[I have been asked many times for the transcript of the speech I gave today at Knowledge Nation, a summit which aims to drive the implementation of the Australian Government’s National Innovation and Science Agenda so I am publishing here].

There is no other industry that can create such immense wealth and long term benefit to the world, with such capital efficiency as the technology industry. Today, the largest public company in the world, Apple, is a technology company. Apple’s market capitalisation is bigger than the entire US retail market sector. Its revenue of over $234 billion generates over US$2 million dollars per employee per year. And that’s just the company directly. Think of all the business, jobs, wealth creation and benefits to society that have come indirectly from using the company’s computers, mobile devices, software, services and products

The largest three companies by market capitalisation globally, as of March 31, 2016, were Apple, Alphabet and Microsoft. Facebook is sixth. Amazon is ninth. Together, these five companies generate over half a trillion dollars in revenue per annum. That's equivalent to a third of Australia's GDP or 70% of our gross national income. And many of these companies are still growing revenue at rates of 30% or more per annum.

These are exactly the sorts of companies that we need to be building.

With our population of 23 million and labour force of 12 million, there’s no other industry that can deliver long term productivity and wealth multipliers like technology. Today Australia's economy is in the stone age. Literally.

By comparison, Australia's top 10 companies are a mine, a bank, a bank, a mine, a bank, a bank, a monopoly telephone company, a bank, a supermarket and a superannuation company.

Our GDP of $1.6 trillion is 69% services. Our “economic miracle” of GDP growth comes from digging rocks out of the ground (mining, which used to be 19%, is now 7%), shipping the byproducts of dead fossils, and stuff we grow. Thanks to the global collapse in commodities prices together this is only 12% of GDP.

When global economic growth falters, the wealth from these industries will be destroyed as fast as it was created; it's the nature of the commodities cycle.

There is an absolutely incredible opportunity before us right now. I can't think of one industry that isn't rapidly turning into a software business. We’re in the grips of a technology gold rush. I think by this stage quite a number of you are well aware of this gold rush.

And you're also well aware that Australia is completely missing out.

Most worrying to me, the number of students studying IT in Australia has fallen by between 40 and 60% in the last decade depending on whose numbers you look at. Likewise enrollments in other hard sciences and STEM subjects such as maths, physics and chemistry.

This is all while we have had a 40% increase in new undergraduate students as a whole.

Women once made up 25 per cent of students commencing a technology degree, they are now closer to 10 per cent.

All this in the middle of a historic boom in technology. This situation is an absolute crisis. If there is one thing, and one thing only that you do to fix this industry, it's get more people into it. To me, the most important thing Australia absolutely has to do is build a world class technology curriculum in our K-12 system. Instead we lump in a couple of horrendous subjects about technology in with woodwork and home economics. Yes there is a little bit of change coming, but it's mostly lip service. Meanwhile, in Estonia, 100% of publicly educated students will learn how to code starting at age 7 or 8 in first grade, and continue all the way to age 16 in their final year of school.

At my company, Freelancer.com, we'll hire as many good software developers as we can get. We're lucky to get one good applicant per day. On the contrary, when I put up a job for an Office Manager, I got 350 applicants in 2 days.

But unfortunately the curriculum in high school pays lip service to technology and while kids would love to design mobile apps, build self driving cars or design the next Facebook, they come out of high school not knowing that you can actually do this as a career.

Now I won't go into yet another boring speech regurgitating about what we need to do to fix the school system, neither will I talk about all the things we need to do to our universities, because so many other people have talked through this subject ad nauseum.

I've come to the conclusion that it's actually all too hard to fix – and I came to this conclusion a while ago as I was writing some suggestions for the incoming Prime Minister on technology policy. I had a good think about why we are fundamentally held back in Australia from structural change to our economy to drive innovation.

I kept coming back to one thing.

The problems we face in terraforming Australia to be innovative are systemic. They are a result of regulatory duplication, confusion and duplication of responsibilities or the mindless populism of absurd policies of the State Governments. Knowledge Nation asked me to be put some controversial ideas out there. Well I think we should abolish State Governments.

How do you fix K-12 education in this country? It's the remit of the bureaucracy of the State Governments. Trying to get them to all agree to modernise the curriculum is an exercise in futility. Or sadomasochism. I genuinely believe the Federal Government wants to fix K-12 education and understands the issues, it can't.

Now let's look at how State governments generate revenue.

If you look at the P&L you'll see a random array of fees and fines. Fees for access to roads and fines for actually using them. Fines which are erratically enforced through the strategic placement of cameras in areas of maximal revenue, random busts on jay walkers, through to the absurd 350% increase in fines on cyclists for not wearing a helmet, when all the public health policy globally says it's better to have your citizens ride bikes and get healthy. But of course, like so many things this all gets sold to you, the general population, under the banner of "health and safety". It's so absurd that in NSW a kid riding home on his bike without a helmet now gets fined more than the speeding driver that ran over him. Why is this important? Well if you are trying to attract young smart people to come back to Australia, it's a bit hard when the hashtag #nannystate is trending on Twitter.

But if you skip through all the rats and mice ways the state government taxes you by stealth in going by simply going about your every day life and look at the big revenue drivers you see two big line items.

The first is payroll tax. Outside of a GST handout from the Federal Government, payroll tax is the one of the two biggest revenue lines for the States. In NSW companies pay $8.4 billion dollars as a result of this idiotic tax which is basically a penalty imposed on you for hiring a lot of people. $8.4 billion that could be better used employing more people. If I hire a lot of people, I should get a discount, not a penalty. Yet this is one of the two primary ways state governments finance themselves.

The second is through stamp duty and land tax. I will leave it as an exercise to the listener to determine whether the Australian property market is well managed and these taxes are appropriately structured.

After that, all you are left of any size is gambling and betting taxes. In NSW this is $2.1 billion. Knowledge Nation asked me to be controversial so I'll say it: the NSW Government is so addicted to gambling revenue that it has shut down most of Sydney's nightlife in order to boost this line item by funneling people into the casino or pokies rooms. This also seems to fit into Mike Baird and the "all new and improved" NSW Liberal or better phrased Evangelical Party's overarching socially conservative ideology of banning anything remotely resembling fun in this city. Again, of course this all under the guise of "health and safety". It's a bit hard to build a technology industry when every second twenty year old wants to leave because you've turned the place into a bumpkin country town.

I'm not sure how many of you in this room will understand this, I think "rock stars" was said 18 times this morning. I don't see many 20 year olds in the demographics among the "rock stars of the nation" in this room. Or 30 year olds for that matter.

Only this morning I was sent a brand new essay by Paul Graham of YCombinator, the greatest technology incubator in the world entitled "How to make Pittsburgh into a Startup Hub". The main thesis of this essay was to make to make it somewhere that 25-29 year olds want to live – build restaurants, cafes, bars and clubs – places that young people want to be.

About young people he said:

I've seen how powerful it is for a city to have those people. Five years ago they shifted the center of gravity of Silicon Valley from the peninsula to San Francisco. Google and Facebook are on the peninsula, but the next generation of big winners are all in SF. The reason the center of gravity shifted was the talent war, for programmers especially. Most 25 to 29 year olds want to live in the city, not down in the boring suburbs. So whether they like it or not, founders know they have to be in the city. I know multiple founders who would have preferred to live down in the Valley proper, but who made themselves move to SF because they knew otherwise they'd lose the talent war.

He then went on to say

It seems like a city has to be very socially liberal to be a startup hub, and it's pretty clear why. A city has to tolerate strangeness to be a home for startups, because startups are so strange. And you can't choose to allow just the forms of strangeness that will turn into big startups, because they're all intermingled. You have to tolerate all strangeness.

Mike Baird, Sydney will never be a technology hub if all the young people want to flee overseas.

We have our own answers to Paul Graham in Sydney. One of their names is Mick Liubinskas, the guy who has probably mentored more startups in this country than anyone through his time running Pollenizer and Muru-D. The other is Hamish Hawthorne, well known as the Chief Executive of ATP Innovations, the incubator based in Australian Technology Park. You may have heard of this place: ATP Innovations was crowned in 2014 the best incubator.. in the world.

Yet last week the headline in the Australian Financial Review read "Startup godfathers' Mick Luibinskas, Hamish Hawthorne move to Silicon Valley".

They're both gone. Mike Baird, it's not just the young people fleeing Sydney.

And you're kidding yourself if you think they are going to come back one day. In the last fifteen years that I have been running technology companies in Australia, out of the scores that have left I'd estimate that less than 10 percent come back. They are at the time of their lives where when they go overseas they usually meet someone and eventually settle down.

Only two weeks ago the topic of Innovation was discussed on ABC's Q&A.

Stephen Merity asked: "I'm an Australian programmer working on machine learning and artificial intelligence in San Francisco after studying at Harvard. I want to return to Australia but I fear it won't ever be the right choice. Research and educational funding has been slashed, the FTTP NBN has been abolished, and my most competent engineer friends have been left with the choice of leaving home for opportunities or stunting themselves by staying in Australia. Even if all that was fixed, it's not enough to just prevent brain drain, we need to attract the world's best talent to Australia. Does the Liberal government truly believe their lacklustre policies can start fixing this divide?"

The response from Ed Husic was "Okay. So on the issue of the brain drain, you can take it two ways. Obviously you can, as Stephen was saying, there is some negative factors that drove him away and I’ve had a father email me of a son who said "I had to leave because I didn't have opportunities, I had to go elsewhere to pursue", in terms of his science career, you know, pursue opportunity elsewhere. I actually also see the positive in that, you know, a lot of the start-ups, a lot of people that are moving overseas are pursuing opportunity to grow and they’re going to gain experience and potentially come back and replenish our pool. The key for us is if people are leaving, what's being done to backfill the places? What’s being done to replenish the talent pool?"

This is like a business saying well we have no customer retention because our product is crap, so let's go find some new customers.

I taught Stephen Merity at the University of Sydney. He also worked for me at Freelancer. He's one of the top graduates in computer science that this country has ever produced. He's never coming back.

What about trying to attract more senior people to Sydney?

I'll tell you what my experience was like trying to attract senior technology talent from Silicon Valley.

I called the top recruiter for engineering in Silicon Valley not so long ago for a Vice President role. We are talking a top role, very highly paid. The recruiter that placed the role would earn a hefty six-figure commission. This recruiter had placed VPs at Twitter, Uber, Pinterest.

The call with their principal lasted less than a minute; “Look, as much as I would like to help you, the answer is no. We just turned down [another billion dollar Australian technology company] for a similar role. We tried placing a split role, half time in Australia and half time in the US. Nobody wanted that. We’ve tried in the past looking, nobody from Silicon Valley wants to come to Australia for any role. We used to think maybe someone would move for a lifestyle thing, but they don’t want to do that anymore.

“It’s not just that they are being paid well, it’s that it’s a backwater and they consider it as two moves – they have to move once to get over there but more importantly when they finish they have to move back and it’s hard from them to break back in being out of the action.

“I’m really sorry but we won’t even look at taking a placement for Australia.”

This is what it is like trying to attract, incentivise and retain talent in a technology company in Australia.