Tech expert exposes the huge problem with Australia that’s making us dumb and why it’s a ticking time bomb: ‘We’ve never punched above our weight’

A tech entrepreneur has blamed Australia’s cost of living for stifling Australian innovation – with people on $200,000 salaries no longer able to afford a typical Sydney home.

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

“The higher cost of living means you have to bring in more money just to put food on the table and put a roof over your head, making it less attractive to start something,” he told Daily Mail Australia.

‘Another thing that startups depend on is the ability to hire employees who are willing to work for a lower salary in exchange for equity – that is very common in the technology sector.

‘There are very often people who would like to work at a startup, but cannot afford the pay cut.

“They don’t live extravagantly, they don’t try to maximize their money before they can blow it on frivolous things, but they have to pay the rent, they have to pay the mortgage, so that keeps them working. higher-paying, larger companies, when in reality they could add more value to a startup.”

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

This person would still be in mortgage stress despite being in the top three percent of income earners.

Australia, the world’s largest exporter of iron ore, also depends on commodity exports for government revenue, while other first world countries are benefiting from the artificial intelligence boom.

Mr. Bernstein, who has worked in the technology industry for the past two decades, was previously Chief Operating Officer at Airtasker and high-end mobile phone and laptop subscription group Circular.

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

“Many 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 this as a side income?” and the answer is yes, in Australia they can do it as a side income, but in Germany the same person can do it full time.

“So who do you think will be more successful at solving that problem?

‘From quite early on you want to hire other people; you don’t just want them to work for you a few hours a week, you have a lot to do and that’s why you want them to be able to commit to it.’

Sydney is even more expensive than New York or big tech cities in California like San Francisco and San Jose, which are at the center of the AI ​​revolution.

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

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

‘People there have more experience with startups; Australia is already losing out due to higher costs.

“Higher housing costs lead to higher labor costs and less competitiveness in this global environment.”

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

“If we rely on being a resource economy forever, we are really missing a trick to raising our living standards and creating the jobs of the future for Australia,” he said.

Australia has spawned 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 the country’ when asked about the invention of the ute, Victa lawn mower, Hills Hoist washing line and WiFi.

“I don’t think Australia has that reputation,” he said.

“I’m not convinced we ever punched above our weight.”

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

RateCity calculates that banks can now lend to someone 5.2 times their pre-tax salary, after 13 rate hikes by the Reserve Bank in 18 months, leaving the cash rate at a 12-year high of 4.35 percent.

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

Even then, this person would have to pay 38 percent of their taxable income in mortgage repayments – well above the 30 percent threshold for mortgage stress.

This is despite the fact that they are in the top 3.1 percent of income earners.

At a variable mortgage rate of 6.24 percent, this highly paid individual would spend $6,866 per month on mortgage repayments – which amounts to $82,392 per year.

When it comes to being innovative, Bernstein, 43, said the most innovative entrepreneurs weren’t necessarily in their 20s or 30s.

‘The most successful age to start a startup is early forties. It’s not about youthful energy, it’s about full focus on doing this innovative thing,” he said.