Process problems dog the big D

James Riley
Editorial Director

The transparency and process problems that have dogged Victorian innovation minister Philip Dalidakis and the grants body LaunchVic have put future support for the sector at risk.

At best, the minister has a perception problem. And the perception held by many experienced and credentialed leaders in the digital startup ecosystem is that Mr Dalidakis is overseeing a regime of patronage and favouritism.

Those on the outside see an environment where programs being run in support of the politics, rather than the reverse.

Philip Dalidakis: Under renewed pressure over transparency and process issues has interviewed a dozen senior people deeply involved in the Victorian innovation ecosystem. You won’t find them directly quoted in this piece of commentary.

And this is the point. To criticise innovation policy is to invite blow-back from the minister or his proxies. This culture, where experienced and successful business-people are unable to express a view, is genuine problem.

The growing cynicism about decision-making processes is damaging to the sector. If the issue is left to fester, these problems put the programs at risk.

Transparency issues were highlighted by the 500 Startups funding debacle in July, but closer scrutiny demonstrates the problems started well before that.

Of note is the revelation that a senior political adviser to Mr Dalidakis’ was appointed to a plum public service job within the minister’s portfolio in New York – despite having had no previous public service experience.

Andy Lee was Mr Dalidakis’ senior innovation advisor for 16 months up to December last year, having joined the minister’s office after an early career in public relations – most recently with Telstra and the NBN Company.

Mr Lee, who says Mr Dalidakis is a friend and mentor, was a well-known and active participant in the Victorian startup ecosystem.

He was a key player during the period in which LaunchVic was getting underway.

Mr Lee’s departure from Mr Dalidakis’ office in late December 2016 was unexpected. According to LinkedIn, he took up his as the New York-based Investment Director, Tech and Innovation at Invest Victoria the following month, in January 2017.

Mr Dalidakis has told through a statement that there was nothing unusual about the appointment process.

“Mr Lee resigned before beginning the application process for the above role. The role was advertised on the Victorian government careers website,” Mr Dalidakis said.

“Mr Lee is currently employed by the department. The current commissioner for the Americas Michael Kapel led a panel that appointed Mr Lee. I had no involvement in the process.”

Victoria’s Economic Development department declined to provide any detail related to the New York role’s application process, other than a spokesman saying “this position was filled applying all the normal process for departmental appointments.”

It would not confirm when the job was advertised, nor what the closing date for applications was. It would not confirm whether Mr Lee had resigned from his position in the minister’s office prior to applying to the New York role, nor when Mr Lee was notified of his successful application.

The department would not say when Mr Lee started in the Invest Victoria role, nor how many applications had been received for the position.

“The vacancy was for an existing position within our international network and the position was posted on the Victorian Government careers website,” a department spokesman said via email.

“Candidates were selected for interview by a panel of departmental representatives.”

“The successful applicant was selected as the best candidate for this role based on his experience and skill set.”

Victoria’s Commissioner for the Americas Michael Kapel – who led the department panel that appointed Mr Lee to the New York – was a chief of staff to the former Liberal Premier in Victoria Ted Baillieu.

It is worth noting that Mr Dalidakis considers Michael Kapel to be a mentor, giving him special mention in his maiden speech to the Victorian Parliament in 2014.

Mr Dalidakis reappointed Mr Kapel to his San Francisco-based role with Invest Victoria three months ago.

None of which means anything, really. But the optics are terrible.

While the background to Mr Lee’s departure from the minister’s office is not clear, his turning up in a portfolio office in New York is stunning.

It was eyebrow-raising when the independent LaunchVic board appointed Kate Cornick, a former colleague of Mr Daildakis from his days as a staffer in former Federal minister Stephen Conroy’s office, as the LaunchVic CEO.

The same concerns were voiced when former LaunchVic board member Rachael Neumann turned up running 500 Startups’ Melbourne operation soon after having been involved in the assessment of the LaunchVic’s (now-defunct) $2.9 million funding of the accelerator.

And when the 500 Startups fiasco blew-up, Ms Neumann was then involved in helping to draft LaunchVic’s statement of response. More raised eye-brows.

When LaunchVic ultimately decided to axe the 500 Startups funding, it was based on Ms Neumann’s resignation from the organisation, rather than its own investigations.

The 500 Startups debacle helped ventilate frustrations within the startup sector over LaunchVic transparency and process issues. It also helped unearth other potential funding conflicts from an earlier round.

The Victorian Auditor General’s Office currently reviewing LaunchVic end-of-year financial statements. Although this is a standard procedure for VAGO in relation to any government-owned business entity, it is understood the office has taken somewhat more of a deep-dive on the grants.

The problem for LaunchVic and the other industry development initiatives being driven by Philip Dalidakis is that the damage has been done through transparency issues is making it more difficult to deliver. Cynicism has set in.

The credibility of the processes have been sorely strained, which puts added pressure on the various parts of the assessment and funding machine.

This is not a small problem for the generally well-regarded Mr Dalidakis. He is known as one of the hardest working of ministers and has a clear view of desired outcomes. But he is hamstrung by processes that are undermining industry confidence.

The vision is grand, and the energy vast in the building of a world-class ecosystem of Victorian startups. But it is being undone.

Do you know more? Contact James Riley via Email.

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