There are two distinct points here that are being a bit muddled. The first is the 457 visa issue. For those that don't know, it is a skilled immigration visa, similar to the H1B in the United States. Australia is coming up to an election in September where the sitting center-left Prime Minister is very likely to lose her Prime Ministership to the center-right party.
To sure up her base on the left yesterday she came out and attacked the 457 visa and said that they needed to be more tightly regulated, since they are being exploited by some and are taking jobs away from Australians.
Prominent Australian entrepreneurs came out in support of the visa, and argued that you can't grow a new information economy without the importation of skilled labour to make up for the shortfall in local skills. This was the biggest national news item yesterday.
As an analogy, imagine if Obama came out in support of lowering H1B visa's or restricting their use, and the shit that would cause.
The second issue here, which Matt also takes on by attaching it to the first, is what a lot of people in the startup world feel is a disadvantage that the Australian startup ecosystem has over its US, Israeli etc. counterparts. This argument has been playing out for years now, to not a lot of effect.
I think there is a contradiction in this argument, when you combine the two together. On the one hand you are asking the government to leave you alone and let you import labour, but on the other hand you are asking them to do something about the lack of venture investment, the lack of skills, university places, etc.
I think the later argument of asking the government to do something to assist startups stems from a misunderstanding of how silicon valley works and why it became successful. This misidentification leads to a feeling that with one or two changes you could 'clone' what has made silicon valley a success, which is not true.
The attitude in Silicon Valley has always been to be left alone by the government. The tech industry in the USA is grossly underrepresented in Washington lobby groups (only recently have Google, Apple and Microsoft invested more in lobbying as their businesses broaden and intersect areas where government has more control, such as spectrum).
Further to that, Australia ranks well in most global indicies for business startup, running a business and open markets. We actually outrank the USA in ability to start a company, and we rank about even in other business friendliness metrics[0].
I think Australia's major problem is cultural. We have a fear of failure, a lack of entrepreneurial spirit, and a severe tall poppy syndrome (all of which I have experienced first hand - ironically from some of the very people who are most vocal about wanting to make Australia more like Silicon Valley).
These should be a clear indication that the "problem" with the Australian startup scene (if there is one, I don't think there is) is not the cause or fault of the government.
I think Matt would have been better served here to focus his argument on the 457 issue, using the same arguments he has (such as Australia won't always have things to dig out of the ground), but leaving the other issues alone for now.
[0] http://www.gfmag.com/tools/global-database/economic-data/118...