The secret weapon Melbourne can use to ward off brain drain

Melbourne’s celebrated liveability is its secret weapon in the fight to attract more high-skilled workers and entrepreneurs, and keep them here while they build the industries of the future.While so-called brain drain continues to be a concern among industry leaders, the city’s growing start-up sector is providing career paths for experts who previously would have been drawn to Silicon Valley or other global hubs.Computer scientist Dee Kulkarni had the option of accepting a job in Melbourne or one in Sydney when she moved to Australia from India in 2016, and chose Melbourne.“I was choosing between the cities because they were both equally challenging roles. I really like Melbourne’s culture, and I’m actually a fan of four seasons in one day”, she said.Melbourne’s liveability is a big drawcard for global talents.Paul JeffersKulkarni has since worked with a string of successful tech companies and could have taken up opportunities in global tech capitals like California.But Kulkarni says the local industry has developed enough that she can continue advancing her career here, and she recently started a new role as chief technology officer at pay.com.au, a payments and rewards company.“I feel like in the last 10 years, Australia has really changed its position in the global market,” she said.“A lot has changed in terms of the start-up ecosystem in Melbourne, and that’s the reason I’m like, ‘Yeah, it still makes sense to stay in Melbourne.’”The industries and jobs of the future will be discussed at Melbourne Assembly, a three-day forum hosted by The Age and the University of Melbourne in October, which will bring together some of the world’s premier experts in city planning, innovation, education, arts and sport.Andrew Wear, a former director of innovation in Victoria’s Department of Jobs, Precincts and Regions, who now runs the consultancy Econovation, says Melbourne needs to deliberately cultivate highly skilled and productive industries to secure its future prosperity.“Victoria is not going to get rich by digging things out of the ground,” he says.“That… is both a challenge and an opportunity because it means that we potentially can build a much more diverse, contemporary and resilient economy than a mining-based economy can. But it means we’ve got to do the work to get there.”While Victoria has recorded strong economic growth over the past decade, Wear says that has been underpinned by population growth.On a per-capita basis, he calculates Victoria’s economic output grew only 11 per cent between 2010 and 2025 – the weakest of any state or territory. Gross state product per capita was $9250 higher in NSW than in Victoria in 2025, with that gap widening from $5300 in 2010.Melbourne’s challengeEmployment in Victoria, meanwhile, has grown fastest in important, but relatively low-wage and low-productivity sectors such as healthcare and childcare.“Victoria is very much linked heavily to growth in population-servicing sectors, whereas New South Wales has seen growth in highly productive sectors such as information, communications and technology,” Wear says.“What that means over the long run is that every year, Victoria’s economy, on a per capita basis, will grow slower than it might otherwise do.“You multiply it by five years, 10 years, 15 years, 20 years, and all of a sudden, you wake up, and you find you’re a long way behind where you might otherwise have been, and that has impacts on living standards and wages and the overall sense of prosperity.”Wear says the solution to improve Melbourne’s economy – and accompanying living standards – is to unlock its highly educated and trained population, and encourage collaboration between higher education and industry, to grow innovative and emerging sectors.Wear says the success of Melbourne’s biotech industry, based around Parkville, should serve as a model of where governments, businesses, and universities can collaborate to build a sector. Technology needed to support the net-zero transition, the circular economy, and niche areas of advanced manufacturing were all major opportunities for this type of sector building, he says.“It just really needs a galvanising effort and some areas of focus,” he says.Kate Cornick, who ran the state government’s start-up agency LaunchVic until recently, and is now chief executive of the Tech Council of Australia, said Melbourne’s tech innovation sector was growing.The number of start-ups in the city more than doubled between 2017 and 2025 to reach about 2300, according to a LaunchVic report released in March. Employment in the sector grew 13 per cent in the past decade, compared to 2.5 per cent growth in all industries statewide.But Cornick said that “brain drain” – the loss of entrepreneurs to larger markets – remained an issue, particularly as international investors encouraged start-ups to move to the US or other jurisdictions.“What we do want to do is hang onto those founders and make sure they know that they can build a globally-leading company from Melbourne,” she said. “And the more people that stay here and do that successfully, the more people will feed into the system, and you will keep that start-up creation rate growing.”Paul Naphtali, founder and managing partner at venture capital fund Rampersand, said Melbourne had all the right ingredients for a great entrepreneurial city, notwithstanding unfriendly state and federal tax settings.“Great entrepreneurial ecosystems are built on education and migration. They’re the two massive cornerstones... Melbourne has some of the leading universities in the world and a really robust environment for migration,” he said.Against that backdrop, the city’s much-publicised liveability was a trump card, he said, meaning it could compete as a destination for the world’s best and brightest against larger destinations that might have larger industries or greater economic opportunities.Melbourne was ranked third on The Economist’s 2026 liveability index, behind Copenhagen and Vienna, and one place ahead of Sydney.“We want the best, brightest, most ambitious people in the world to take advantage of the one thing that we have that very, very, very few cities and countries in the world have: the highest-quality living in the world,” Naphtali said.“I spend a lot of time travelling. In absolute relative terms, this is still one of the great cities of the world.”Naphtali said Melbourne’s tech hub at Cremorne had organically developed, but could become a world-class innovation precinct with a deliberate push to attract researchers and investment.That could start with providing simple necessities such as high-bandwidth internet to the area, or something bold, such as restricting traffic to autonomous vehicles only.“The potential is so much more to collocate and bring these elements together in an aligned way for applied research, commercialisation, job creation, investment, and then go and export these things to the country and to the world. And you don’t even have to move postcodes,” he said.Supporting ‘brain gain’CSIRO chief executive Doug Hilton said the “brain drain” question has been debated for decades, and that he was less anxious about it given Melbourne also enjoyed tremendous “brain gain” from overseas.“But we shouldn’t be complacent,” he said.“We’ve got to be painting a picture for people, whether they’re Australians returning to Australia, or whether they’re immigrants who want to make their life in Australia. We have to make sure they have infrastructure to be able to do great science, and they’re supported to make a life here.”Kulkarni’s new employer, pay.com.au, has recently moved into an office in Windsor, after growing to more than 200 local staff since its founding in 2019, with 15 new starters last week alone.Chief executive and founder Grant Austin said that although the business has expanded into the US, with employees now working in Dallas, he had not been tempted to relocate.“The business was founded out of Melbourne. Our roots are in Melbourne. We’ve been happy with the talent we’ve been able to recruit, and we’re an online business, so our customers are everywhere.”However, Austin said more could be done to nurture local business, with state payroll tax and the recent federal changes to capital gains tax of concern to entrepreneurs.“Melbourne has had a history of great tech talent. But it needs government to make the right decisions to support the industry and businesses,” he said.“That is not to say people won’t start businesses here, but the recent changes have made it harder. But there’s a population here, there’s great talent here, and it’s still a great place to find that talent and grow a business.”Melbourne Assembly will be held from October 19 to October 21. More information is available on the Melbourne Assembly website, including special offers for Age subscribers.