The news that the ASX is scrapping and taking a massive loss on its blockchain-backed replacement for CHESS holdings is no surprise to anyone who has the basic ability to google “What is a blockchain?”, or who isn’t deliberately paid to believe in blockchain hype.
That the nation’s stock exchange bought into this nonsense is a broader indicator of the rot at the core of Australian society when it comes to technology.
I have no doubt there were smart and effective technologists inside the ASX who were steamrolled by external consultants who said the blockchain was the solution to the idea of “knowing who owns what”. Keep in mind, this was a service the ASX was providing quite effectively without the need for a group of weirdos to run some software on their home PC to ensure the nation’s ability to trade securities continued unimpeded.
Blockchain technology has a very effective use case: cryptocurrencies. It’s great at providing an indication as to who owns what in a trustless environment (making sure someone can’t, say, double spend a particular dollar — the use of that dollar is validated by a distributed network of equally participating peers, to put it both technically poorly but also succinctly).
Trustless is the key here. The point at which the authority that records who owns what securities in a regulated market thought about investigating a trustless solution is the point at which consulting dollars become less a function of transitory value and more a function of how much cocaine they can buy.
Australia has a massive problem with consulting firms. The percentage of spend of Australian taxpayer dollars that have gone into the pockets of KPMG, EY, Accenture et al has skyrocketed. Thankfully the new federal government is investing in bringing capacity in-house — both a strategic and national security imperative.
The broader issue here is that the Australian business landscape is one of pervasive laziness. Australia is the great land of the second mover; the moment a particular strategy is proved to be even considered by another business, the forces of mimesis mean that every other middling Australian business jumps at the chance to implement it.
The Optus and Medibank hacks are both indications of Australian technical incompetence. Having the skill sets to manage and deal with data at scale is now as table stakes as being able to accept currency for the work you do — and yet this function, particularly in this country, is monumentally underinvested in.
Enter again Deloitte, KPMG, EY etc, an entire workforce predicated on arbitrage of labour from the global south, slick marketing that resonates with the perpetually stupid and fearful and the eroding of institutional knowledge. They’ll come in, recommend a blockchain (or whatever BS buzzword is apparent) solution for you for a sharemarket and then come back four years later and write a report for $20 million that the initial strategy they recommended was not followed and should be ignored.
There’s a path out of this: the Victorian government’s Level Crossing Removal Authority. The LXRP was formed in 2015 and given a profound task: replace a series of level crossings (dangerous and routinely quite deadly) with transport infrastructure that provided unimpeded thoroughfare for vehicles and pedestrians. Its solution was to go deep, build knowledge, and be funded and staffed to a degree that that knowledge and those insights could be built up internally.
It’ll come as no surprise that this was a success. Building a broader deep bench of knowledge internally and funding it meant that the Victorians are years ahead of their project to remove all these level crossings.
Australia is not going to be able to produce enough technologists (or enough managers with enough sense to deal with technologists and projects in those areas). We’re going to need a steady source of people either immigrating or third-party groups that can provide these services.
The federal government has committed to building staffing numbers, but should be looking at every cent paid to a consulting firm as a waste of taxpayer resources. If the government can’t hire technologists or people who have the right skill set because it’s outcompeted by the private sector, it should increase the pay rate.
There’s no reason Australia could not be a first-rate nation in terms of technical proficiency. The sclerotic situation we find ourselves in is not something that just happened. It was always a choice. We can build our way out of it.
