COMMENTS ONLY VERSION of
Background Data to Innovation, Technology and Wealth Creation Institute Proposal
See also [Working Draft of] Australia's Strategic Positioning  Strategic Positioning Data

FOLDER 1

PRE 1.1:  (Garnaut J., 'Rail and sea snarls blamed for trade loss', SMH, 12/1/05)

Comment: Rail and port bottlenecks affecting minerals / energy reflect that (a) no one expected boom - partly due to erosion of capabilities connected with that sector and (b) machinery for developing infrastructure has been incapacitated by both federal / state financial imbalances (since 1970s) and attempts to adopt 'business-like' approach to 'public-goods' infrastructure in 1990s. China / India etc are are major challenge to medium technology manufacturers. However the prospects of a (financial / environmental / political) crisis derailing China's growth seem pretty high.

PRE: 1.2:  (Uren D 'Massive deficit made in China', A, 2/05)

Comment: Current account deficit is a complex issue. Trade deficit is the mirror image of capital surplus - and this has to do with the productive use of capital. There is a large capital inflow from Asia to US (and also Australia) with offsetting trade deficit because capital is used more productively in the latter, and relatively unproductively in Asia. Many would argue that US economy is in trouble because it has a large CAD and high foreign debts. But US has a sound balance sheet - ie the excess of asset values over debts. The real financial problem is in Asia (despite its current account surplus and accumulated foreign reserves) because balance sheets are very bad. Australia's situation needs to be assessed in global context. None the less the need to boost competitiveness is very real. $A does not have protection which $US has of being global reserve currency.

PRE: 1.3:  (Uren J., 'Surge blows out trade deficit', A, 1/3/05)

PRE 2.1:   ('Manufacturing the future?', Radio National - interview with Jim Fox, Vision Systems, 19/9/04)

Comment: Advice offered here is good from a business viewpoint, but not necessarily from economic viewpoint. Governments like those in Australia are structurally incapable of effectively targeting anything that is likely to be economically productive.

PRE 2.2:  ('The Celtic tiger', transcript of National Interest program in which Terry lane interviewed Roy Green - dean of faculty of commerce at University of Ireland 12/12/04)

Comment: The question of whether government can have useful industry plans depends entirely on how they are managed - ie whether the outcomes are determined by political aspirations reflecting the desires or influential interest groups or determined by market requirements. Industry policy is not possible in US (for example) because of its strong interest group politics, but was more feasible in Japan because policy was orchestrated by bureaucracy to be market oriented and political pressure was excluded. Attempts to develop innovation capabilities in Australia have been crippled by dominance of science / education lobbies (see Upgrading Australia's Economic Leadership).

European concept of role of state (under Roman law) tends to make industry policy more feasible than under British law (eg because state is dominated by professional bureaucracy and is seen to be above interest group pressure). The social partnership arrangements envisaged depend entirely on philosophy about the nature of the state - and have disadvantages as well as advantages.

The establishment of Enterprise Ireland system to build supply chains and industry clusters could have been achieved in Australia but for the politicisation and de-skilling of the state public sector by Governments like Kennett, Greiner and Goss. Experiments with this were being done in the mid 1980s.

The basic point is that unless the character of Australia's political system is changed so that its does not simply reflect populist pressures, there is no way that industry-related policy can be effective. This requires competent inputs to the political system that are both external (ie via civil institutions) and internal (ie via a competent bureaucracy)

Ireland's proposal to build cluster of innovative firms around major in industrial plant might work, or it might fail. It all depends on how it is managed.

In Australian situation I have been arguing for over two decades that similar outcomes can only be achieved if they are undertaken by apolitical institutions (see Defects in Economic Tactics Strategy and Outcomes). Ways for achieving productive gains were demonstrated in the late 1980s and protocols for institutions through which such outcomes might be achieved under a British law tradition were created in the US in 1990s.

It is of serious concern that we are still struggling to develop innovation capabilities - the need for which was obvious in early 1980s. There has been no serious effort to discover what is required for the next stage in development (which others have worked on over the past 25 years - and which have emerged because of the rapid progress in China / India).

PRE 3:  (Pratt R. Australia Day Address, 19/1/05)

Comments: Population target issue is subject of uncertainty. Australia genuinely has soil and water constraints on numbers, but these are unlikely to be as low as pessimists suggest, and can probably be increased by better management. Dealing successfully with infrastructure requires much more than increased spending. It requires creating machinery which is capable of doing this which has progressively been demolished by politicisation and efforts to take a 'business-like' approach to government. Kyoto protocol is not the only way to achieve the technological transformation needed - and has been bypassed by events. To lift business R&D requires development of innovation system. Method suggested to increase numbers of research chairs and then try to make academics into entrepreneurs is the 'frolic' that Evan Thornley criticised. Other proposals seem sound. Managing water (including environmental water) on a balance sheet may improve situation, but it leaves humanity trying to manage the environment which is intrinsically impossible. In this respect any such proposal will be opposed by greenies and Islamists.

PRE 4: (Earle M., 'CER Technology and Innovation', 12/1/04)

Comment: Rather than teaching individuals total technology - and then putting them into hostile economic environment - there would be more to be gained by accelerating real economy's learning about total technology.

It is not certain that hierarchy of skills can be ensured by coordination amongst education and training institutions as the latter do not determine how many people study this or that. This is determined by students and their parents. Thus probably the goal should be to inform the community.

PRE 5: (Mack J., 'Wealth creation: innovation and technology - The supply of technological skills', 7/6/04)

PRE 5.1: (Walsh B 'STEP / SCOPE / CERTECH Experience: 1974 -1990)

Comment: Data is only needed for 'planning' (ie decision making) if someone is doing so. The key issue is not whether an information system is set up, but whether there is an organization (s) which 'plans' (and thus uses the information). Massive changes that have taken place in public administration (to create what are little more than politicized pseudo businesses) need to be considered in this regard.

PRE 5.2: (Mack J., and Walsh B., 'Proposal for a Community Network for Disadvantaged Young Australians', 1/4/04)

Comment: Something like this seems to be needed. To get there requires (a) developing a vision in minds of community that recognizes the problem and the opportunity and (b) building existing organizations that are doing something similar into a network.

PRE 5.3:  (Walsh B 'Education to work: The place of counselling / management information', June 2004)

Comments: Implementation failure identified by Schools Commission is very common. Experience of reform failure in Queensland in 1990s strongly suggested that it tends to arise from over simplistic assumptions made by inexperienced reformers about the systems they are dealing with.

There is a shambles now in provision of infrastructure services - which is leading towards proposals for private sector provision because government systems have broken down.

There seem to be two major factors in breakdown in effective public sector delivery (a) federal state fiscal imbalances which grew most severe in their impact after 1970s - and which were the base for Schools Commission etc - and made it essentially impossible for states to take serious responsibility for their nominal functions and (b) politicisation and competition policy experiments in 1990s which significantly undermined public sector professionalism and ability to deal with infrastructure systems as a whole.

PRE 6:  (Hollingworth P., 'Proposal for a Queensland Enterprise network', October 1997)

Comment: Something like this would be of value to improve supply of technological skills, but will be of no significant benefit until demand for them is created

PRE 7: ('Round Table on Wealth Creation and Social Justice', IEAust and Australian Enterprise Network, 24/5/1995)

Comment: The lack of effective cooperation / coordination is largely a consequence of the domination of the policy process by science / education lobbies which has resulted in a focus on the supply side (of education and R&D), when it has been obvious for 20 years that the real problem has been on the demand side (ie the commercial competencies and organization to use those inputs).  The skill base which was emerging in governments the 1980s which could have orchestrated the necessary commercially-focused cooperation and coordination was purged because the political system continued to rely on advice from the science / education lobbies (see The Economic Futility of Backing Australia's Ability 2).

FOLDER 2

POST 1.1 /1.2 Diagrams

Comment: It is unclear what these are supposed to represent. Would they be the structure of proposed Institute or of some other collaborative arrangement?

POST 2.1:  (Thornley E. 'Innovation at the Workplace', Big Ideas, Radio National, 15/5/05)

Comments: Trade deal with US will force firms to lift their game. That is the main benefit. Scale is not the only basis for boosting productivity - and is unlikely to be the basis that Australian firms can rely on. Flexibility is a key to productivity - but there is no evidence that making employees operate as individuals is the most effective path to overall organisational flexibility. It is likely, for example, to undermine teamwork.

Export surpluses of Asian tigers are driven by losses in their financial system (see PRE 1.2). Japan has had huge export surplus in 1990s and stagnant economy - because of financial system problems. Suggestions here amount to something like a mercantilist economic strategy (ie economic success is achieved when one stockpiles a large pile of 'treasure' or has a strong economic supply capacity). This view dominated in Europe in 18th? century before Adam Smith's 'wealth of nations' pointed out that an integrated system of supply and demand was the key to real strength.

National economic strategy should not be picked politically. The idea of backing winners was advanced at one stage (in 1970s or 1980s) in Canada - but Canada has not gotten anywhere. I have a document somewhere that both advocates and critiques this proposal.

Problems in skills development could be a result of character of TAFEs - which reduces responsiveness because they are mainly supplier driven. European models involve arrangements which are far more responsive to industry. Part of the problem in Australia is probably the lack of institutional capacity by which industries can even work out what their future needs are likely to be.

POST 2.2: (Combet G. 'Industrial relations: Employee Rights and the Economy', ACTU, Speech to national Press Club, 6/7/05)

Comment: Arguments in relation to IR proposals could be based also on the fact that individual agreements are unlikely to be the best path to organizational flexibility (because competition could slow organizational learning). The whole problem is that neither the proponents nor opponents of IR change have done any serious work to identify what sorts of models might work to ensure both organizational flexibility and fair distribution of business income.

The real capacity constraint on Australia's economy is neither infrastructure nor skills - which are merely inputs to economy. The main constraint is on the ability of the economy to transform those inputs into economic value added (ie the problem is in productivity). There is seen to be a need for more low grade inputs so as to increase production / income to match spending. The real requirement is to use inputs that are available more productively. Creating a serious innovation capability is one way in which this could be achieved.

Lack of infrastructure investment by federal government reflects its unrealistic assumption that this can be achieved by private sector if only an appropriate regulatory regime can be established.

It is very doubtful that an investment-led reform of economy would be appropriate - because this would not achieve the necessary change in the relationship between inputs and value added.

POST 2.3: (Peacock J. 'Tomorrow's agriculture - we need to work things out', National press Club Address, 27/7/05)

Comments: Agriculture is now far better organised than it was (ie able to address vertical integration issues). None-the-less it faces immense challenges and is losing market share. The proposals that biotechnology can improve food is undoubtedly true in parts, but contains risks. Human biological and food biology systems are too complex for understanding. Experience suggests that 'Good ideas' can have unforeseeable adverse side effects. This applies to all complex systems. Thus there is a counter emphasis on natural foods and alternative ideas about science (some of which seem to be central to ideology of Islamist extremists, as well as to greenies). Article suggests the need for good management - but does not say what this would mean.

Innovation is equally important to viability of resource industries and globally focused SME - for which institutional capabilities are much weaker than for agribusiness

POST 3.1:  (Brown T., etal 'Who's teaching science?', Australian College of Educators, May 2005)

Comment: Recognition of the need for many elements in the supply chain to be right within education institutions is of value. However the supply chain is not confined to education institutions and thus can't be controlled entirely internally. The best way to boost the supply chain for science graduates is to increase the demand for them by (a) enabling community and business to perceive the opportunities and (b) enabling economy to use them more productively.

POST 3.2:  (Slattery L and Taylor P 'States in disarray on maths teaching', A, 23/6/05)

Comment: If Queensland is anything to go on, the states are in disarray on everything. The dysfunctions that are publicly recognised in Queensland Health are pervasive across the whole public sector. The problem arose from the elimination of accumulated knowledge and skill bases in public services (whose significance was not appreciated) in the process of politically driven and politically-self-interested 'reform'. This is the reality of the embryonic 'banana republic'. This is the core of (a) the absence of further attempts to develop progressive policies (because much of this traditionally derived from public services) and of (b) the fact that future economic reform is conceived as simply requiring a continuation / tidying up of efforts over the past 2 decades.

POST 3.3 (Slattery L 'Fun misses maths essentials', A, 7/8/05)

Comment: The problem here is that there are many different ideas being developed, and the political system has no way to distinguish the trendy from the substantial.

POST 3.4:  (Implications, Certech, ????)

Comment: Even more important than increasing the supply of such trained people is to lift the ability of the economy to use them productively - as otherwise they will be under-employed or contribute to brain drain

POST 4:  (Passmore D. 'Retire? The sack is more likely', SM, 17/7/05)

Comment: The talent pool associated with older workers may be unemployable because they are a threat to the credibility of younger managers with less knowledge and experience. In government at least and in Queensland at least, connections tend to be more important in advancement now than competency.

POST 5.1:   (Catley B 'The ALP needs to become a more liberal party', A, 1/8/05)

POST 5.2  (Dodson L., 'Economy could be world's third richest', SMH, 7/8/05)

Comment: The mainstream view of Australia's future reform agenda involves a continuation and elaboration of changes over the past 20 years which have led to unbalanced economic success and severe adverse side effects. They clearly need reconsideration (see [Draft of] Australia's Strategic Positioning)

OTHER

 ('Hollingworth P., 'Country and Calling', 16/9/1992)

Comment: Divisiveness is not solely due to capitalism. It is also due to political system. There is a need to distinguish between vertical groups (ie those with complementary capabilities) and horizontal groups (ie those with similar capabilities). A business is an example of a vertical group, while a union or business association are examples of horizontal groups. Capitalism requires competition / divisiveness in perusing own interests between different vertical groups, while interest group politics requires competition / divisiveness in perusing own interests between different horizontal groups.  Both are needed to get balance.

Lack of collaboration / coordination was mentioned under PRE 7.

Ideas in this about basis for creation of communitarian ethic are of value - but hard to put into practice because of fragmented value systems. It seems possible that PH gained the job as GG because PM liked the general ideas in 'Country and Calling' and hoped to hear them advanced.

 (Massey Uni, CIT, Industries Development Commission' The Supply of Technological Skills to a Changing Economy', Oct 1986)

Comment: The pressure for economic change is the main basis for emphasis on market mechanisms - because they are seen to be effective in managing this. If one wishes to develop arguments for the need for government or anyone else to do anything about economic change, then there is a need to show the ways in which markets fail to properly do cope with change. Suggestions about inadequacies in market mechanisms are the subject of Defects in Economic Tactics, Strategy and Outcomes.

 ('The Secondary -tertiary student flow 1979-1986 and the implications for a changing economy', Certech, 1987)

Comment: This seems to be the foundation for a 'strategic planning' methodology which tended to fall out of favour for reasons outlined in Strategy Development in Business and Government. The ability to understand what would drive changes in the environment became as important in appropriate strategic positioning as hard data.

 (Withers G., 'Public Policy Research Foundation at ANU: A Proposal', August 2002)

('Proposal for a Queensland Enterprise Network', )