Innovatia

All these comments made clear the major economic challenge we faced. And there is now every chance that, in meeting it, Australia may be able to achieve the political consensus that characterised the Hawke–Keating reforms of the 1980s and ’90s. If we are doubly fortunate, this consensus could even extend to genuine climate action, which has been so obviously lacking up to now. The following are some es- sential measures that might be considered by the incumbent federal government. First, we must overcome the fragmentation and under-resourcing of institutional policymaking in Australia. We need a national industrial strategy commission or similar body comparable with those in other advanced economies. It could de- velop national priorities in consultation with in- dustry sectors to grow industries of the future, based on new technologies and business models. The initial task of this commission would be to undertake a “knowledge foresight” to identify ar- eas of current and future competitive advantage for Australia, as well as gaps in domestic supply chains. Clearly, enhancing self-sufficiency is not incompatible with a commitment to a more com- plex globalised economy. Second, a more systematic approach is required to deepen collaboration between industry and re- search organisations, possibly around the CSIRO’s designated “national missions”. This will require the government to reverse the decline in public funding of research and innovation, now far below the OECD average and still falling as a share of GDP. In addition, the national missions will require an implementation strategy at the enterprise level, or they will simply remain abstractions. This might take the form of industry-led innova- tion hubs – again a successful model elsewhere

– which would benefit from shifting resourc- es from the R&D tax incentive to more direct targeted programs. Third, we should not overlook the contribution of entrepreneurial start-ups to economic renew- al, including integration of the digital and physi- cal dimensions of manufacturing, which is a key feature of Industry 4.0. Governments everywhere facilitate start-ups, and scaling up, through sup- port for innovation precincts in cities and regions. Fourth, the government can make a big dif- ference for small and medium enterprises with public procurement policy. Too often we see lo- cal tenders overlooked in favour of large interna- tional companies on a narrow “value-for-money” basis, when these large companies themselves might owe their existence to another country’s procurement policy. Finally, industrial transformation will depend on the adequacy of our workforce and manage- ment skills. This will require measures to compen- sate for the COVID-19 hit to international student revenues that cross-subsidise university domes- tic teaching and research, as well as the earlier damage to Australia’s vocational education and training system from market contestability. The government’s “whatever-it-takes” interven- tion to safeguard people’s lives and livelihoods was clearly justified, but this entailed an unprecedented level of public debt. The history of wars and crises tells us that the only way to pay off such debt is to create a new economic growth engine. That new growth engine will be advanced manufacturing. Emeritus Professor Roy Green is Special Innovation Advisor at the University of Technology Sydney. He is also Chair of the Advanced Robotics for Manu- facturing Hub and of the Port of Newcastle.

Source DFAT

in engineering products (see graph). Widening trade deficit in engineering prod- ucts, 1995/96 to 2018/19 Despite much talk of the post-mining boom transition to a more diverse, knowledge-based economy, current examples of Australian manu- facturers with a global presence are few and far between. The problem lies not in any lack of tal- ent but in the absence of a coherent and effective national industrial strategy. The COVID-19 crisis exposed and accentuated this problem, but it also provides the opportunity for a fundamental redesign of our outdated industrial structure. During the “hibernation” phase of the crisis, the Coalition Government did what it could, with

Labor’s support, to retain jobs, strengthen the so- cial safety net and ensure production of urgently required medical equipment. But in planning for the longer term, it referenced a bridge that must be constructed to a “better, stronger economy”, argued that Australia must “compete on value, not cost”, and proposed the prospect of industry support be “niche, targeted and purposeful”. In addition, as US economist Richard Baldwin not- ed, “governments will have to undertake detailed thinking on production networks not undertaken since the 1940s … The containment policies will need to be intelligently crafted. And the longer the containment policies last, the more impor- tant it will be for them to be intelligent, flexible and well-informed.”

INNOVATIA

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INNOVATIA

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