22 March 2004

Mr Graham Heilbronn
Commerce Queensland

A Lack of Substance in Smart State programs?

I should like to reinforce your reported suggestion that there may be little substance in Queensland's smart state endeavours.

My interpretation: Pushing money into aviation and other hi-tech sectors as part of Queensland's smart state focus has been criticised by a business group. Expanding the commercial potential of aviation, biotechnology and e-security was highlighted in the premier's vision statement to parliament. Commerce Queensland president (Graham Heilbronn) suggested there is nothing wrong with the smart state goal, but that a lot of it is hype with little substance. New industries should be supported, but so should existing industries. Government intervention and incentives are not needed. Minister for State Development (Tony McGrady) pointed out that aviation offers considerable opportunities - and that main obstacle was shortage of skilled professionals (Ludlow M., 'Critics clip Beattie's wings', Financial Review, 20-21/3/04).

Your point about the need for both existing and new industries to succeed is most appropriate because there are many 'bread and butter' requirements of existing industries which tend to have been neglected in striving for a new economy of 'smarter' industries (see comments on trying to force the pace and direction of economic change in Queensland's Economic Strategy).

Moreover the apparently virtuous and forward-looking 'smart state' efforts have themselves lacked substance - as outlined below.

I note that the Minister for State Development and Innovation has argued that there is a need for state intervention because of (for example) a need for more professionals to support growth of the aviation industry. However a system for skills' development which involves waiting until a minister recognises that particular skills are needed is a significant economic bottleneck - and government intervention should surely be directed to removing, rather than creating, bottlenecks.

It is not only the aviation industry which requires skilled professionals. So also does the state government. As you may be aware Queensland has not had any serious requirement for professional competence to be taken into account in making senior Public Service appointments for over a decade and there has been bipartisan support for its politicisation (see The Growing Case for a Professional Public Service). Even though the federal Labor Party has now apparently recognised that politicisation limits government effectiveness (see Taylor L. 'Yes minister: Public servants keep thoughts private', Financial Review, 20-21/3/04), there has been no sign as yet that this issue has been recognised by Queensland's political establishment.

It is time that it was.

Regards

John Craig

About Smart State

A Commentary on Smart State suggests that little commercial / economic benefits can be expected because:

• the major emphasis has been on increasing 'smart' inputs (eg research and education) to Queensland's economy which has generally lacked the systemic ability (in terms of both skills and organization) to make productive use of them; and

• efforts to promote commercialization have involved government 'assistance' in individual cases, which is the opposite of (and something of an obstacle to) developing the systemic ability of business and the community to smoothly provide such support in many more cases.

Research done in the 1980s, when the need for something like a smart state agenda, was first identified typically concluded that the obstacle lay in the lack of organisation and skills within the economy generally to profit from the large number of technically interesting opportunities that were already available. Thus a better alternative approach to the smart state goal would involve:

• emphasis on upgrading the systemic ability of the economy generally to gain commercial success through innovation. Once this exists then funding additional 'smart' inputs will be vastly more constructive; and

• recognition that successful innovation will usually start with market demand (to which entrepreneurs find a technical solution) rather than through trying to force-feed the 'commercialization' of research results.