well, and if it doesn’t we all walk away and say at least we tried. Regrettably in this country anyone wanting in, want the return based on the risk, but the immediately seeks to remove that risk. Borrow money from any bank, invariably they will seek bricks and mortar.
So if there is a clear deal on the table and everyone has a common expectation of risk and return, then we will see growth in innovation; but whilst we continue down that path that we are with the ideas person being the guarantor of all then bankruptcy will always be their final step, and as such these people will not innovate.
Regrettably those that try, and try again in this country could quite easily be branded as serial phoenix operators! Long term we will get what we work towards, it’s the old adage ‘what gets measured gets done,’ if we develop a plan then we might just be able to build a future.
One thing is for sure though, it’s not the bankruptcy laws that need fixing, it’s how we in this country go about doing business and our banking sector’s appetite for risk.