Industries of the Future: Maybe there is hope!

In 2016 I published a blog article titled Moonshots for Australia: 7 For Now. It’s one of many I have posted on business and innovation in Australia. In that book, I highlighted a number of Industries of the Future among a number of proposed Moonshots.

I self-published a book, Innovation in Australia – Creating prosperity for future generations, in 2019, with a follow-up COVID edition in 2020.

There is no doubt COVID is causing massive disruption. Prior to COVID, there was little conversation about National Sovereignty or supply chains. Even now, these topics are fading, and we remain preoccupied with productivity and jobs!

My motivation for this writing has been the absence of a coherent narrative for Australia’s business future. Over the past six years, little has changed. The Australian ‘psyche’ regarding our political and business systems is programmed to avoid taking a long-term perspective.

The short-term nature of Government (3 to 4-year terms), the short-term horizon of the business system (driven by shareholder value), the media culture (infotainment and ‘gotcha’ games), the general Australian population’s cynical perspective and a preoccupation with a lifestyle all create a malaise of strategic thinking and conversation.

Ultimately, it leads to a leadership vacuum at all levels.

In recent years we have seen the leadership of some of our significant institutions failing to live up to the most basic standards, with Royal Commissions, Inquiries and investigations consuming excessive time and resources.

·       Catholic Church and other religious bodies

·       Trade Unions

·       Banks (and businesses generally, take casinos, for example)

·       the Australian Defence Force

·       the Australian cricket teams

·       our elected representatives and the staff of Parliament House

As they say, “A fish rots from the head!”

At best, the leadership behaviour in those institutions could be described as unethical and, at worst….just bankrupt!

In the last decade, politicians have led us through a game of “leadership by musical chairs” – although, for now, it has stabilised.

However, there is still an absence of a coherent narrative about business and wealth creation. It is a challenge. One attempt to provide such a narrative has been the Intergenerational Reports produced by our federal Government every few years since 2002.

The shortcomings of the latest Intergenerational Report

Each Intergenerational Report examines the long-term sustainability of current government policies and how demographic, technological, and other structural trends may affect the economy and the budget over the next 40 years.

The fifth and most recent Intergenerational Report released in 2021 (preceded by Reports in 2002, 2007, 2010 and 2015) provides a narrative about Australia’s future – in essence, it is an extension of the status quo.

The Report also highlights three key insights:

1.      First, our population is growing slower and ageing faster than expected.

2.     The Australian economy will continue to grow, but slower than previously thought.

3.     While Australia’s debt is sustainable and low by international standards, the ageing of our population will pressure revenue and expenditure.

However, its release came and went with a whimper.

The recent Summit on (what was it, Jobs and Skills and productivity?) also seems to have made the difference of a ‘snowflake’ in hell in terms of identifying our long-term challenges and growth industries.

Let’s look back to see how we got here and what we can learn.

Australia over the last 40 years

During Australia’s last period of significant economic reform (the late 1980s and early 1990s), there was a positive attempt at building an inclusive national narrative between Government and business. Multiple documents were published, including:

·       Australia Reconstructed (1987) – ACTU

·       Enterprise Bargaining a Better Way of Working (1989) – Business Council of Australia

·       Innovation in Australia (1991) – Boston Consulting Group

·       Australia 2010: Creating the Future Australia (1993) – Business Council of Australia

·       and others.

There were workshops, consultations with industry leaders, and conferences across industries to pursue a national microeconomic reform agenda. Remember these concepts?

·       global competitiveness

·       benchmarking

·       best practice

·       award restructuring and enterprising bargaining

·       training, management education and multiskilling.

This agenda was at the heart of the business conversation. During that time, the Government encouraged high levels of engagement with stakeholders. As a result, I worked with a small group of training professionals to contribute to the debate. Our contribution included events and publications over several years, including What Dawkins, Kelty and Howard All Agree On – Human Resources Strategies for Our Nation (published by the Australian Institute of Training and Development).

Unfortunately, these long-term strategic discussions are nowhere near as prevalent among Government and industry today.

The 1980s and 1990s were a time of radical change in Australia. It included:

·       floating the $A

·       deregulation

·       award restructuring

·       lowering/abolishing tariffs

·       Corporatisation and Commercialisation

Ross Garnaut posits that the reforms enabled Australia to lead the developed world in productivity growth – given that it had spent most of the 20th century at the bottom of the developed country league table. However, in his work, The Great Reset, Garnaut says that over the next 20 years, our growth was attributable to the China mining boom, and from there, we settled into “The DOG days” – Australia moved to the back of a slow-moving pack!

One unintended consequence of opening our economy to the world is the emasculation of the Australian manufacturing base. The manic pursuit of increased efficiency, lower costs, and shareholder value meant much of the labour-intensive work was outsourced.

Manufacturing is now less than 6% of our GDP, less than half of what it was 30 years ago!

The CSIRO

The CSIRO announced six significant challenges they intend to turn into Australia’s unique advantages.

·       Food Security and Quality

·       Health and Wellbeing

·       Resilient and Valuable Environments

·       Sustainable Energy and Resources

·       Future Industries

·       A Secure Australia and Region

They have also named twelve co-creation opportunities when overcoming these challenges. While all are important, there are four that stand out to me:

·       First, create a hydrogen industry to generate a new clean energy export industry.

·       Collectively drive our trusted agriculture and food exports to $100 billion annually by:

·       creating a sustainable protein future protein industry

·       Leveraging the world’s love of Australian food

·       Helping our farmers overcome drought, mitigate climate impacts, and

·       Increasing yield and profitability.

3) create new industries that transform raw material commodities into unique, high-value products.

For example, critical energy metals that build Australia’s value-added offerings, jobs and sovereign supply.

4) become a leader in new technologies.

But what does ‘becoming a leader in new technologies mean?’

Just because we might say we are a leader does not necessarily mean we are. So how do we objectively measure it?

The Why Australia Benchmark Report 2022 outlines that we currently have over 2000 tech companies across FinTech, MedTech, EdTech and AgTech. It provides a range of data that may form the basis of such measurement. For example, the EdTech sector currently employs 13,000 people. Does that make us a leader?

The Australian Brand (2019)

Who remembers “Australia’s Nation Brand”, published in December 2019

To ensure the success of the Nation Brand, we recommend adopting:

Our proposed brand framework, including purpose, promise, values and personality, as the foundation that guide Australia’s Nation Brand.

A narrative-led approach to celebrate everything that’s unique about Australia’s people, place, and product.

Our preferred brand design includes a premium green and gold colour scheme, wattle-inspired visual devices, and the use of the AU shortcut for Australia as design elements.

This document talks about a ‘narrative-led approach!

AND NOW!! November 2022

National Reconstruction Fund (NRF)

Priority funding areas 

The NRF will diversify and transform Australia’s industry and economy through targeted investments in the following priority areas:

1.      value-add in resources

2.      value-add in agriculture, forestry and fisheries

3.      transport

4.      medical science

5.      renewables and low-emission technologies

6.      defence capability

7.      enabling capabilities.

How the NRF will operate

The NRF will be an independent financier that operates commercially to deliver a positive rate of return.

It will be governed by a board that will make independent investment decisions guided by an investment mandate.

The NRF will finance projects that align with the seven priority areas to leverage Australia’s natural and competitive strengths.

The Government has identified $8 billion of the NRF’s $15 billion for the following areas:

·       up to $3 billion for the Powering Australia plan

·       $1.5 billion for medical manufacturing

·       $1 billion for value-adding in resources

·       $1 billion for critical technologies

·       $1 billion for advanced manufacturing

·       $500 million for value-adding in:

o  agriculture

o  forestry

o  fisheries

o  food

o  fibre.

If we aggregate Australian Industry Policies, we have:

1.      The Industry Growth Centres – recently reviewed

2.      The Modern Manufacturing Strategy

3.      The CSIRO strategy

4.      The Australian Brand 2019

5.      National Reconstruction plus

6.      Multiple other initiatives – CRC’s

In addition, there are other random announcements that, if read at face value, are statements about Government intentions!

1. The Australian Space Agency (announced in 2018) and, in 2021, Scott Morrison announced a more focused investment in the Space Industry.

“By 2030, we want to triple the size of our space sector – adding $12 billion to our economy and creating up to 20,000 new, high-skilled jobs – providing more opportunities for Australians and industries.”

https://www.businessnewsaustralia.com/articles/australia-partners-with-nasa-on-our-first-mission-to-the-moon.html#.YWZMCyGYBSQ.linkedin

2. Then we have some random – Directions – or Targets

Malcolm Turnbull announced:

·       A specific target: Australia as a Top 10 Arms Exporter.

The Australian Government and the Australian tech sector have a shared commitment to achieving 1.2 million tech jobs in Australia by 2030.

There are many industries on the journey to creating a more vibrant and robust future– making the stories more visible is a great way to focus stakeholders on the future. Focusing on the future and increasing the size of the pie is more inspiring than the current mediocre nonsense that passes for political conversation.

An analysis of the above will give a clue to Australia’s Future Industries; this TASK is challenging, but right now, Australia needs a narrative beyond the day-to-day!

Why business needs to lead Australia into future prosperity

A prosperous Australia benefits all Australians. Business is a powerful platform for that prosperity to be achieved. It is the only body with the NATIONAL GRUNT and longevity to undertake the task. Governments come and go.

It is essential to understand that Australia’s federal Government has always carried an excessive load by tradition and design. Over time it has become the national “problem solver” (or not) – but what if both government and business (industry) provided authentic leadership to establish a new, long-term strategic narrative for Australia instead?

There is a role for the Government to be at the leading edge of innovation and to encourage pioneering business ventures to help shape our future. However, business needs to find a new role – it is called leadership.

Sadly, in our business culture, we have a government-dependent mentality – i.e., we want governments to do the giving, BUT we do not want them to lead.

There was a time when Government did play a leadership role in business – five of our top ten ASX-listed companies were Government founded. And many other firms and industries would not exist now without Government funding/support.

If not the Government, then WHO?

Has our business sector become so self-serving and inward-looking that it cannot focus on and contribute to the conversation on national prosperity?

Or does business expect the Government to do all the heavy lifting?

It appears that both are possibilities!

The whole issue might have more clarity if there was a shared understanding of the longer-term view via more collaborative discussions and planning between Government and businesses. In any society, there is a need for HOPE.

What if businesses took some responsibility for making a genuine difference in ordinary Australians’ lives – and focused on increasing our national prosperity?

In the current scenario, that would be real innovation!

A PATHWAY to THE FUTURE? www.innovationinaustralia.com.au

Over decades Australia has developed competence in the conduct of running Royal Commissions. WE spend months /years (not to mention millions of dollars) investigating acts of corruption/ criminality and incompetence. The Commissioners make multiple recommendations for Governments to change the system.

Whether any significant change occurs because of the Royal Commission is moot.

The legal process as good as it is, is sometimes described as a process ‘which walks backwards into the future using the past as a reference.’ At best, changes are incremental.

The concept of a Royal Commission could be the basis of a new Prosperity Commission.

In Innovation in Australia, I posited seven initiatives and steps to shift our thinking. They have been enhanced based on conversations over the past two years.

1. A Prosperity Commission (every seven years)

2. Establish an independent Prosperity Commission (to build on and extend) the work of the Prosperity Commission.

3. An Australian Prosperity Progress Report at 3.5 years

4. Industry learning forums each year.

5. Establishing multiple industry ecosystems needs to be prioritised with collaboration (learning) networks and information-sharing tools.

6. An innovation venture fund (I understand multiple funds are in place now!

7. Nation-building projects: bi-partisan agreement on infrastructure projects. One announced each parliamentary term. These could emerge in Industry Learning Forums and be priorities in the Royal Commissions.

Wealth Creation 2050 and beyond!

Building industries based on Australian innovation is how to increase the ‘size of the pie’ to ensure Australia’s future prosperity. It requires a shift of mind at every level of Australian business and Government. It will also need some radically different approaches. Finally, it will require a form of business and government leadership that we have not seen in recent years, if ever.

The nature of Industry conversation will have to change.

Some initiatives could contribute to the ‘mind shift’ required.

1. A Prosperity Commission (every seven years)

I propose convening a Prosperity Commission (not a legal process) to address issues of national significance – THE FUTURE of AUSTRALIA.

Some early design principles:

·       The National Cabinet established during COVID would be the convening body.

·       Social technologies, e.g., Scenario Planning; Open Space – are the basis of the process.

·       Planning will start with the States – (even Local Authorities)

A process such as this might propose to create multiple scenarios for Australia plus 30 years – and various initiatives for a National Conversation.

The proposed outcome of this investment:

i.        Seven -Ten Industry Development Initiatives for public/political conversation must focus on wealth creation.

ii.      Seven – Ten Nation building projects for a National Conversation (Definition)

China has major initiatives – the China Belt Road Initiative and South-to-North Water Diversion Project. These projects have time frames for completion of more than 50 years.

Our track record in Nation Building projects is ordinary – the last one anyone can identify is the Snowy Mountains scheme completed in the early 1950s. Others?

·       It took over 30 years to get Sydney Airport – (and Inland Rail) off the ground.

How do we create an environment where significant projects are an important feature of the National agenda in Australia?

2. Establish an independent Prosperity Commission (to build on and extend) the work of the Prosperity Commission.

We were so disappointed after not winning a gold medal at the 1976 Montreal Olympics that we did something about it. As a result, after some time, we established the Australian Sports Commission. 

Why not an Australian Prosperity Commission? Our record on many indices leaves a lot to be desired.

3. An Australian Prosperity Progress Report at 3.5 years

This Report could position Australia in a global context.

Our current rankings on any Global index leave the possibility of significant improvement.

4. Industry learning forums each year.

Businesses/industries/governments could hold annual forums to educate and create a ‘learning agenda’ in each industry. 

There might even be debate and discussion about industry scenarios that will be a resource for the participants. We might even reach a stage of joint industry projects.

5. Establishing multiple industry ecosystems needs to be prioritised with collaboration (learning) networks and information-sharing tools.

What if we measured the number of ‘for-profit’ businesses established (and the number of jobs created) because of our national R&D investment?

We could even be so bold as to measure businesses’ lifespans and economic and social contributions.

6. An innovation venture fund (I understand multiple funds are in place now!

My question? How are they working? What are they producing, and how are they being assessed?

At least three funding sources stand out:

i.        A levy (tax) on every business transaction engaging an international investor buying an Australian business. (The purpose is the re-creation of Australian industry.)

ii.      Dividends back to Government from investments in Government-funded R&D research, which is later commercialised.

iii.    the Business Council of Australia and other leading industry bodies contributing to this fund and working with the Government on prioritising a list of nation-building innovations that they believe Australia needs over the next 50 years.

7. Nation-building projects: bi-partisan agreement on infrastructure projects. One announced each parliamentary term. These could emerge in Industry Learning Forums and be priorities in the Royal Commissions.

Our infrastructure projects should never end up as political footballs like the NBN. Instead, the Government and opposition should jointly announce at least one major nation-building project every election term.

THE CURRENT POSITION?

The current Minister has announced the following:

We must be a nation that takes our big ideas and makes them

Our aim is to transform Australian industry and manufacturing!

While I wish the Minister well, the last major reconstruction had intended and unintended consequences – what innovations are being made in the social process of Australia to create a ‘shift of mind’ so that we focus on the future and minimise the unintended consequences.

Now - the strategy is incoherent and follows a similar pattern to history! AND

 “If you always do what you have always done you will always get what you have always got”.