Creating a More Scientifically and Technologically Capable Australia (2004)

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The Problem +

The Problem

Australia has pretensions to being a 'clever' country. Furthermore federal and state governments support programs intended to boost creativity, science, technology and innovation - such as Backing Australia's Ability and Queensland's Smart State.

Enhanced economic and jobs performance, and other goals (such as a reduced ecological 'footprint' from growth) can be achieved by a stronger science and technology (S&T) capability (see The Economic Role of Technology). However in practice, though Australia's scientific institutions have been comparatively well resourced by governments:

  • Australia's capability to exploit S&T to gain competitive advantages through business innovation  is weak and apparently declining;
  • scientific literacy in the community is limited;
  • the schools and universities which need to develop such capabilities are stressed;
  • substantial numbers of children come from family backgrounds that will make it difficult for them to achieve the education levels needed to prosper in a truly 'clever' country; and
  • the political establishment generally lacks any depth of understanding of these issues.

The need to give practical effect to Australia's S&T pretensions is made more necessary by an increasingly difficult trading environment and the emergence of challenging competition (see The Need to to Better in Queensland's Economic Strategy, whose state focus has national parallels).

This document will:

  • suggest that Australia's S&T capabilities in industry, academia and government will not be effective until their priorities and integration are primarily driven by market demand rather than by political support for the 'good ideas' of science or industry lobbies;
  • outline significant developments over the past 15 years which do not yet seem to have been fully taken into account in thinking about developing Australia's S&T capabilities;
  • speculate about methods to advance the position of significant identifiable segments of the community who seem at risk of being left behind in a more knowledge-based economy;
  • mention the author's qualifications for advancing this proposal.
A Solution

A Solution

In order to achieve more effective outcomes, the main requirement is for community leaders to break Australia's tradition of colonial dependency on authorities and accept 'ownership' of, and take responsibility for, Australia's S&T capabilities and innovation systems (see also Upgrading Australia's Economic Leadership).

 In particular, civil institutions and / or their leading members need to:

  • shift their emphasis from lobbying politicians to 'do something to help', and directly take responsibility for stimulating market-oriented regional initiatives to develop the elements of Australia's innovation systems (eg scientific / technological / market  intelligence gathering by business; the management of innovation within firms; financing and commercial support for entrepreneurs; technology transfer; relationships between business and research / education / training institutions; business support services such as law, accounting, logistics);
  • establish and finance institutions able to communicate the challenge and what is being attempted to the general community as well as to the latter's elected representatives. The functions of those institutions would include:
    • raising general awareness of the opportunities available and what is required to participate;
    • highlighting to governments the type of regulatory / tax / public demand regimes which should encourage an improvement in S&T capabilities and innovation systems. Current efforts by governments to boost these functions seem very poorly considered (eg see The Economic Futility of Backing Australia's Ability 2 and Commentary on Smart State).

The direct initiatives suggested above would have an appreciable, though not enormous, cost. Methods whereby such initiatives might be achieved in practice are illustrated by:

  • the industry-policy methods used for rapid development of industry clusters by Japan's bureaucratic elites; trading companies; and banks prior to 1990 - methods which need to be evaluated in the light of differences in concepts of power and governance which are implicit in Japan's cultural traditions;  
  • the leadership role which banks at the centre of business groups played under the ordo-liberal economic model which was the basis of Germany's post WWII economic miracle - methods which also need to be considered in the light of the effect of the nature of governance expected under Roman Law traditions;
  • the private-public partnerships developed in the US in the 1990s to strengthen the position of key industry clusters (eg Silicon Valley Joint Venture Network) - methods which need to considered in the light of the tradition of business leadership of economic initiatives in US;
  • Developing a Regional Industry Cluster (2000) which describes a highly generalized method, based on a reasonably successful practical experiment in the 1980s, to accelerate economic development in the Australian environment without the process becoming politicized (which would make it economically ineffective). The process described would need to be adapted to suit the development of S&T / innovation capabilities;
  • Engineering Enterprise Development Centre Proposal (2002) - a preliminary concept developed by the Technology Task Force of the IE Aust Queensland - from which a practical way to 'bootstrap' existing commercial and technological support for engineering enterprises might have evolved.

It is very likely that appropriate consultation and a literature search and would reveal methods which have proven effective in achieving the above goals.

Gains can only be achieved if the political system endorses the general initiative and the types of institutional arrangements through which direct initiatives might be taken, but is not otherwise involved (eg in controlling the process, or authorizing special funding to support proposals). This is because a politically-motivated process will :

  • slow rather than accelerate economic change - because of the usual 15 year lag in gaining public understanding of new options, a lag which is fatal to gaining competitive advantages; and
  • degenerate into wealth redistribution rather than wealth creation and ultimately result in a loss of any realistic sense of direction - by attracting interests lobbying for government to support them in doing what they think ought to be helpful in an ideal world. The alternative would enable those interests to do what their potential customers really want, and ultimately provide a strong and clear sense of direction for Australia's S&T efforts.


The above basic concepts were developed around 20 years ago (but were then suppressed in favour of numerous politically-motivated efforts to develop Australia's innovation systems).

The international environment has changed dramatically since that time - and these changes require that the basic concepts be reviewed. Significant changes include:

  • Japan's relative economic stagnation since the bursting of its financial bubble around 1990, and the Asian Financial crisis around 1997 - which demonstrated limitations in East Asian economic / business models (eg see Understanding the Cultural Revolution);
  • the development of the American 'new' economy in the 1990s - involving a breakdown of hierarchical management into networks which lifted the ability of firms to exploit knowledge advantages, so overcoming prior concerns about an inability to compete with fast developing economies in East Asia;
  • politically-motivated manipulation of Australia's Public Services - including trying to make them more 'business-like' - which eroded their effectiveness in giving policy and implementation support to governments (eg see The Decay of Australian Public Administration);
  • many ineffectual politically-motivated efforts to develop Australia's S&T and innovation systems - including attempts to make universities more 'business-like' which have arguably reduced their abilities to perform their functions as universities;
  • the rapid economic growth of China and India, and their potential not only as difficult markets but as tough competitors in medium technology areas;
  • economic stagnation and sustained high unemployment in Europe - leading to a new priority now being given to building competitiveness;
  • the emergence of financial imbalances which put future global economic growth at risk (eg global growth has for a decade  been driven by credit-based US demand, associated with large current account and fiscal deficits and foreign debts; while financial institutions in the US's creditor nations in East Asia are often insolvent);
  • the war on terror - which shows how the current global order is fraying at the edges, and suggests the need for serious reform (eg see Competing Civilizations);
  • breakdown of efforts to develop multilateral trade - and incipient protectionism (eg in US) because of its inability to date to demonstrate another set of 'new' strategies to create large-scale high-income job opportunities in the face of the outsourcing strategies that major corporations have adopted to boost their bottom line). 

Unfortunately despite such changes (and largely because of the politicisation and consequent de-skilling of critical institutions) there has been little serious work to bring the understanding of Australia's competitive environment and appropriate strategies up to date for the past 15 years.

There is however reason to suggest that competitive advantages may still be derived by the methods suggested above - namely that the critical role which knowledge now plays in economic growth theories does not seem generally to be properly understood (see Probable Breakthrough in Understanding Economic Development). Thus:

  • outside East Asia few recognize the prospect of adding a dynamic element to the idea of industry clusters whose importance was widely recognized in the 1990s; and
  • in East Asia the methods used to add that dynamic element seem incompatible with achieving positive financial outcomes - a constraint which Australia should be able to avoid.
Maintaining Cohesion

Maintaining Cohesion

One consequence of the economic reforms (ie market liberalization) introduced in Australia in the 1980s was that many marginal rural, coastal and metropolitan communities did not gain the capabilities required for success in the more competitive environment that was created - and the political instability associated with the One Nation phenomenon emerged.

In order to avoid a repetition in developing Australia's S&T capabilities it is vital that potentially 'left behind' communities be taken into account. For example:

  • rural and regional communities would be less likely to be 'left behind' if encouraged to develop competitive advantages on the basis of knowledge and skills associated with globally specialized industry clusters - rather than reliance on their natural comparative advantages; 
  • pathways could be developed for disadvantaged groups (say single parent families or poorly educated adults who may be under-employed) to participate in an increasingly knowledge based economy.

The fact that bipartisan support appears to be emerging for the reduction of welfare dependency will clearly help in the latter regard by providing incentive. At the same time, the direct initiatives suggested above should increase the demand for more skilled and highly paid employees (and thus the availability of good jobs and the motivation to prepare for them).

Pathways into such opportunities might be created by:

  • research to identify models which are now working - and thus can usefully be more widely applied;
  • serious efforts to strengthen social (and particularly family) relationships, and thus increase the support available to individuals;
  • encouraging the disadvantaged to take a positive role in helping others (eg through some sort of volunteering or charity work) - to shift their self-image from that of dependent victims;
  • providing exposure through such volunteering or charity work to (a) basic work / enterprising skills (b) social interaction with local tradesmen / professionals / employers and (c) information about educational / training opportunities;
  • focusing regional business, community and educational organizations on how they (or their members) can participate in providing such pathways.


The author's qualifications for putting forward the above proposals include:

  • strategic policy R&D for over 2 decades with the Coordinator General's and Premier's Department's in Queensland. This included involvement in (and a master's thesis about) quite effective public sector development in the 1970s based on organizational systems' development using what would now be called a strategic management approach;
  • researching opportunities for sophisticated economic development in the 1980s which:
    • encouraged the establishment of the first formal policy functions in a Queensland agency;
    • showed how a systems' development approach could be used in upgrading S&T capabilities (see Towards a Strategy for Technological Development in Queensland, 1983), which led (very briefly) to a position as Director of Technology Policy;
    • identified worldwide experience and debates about economic development;
    • included applying systems' development by strategic management methods with fair success in a practical case;
    • resulted in 'reverse engineering' of the quite different intellectual basis of Japan's economic miracle - and thus of the East Asian economic models generally;
  • a probable significant breakthrough in understanding economic development as a systemic issue (and particularly in understanding the role of knowledge, which economics has long regarded as the most important factor in economic growth).

September 2004