10 May 2020.
Australia is experiencing a public health crisis and a challenge of economic recovery. The crisis and the challenge sit in front of a more fundamental threat to Australia’s future that lies in the need to respond to the forces of climate change and move from an economy where wealth has been created by the exploitation of mineral fuels and consumer demand driven by high levels of immigration, to one driven by knowledge and technology.
We must move from a second-world to a first-world nation.
Australia must look for new sources of growth in this post-carbon future. These sources of growth will be built on the development and application of new technologies to revitalize industries that suffered as a result of the importation of cheaper manufactured goods, and the creation of “new industries” formed around the application of new technologies, such as big data and analytics, automation and robotics, simulation, visualization and augmented reality, and cloud-based platforms.
New sources of growth will be the outcome of a national commitment to research, development, and innovation within a framework of a National Recovery Plan that will form the basis of a National Industrial Strategy.
Nations have done well when they start planning for the future amid a crisis. Without reverting to protectionism, Australia must become more self-sufficient in the production of goods and services that have relied on complex supply chains, which can be dislocated in the event of a crisis. Risks must be managed. Many would argue that we have lost the capacity to make things – although we are good at consuming them.
The crisis has pointed to the strength of Australian agriculture, but even there we export much of the raw produce and let others do the processing - and then we bring it back again as a manufactured product. We allowed the wool industry to largely disappear as a result of agri-politics. And we allowed manufacturing to disappear by a failure to respond to the challenge of international competition – continuing to produce fair average quality commodity-based products, whilst others charged ahead based on a heavy commitment to RDI.
We must dispense with the idea that an active industrial strategy is about “picking winners”, that we can import RDI from overseas, and address system failures such as the very poor interaction between industry and universities. We can take the lead from the Australia 2030 Innovation Strategy and look for national missions that will guide RDI investment and the creation of new industries.
Australian investment in RDI has been declining for many years, due in large part to the failure of businesses and the government to invest. However, universities have been increasing their commitment. The result has been a mismatch between university investment priorities and the priorities of business and industry to deliver products and services based on internationally competitive leading-edge research and invention.
Universities have done a fantastic job of investing in health and medical research that has delivered new products and services in medical devices, pharmaceuticals, and vaccines. It has placed Australia in a good position to confront the current health crisis. It is time to think about a similar result for Engineering and Technology.
A revitalisation of investment in technology and engineering is essential to address the challenge in moving to new sources of growth.
To create the future, we must address and close the policy gaps. Numerous funding programs and cross-cutting Ministerial and Commonwealth-State responsibilities means that we do not currently have any semblance of an industrial strategy or coherent innovation policy. There is some support for sector-based strategies and innovation district initiatives – but the commitment is weak across Government, and expenditure is reported “after the event” instead of being driven by clear missions, objectives, and outcomes. To recover from the present health and economic crises we must develop an industrial strategy and innovation policy that can move Australia to a post-carbon future, we must draw on Australian responses to previous crises, such as the Post War Reconstruction commitment, and avoid the policy failures surrounding responses to previous crises such as the 1974 oil shock, and the restructuring of the economy required after the removal of industry protection regimes and introduction of microeconomic reforms in the early 1990s.
In particular, we must:
Make a commitment to a national industrial strategy with a new body charged with responsibility for the development and implementation of a national industrial strategy and innovation policy, with a remit to identify, plan, and commit to specific national missions. It could be referred to as the National Industrial Strategy and Innovation Commission. The present Productivity Commission would advise the new Commission on specific micro-economic issues.
Develop and adopt a consistent and coherent policy framework across all agencies with an industrial policy remit to put an end to the fragmentation of programs across Ministerial portfolios, departments, and agencies. Policy must obtain high-level cooperation and coordination with the States/Territories, respecting State/Territory roles and responsibilities, and their front line capacity for implementation and delivery.
Make a sizeable RDI investment commitment in industrial sectors critical to Australia’s technology and innovation future: Energy (renewable particularly); Land, Water, and Climate Change; Transport, Communication and Infrastructure; and Industrial Production and Technology. Investment in each sector would be driven by four new Research Investment Councils. They would complement the investment mandates of the NH&MRC and the Rural RDCs. The ARC would continue to invest in the Humanities, Arts, and Social Sciences.
Address workforce development, education, and training imperatives to ensure that people can acquire both the high level occupational and academic skills required for industrial growth in the industries of the future. The small and mostly disconnected STEM training initiatives across the Commonwealth and States/Territories must be consolidated. The current high level of participation in Health education and training should be replicated in the Engineering and Technology fields.
Secure a much higher level of university-industry collaboration with a better match of research and innovation priorities supported by the Research Investment Councils and financial support for university-industry Engineering and Technology Research Institutes, drawing on the Fraunhofer framework.
Support innovation place-making through investment in nationally significant precincts, districts, and clusters that will facilitate the formation of high-growth new technology businesses (start-ups) and scale up through smart specialisation strategies in global markets and value chains.
The health crisis and the current uncertain economic future provide the essential foundation for a National Recovery Plan that has Science, Research, and Innovation at its heart. But we can be assured that economic recovery will not be back to “business as usual”. Industries that have collapsed, which have relied on low-cost, casual, part-time, and unskilled workers, may never recover.
This Paper addresses the issues in the following Sections:
An introduction that sets the scene, the problems and opportunities (Section 1)
A detailed outline of the Challenges ahead (Section 2)
The current Research, Development and Investment Climate (Section 3)
Policy gaps, failures and opportunities (Section 4)
Policy imperatives that must be addressed (section 5)
Recommendations for new policy directions (Section 6).
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