Securing Australia's Future : Harnessing Interdisciplinary Research for Innovation and Prosperity [1 ed.] 9781486306701, 9781486306695

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Harnessing Interdisciplinary Research for Innovation and Prosperity

Securing Australia’s Future synthesises the major themes that emerge from ACOLA’s reports. The chapters examine Australia’s strengths, education, productivity and innovation, engagement with Asia, and energy and the environment. Each chapter includes key findings designed to optimise Australia’s prosperity and place in the region. The future is a long game but its base must be built now. This book provides a vision for the nation, for our politicians, public servants and industry leaders – a sound footing for securing Australia’s future. About the authors Dr Simon Torok has worked in communication for more than 20 years, including as Communication Manager for CSIRO Oceans and Atmosphere, as a climate change communicator at the Tyndall Centre for Climate Change Research in England, and as editor of two science magazines for young people. Simon has a Graduate Diploma in Science Communication from the Australian National University, and completed a PhD in climate change science at the University of Melbourne. 

Simon and Paul are Directors of science and environment communication company Scientell. They have together co-authored 19 popular books on science, technology and climate change, published by ABC Books, CSIRO Publishing, Oxford University Press and Pan Macmillan, several of which have been translated into Spanish, Portuguese, Chinese, Korean and Hungarian.

SECURING AUSTRALIA’S

Simon Torok and Paul Holper

Paul Holper worked for CSIRO in the environmental research field for over 25 years, in senior communication and research management roles. He managed the Australian Climate Change Science Program, was convenor of the high-profile Australian climate change science ‘Greenhouse’ conference series, and was Communication Manager for Atmospheric Research. Paul has an Honours degree in chemistry and qualifications in science communication and education. 

SECURING AUSTRALIA’S FUTURE

The future will bring change for Australia. But whether that change is for the better or worse largely depends on the decisions we make today as individuals and as a nation. Recognising rapid changes in the global economy, environment and policy, the Australian Government engaged the Australian Council of Learned Academies (ACOLA) to undertake detailed interdisciplinary research to help guide Australian thinking and policy decisions. Dozens of Australia’s finest minds assessed the opportunities available to us globally and domestically, charting a course for the future. The resulting findings can prepare Australia to address the challenges ahead and make the most of the opportunities.

Simon Torok and Paul Holper

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Securing Australia’s

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Harnessing Interdisciplinary Research for Innovation and Prosperity

Securing Australia’s

Simon Torok and Paul Holper

© Australian Council of Learned Academies Secretariat Ltd 2017 All rights reserved. Except under the conditions described in the Australian Copyright Act 1968 and subsequent amendments, no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, duplicating or otherwise, without the prior permission of the copyright owner. Contact CSIRO Publishing for all permission requests. The moral rights of the author(s) have been asserted. National Library of Australia Cataloguing-in-Publication entry Torok, Simon, author. Securing Australia’s future : harnessing interdisciplinary research for innovation and prosperity / Simon Torok and Paul Holper. 9781486306695 (paperback) 9781486306701 (epdf) 9781486306718 (epub) Includes index. Economic development – Australia. Economic development – Effect of education on – Australia Technological innovations – Economic aspects – Australia. Globalization – 21st century. Australia – Economic conditions – 21st century. Holper, Paul N., 1957– author. Published by CSIRO Publishing Locked Bag 10 Clayton South VIC 3169 Australia Telephone: +61 3 9545 8400 Email: [email protected] Website: www.publish.csiro.au Front cover: Night-time view of dishes that are part of the Australian Square Kilometre Array Pathfinder (ASKAP) – a next-generation radio telescope in remote Western Australia (with modifications) (Credit: Alex Cherney/CSIRO); Blurred walking people (Credit: bim/iStockPhoto) Back cover: Stars at Uluru, NT (Credit: Ed Dunens/Flickr, CC BY 2.0) Set in 10.5/12 Minion and Stone Sans Edited by Joy Window (Living Language) Cover design and typeset by James Kelly Index by Bruce Gillespie Printed in Australia by Ligare CSIRO Publishing publishes and distributes scientific, technical and health science books, magazines and journals from Australia to a worldwide audience and conducts these activities autonomously from the research activities of the Commonwealth Scientific and Industrial Research Organisation (CSIRO). The views expressed in this publication are those of the author(s) and do not necessarily represent those of, and should not be attributed to, the publisher or CSIRO. The copyright owner shall not be liable for technical or other errors or omissions contained herein. The reader/user accepts all risks and responsibility for losses, damages, costs and other consequences resulting directly or indirectly from using this information. Original print edition: The paper this book is printed on is in accordance with the rules of the Forest Stewardship Council®. The FSC ® promotes environmentally responsible, socially beneficial and economically viable management of the world’s forests.

Contents Prologue Preface: The SAF Program – rethinking science advice to government

Introduction

An evidence-based approach to informing policy Securing Australia’s future Golden threads Interdisciplinary research topics The Australian Council of Learned Academies (ACOLA)

1 Australia’s strengths – and a plan for a secure future Introduction Addressing the fundamentals Policy directions Opportunities for sectors of the economy An innovative workforce Protecting our environment Conclusion

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2 6 11 12 19 20 22

2 Engagement with Asia: time to be smarter

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3 Boosting productivity with innovation and new technologies

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4 Recharging education to power the nation

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Introduction Smart engagement: identifying the opportunities Tapping into the market while avoiding the risks Teaming with our neighbours Better business Conclusion

Introduction Investing in ourselves Transforming research into value Innovation requires skilled labour and collaboration across disciplines Tinkering, failing and adapting: working with new technology Conclusion

Introduction Achieving an innovative, flexible and creative workforce Science, technology, engineering and mathematics education: a national report card Encouraging and improving STEM teaching Too few women in STEM Lifting Indigenous engagement in STEM Partnering and enriching National STEM coordination Lessons for Australia and STEM Findings for the future Engaging with the world Conclusion

24 25 28 35 40 45 48 50 51 56 62 69 72 73 77 82 83 85 86 87 88 92 92 94 v

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5 Green and clean: securing a sustainable future

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Introduction 96 Environment and energy 97 Cities and mobility 106 Collaborative research for sustainability 110 Preparing for the future 115 Conclusion 120

6 Conclusion: challenges and opportunities for Australia Advice for an unknowable future Past performance ≠ future success Smart farming, smart engagement Educating the future workforce Exporting knowledge Securing Australia’s environment Taking it home: key messages

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Segue: Securing Australia’s Future compendium

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Appendix 1. Australia’s Comparative Advantage

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Appendix 2. STEM: Country Comparisons: International Comparisons of Science, Technology, Engineering and Mathematics (STEM) Education

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Appendix 3. Smart Engagement with Asia: Leveraging Language, Research and Culture

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Appendix 4. The Role of Science, Research and Technology in Lifting Australian Productivity

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Appendix 5. Technology and Australia’s Future: New Technologies and their Role in Australia’s Security, Cultural, Democratic, Social and Economic Systems

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Appendix 6. Engineering Energy: Unconventional Gas Production

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Appendix 7. Australia’s Agricultural Future

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Appendix 8. Delivering Sustainable Urban Mobility

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Appendix 9. Translating Research for Economic and Social Benefit: Country Comparisons

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Appendix 10. Skills and Capabilities for Australian Enterprise Innovation

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Appendix 11. Australia’s Diaspora Advantage: Realising the Potential for Building Transnational Business Networks with Asia

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Index 174

The members of the Council and Board of the Australian Council of Learned Academies (ACOLA) commend this publication and express their deep thanks to all who have contributed to its success, particularly the Australian Research Council who funded the Securing Australia’s Future program, the Project Steering Committee (with special thanks to Peter McPhee for his oversight of the production of this book), the Expert Working Groups and the ACOLA Secretariat. ACOLA Council Professor Andrew Holmes, Chair of ACOLA (2016) and President of the Australian Academy of Science Professor John Fitzgerald, President of the Australian Academy of the Humanities Professor Glenn Withers, President of the Academy of the Social Sciences in Australia Professor Peter Gray, President of the Australian Academy of Technology and Engineering ACOLA Board Mr Ben Patterson, Acting Chief Executive of the Australian Academy of Science Dr Christina Parolin, Executive Director of the Australian Academy of the Humanities Dr John Beaton, Executive Director of the Academy of the Social Sciences in Australia Dr Margaret Hartley, Chief Executive Officer and Director of the Australian Academy of Technology and Engineering Dr Angus Henderson, General Manager of the Australian Council of Learned Academies

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Prologue

Professor Ian Chubb AC FTSE Chief Scientist for Australia (2011–15) In 2011, when I started as Chief Scientist for Australia, there was a view around that we (or I) could spend a lot of time developing great reports with their climax so far in the future that the government of the moment would have little capacity (or interest) in taking them anywhere. So I had a problem: how would we seek to influence the here and now, and identify the matters that Ministers needed to know about along with the actions that they could take, without losing sight of the need to think ahead of the game? The downside risk was obvious: a focus on the now means that the matters further ahead in time could drift even further into the future. A cursory knowledge of our history shows us that the exigencies of the moment nearly always trump discussion of the actions which should be taken to improve the mid- to long-term view. To me it was clear: we would have to make a particular effort to shift and sustain the conversation or lose sight of the horizon because of a myopic view of the world. So the Office of the Chief Scientist with help from the Australian Research Council sought out the Australian Council of Learned Academies (ACOLA) – the group established by the four Australian academies to enable intelligent people to work together away from the exigencies of their disciplines, territory, narrow interests or academic envy. We effectively set up a novel experiment in Australian public policy: draw all the academic disciplines in to produce evidence that would put the interests of the future securely on the national radar. It reflected a belief that the future can and should be discussed in informed – dare we say ‘learned’ and cross-disciplinary – terms. HG Wells once observed that there were many professors of history, but few or no professors of the future. That probably remains the case in much of the academic world. In the media, on the other hand, the ratio seems to be reversed: any number of pundits will speculate about what the future might hold, or promise the renaissance of some neverdefined Golden Age – too often mouths masquerading as brains. That is not a surprise. It is much easier to make things up than to look them up. It is also fairly safe because the conversation moves on, and we forget. So when we started we knew that Australia, too, has no shortage of pontificators-atlarge. What we sought to develop through this project was different: a deep tradition of scholarly future-thinking, combining the merits of expert peer review and rigorous analysis with a mission to shape change. This meant the challenge was twofold. One, to encourage researchers to venture boldly into the difficult business of combining their expertise to tease out the implications for the future. And two, to find a way to give national decision makers access to genuine expertise in a helpful and timely form. ix

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Front of mind was the example of the National Research Council of the United States. As the research arm of three of the US academies, the Council has the mission: To improve government decision making and public policy, increase public understanding, and promote the acquisition and dissemination of knowledge in matters involving science, engineering, technology, and health. Our independent, expert reports and other scientific activities inform policies and actions that have the power to improve the lives of people in the USA and around the world. – The National Academies of Sciences, Engineering, and Medicine website

Good enough for them … and surely (with a broader focus, and the appropriate geographical tweak) good enough for us. To improve government decision making, public understanding, acquisition and dissemination of knowledge, and so forth, is the stuff that dreams are made of. We have the passion, talent and ability in Australia. But it has rarely (or never?) been harnessed to focus the disciplines so squarely on particular topics especially important to future national wellbeing. What will Australia be like? What do we want it to be? What do we have to do to prepare the foundations for that future – to take the long run, to be ready? How do we eschew the ‘techo-talk’ that turns too many in the community off, even though they pay for most of the expertise that generates it? And all this in the context that this generation has, surely, a moral obligation to prepare comprehensively and as best it can the ground for the next. I would not be the first to see in Australia’s political institutions a tendency to drift. It is captured by our national motto ‘she’ll be right’, or its sibling ‘no worries’. Perhaps our history has led us to believe that something will always crop up to replace the last bit of good luck we’ve exhausted, without our taking the trouble to build something with enduring strength in its place. In any event, the rewards for building those assets are difficult to fit within the three years that governments have (at least nominally) to leave their mark. And marks are important to our professional polity. But to be better than that, we have to work at it. And it can be complicated. Since the Securing Australia’s Future (SAF) program commenced, we have had four Prime Ministers and seven Ministers responsible for science. All have had instincts, interests, impulses and imaginations – overlapping maybe, but different. That is the context in which 11 reports and one SAF review report were born. The point of the exercise was to create a mechanism that would endure, no matter the personalities or politics involved. That is the test we had to meet. Did we succeed? As always, the answer depends on where the expectation is set. Every report put forward evidence and useful and useable insights. These were orchestrated into recommendations to government by the Office of the Chief Scientist and the experts. Their quality is testament to the calibre of the teams involved. On the other hand, not every report received the coverage or policy impact it deserves. So perhaps the better question to ask is under what circumstances the individual projects fared best.

Prologue

I think, for example, of SAF02 STEM: Country Comparisons, a report routinely cited in the many think-tank papers and policy submissions that followed in its wake. That study made it abundantly clear that science, technology, engineering, mathematics (STEM) education is, in the authors’ words, the ‘overwhelming preoccupation’ of national governments nearly everywhere (but not here at that time). It set out models for our own education system to follow, as well as an imperative to raise the bar. SAF02 was well targeted, well timed and well supported long after the initial report launch. We kept talking about it – and so it kept being talked about in the places where its insights were required. Of course, SAF02 is not alone in presenting ideas or changing readers’ perspectives. The challenge that remains is to capitalise on the insights to be drawn from all 11 reports. My three word mantra is passion, persistence and patience. It is not enough to be authors of reports, even good ones. We have to be passionate ambassadors for their findings long after the ink has dried. Patient and persistent. Relentless. The future is a long game, after all, but its base must be built now. What we will need is not simply waiting on a shelf in some cupboard somewhere for a future Prime Minister to take it down, dust it off and use it. It is a national vision handed on through time; with every new Prime Minister picking up its threads, because Australians understand its importance and insist that they do. In concluding, let me acknowledge the many people who have contributed to the SAF series over the years and pushed the project in new directions. The million words we have on the page mark the diversity, as well as the dedication, of the individuals and organisations involved. The SAF project was a good beginning which has left us with an understanding of how best to choose our means. The end remains: securing a better Australia. We will always go further, and faster, with the guidance that evidence provides, combined with respect for expertise.

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Preface: The SAF Program – rethinking science advice to government

Emeritus Professor Michael N Barber FAA, FTSE, FAICD Chair, Program Steering Committee (Jan 2013–June 2016) Securing Australia’s Future program Australian Council of Learned Academies In an age dominated by science and technology it is ironic that science and research are not taken as seriously as they should be in the formulation of public policy. From climate change and genetically modified crops to debates on the safety of nanotechnology and vaccination, scientific facts often get lost. Part of the problem lies with those offering science advice failing to appreciate, as Sir Peter Gluckman, the Chief Scientist for New Zealand, has emphasised, that science advice is only one stream of advice that public policy makers receive. The vision of the Securing Australia’s Future (SAF) program was to encourage more compelling science and research advice, enriched through an interdisciplinary way of generating evidence-based findings (importantly, not recommendations) that were based upon contemporary and high-quality research and conveyed with a greater awareness of the cultural, economic and social and even political contexts in which any ensuing policy would be developed. To do so, the then Chief Scientist for Australia, Professor Ian Chubb, decided to draw upon the collective wisdom of Australia’s four learned academies operating as the Australian Council of Learned Academies (ACOLA). With the support of the Australian Research Council, SAF was conceived. The entire program of 11 reports was overseen by a project steering committee (PSC) that ACOLA convened. The PSC was a remarkable group of individuals that I had, for all but the first six months of the program, the privilege and honour to chair. At any time the PSC consisted of three Fellows from each of the four academies. Over the four years of SAF, 22 Fellows served on the PSC. As Fellows we came to the PSC with recognition of distinction in our disciplinary specialities: from mathematics to history, economics to biology, engineering to geography. However, over the program we all increasingly relished the views that came from very different perspectives. As Peter McPhee, a historian, once said: ‘the camaraderie, sense of purpose and willingness to step out of our own comfort zones often made the PSC meetings exhilarating’. Scott Page of the University of Michigan has written a book, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, on the importance

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of diversity in public policy, particularly in tackling so-called wicked problems for which interventions can have (and usually do have) unintended consequences. By diversity Page does not only mean gender diversity, as important as that is. Rather he refers to the value that different perspectives of experts from different backgrounds, experience, discipline and so on can have on the development of effective public policy and associated interventions. However, to realise this value, Page argues, the experts must be willing to step outside their comfort zones and recognise that no particular perspective is any more valuable than any other. I believe that the PSC, and to a large extent the SAF program itself, was a confirmation (and indeed an exemplar) of Page’s thesis. What did the PSC do? Initially it was conceived as a steering and oversight committee charged with recommending the membership of the Expert Working Groups (EWGs), high-level oversight of their work and quality assurance. Over the duration of the program the PSC evolved in response to various issues that arose. In particular it took a greater direct involvement – through periodic ‘deep dives’ and the assignment of specific PSC members to liaise with the EWGs – in the workings of the EWGs to ensure that the breadth of the academies’ expertise was brought to bear and timely reports were delivered with clear findings that could be actioned by the Office of the Chief Scientist and/or line government departments. The 11 reports developed through the SAF program, and this volume which synthesises them, are the important legacy of the work undertaken through the SAF program. The individual reports, while summarised in the appendices of this volume, can be accessed on the ACOLA website (www.acola.org.au). The ACOLA website also archives the working papers and consultant reports commissioned by the EWGs. These, by themselves, constitute a significant legacy of the program that can assist future research. A less formal but nonetheless very important legacy of the SAF program is the lessons PSC and ACOLA learned from delivering the program itself. SAF was a novel experiment and had to test and learn as it progressed. The learnings form a valuable asset for ACOLA which should continue to contribute to the development of any future opportunities for SAF-style programs that contribute to national interests. So what did we learn? The most significant conclusion from the past four years is that the SAF program demonstrated that the four academies, working collectively and collaboratively as ACOLA, can be an important voice in evidence-based policy advice in Australia. Eleven reports of substance, drawing value and insights from both the science, technology, engineering, mathematics (STEM) and humanities, arts and social sciences (HASS) disciplines, were produced on topics of importance to Australia’s future. The quality and depth of these reports should see their relevance maintained for some time. In process terms, we learnt a great deal about the management and leadership skills necessary to produce effective, productive research across the disciplines. Such skills paid rich rewards in outcomes and are recorded in the PSC review of the program available on the ACOLA website. Since the overall aim of the SAF program was to influence the formulation of public policy, how successful was it in achieving this objective? By design many of the projects coincided with important issues of public policy and they do seem to have had an influence. Prime examples include: ●●

SAF01: substantive input to the development of the Productivity Commission Report, Migrant Intake into Australia (2016);

Preface: The SAF Program – rethinking science advice to government

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SAF02: substantive input to the development of the Chief Scientist’s position paper Science, Technology, Engineering and Mathematics in the National Interest: A Strategic Approach (2013) and the Vision for a Science Nation Consultation Paper (2015); SAF03: influence on the development of the Department of Foreign Affairs and Trade’s Public Diplomacy Strategy 2014–2016 (2014); SAF04: substantive input to the development of Boosting the Commercial Returns from Research (2015) and the Industry Innovation and Competitiveness Agenda (2014); SAF06: substantive input to the development of shale gas policies at federal and state/territory level (2014); SAF07: coincided with the release of the Government’s Agricultural Competiveness White Paper (2015); SAF08: references in the Australian Infrastructure Plan: Priorities and reforms for our nation’s future (2016); and SAF09: findings incorporated in the National Innovation and Science Agenda (2015), the Watt Review of Research Policy and Funding Arrangements (2015).

Ideally this book will carry the SAF findings even more widely. What else could have been done with SAF? The 11 SAF reports all deal with issues of public policy important to Australia’s future. There are, of course, many other issues that will affect and determine Australia’s future, a number of which could benefit from the multidisciplinary perspective brought to the SAF program. As Simon Torok and Paul Holper, the authors of this book, note: The scope of the SAF project was limited by the commission agreed between the government of the day and the Office of the Chief Scientist. There was no suggestion that the project would examine every major challenge facing Australia: so, for example, there was no specific report that examined the implications of Australia’s demographic changes, such as in life expectancy, and their implications for health policy. Nor was there a report devoted to climate change, although the imperatives of environmental sustainability underpin many of the reports and this book. Two of my favourite projects that the PSC tried to get up but failed to for various reasons were tentatively called ‘Reengineering Health’ and ‘Privacy in the Age of Security’. The former would have explored how technology and other disciplines from engineering and operations technology to economics, industrial relations, psychology and design theory might transform health, thereby decreasing cost and increasing patient outcomes. The latter could have explored the tensions and compromises involved in striking an appropriate balance between privacy and the need for security particularly given technological developments, and could have asked questions such as: has the notion of privacy changed in the age of Facebook? While those of us close to the SAF program and particularly on the PSC could, by the end, see topics that SAF could have explored and even how we might have improved the ones we did, SAF has left a lasting legacy. And indeed, in doing so, it broke new ground. A fundamental tenet … is the interdisciplinary nature of the enterprise. The ability to mobilize first-rate expertise across the science, engineering, social science and humanities communities is quite extraordinary. Indeed, there is no comparable effort

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outside Australia that has been able to sustain such an integrated structure beyond a one-off study … In that sense, the work of the SAF is not only a unique asset in Australia; it is also a model that academies abroad should watch closely to see whether it can be institutionalized. – Richard Bissell, Executive Director, Policy & Global Affairs, of the US National Academies in Washington

This book by Simon Torok and Paul Holper is thus not just a synthesis of the reports but also a tribute to all who made SAF what it was. I commend the book to you.

Introduction

We can’t know the future, we can’t predict it with great certainty, but we ought to know it’s going to be different, so we may as well think as constructively as we can about how to make it better. – Ian Chubb, launch of SAF08 Delivering Sustainable Urban Mobility, 7 October 2015

An evidence-based approach to informing policy Early in the second decade of the 21st century, the Australian Government recognised that a rapidly evolving global environment presents both opportunities and challenges. The Government engaged the Australian Council of Learned Academies (ACOLA) to undertake a series of detailed interdisciplinary national and international assessments to help guide Australian thinking and policy decisions. ACOLA, an independent organisation that links more than 2000 of Australia’s most eminent academics to support evidence-based interdisciplinary research, harnessed the expertise from across the country’s academies. This included many of Australia’s most influential leaders in the humanities, arts and social sciences (HASS) and science, technology, engineering and mathematics (STEM) domains. They did extensive research and, based on extensive evidence, compiled a series of well-supported findings designed to encourage Australia to be creative and innovative, adaptable and resilient. The ultimate objective of the work is ‘to secure the country’s future’. The scope of the SAF project was limited by the commission agreed between the government of the day and the Office of the Chief Scientist. There was no suggestion that the project would examine every major challenge facing Australia, so, for example, there was no specific report that examined health policy, nor the implications of Australia’s demographic changes such as increased life expectancy. There was no report devoted to climate change, although the imperatives of environmental sustainability underpin many of the reports and this book. All pervasive, too, is the assumption that governments at all levels have responsibilities for providing leadership and, as much as possible, the social, political and economic policy settings to enable successful responses to the challenges identified by ACOLA. Any significant challenge will often span many disciplines. It is essential to have an interdisciplinary approach to provide complementary worldviews when addressing complex policy issues. The interdisciplinary Securing Australia’s Future research program aimed to identify Australia’s distinctive strengths and advantages; to establish the contexts and policies that would encourage creativity and innovation, as well as adaptability and xvii

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resilience; and to explore the natural, geographical, economic, social, cultural and scientific characteristics and capabilities that Australia needs to succeed and thrive. The term ‘innovation’ has many definitions. Here we use the word broadly, to mean the implementation of a new or significantly improved product (good or service), or process, a new marketing method or a new method in business practices, workplace organisation, external relations and public policy. In this book, we have primarily used the 11 Securing Australia’s Future reports (each summarised in the appendices) to draw out from an independent perspective the key findings, themes and threads that emerged from the program. These are presented as findings – rather than recommendations – as the SAF program sought to present analysis and research-based evidence grounded in the many related studies, providing a foundation for further future policy development. It was beyond our scope to draw on new research outside the research-based evidence delivered by the authors and expert panels associated with the 11 reports. We have not included references, but full lists of references are available in each of the reports listed below. Therefore, we have not aimed to provide a summary of the program or repetition of the 11 reports. Rather, this book is a synthesis and consolidation of the approximately one million words contained within the reports, distilled to independently interpret and represent ACOLA’s findings.

Securing Australia’s future The Australian Government announced the Securing Australia’s Future program in June 2012. In the face of an ever-uncertain future, the aim of the project, as described by then Chief Scientist Ian Chubb, was for trans-disciplinary researchers to come together for the benefit of the country: ‘The answers to the challenges we face, and the contributions that can be made, don’t come from one discipline; they actually require disciplines to work together in different ways from the ways that we have in the past.’ His sentiments were reflected in the foreword to the ACOLA report on technology and Australia’s future by Robin Batterham, Former Chief Scientist of Australia and Fellow of the Australian Academy of Science and the Australian Academy of Technology and Engineering: ‘Just because we are uncertain of the future doesn’t mean that it is not clear that action is required … Interventions can succeed even in the face of the uncertain future.’ The Securing Australia’s Future program was a four-year, $10  million research program, funded by the Australian Research Council. The program, responding to changes in Australia and around the world, aimed to identify and enable preparation for the opportunities and challenges that may arise through a period of transition in Australia’s economy. It was conducted through ACOLA, by the Australian Academy of the Humanities, the Australian Academy of Science, the Academy of Social Sciences in Australia, and the Australian Academy of Technology and Engineering. Experts from across these disciplines worked together to deliver a series of 11 strategic research projects (see the details of each project below). ACOLA undertook the program for the Prime Minister’s Science Engineering and Innovation Council (PMSEIC) and, subsequent to changes in October 2014, the Commonwealth Science Council, through the Office of the Chief Scientist. Ian Chubb, as Chief Scientist, commissioned the learned academies to work together to investigate challenges and opportunities facing Australia. Such an undertaking could only have been possible through an interdisciplinary approach enabled by ACOLA (for more information on the genesis of the project, see the Preface by Ian Chubb). The four national

Introduction

academies – covering the humanities, arts, social sciences, science, engineering and technology – worked together to deliver interdisciplinary, research-based evidence to support proactive policy development in areas of importance to our future (for more details about ACOLA’s approach, see the Foreword by Michael Barber). Six research topics were initially identified by PMSEIC. Another five topics were subsequently identified by ACOLA and then approved by the Australian Research Council and the Office of the Chief Scientist, as well as a summary of the program reports, and a review of higher degrees by research (the latter is not considered in this book). The Securing Australia’s Future reports are a unique contribution to the consideration of Australia’s future, and an ambitious undertaking involving a dozen significant results delivered in a short period of three to four years. The reports resulted from informed discussions among experts from a wide range of fields. Such a wide-ranging interdisciplinary approach is novel. Richard Bissell from the US National Academies assessed the program, observing that, ‘a fundamental tenet about the SAF’s unique contribution to national policy-making is the interdisciplinary nature of the enterprise. The ability to mobilize firstrate expertise across the science, engineering, social science and humanities communities is quite extraordinary’. Bissell goes on to say that ‘indeed, there is no comparable effort outside Australia that has been able to sustain such an integrated structure beyond a one-off study (for instance, in reports issued by the American Academy of Arts and Sciences). In that sense, the work of the SAF is not only a unique asset in Australia; it is also a model that academies abroad should watch closely to see whether it can be institutionalized’. The program’s interdisciplinary approach was not the only factor that made the work unique. The program accessed Australia’s leading experts, scholars and practitioners, including through several expert panels; established relationships with public policy makers and influencers; and provided an assurance of quality and independence through the development of balanced and peer-reviewed findings. Such interdisciplinary cooperation can be challenging. However, reading the reports suggests that the authors, expert working groups and steering committee members arrived at a large degree of consensus about the nature of the issues and, to some extent, about the solutions. Securing Australia’s Future uses research concepts and methods drawn from across the range of academic disciplines to help address fundamental issues involved in positioning Australia for the future. The program focuses on the medium and the long term, and also on the pathways that need to be built between today and that future. Many aspects of Australia’s past, present and – in particular – future are considered, including the characteristics of our environment, biodiversity, location, population and culture, and other attributes that define the unique domains where the country can succeed in an evolving global environment. Securing Australia’s Future examines what makes Australia an attractive international partner in research and development, industry and innovation. It also identifies the advantages we have and can build on to help the country enhance productivity, innovation, fairness and equity.

Golden threads ACOLA’s Securing Australia’s Future (SAF) program provides evidence demonstrating that continued increases in Australia’s productivity and economic growth can be achieved by stimulating creativity, instilling adaptability and fostering innovation. Embracing an

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education system that values excellence in the pursuit of knowledge across all domains – science, technology, engineering, mathematics (STEM), humanities, arts and social sciences (HASS) – the 11 SAF reports call for a system that extends Australia’s strengths and finds opportunities for a confident, regionally connected and globally minded nation. This book identifies cross-cutting themes and common threads from across all 11 SAF reports (see below). Each chapter explores an overarching theme and distils the interdisciplinary research and evidence presented as a single ‘golden thread’: 1. A prosperous future is more than just technological advancement. For us to secure an Australian future characterised by social wellbeing and increased equity, prosperity and sustainability, we need to understand international trends and position Australia to take maximum advantage of its strengths. Achievement will entail economic, social and cultural changes, facilitated by visionary leadership and by targeted investments in skills, infrastructure and innovation. 2. Australia must celebrate its relationships in the Asia-Pacific region. We need to engage better and cement Australia’s prominent place in the Asia-Pacific region. Finding these new opportunities must embrace the invaluable resources of Asian and Pacific communities by improving Australia’s language ability, increasing cultural awareness, building on current export strengths and extending networks and linkages. 3. Building the industries of the future will enhance productivity and ensure resilience. Adapting to change and creating new opportunities for all Australians in the future require increased investment in research and development, a commitment to innovation, better links between business and research, and the training and use of an innovation-capable workforce that effectively combines HASS and STEM capabilities for creative problem solving. 4. Australia must maintain its strong and broad foundations in education, including STEM subjects. We should nurture and challenge those who are enthusiastic in STEM, by better engaging primary and secondary school students, and supporting teachers. A major objective should be increasing participation in STEM by girls, those from lower socioeconomic backgrounds and Indigenous students. One immediate initiative would be a well-funded national STEM coordinating agency. 5. Providing global leadership on environmental sustainability and adaptation is an area of great opportunity for Australia. With strengths in innovative research and a focus on community adoption consistent with a need to achieve a social licence to operate, Australia can seek to develop its own capabilities and give global advice on urban planning, transport and clean energy solutions. Achievement will protect our clean and green environment and international reputation. To meet these cross-cutting objectives, we provide key findings in each chapter that need to be addressed and implemented for us to secure the country’s future.

Interdisciplinary research topics The golden threads above were synthesised from 11 SAF reports. Specifically, the reports are as follows: 1. Australia’s Comparative Advantage, by Withers G, Gupta N, Curtis L and Larkins N (2015) (http://acola.org.au/wp/project-1/), as summarised in Appendix 1. The

Introduction

2.

3.

4.

5.

6.

7.

8.

9.

report provided a national roadmap for decisions about the future and the conditions that can underpin us creating and taking advantage of Australia’s strengths while ensuring flexibility and resilience. STEM: Country Comparisons, by Marginson S, Tytler R, Freeman B and Roberts K (2013) (http://acola.org.au/wp/project-2/), as summarised in Appendix 2. The report focused on strategies, policies and programs used to enhance STEM at all levels of education and work, examining solutions to the STEM skills shortage in Australia. Smart Engagement with Asia: Leveraging Language, Research and Culture, by Ang I, Tambiah Y, and Mar P (2015) (http://acola.org.au/wp/project-3/), as summarised in Appendix 3. The publication provided insights into the complexities of our relationships in the region, and laid out a blueprint for the bridges Australia can build to improve connections between people, businesses and institutions. The Role of Science, Research and Technology in Lifting Australian Productivity, by Bell J, Frater B, Butterfield L, Cunningham S, Dodgson M, Fox K, Spurling T and Webster E (2014) (http://acola.org.au/wp/project-4/), as summarised in Appendix 4. The document identified opportunities for applying knowledge and skills in science and research across a range of industries and sectors to enhance innovation, creativity and productivity, and recommends business practices that will drive Australia’s prosperity. Technology and Australia’s Future, by Williamson R, Raghnaill M, Douglas K and Sanchez D (2015) (http://acola.org.au/wp/project-5/), as summarised in Appendix 5. This entailed an interdisciplinary assessment of today’s technologies and emerging technologies, as well as how technology changes, the nature of its impacts, how it can be predicted and the types of interventions that help deal with the complexity and uncertainty inherent in technological change. Engineering Energy: Unconventional Gas Production, by Cook P, Beck V, Brereton D, Clark R, Fisher B, Kentish S, Toomey J and Williams J (2013) (http://acola.org. au/wp/project-6/), as summarised in Appendix 6. The publication filled knowledge gaps, identified and considered community concerns, and addressed opportunities and challenges that might arise in producing shale gas. Australia’s Agricultural Future, by Daly J, Anderson K, Ankeny R, Harch B, Hastings A, Rolfe J and Waterhouse R (2015) (http://acola.org.au/wp/7-australias-agricultural-future/), as summarised in Appendix 7. The report provided a vision of Australian agriculture’s future, and mapped the pathway towards enhancing our outstanding reputation in agriculture, while producing more food in a sustainable way. Delivering Sustainable Urban Mobility, by Armstrong B, Davison G, de Vos Malan J, Gleeson B and Godfrey B (2015) (http://acola.org.au/wp/8-deliveringsustainable-urban-mobility/), as summarised in Appendix 8. The publication called for a new approach to urban transport that prioritises people rather than one particular mode of transport, to ensure our future cities are productive, liveable, and accessible. Translating Research for Economic and Social Benefit: Country Comparisons, by Bell J, Dodgson M, Field L, Gough P and Spurling T (2015) (http://acola.org.au/ wp/saf09/), as summarised in Appendix   9. The work analysed international

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approaches to encouraging and facilitating research translation, commercialisation and collaboration. 10. Skills and Capabilities for Australian Enterprise Innovation, by Cunningham S, Gahan P, Boal K, Callan V, Sridhar T and Zeitz C (2016) (http://acola.org.au/wp/ saf10/), as summarised in Appendix 10. ACOLA investigated the extent to which technical and non-technical skills underpin innovation, how they interact to meet innovation challenges, and the potential for industry, education and government to properly invest in the skills and capabilities that support enterprise innovation. 11. Australia’s Diaspora Advantage: Realising the Potential for Building Transnational Business Networks with Asia, by Rizvi F, Louie K and Evans J (2016) (http://acola. org.au/wp/saf11/), as summarised in Appendix 11. The report explored the extent, diversity and nature of Australia’s Asian business diasporas. In addition, a twelfth report provided a review of the above 11 reports, Securing Australia’s Future Program: Summary Report, by the ACOLA Secretariat Ltd (2016) (http:// acola.org.au/wp/saf12/). The document drew on the 11 appendices in this book to provide a summary of the Securing Australia’s Future program. There was also a comprehensive review of higher degree by research training in Australia, commissioned by the Minister for Education and Training and funded under the Securing Australia’s Future program. The report was entitled Review of Australia’s Research Training System, by McGagh J, Marsh H, Western M, Thomas P, Hastings A, Mihailova M and Wenham M (2016) (http://acola.org.au/wp/saf13-rts-review/). The Securing Australia’s Future Program Steering Committee was responsible for the overall quality of the program, including selection of the Expert Working Groups (members are listed in the appendices) and the peer-review process. In total, 56 Fellows from the four academies and 19 experts from outside the academies participated as members of Securing Australia’s Future Expert Working Groups (about three-quarters of these were from universities). The Program Steering Committee comprised three Fellows from each of the four learned academies: Alan Finkel and then Michael Barber as Chair, with Dennis Trewin (Deputy Chair), James Angus, John Burgess, Bruce Chapman, Ruth Fincher, Paul Greenfield, Lesley Head, Peter McPhee, Stephen Powles, Susan Pond and Graeme Turner, as well as previous members Mark Finnane, Margaret Hartley, Iain McCalman, Graham Mitchell, Jim Peacock, John Quiggin, Leanna Read, Julianne Schulz and Richard Waterhouse.

The Australian Council of Learned Academies (ACOLA) We must pursue innovation through technology as the main contributor to our future prosperity and happiness … Invoking the four academies covering the humanities, social sciences, science and engineering and technology was a brilliant step as any challenge of significance inevitably spans across the disciplines. – Robin Batterham, SAF05 Technology and Australia’s Future

Introduction

ACOLA (www.acola.org.au) is an independent, not-for-profit organisation that supports evidence-based interdisciplinary research. It was established in 2010, as the successor to the National Academies Forum that had been established in 1995. It comprises a council and board, and an independent, not-for-profit secretariat that receives funding from the Australian Research Council and the Department of Education. By providing a forum that brings together great minds, broad perspectives and knowledge, ACOLA is the nexus for true interdisciplinary cooperation to develop integrated problem solving and cutting edge thinking on key issues for the benefit of Australia. The organisation combines the strengths of the four Australian learned academies: the Australian Academy of the Humanities, the Australian Academy of Science, the Academy of Social Sciences in Australia, and the Australian Academy of Technology and Engineering. The Australian Academy of the Humanities (www.humanities.org.au) advances knowledge of, and the pursuit of excellence in, the humanities in Australia. Established by Royal Charter in 1969, the Academy is an independent organisation of more than 500 elected scholars who are leaders and experts in the humanities disciplines. It promotes the contribution of the humanities disciplines for public good and to the national research and innovation system, including their critical role in the interdisciplinary collaboration required to address societal challenges and opportunities. The Academy supports the next generation of humanities researchers and teachers through its grants program, and provides authoritative and independent advice to governments, industry, the media and the public on matters concerning the humanities. The Australian Academy of Science (www.science.org.au) was established by Royal Charter in 1954 to provide independent, authoritative and influential advice, to build public awareness and understanding of science, to promote international scientific engagement and to champion, celebrate and support excellence in Australian science. The Academy comprises more than 500 of Australia’s leading scientists, each of whom is elected for their outstanding contributions to science. The Academy represents Australian science internationally through membership of international unions and councils, and through exchanges, events and meetings. The Academy also promotes science and mathematics education in schools through its widely used inquiry-based education programs. The Academy of the Social Sciences in Australia (www.assa.edu.au) promotes excellence in the social sciences in Australia and in their contribution to public policy. It coordinates the promotion of research, teaching and advice in the social sciences, promotes national and international scholarly cooperation across disciplines and sectors, comments on national needs and priorities in the social sciences and provides advice to government on issues of national importance. Established in 1971, replacing its parent body the Social Science Research Council of Australia, itself founded in 1942, the Academy is an independent, interdisciplinary body of some 600 elected Fellows. The Fellows are elected by their peers for their distinguished achievements and exceptional contributions made to the social sciences across 18 disciplines. It is an autonomous, non-governmental organisation, devoted to the advancement of knowledge and research in the various social sciences. The Australian Academy of Technology and Engineering (ATSE, www.atse.org.au) advocates a future in which technological sciences and engineering and innovation contribute significantly to Australia’s social, economic and environmental wellbeing. The Academy is empowered in its mission by some 800 Fellows drawn from industry, academia, research institutes and government, who represent the most intellectually and experimentally able in technological sciences and engineering in Australia. Through engagement by

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its Fellows, the Academy provides robust, independent and trusted evidence-based advice on technological issues of national importance. It does this via activities including policy submissions, workshops, symposia, conferences, parliamentary briefings, international exchanges and visits, and the publication of scientific and technical reports. The Academy promotes science and maths education via programs focusing on inquiry-based learning, teaching quality and career promotion. ATSE fosters national and international collaboration and encourages technology transfer for economic, social and environmental benefit. By linking more than 2000 of Australia’s most eminent researchers, scholars and practitioners from these four academies, ACOLA enables interdisciplinary thinking to help solve complex societal issues for the benefit of Australia’s social, cultural, economic and environmental wellbeing. ACOLA’s strength is in pulling together interdisciplinary perspectives from across the HASS and STEM disciplines, bringing different expertise and methodologies to some of the most complex issues and questions facing the nation. It is this strength that enabled the delivery of the Securing Australia’s Future program and allowed ACOLA’s reports to provide a rich understanding of the opportunities and challenges in Australia.

1 Australia’s strengths – and a plan for a secure future Australia has achieved much over recent decades, but there are substantial challenges ahead, including the risk of economic slowdown with the ending of the mining investment boom. Our research shows strategic reforms could ensure Australia’s strengths are aligned to the new century’s imperatives to keep serving the national interest. Glenn Withers co-author of SAF01 Australia’s Comparative Advantage

Golden thread A prosperous future is more than just technological advancement. Securing an Australian future characterised by social wellbeing and increased equity, prosperity and sustainability needs us to understand international trends and position Australia to take maximum advantage of its strengths. Achievement will entail economic, social and cultural changes, facilitated by visionary leadership and by targeted investments in skills, infrastructure and innovation.

Key findings Here are five key findings designed to position Australia for long-lasting improvements to growth and living standards: 1. Industry policy that relies only on past strengths will not provide the desired results unless complemented with new policies. This is due to the realities of globalisation, and the ongoing revolution in information technologies and other enabling technologies.

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2. Lower value activities, such as extracting and exporting minerals and ores or growing and exporting basic agricultural commodities, cannot be a viable strategy for the longer term future. Instead, we should also focus on adding value to these activities through economic value-creating innovation. 3. Australia needs to have world-class infrastructure, not just in physical terms (such as roads, ports and utilities, and for research), but also digital infrastructure that supports large data transfers and high speeds. Infrastructure brings substantial economic benefits. 4. Australia needs to further develop its workforce’s skills to increase productivity. We require multidimensional skills capabilities, where a strong STEM capability is complemented by capability in management, creativity and other humanities and social sciences. 5. Australia’s taxation and legal system should be modified to encourage innovation and risk taking, and we need improved innovation finance arrangements.

Introduction Australia is a prosperous nation, with abundant natural resources. We have been generally well served by governments, our institutions, and a strong education system. Our workforce is productive and well educated. We have a respected and successful research capability. This is an attractive place to live. We rank well on some – but certainly not all – environmental measures, including water and sanitation, water resources and air quality (see Chapter 5). Agriculture, mining and traditional manufacturing have been massive contributors to our economic strength and international impact. Today, the services sector dominates the economy, while other sectors undergo significant transformation in response to the changing international trade environment. This chapter explores Australia’s current position and how we arrived at it. It looks at how we can build and secure the nation’s future by creating and taking advantage of our strengths, and being flexible and resilient in the process. How will we meet the challenges that an increasingly complex world will bring to our lives and our work? What should we continue doing, and what should we do differently? The objective is to craft a national roadmap for decisions about the future and the conditions that can underpin achieving the nation’s best. Establishing proper policy foundations now, combined with public support and effective leadership, will better place Australia on a trajectory for national wellbeing. While change is challenging, the benefits of systematic reform and investment in our future to build our position internationally will mean higher living standards, increased equity and greater sustainability. It is clear that we must strongly engage in the global marketplace and wider international activities in ‘the Asian century’ (as detailed in Chapter 2), as well as embrace the

1 – Australia’s strengths – and a plan for a secure future

non-trade sectors from construction to services to local manufacturing. Institutional, social and cultural arrangements are pivotal. An effective education system, sound legal and cultural institutions, progressive property rights and regulatory regimes, and an inclusive society are all important if we are to achieve sustained national prosperity. Traditional sectors will still contribute significantly to our economy and there will be emerging opportunities in advanced manufacturing and service industries. Some might think that the future will simply be a more technologically advanced version of today. But that is unlikely; worse, this sort of thinking doesn’t encourage us to explore new possibilities. A broad approach – with a suite of prioritised and well-supported objectives – is desirable in choosing how we face an unknown and, in some cases, unknowable future. That approach will help ensure the sound foundations for the new challenges. Institutions and culture will need to be configured to support the process. We need better leadership and management, as well as the encouragement of innovation and entrepreneurship. Knowledge and ideas will be more important than ever. Political, legal, market and cultural changes alongside investment in skills, infrastructure and innovation will see long-lasting benefits to growth and living standards. If we want Australia to be the best it can be, we will have to build that future. If we want Australia to be the best it can be, we will have to build that future.

Setting the scene Australia performs well internationally on a range of measures (Table 1.1). Governmentprovided services, including health and education, rank highly. Australia is fairly free economically and mostly a fertile place to do business. People can expect to live longer than previous generations and be well educated. Our workforce is flexible. Business and government are willing to engage globally. The challenge is to take advantage of our existing strengths and build new ones that will help us face intense and growing international competition. In some areas, Australia is not yet well equipped to meet that challenge. There are concerns about our ability to innovate and to take advantage of innovation. In this context, innovation means not only the generation of new ideas through research and development, but also the rapid implementation of the ideas to improve Australia’s wealth and wellbeing, both commercial and cultural. Currently, business cannot always obtain the money it needs to grow. Management skills may be insufficient. Regulation imposes unnecessary constraints. Several assessments have found that Australia’s regulation, including on labour and taxation, places a high burden on business. Compared with similar advanced economies, we do not do well on competitiveness. We are generally good at the research and development phase of innovation, but not good at the other components of innovation, namely speed and national wealth creation. Constraints imposed on true innovation include regulation and inefficiencies in taxation and bureaucracy. We are good at basic research, but not so good at the next stage of developing or commercialising those ideas.

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Table 1.1.  Key social ranking studies Report

Number of countries ranked

Australia’s ranking

Better life index

36

1

Corruption perception index

176

11

Liveability survey

140 cities

Melbourne at number 1

Quality of living and quality of infrastructure

460 cities

Sydney at number 10

Human development index

186

2

Source: Kumar S (2013) Compendium of Global Ranking Reports. Australian Council of Learned Academies, Melbourne.

The World Economic Forum’s 2015–16 global competitiveness index ranked us as 21st of the 140 countries listed. Switzerland, Singapore, United States and Germany are, in order, the top four ranked countries. New Zealand is five places above us at 16th. The Australian performance overview states: The country’s performance remains strong across all categories of the Index, particularly in education (9th in basic education and 8th in higher education) and financial market development (7th). Australia leapfrogs 20 places in the labour market efficiency pillar (36th), which has traditionally been its weakest aspect. Despite world-class education and universities, however, it continues to lag behind most advanced economies in innovation (23rd, up two). With global commodity prices set to remain low for the foreseeable future, along with the slowdown in China, the country must diversify further and move up the value chain.

Education – lifting our performance Providing high-quality education from the early years through to tertiary and vocational education is essential. Education is also one of our biggest export earners. Maintaining and improving our education system, including its export contributions, will be crucial in an increasingly competitive market. In global rankings, our education system performs well at the school, tertiary and vocational stage, and particularly well at attracting foreign students. However, government expenditure on education is no more than similar countries, particularly in pre-school and post-school education. There are areas where improvements are needed. The percentage of year 12 students enrolled in higher level STEM in Australia has been declining for decades (as Chapter 4 explains). There has been a lesser decline in mathematics, but most senior students are enrolled in elementary, rather than advanced, maths subjects. A growing proportion of highachieving year 12 students, particularly girls, participate in no mathematics program at all. Australia has too few maths and science teachers, with shortages especially in rural and remote communities. A larger problem is teaching ‘out of field’, such as teaching maths, where teachers take classes for which they have little, or even no, university training. Australia is relatively strong in participation in the sciences at tertiary level, but weak in maths and engineering.

1 – Australia’s strengths – and a plan for a secure future

We need to encourage more students to undertake STEM studies. (Source: CSIRO)

Despite a plethora of government policies and reviews of education, science and innovation, Australia still needs to lift its performance in the years 1 to 10 foundation skills of literacy (reading and writing skills) and numeracy (arithmetic skills) and encourage more students at years 11 and 12 and at tertiary levels to undertake STEM studies. A focus on quality in all disciplines at all levels, not just in STEM, is desirable.

The Australian workforce ACOLA commissioned a broad global business survey of 262 people. The majority were senior executives or company owners, with a high number of foreign nationals and people working for companies with headquarters outside Australia. Survey respondents thought favourably of the Australian workforce, viewing it as productive, well educated and easy to work with. A majority agreed that Australian workers are flexible and adaptable when faced with new challenges, are open to new ideas and have a strong work ethic. More than three-quarters believed Australia has capable scientists, engineers and mathematicians. Fewer than half of the surveyed business people viewed Australian workers as tolerant of different cultures. The majority viewed workplace regulations as neither harmonious nor productive.

Impediments to growth Australians themselves have a degree of pessimism concerning our industries, policies and the prospects for growth in some sectors. This is particularly so for infrastructure, education and research.

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The Committee for Economic Development of Australia surveyed its members for an industry perspective on our strengths and weaknesses. The Institute of Public Administration Australia surveyed public servants. Both groups rated basic infrastructure as inadequate. Fewer than half of the respondents in each group believed that the education system is imparting the skills needed for a competitive knowledge economy and that basic research is strong. Only a minority of both groups said that knowledge transfer and technological cooperation between universities and companies are well developed. Neither group was particularly complimentary about our leaders. Industry respondents rate the quality of management as just adequate, assessing it as high to very high only in the financial services and retail trade sectors. Similarly, almost three-quarters of industry respondents and nearly half of public servants disagreed with the proposition that the political system fosters national progress. The salient point is that business representatives and public servants question the quality and capacity of government to respond in some of the areas most tied to global competitiveness. Business representatives and public servants question the quality and capacity of government to respond in some of the areas most tied to global competitiveness.

Addressing the fundamentals Australia’s future prosperity will be well supported by carefully laid policy foundations today. It would be naive to believe that the institutions, structures and funding regimes of the past will serve us adequately in future. To quote Giuseppe Tomasi di Lampedusa, author of The Leopard, ‘If we want things to stay as they are, things will have to change’. Here we examine those foundations and describe some findings on our institutions, the economy, our education system, government spending and environmental sustainability.

Our institutions Institutions, formal and informal, play a vital role in national prosperity and sustainability. Federation has allowed Australia to deal effectively with great challenges and changes, and yielded one of the highest living standards in the world. Unlike many resource-rich countries, Australia has remained a stable, liberal democracy with an abiding rule of law, free press, economic vibrancy and cultural cohesion. Australia’s federal structure has been a source of national strength and advantage for Australia in the past. It can be a critical determinant of future success as well. Australia’s federal structure has been a source of national strength and advantage for Australia in the past. There is a highly uneven allocation of resources between federal and state governments, with the former collecting most of the revenue and distributing it among the states through unconditional and conditional grants. The problem is that grants can be motivated by national political considerations, and may be contrary to what states actually need or prefer. The difficulty can be exacerbated if opposing parties control the Commonwealth and state governments.

1 – Australia’s strengths – and a plan for a secure future

States account for nearly half of total public spending in Australia, but collect less than a fifth of the revenues. This has created a major state government dependence on the Commonwealth for financing, and results in ongoing political conflicts over adequacy of transfers. An ineffective federal framework undermines Australia’s long-term national advantage by creating various mismatched priorities, perverse incentives, efficiency losses and resource misallocations. Improving Australia’s capabilities requires fundamental reforms. Government is at times failing to adapt to a changing strategic environment and must be realigned to 21st century imperatives if it is to optimally serve the national interest.

Microeconomic reform For much of its modern history, Australia has relied on the free market for most economic activity, with the market operating alongside a range of core government functions and within government-specified settings designed to ensure they deliver in the national interest. Periodically, these government settings can inhibit the efficient operation of the private market too much. Such concerns led to the ‘microeconomic reforms’ that began in the 1980s and continued into the 21st century. There was substantial review of legislation, regulation and public finances designed to free up a range of market operations or make the ongoing government role more market-consistent. Many commentators credit this reform process for the long period of sustained income and employment growth that ensued and the resilience that our economy displayed in the face of various external financial crises. Today, topics popularly raised for reform include international agreements that affect global trade in goods and services, workplace relations regulation, taxation structures and competition policy. Investing in Australia’s future Australia is well respected for its educational quality and the overall capability of its population. Our population is experienced, educated and highly skilled. A strong and robust skills capability is integral to our continuing wellbeing and prosperity in the 21st century. If Australia is to maintain its high standard of living, greater support and enhancement for education and training are needed. If Australia is to maintain its high standard of living, greater support and enhancement for education and training are needed. The information and communications technology revolution, and globalisation, are pervasive forces that have fundamentally changed global production and competition. This presents three important imperatives for Australia if we aspire to secure sustained prosperity and wellbeing in the 21st century – and skills in STEM and in the humanities, arts and social sciences (HASS) will all be indispensable to achieving them: 1. Australia must effectively embed itself into global production networks in a strategic way. 2. Within these networks, we must specialise in the high value-added, skill-intensive functions. 3. We must be able to develop global marketing opportunities, and to manage a global fragmented production chain.

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We should lift our performance in equity of opportunity and access, particularly for women and minority groups. Women are key contributors to national wellbeing and prosperity. We need to further improve their participation rates in education and the workforce. In 2012, the Australian Bureau of Statistics reported that only 67 per cent of women aged 15–64 were in paid work, compared with 78 per cent of men. While 55 per cent of employed women worked full time, 85 per cent of employed men did. These female workforce participation rates are substantially lower than in many other Organisation for Economic Co-operation and Development (OECD) countries. We should lift our performance in equity of opportunity and access, particularly for women and minority groups. A quarter of the Australian population is born overseas and migration has long been a defining feature of Australian development. As such, immigration needs to be continue to be managed well. Economic growth in Asia presents great opportunities for Australia (see Chapter 2). OECD projects that Asia’s middle class will increase from 28 per cent of the global total in 2009 to around 66 per cent by 2030. In addition to resources-related business, Asia could contribute an additional $275 billion to the Australian economy over the next 10 years. However, business leaders believe that large Australian companies possess only ‘average’ Asia capabilities. Australian small and medium-sized enterprises are also seen to fall behind their international competitors on their understanding of, and experience operating in, Asian markets. We will need to improve our skills if the nation is to realise these opportunities.

Infrastructure and financing innovation Infrastructure is a term that includes energy, water, transport (rails, seaports, roads and airports), information and telecommunications. Infrastructure represents an investment and delivers substantial economic benefits. Infrastructure Australia calculated that in 2011 expenditure on infrastructure produced a return of over 10 per cent. Infrastructure represents an investment and delivers substantial economic benefits. Investment in infrastructure is vital and provides essential services for the nation. Historical investments in infrastructure made Australia one of the most urban countries, and delivered one of the highest living standards in the world (see Chapter 5). However, today, Australia ranks as a ‘middle performer’ among a cohort of advanced nations. Given a projected 40 per cent increase in population over the next 20 years, a failure to upgrade and invest in new infrastructure could jeopardise long-term national prosperity. Lack of adequate finance is a major contributor to poor innovation outcomes. The Australian Bureau of Statistics’s Business Characteristics Survey identifies this as the biggest impediment to innovation in Australian firms, over 90 per cent of which are classed as small or medium enterprises. There is a clear case for policy solutions that alleviate the financial constraints for firms, allowing them to build a sound credit profile and investment level while pursuing innovations.

1 – Australia’s strengths – and a plan for a secure future

Australia: the world’s richest nation The 19th century gold boom transformed the nation. In the 1850s, Australia was producing almost 40 per cent of the world’s gold. The lure of riches attracted thousands to the colony. In 1850, Australia’s population was a little over 405 000; by the end of the decade it had almost trebled. Improving transport became a priority. In September 1854, Melbourne opened Australia’s first locomotive-powered railway line. The line ran from Flinders Street to Sandridge (now Port Melbourne). Within years, passengers could board suburban trains for St Kilda, North Brighton, Hawthorn and Essendon. The gold rush created major regional towns at Ballarat and Bendigo. The government rapidly built regional rail lines. The advantages of building our own locomotives rather than importing them saw the emergence of local engineering and building expertise that would create Victoria as the manufacturing centre of Australia. In Why Australia Prospered: The Shifting Sources of Economic Growth, Ian McLean writes: it is remarkable the extent the colonial governments engaged in a development strategy to garner long-term benefits from what might well be [governments feared] a short-lived boom if left to its own dynamic. The strategy included huge investment in constructing railways, roads, the telegraph, ports and harbours and doing so efficiently and well. Due in part to these investments, in the late 19th century Australia had the world’s highest living standards. Australia deployed the wealth from its agricultural and mineral bounty to support those industries with the infrastructure they needed. It also built cities for commerce and manufacture that made Australia one of the most urban of nations. Australia’s wealth was just as much based on a smart urban society, well managed and well administered, with good investment in infrastructure and skills and innovation, as it was on simple exploitation of nature. Nineteenth century Australia led the world in patents per capita – just as it did in schooling participation and funding per student.

Flinders Street Station, Melbourne, in 1927, when it was one of the world’s largest railway stations.

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Public policy development Australia’s system of government is stable and strong. Supported by an efficient and effective public service, successive Australian governments have developed and implemented innovative, world-leading public policy. Medicare, our retirement income system, the Higher Education Contribution Scheme, plain packaging of tobacco products and Australia’s points-based immigration system are just some of many possible examples. Taking maximum advantage of Australia’s opportunities is highly contingent on the continuation of innovation in public policy development and implementation. To meet the challenges of the next decade and beyond, sound public policy including appropriate regulation, funding and incentives is needed. In sectors where we are strong, we should continue to build on those capacities. In areas where we are weak, such as commercialisation of innovation and research–industry collaboration, we should learn from world leaders such as Switzerland, Singapore, the United States and Germany. Implementing public policy that has worked well in other countries can be an efficient way to create an even more successful Australia. Managing intellectual property Advances in innovation are closely tied to the question of intellectual property. The manner in which innovation is generated, regulated, and rewarded is of prime concern for any nation aspiring to be a knowledge economy in the 21st century. The intellectual property regime must balance two competing considerations. There is the need to foster new innovations, and there is the need to reward creators of existing innovation, whose works often reflect considerable risks, efforts and costs. The biggest challenge for governments is determining how much monopoly power to give innovators while preventing anti-competitive activities by organisations. Australia should examine whether its intellectual property arrangements are geared towards fostering its long-term innovation capability. This examination needs to account for the evolving impact of technology and social values on industrial structure, and the constraints placed by existing institutional arrangements. Ensuring sustainability As Australia seeks to uncover new areas of growth, environmental sustainability will be important. Environmental performance and sustainability are fundamental to the nation. They represent the legacy that the current generation will leave for posterity. Australia, with a rising population and ongoing urbanisation, needs to improve environmental outcomes. Environmental performance and sustainability are fundamental to the nation. They represent the legacy that the current generation will leave for posterity. Urban mobility planning this century must aim to ensure that the accessibility needs of people and businesses are met in a manner that minimises environmental and social impacts and economic cost. The Securing Australia’s Future report SAF08 Delivering Sustainable Urban Mobility envisages a far-sighted urban planning approach – across all tiers of government – for a resilient, nationally competitive future. Chapter 5, ‘Green and clean: securing a sustainable future’, covers urban mobility and planning in some detail. Unfortunately, there is deterioration in several environmental variables, which is only partially offset by adoption of better technologies, government policies, and a move away

1 – Australia’s strengths – and a plan for a secure future

from more polluting industries. We need to do more to address the environmental impacts of growth.

Policy directions A prime objective of the Securing Australia’s Future program was to identify fundamental priorities for Australia’s long-term wellbeing. Implementing these priorities requires bold and far-sighted political leadership. Leadership involves developing strong policies that are based on rigorous evidence and stakeholder perspectives. It entails putting in place mechanisms that can actually deliver results. It means understanding what the public will accept (or not), and where governments should seek to influence opinion. It also entails demonstrating the potential benefits of proposed changes and working with others to obtain cooperation and understanding in managing change. Partnerships have been a real strength for Australia, with important applications to problem areas such as environmental sustainability, rising inequality and skills development. Sadly, Australia is weak in the area of rigorous contestation of policy ideas. This means that policies and paradigms can be ‘imported’ from overseas without proper assessment of their need or appropriateness. Research reveals public attitudes towards various reform and spending proposals. The public will approve of many of the changes that will benefit Australia in the long term. Where it does not, there are opportunities for political leadership. Change is difficult for government. However, change becomes easier to implement if benefits can be shown for the economy and for people’s prospects and living standards. Reassuringly, detailed

Westlink M7 infrastructure project. Tax reform and investment in infrastructure would benefit the economy, according to modelled scenarios. (Source: Bren Barnes, CC BY-SA 3.0)

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econometric modelling has shown that many of the policy changes described in ACOLA’s Securing Australia’s Future reports can yield long-term economic benefits. Change that strengthens Australia’s economy doesn’t have to be limited to narrow, sectoral improvements. Broad policy change and reform will have benefits across the economy over the next decades. ACOLA modelled the impacts of two scenarios. The first scenario entailed broad, institutional policy change aimed at improving political, legal and market settings. It included implementing the Henry Tax Review recommendation of cutting company tax from 30 per cent to 25 per cent, and the impacts of free trade agreements and reform of federalism. The result was growth in the economy and consumption, with an improvement in employment rates and wages. The second scenario involved boosting investment in capability. It included a 10 per cent increase in government spending on infrastructure, reforms to encourage higher participation in the labour force by women and older workers, comprehensive innovation policy reform using OECD best-practice strategies, a lift in government funding of vocational education and training, and an increase in university funding from 1.5 per cent of GDP to 2.0 per cent. The policies described are growth oriented and yield benefits that continue to grow over time. The policies also improve productivity and employment. Each scenario brings major economic benefits compared with no change to current policy. The biggest economic benefits come from implementing both scenarios. The aggregate pay-off from a combined package of widely recognised reforms could be of the order of 22 per cent for living standards by 2030. The wage benefit to less advantaged workers would be higher than that for average workers, representing an important equity advance. The changes could stimulate the private sector and underpin all of the industry sectors that are crucial to Australia’s future.

Opportunities for sectors of the economy Australia’s main employment, production and export sectors are agriculture, mining, manufacturing and services. Here we examine them, looking at past and current performance and opportunities. In mining, Australia is predominantly focused on extracting and exporting, noting that its service sector, such as software development, has been successful internationally over the past decade or more. Agriculture, like mining, has a strong emphasis on commodity exports. An inward focus in the services sector is meeting the growing needs of Australia’s population but, with the exception of education, is not capitalising on the expansion of the middle class in the booming Asian region. The focus of the manufacturing sector needs to change from industrial to functional specialisation to take advantage of global value chains.

Agriculture Australia’s initial journey to prosperity was on the sheep’s back. For a century, wool was our main export commodity. In the 1960s, new challenges faced an old industry. International wool prices waned, costs rose and there was competition from synthetics. Agriculture had to adapt to the challenges. Agriculture is one of Australia’s oldest and most important sectors. It has steadily declined in its economic contributions over the past century. Such a decline is characteristic

1 – Australia’s strengths – and a plan for a secure future

of advanced economies in which diversification of economic activity is the norm. Australia’s agriculture sector contributed $54 billion to the economy in 2014–15 at farm gate, but considerably more through its support of rural and regional economies. Australian agriculture’s success since the mid-1900s has been based on growing produce that people want and doing it more efficiently. Continued success will be dependent on how the sector responds to rapidly evolving export opportunities within an increasingly challenging environment. Dramatic increases in productivity since the Second World War have been stimulated by increased use of technology and investment in innovation. The application of superphosphate fertiliser and the establishment of legume-based exotic pasture improvement, for example, improved the carrying capacity of pasture-based livestock systems and assisted sheep–wheat farming enterprises. Conservation tillage, introduced in the 1980s, helped to control soil erosion and to conserve soil moisture, increasing crop yields especially in lower rainfall years. We have been able to satisfy both global and local demand with quality products. Australian farmers have been highly productive, successfully employing research and development. We have extensive water and transport infrastructure, agriculture is relatively pest and disease free, and we have a global clean and green reputation. Australia is a net agricultural exporter, with around 60 per cent of all products exported. Population growth and rising living standards here and overseas will increase the demand for agricultural goods. However, consumer preferences are changing, trade reform has been slow and global competition has emerged. The future success of agriculture depends

Conservation tillage has helped to increase agricultural productivity. (Source: USDA)

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on growing not only what people want, but growing it better than other producers and connecting to markets and consumers. Global drivers affecting agriculture include strong population growth, with continued urbanisation; climate change; high price volatility; skilled labour shortages; scientific and technological research and development; changing cultural preferences and eating habits, such as demand for foods with health attributes; and increasing demands for sustainability and environmental stewardship. There are several ways in which Australia could expand agricultural capacity. We could farm new areas of land (this would require investments in irrigation, energy and transport infrastructure), move from low input and production systems into high input and production systems (requiring new management skills and finance) and raise production by increasing water use efficiency or exploiting innovation-based productivity. (See Chapter 5 for further discussion.) Access to, and innovative methods of, financing will be critical. Most Australian farming businesses are financed by families using their accumulated capital (mainly land) as collateral for loans from banks. To capitalise on opportunities, policy makers need to ensure that demand growth is sustained in line with population and income drivers; there is ready access to markets, particularly international ones; agricultural protectionism is limited; and the diversity of consumer demands is reflected in market and regulatory processes.

Mining The mining industry has been a leading contributor to Australia’s economic growth and international impact, especially during the past two decades. It represents Australia’s largest export earner. The sector is part of a larger value-chain industry that comprises processing, exports and associated services. Performance depends on pricing, the value of the Australian dollar, and global trends in supply and demand for commodities. Investment in the sector has declined after the high rates of capital investment to increase production during the recent period of great resources demand. Commodity prices have fallen but production remains high and costs low, especially for major commodities like iron ore. Despite significant year-to-year fluctuations, the sector’s share of total economic output is projected to remain relatively stable in the decade through to 2020–21. Coal has historically dominated the power sector. Australia has significant gas resources; gas use has grown in the past decade and in 2013–14 represented 24 per cent of Australia’s energy supply. Increased investment in the industry will lift output. Australia has a longer term opportunity to exploit shale gas. The ACOLA report SAF06 Engineering Energy: Unconventional Gas Production notes that ‘shale gas has the potential to be an economically very important additional energy source’ (see Chapter 5). Australia’s strengths in mining are primarily based on past discoveries, with no new significant discoveries in the past two decades. With a wealth of rich deposits at its disposal, Australia’s mining sector is largely focused on extracting and exporting, since traditionally the return on investment from this activity has been higher than for further mineral processing. Reduction of capital costs for mining, such as through new processes or mineral processing facilities, would be advantageous. Australia has an excellent reputation for planning, design, development and servicing of mining software and equipment, scientific analysis, exploration assessment technology, mineral processing technology, environmental services, and health and safety

1 – Australia’s strengths – and a plan for a secure future

services and equipment. These could provide major opportunities for advanced manufacturing, consulting and service industries locally and globally. However, these avenues are not being developed. In order to regain world-leading competitiveness, Australia should focus on skills development, innovation for productivity gains, optimisation of infrastructure investment and operation, reforms in multi-user infrastructure chains, and cost reductions. We need to invest in more research and development, including humanities and social science research; address environmental challenges; improve productivity; and devise new methodologies and techniques for exploration and exploitation.

Manufacturing The manufacturing sector plays an important role in Australia’s economy but its contribution to gross domestic product (GDP) has declined as other sectors such as mining and the services sector have grown in importance (Fig. 1.1). While accounting for around 6 per cent of GDP in 2014–15, its contribution to GDP has almost halved since 1980 (see Fig. 1.1). Employment in the sector has mirrored the drop in GDP contribution. The decline is in part due to growing automation, but it also reflects structural change. Traditional manufacturing played an important role in the economy for a long time. However, a changing business environment and challenging economic conditions have seen the emergence of successful advanced manufacturers. Table 1.2 highlights some of the differences between the two approaches. The success of Australia’s future manufacturing industries will depend on technological innovation, a shift to advanced manufacturing, integration with services, international connectedness and enhanced participation in global value chains. A global value chain is a collection of operational activities that deliver an idea for a product or service to the market. These activities, which include research, development, design, assembly, production and marketing, can be shared between several companies across the world. To capitalise on this development, innovation and access to high-quality information and communications technology are key. Advanced manufacturing will boost Australia’s competitiveness in the global manufacturing market. Australia’s strength lies in high-value, low-volume manufacturing, with emphasis on design, research and development, and innovation in the production process. Specialising in the pre-production end of the value chain turns some of the natural disadvantages we face into potential advantages. Adding value to the production process is crucial to remain viable in a high-cost environment. Advanced manufacturing will boost Australia’s competitiveness in the global manufacturing market. Australian advanced manufacturing should focus on collaboration, innovation, skills and capabilities. Effective collaboration is critical to innovation and Australia needs to improve links between industry and researchers to ensure that research and development and innovation provide economic and social benefits. An innovative and skilled workforce will be critical to increasing productivity. This will require more investment in science, technology, engineering and mathematics to develop those skills. Australia will also need to promote complementary skills in humanities and social sciences to develop understanding of systems, cultures and the way society uses and adopts new ideas. Also important will be strengthening the links between

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Table 1.2.  Characteristics of traditional and advanced manufacturing Traditional manufacturing

Advanced manufacturing

Focused on the production of goods.

Value creation is extended, so manufacturing is no longer just about production. Services and manufacturing are inextricably linked, so that production is now the core of a much wider set of activities geared towards creating a tailored experience for individual consumers. In 2011, only 28 per cent of Australian manufacturers with more than 100 employees derived value from services related to their products, compared with the United States and Finland, where the figure was closer to 55 per cent.

Much of the workforce is employed in low-skilled, blue-collar or production roles. Technical competencies are much more common than commercial competencies.

High-skilled operations that harness a wider skill base, including both technical and commercial competencies, and employ fewer people on the factory floor.

Firms compete on the basis of their own strengths. Competitiveness is based on knowledge, mostly developed and retained in-house.

A solely internal focus is no longer sufficient to be competitive. Competitiveness is based on the ability to identify and harness globalised knowledge flows – the production, diffusion and use of knowledge. Individual firms cannot access all the information required to be competitive, so the depth and quality of a company’s networks and interactions are critical to its competitiveness.

Mass manufacturing of commodity goods, with manufacturing functions typically bound to localities and conducted in large capital- and labourintensive factories.

Firms rapidly and economically adapt physical and intellectual capital to exploit changes in technology, markets and customer demand. A strong customer orientation, including mass customisation or short runs. Greater flexibility in how and where people are employed.

Energy intensive with large waste streams.

Manufacturing processes and products are more sustainable, including a move towards low-emissions, zero-waste and zero-carbon manufacturing. Manufacturing practices include built-in reuse; remanufacturing and recycling for products reaching the ends of their useful lives; and turning waste streams into sources of value creation.

industry and research institutions, including universities, to overcome cultural barriers to undertaking applied research. Advanced manufacturing requires advanced technology. CSIRO has identified robotics, mobile devices, consumer devices and cloud services as technologies that will enable advanced manufacturers to respond to consumer demand. Advanced manufacturing requires an innovative approach from government, industry and researchers. The focus should be on working together to develop an innovative workforce and improving entrepreneurship and business management skills. Government support through increased public sector research and development and reliable communications infrastructure will make an important contribution to Australia’s productivity gains.

1 – Australia’s strengths – and a plan for a secure future

80

Per cent (%)

60

Services

40 Manufacturing 20 Agriculture 0

Construction

Mining 1961–62

1971–72

1981–82

1991–92

2001–02

2011–12

Fig. 1.1.  Employment in Australia by industry, share of total, 1961–62 to 2011–12 (estimate for 2011–12). (Source: Woyzbun K, Beitz S, Barnes K (2014) Industry transformation. In Drivers of Change for the Australian Labour Market to 2030. (Eds K Barnes and P Spearrit). ASSA, Canberra)

Services The services sector encompasses any part of the economy not devoted to making things (manufacturing), removing them from the ground (mining), or growing plants and herding animals (agriculture). The sector is diverse, as Table 1.3 shows. The services sector dominates the Australian economy. In 2013, it accounted for close to 60 per cent of Australia’s GDP and for 78 per cent of employment. Like many similar countries, the services sector in Australia has been growing as a share of the economy since the early 1990s, but its net exports have declined steadily after peaking in 2001–03. ACOLA’s Securing Australia’s Future reports focus on three sectors that have the potential to drive productivity growth in all other sectors, namely post-school education, Table 1.3.  Service industries in Australia Electricity, gas, water and waste services Wholesale trade Retail trade Accommodation and food services Transport, postal and warehousing Information media and telecommunications Financial and insurance services Rental, hiring and real estate services Professional, scientific and technical services Administrative and support services Public administration and safety Education and training Health care and social assistance Arts and recreation services Other services Source: ABS (2006) Australian and New Zealand Standard Industrial Classification 2006, cat no. 1292.0, Australian Bureau of Statistics, Canberra.

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Australia’s universities attract many international students. (Source: UNSW.Flickr, CC BY 2.0)

health services and financial services. The sectors are well established and subject to potentially high rates of innovation and hence productivity growth. They are also highly regarded for their quality, resilience and outcomes. In 2013, the health care and social assistance industry accounted for 6.3 per cent of Australia’s GDP. The education and training industry has grown for the past 20 years and contributed equivalent to 4.5 per cent of total GDP. The finance and insurance industry has also grown, contributing equivalent to 8 per cent of total GDP in 2013. Our health industry sector has an excellent research infrastructure and scientific workforce thanks to decades of investment in research and development. Australia’s higher education institutions have a global reputation and have attracted many international students. As a small sector – there are only 39 Australian universities – it is also relatively easily monitored and regulated. The Australian financial sector is large, the superannuation sector is very large by international standards and the pension fund sector is one of the biggest in the world. The Australian Stock Exchange is the seventh largest exchange by market capitalisation and the fifth largest measured by free-float market capitalisation. Australia has a good regulatory management of systemic risk. There are opportunities for us to export our banking services as well as increase the penetration of financial management and funds management services in Asia. There is also an opportunity to develop skills in Islamic finance and export Islamic finance services. The economic rise of Asia provides a significant opportunity for Australia to increase its net trade in these three sectors. Rising incomes in the Asian region are driving greater demand for a diverse range of goods and services, including health and aged care, education and funds management. As well as its proximity to Asia, Australia’s highly educated workforce, political stability, successful macroeconomic policy, legal and regulatory framework, and appetite for innovation place it as a leader in the region.

1 – Australia’s strengths – and a plan for a secure future

Despite their positive outlook, the education, health and financial services sectors face common risks including lack of diversity in the Australian economy, sensitivity to currency fluctuations, distance from European and US markets, low levels of private sector research and development spending, high tax rates for companies and individuals, and an ageing population. Higher education is particularly vulnerable to changes in enrolments of international students.

Adding value Australia’s key sectors have been highly successful. However, without continued improvement and reform, we risk losing hard-won gains. Government and industry need to develop strategies to take advantage of the opportunities presented by future markets. Reliance on the export of low-value commodities in mining and agriculture leaves Australia vulnerable to currency fluctuations, commodity prices and global demand. We face increasing competition from lower cost international markets in the production of commodities and the manufacturing of value-added products. To secure our place in global economic prosperity, we need to move away from an extract-and-export focus and learn from countries such as Canada, Norway and Sweden that are building value-added opportunities. Countries are operating in vast global value chains and we must embrace this. We have a skilled workforce and a talented pool of world-class researchers and academics. There is strong support for public investment in research and development. Our proximity to Asia gives us continued opportunities for growth in the delivery of value-added products and advanced services. Australia needs to improve the collaboration between government, academia and business to foster innovation and develop commercial solutions. Low levels of private sector research and development and a lack of collaboration have left Australia lagging in the area of applied research and commercialisation. Government has a role to play in developing policies that support collaboration and encourage greater investment in research and development. We need more skilled workers. Investing now in the skills, value-added products and services of the future will help secure Australia’s place in the global economy of tomorrow.

An innovative workforce With just over 12 research and development personnel per 1000 people employed, Australia’s workforce compares favourably with other OECD countries. However, we are well behind the leaders in this field, such as Israel and Finland. Significantly less than half of Australia’s research and development workforce is employed by business. A decline in participation in science, technology, engineering and mathematics (STEM) subjects in Australian schools and higher education may be leading to a decline in STEM skills in the workforce. According to the Australian Industry Group, three-quarters of the fastest growing occupations require STEM skills and knowledge, and employers are facing recruiting difficulties for STEM occupations. They report a lack of STEM skills and workplace experience, and qualifications not being relevant to business needs. Engineers Australia conducted an investigation into the supply of engineers in Australia in 2012, concluding that Australia does not produce sufficient engineers to meet its requirements and that there is a strong case for permanent immigration to make up the numbers. Demographics highlights concerns. The age profile of the Australian population may hamper future workforce needs. The proportion of the Australian population over 65 is

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Diverse and inclusive workforces encourage innovation. (Source: CSIRO)

forecast to rise from 17 per cent in 2010 to more than 20 per cent by 2020, and to 24 per cent by 2030. Maintaining high levels of workforce participation will be important to overcoming some of the consequences of this demographic change. Businesses will need to be encouraged to take advantage of the experience of older employees. A diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation. Highly innovative organisations draw innovation capacity from actively diversifying the skills (both STEM and HASS), backgrounds, experiences and cultures in their work teams. One problem is too few women in Australia’s STEM workforce. The participation rate of women in engineering professions is low. It was just 21.5 per cent in 2011. The numbers are low for two reasons: few women undertake engineering degrees, and there is poor retention of women within engineering-related fields. Increasing the participation of women in the engineering workforce would help address skills shortages. Goldman Sachs JBWere reported that closing the gap between male and female employment rates would boost the level of Australian gross domestic product by 11 per cent. Women working in science remain hugely under-represented in leadership roles. Lack of women participating in STEM is not restricted to Australia. ACOLA’s SAF02 STEM: Country Comparisons includes several strategies used in various countries to increase the participation rate. Australia should continue to work to improve the participation of women in all STEM fields, and to improve the diversity of the STEM workforce in general.

Protecting our environment Tackling environmental challenges is important. Environmental sustainability is an essential objective in itself. Environmental protection also has economic benefits. Agriculture and tourism profit considerably from Australia’s clean, green reputation. There is even

1 – Australia’s strengths – and a plan for a secure future

potential to export relevant environmental expertise in these two industries as well as in other sectors. Australia’s performance on several environmental measures is mixed, with some significant gaps, including in greenhouse gas emissions (see Chapter 5). Every two years, Yale University in the United States releases an Environment Performance Index that provides a global view of performance and country-by-country metrics. In the 2016 report, Australia ranks 13th overall out of 180 nations. Australia was ranked top for water and sanitation, for access to electricity and for lowest exposure to environmental risks. We also fare well on air quality and water resources. We achieve only midlevel rankings for biodiversity and habitat, forestry (tree cover loss), agriculture and fisheries. Australia’s ranking on climate and energy is middling, including on trends in carbon intensity. Rating very low (150th) is the trend in emissions of carbon dioxide per kilowatt-hour. Climate change is an ongoing challenge. Per capita, we are one of the world’s highest emitters of greenhouse gases. In Australia as elsewhere, greenhouse emissions demand immediate mitigation strategies. The most recent CSIRO and Bureau of Meteorology projections for climate change in Australia, released in 2015, include the following observations: ●● ●●

●●

●●

It has become hotter since 1910, with warming across Australia of 0.9°C. Rainfall has increased in northern Australia since the 1970s and decreased in southeast and south-west Australia. More of Australia’s rain has come from heavy falls and there has been more extreme fire weather in southern and eastern Australia since the 1970s. Sea levels have risen by ~20 cm since 1900.

Environmental protection is essential in itself and is also key to agriculture and tourism. (Source: CSIRO)

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The two organisation express ‘very high confidence’ that hot days will become more frequent and hotter; that sea levels will rise, oceans will become more acidic, and snow depths will decline. Extreme rainfall events are likely to become more intense, even where annual average rainfall is projected to decline. No forward planning can be complete without consideration of regional and local climate change impacts. On a global scale, climate change will present us with opportunities and threats. We do have emission reduction targets; Australia is likely to face international pressure to achieve a dramatic reduction in our greenhouse emissions in order to contribute to emissions reduction approaching the magnitude required to limit global warming to 2°C.

Conclusion Australia’s economy is shifting rapidly in response to local and international pressures. Agriculture, mining and traditional manufacturing have served us well in the past, but their approach is changing and must continue to do so if we are to prosper. Historically we grew and sold produce, dug up and shipped out minerals, and built things. We have excelled in the first component of innovation – new ideas through basic research and development – but have not been so adept at the next stage of development and commercialisation. In large part, we haven’t had to be. Prices have been high and our vast land has been productive. In agriculture, people’s tastes are changing and international competition grows. Mining production remains high, although investment is in decline and product prices are falling. Structural change and automation force closures in the manufacturing sector. In order to regain world-leading competitiveness, we need to move up the value chain and invent and produce value-added products and services. The world is changing and the future unknowable. There is overwhelming evidence that high-quality education will serve as the best springboard to the coming decades. We need to become a clever country, literally. Skills growth, innovation, research and development, infrastructure investment and cost reductions will help us get there. So will attention to the foundations – investment in education, environmental protection, leadership and a range of economic reforms. This chapter on building on Australia’s strengths for a prosperous future draws on key ACOLA reports (SAF01 Australia’s Comparative Advantage; SAF02 STEM: Country Comparisons; SAF04 The Role of Science, Research and Technology in Lifting Australian Productivity; SAF06 Engineering Energy: Unconventional Gas Production; SAF07 Australia’s Agricultural Future; SAF08 Delivering Sustainable Urban Mobility) as well as incorporating cross-cutting themes that appear in the other ACOLA reports.

2 Engagement with Asia: time to be smarter You can’t do Asia with a Western head, Western thinking. Australian businesses miss opportunities because of a mindset that ‘Aussies know best’. Aussies need to change the way they think about their business. Chinese executive, quoted in SAF11 Australia’s Diaspora Advantage

Golden thread Australia must celebrate its relationships in the Asia-Pacific region. We need to engage better and cement Australia’s prominent place in the region. Finding these new opportunities must embrace the invaluable resources of Asian and Pacific communities by improving Australia’s language ability, increasing cultural awareness, building on current export strengths and extending networks and linkages.

Key findings This objective distils the interdisciplinary research and evidence from the 11 reports published as part of ACOLA’s Securing Australia’s Future project. To meet this objective, the following six key findings for improving Australia’s smart engagement with Asia and the Pacific need to be addressed: 1. Incentives are required to improve Australia’s linguistic and intercultural competence at school, university, and in the workplace. 2. We need to increase Australia’s ‘soft power’ through cultural diplomacy that updates perceptions of Australia in the Asia-Pacific region, and brings into the 21st century the way Australians see our place in the world.

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3. Multinational research initiatives should be encouraged to promote collaboration between countries in Asia and the Pacific to address regional issues, as well as increase research diplomacy opportunities that add to Australia’s soft power. 4. Australia needs to make the most of our regional proximity to the growing markets of Asia, building on current export strengths such as agriculture, exploiting niches created by our competitive advantage, and identifying new strengths, ensuring a strategic approach by government and industry through ongoing investment and clear policy directions. 5. Century-old corporate behaviour of turning to historical markets for trade needs to evolve to meet the needs of a 21st century economy located in the Asia-Pacific region. Australian business attitudes and preconceptions need to change to gain a better understanding and appreciation of how to do business with Asian cultures. 6. Governments, institutions and industry need to better support the activities of Asian and Pacific diasporas and better employ the invaluable resources (including language skills, cultural knowledge and global networks) presented by Asian and Pacific communities living in Australia. This includes the improvement of representation of people with Asian and Pacific backgrounds on industry councils and business associations and in trade discussions and delegations, to reduce the mismatch in particular between the large size of Asian diasporas in Australia and the small number of their representation on relevant boards and professional bodies.

If these key findings are implemented, then Australia will go a long way towards securing the country’s future.

Introduction Asian Australians … should be involved routinely as informal ambassadors for Australian science, research, innovation, entrepreneurship, arts and voluntary association. They are already involved in a small way but if Australia were to scale up our Asian-Australian engagements with the region then all Australians would stand to benefit. – John Fitzgerald, ACOLA SAF03 Expert Working Group

Australia needs to be smarter in our engagement with the countries of Asia and the Pacific to benefit from the global power shift towards Asia, in order to secure our future in the region. This chapter looks into what smart engagement means across business and the general population, for individuals and for the country as a whole. Chapter 2 begins with an analysis of our place in the region, from the historical contact of colonial heritage to how we – and those in neighbouring countries – see Australia in the

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21st century. It summarises population trends and increases in trade, and identifies the growth in the region that is leading to the rise of Asia as an economic powerhouse. The chapter proceeds with details about sectors where Australia has – or can build – competitive advantages due to our location in the Asia-Pacific region, our plentiful resources, our clean environment, and other positive national attributes. These opportunities are described along with the risks in a rapidly evolving world. We then discuss the importance of language for communication and business activities in the region, and highlight the linguistic barriers that exist in Australia. The chapter goes on to discuss the importance of cultural understanding, and the roles cultural activities and institutions contribute to cultural diplomacy and the improvement in Australia’s soft power. These subjects set the scene for a discussion about Australian businesses in Asia – or the lack thereof. We discuss the cultural barriers that dissuade businesses from engaging with Asia, and summarise strategies for overcoming these – including the strategic use and encouragement of the invaluable resource presented by Asian and Pacific communities living in Australia. This chapter follows Chapter 1’s exploration of how to build and secure Australia’s future through advantages compared to our international competitors in a globalised world. It focuses the themes discussed in Chapter 1, to highlight our role within the AsiaPacific region: particularly the Asian region that has a rapidly growing influence on the international stage.

Smart engagement: identifying the opportunities There is little doubt that the rise of Asia will be a defining characteristic of the 21st  century. – Australian Council of Learned Academies, SAF03 Smart Engagement with Asia: Leveraging Language, Research and Culture

Australia in the 21st century has begun to find its place in Asia. Building on earlier efforts, Australians are now realising the benefits of looking to our near neighbours for professional, cultural and other interactions as part of broader global engagement. There are obvious economic benefits in doing so. However, to date, engagement with countries in our region has too often been piecemeal, opportunistic and short-lived rather than strategic and focused on the longer term. To successfully secure Australia’s future, we need to be smarter. Smart engagement with Asia and the Pacific involves building relationships for the long haul. It means scaling up current activities and nurturing wide-ranging, long-term, mutually beneficial relations between Australia and the diverse countries of the region. It values cooperation, reciprocity and trust in international relations. Smart engagement promotes active interactions between Australians and Asians through business associations, community groups, research links and other networks. These interactions can build on the resources and connections already represented by Asian and Pacific communities in Australia, as well as Australian communities in Asian and Pacific countries. Importantly for policy considerations, we need to recognise that

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building sustained relationships requires long-term investment and commitment – it cannot be a quick fix. If Australia does not step up its connectivity with countries in our region, it will be left behind as global power shifts towards Asia. (Note that our use of the term ‘Asia’ is in keeping with its use in the ACOLA Securing Australia’s Future reports, and indeed how it is popularly used in Australia; that is, covering the countries of East Asia, South-east Asia and South Asia.) Connections need to be strengthened between people, between institutions, and between countries. We need to build stronger transnational links across the region to allow Australia and Australians to become more integrated within the AsiaPacific region, which is increasingly characterised by overlaying networks of cross-border connections and relationships. If Australia does get it right, smart engagement with Asia and the Pacific will enable integration with the region and provide new insight into the complexities of our regional relationships; it will also deliver a blueprint for the bridges that Australia can build to access long-term social, economic and political benefits.

Mutual misunderstandings Other than New Zealand, Australia is the only country in the region with a predominantly European heritage. Australia’s relationships with the countries of Asia and the Pacific often continue to reflect this heritage. Using the analogy of warmth as measured by a thermometer, a 2015 poll by the Lowy Institute found feelings towards Asian countries varied from cold for North Korea (29°), through average for Indonesia (46°), India (56°) and China (58°), to slightly warmer for Japan (68°). This relative coldness felt for our neighbours compares unfavourably with the warmth felt for New Zealand (83°), the United Kingdom (79°) and the United States (73°). Emotional distance is linked to common misunderstandings. For example, while Indonesia is Australia’s closest neighbour, a 2013 survey for the Australian Department of Foreign Affairs and Trade found 30 per cent of Australians do not know that Bali is part of Indonesia. Surprisingly, fewer than half of the respondents knew Indonesia is a democracy. When asked to name the first three things that come to mind when thinking about Indonesia, about one-third of the survey respondents said ‘holiday destination’, while other common responses included ‘boat people’, ‘bombs and terrorism’ and ‘drugs and drugs trafficking’. The ignorance and feeling of distance is mutual – most people in Asian countries lack detailed knowledge of a 21st century Australia, and have impressions based on outdated stereotypes. For example, in a 2011 poll only 14 per cent of Indonesians knew that Australia was Indonesia’s largest aid partner, and more than half agreed with the statement that Australia is ‘a country suspicious of Indonesia’. Impressions of Australia in China can be similarly sketchy, with a focus on koalas and kangaroos. Many people in the region perceive Australia as racist, with pervasive impressions based on the White Australia Policy, which has not been official policy since the early 1970s. For example, 38 per cent of the population in India still believe that race is an important factor in Australian immigration intake. The Pacific region, too, suffers from Australian misconceptions. It is too often perceived in Australia as a stereotypical place to holiday in the sun. This overlooks its importance in strategic terms, and the vulnerability of some Pacific nations to the impact of climate change and sea-level rise.

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To overcome these misconceptions, Australia needs to evolve further to meet the needs of a 21st century economy ensconced in the Asia-Pacific region. Australia’s relationship with the Asian region has been a policy priority for the Australian government since at least the 1990s. While there have been some wins, more needs to be done. We need a strategic focus on the longer term. Already there has been a rapid transformation of Australia’s population. In 1947, more than 90 per cent of the Australian population was born in Australia, but this proportion had dropped to 72 per cent by 2014. A significant share of the 6.6 million people born overseas is represented by people born in Asia and other non-English-speaking regions. Over the past 15 years there have been positive shifts in public perceptions of Asia and Asians in Australia. This may be a reflection not only of the changing make-up of our population, but also of the evolution observed in trade. Until the mid-20th century, the United Kingdom was the destination for most of Australia’s exports, and the main source of our imports. Since the 1950s, Asian demand for Australian primary exports has steadily grown due to the increasing industrialisation of countries in the region. East Asia’s dominance as a destination for Australian exports continues to grow, taking more than 80 per cent of Australia’s mineral exports, more than two-thirds of all merchandise exports, and more than 40 per cent of food exports.

The Asian century The rise of Asia is cited as the biggest economic trend – and indeed the defining characteristic – of the 21st century. We are indeed in the Asian century. In the era of globalisation, the next few decades will see a shift in wealth and significance towards Asia. China and India stand out as emerging super-economies. This shift will have huge economic, political, social and cultural implications for Australia. Engaging with Asia is, more than ever, a national necessity. Over the past 60 years, Asia’s share of world output has doubled. This is particularly accentuated in China and India, which have tripled their share of world gross domestic product (GDP) in the past 20 years, and their economies have grown by a factor of six. China is now Australia’s largest trading partner, accounting for almost a quarter of Australia’s total exports and imports in 2013. Japan, Singapore and Hong Kong are also major investors in Australia. But still it was non-Asian countries – the United States, followed by the United Kingdom – that invested the most in Australia. Engaging with Asia is, more than ever, a national necessity. There has been a rise of Asian middle classes and increasing affluence in Asia. Asia’s middle class is estimated to increase from 28 per cent of the global total in 2009 to around 66 per cent by 2030. This presents great opportunities and challenges for growth of the Australian economy. In addition to resources-related business, Asia could contribute an additional $275 billion to the Australian economy over the next 10 years. An assessment of industry and public service perspectives saw growth of an increasingly affluent middle class across Asia as a global trend that could have a positive impact on Australia’s competitive advantage compared to other countries over the next 25 years. Industry representatives and public servants rated the changes in Asia, with the rising economic role of emerging economies and its resultant rising Asian middle class, as positive for Australia (see Table 2.1). Such results are corroborated by the 2015 ACOLA report SAF01 Australia’s

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Table 2.1.  Global trends which could have a positive impact on Australia’s comparative advantage over the next 25 years according to industry and public servants. (Areas of agreement in bold) Industry

Public servants

Growth of an increasingly affluent middle class across Asia

New technologies in energy, materials and digital areas

Rising economic role of emerging economies

New biological technologies

Diffusion and harmonisation of technology across trading partners

Growth of an increasingly affluent middle class across Asia

Increased emphasis on environmental sustainability

Increased emphasis on environmental sustainability

Demand for a new energy mix to reduce fossil fuel use

Rising economic role of emerging economies

Comparative Advantage, which notes the rise of Asia, particularly China, India, and Indonesia, as one of the main global trends expected to significantly affect Australia over the next 30 to 40 years. Demand for Australian primary exports has steadily grown in Asia due to increasing industrialisation and growth in manufacturing in Asian countries. Korea and Japan, in particular, are densely populated and relatively poor in natural resources. China and India, which are better off for natural resources, need to import primary commodities to fuel their growing economies. Such rapid industrialisation makes Asian countries highly complementary to countries such as Australia, with our relatively sparse population, large areas of agricultural land, and plentiful mineral and energy resources. The scarcity of land for agricultural production in the growth markets in Asia provides us with a significant opportunity; over the next four decades this could result in more than $700 billion of additional revenues for Australia from agricultural exports. Furthermore, our proximity to Asian countries provides a strong advantage in the trade of bulky primary products that are expensive to transport. Australia will also have increasing opportunities to respond to the growth in demand for high-value products in Asia. These advantages open up opportunities for business and research. However, what we make of them will be determined by Australia’s strategy and commitment to our future in the region. What we make of advantages due to our proximity to Asia will be determined by Australia’s strategy and commitment to our future in the region.

Tapping into the market while avoiding the risks From a period when the then Singapore Prime Minister Lee Kuan Yew bluntly warned Australians that they were on the road to becoming the ‘poor white trash’ of Asia, the situation has changed and liberal economic reform is seen as playing a significant role in avoiding at least this outcome to this time. – ACOLA, SAF01 Australia’s Comparative Advantage

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Australia already exploits its plentiful resources in mining, our competitive advantage in agriculture, our attractiveness as a tourist destination, and our reputation for provision of education. There are opportunities to increase these, as well as build on our research collaboration, and increase exportation of banking and finance services, and other industries. The value and potential of Asian markets in all these areas are well recognised. However, making the most of our regional proximity to the growing markets of Asia requires ongoing investment, strategic policy directions, and an awareness of the risks to individual industries.

Unique food and agriculture Agriculture has stopped being seen as a sunset sector in Australia and is more recognised as having a renaissance. The highly productive agribusiness sector, which consists of 25 per cent of Australian farms (not to be confused with lifestyle and other farms that make up the rest) are innovative and adaptive. Agriculture also contributes more than 10 per cent of GDP through its support of value-adding, regional manufacturing, transport, services and other aspects associated with agriculture. The emergence of new markets has led to a revival of optimism, and buoyant agricultural markets have allowed rural producers to remain optimistic despite two periods of extended drought in the past 30 years. Demand for Australian agricultural products is expected to further increase in line with both Australian population growth and increasing global population. By 2050, global agriculture will need to feed a world population of nine billion people. Research by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) shows the potential for large increases in imports of beef, lamb, dairy products, sugar and wheat into Asia by the middle of this century. By 2050, the value of global agrifood demand is projected to increase on 2007 levels by 77 per cent.

Demand is growing in Asia for clean, green Australian products, such as baby formula. (Source: ValeStock/Shutterstock.com)

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The types of products being demanded are likely to change with increased affluence and the growth of the Asian middle class. Changing dietary preferences, particularly in China, India and Indonesia, could result in export opportunities worth many hundreds of billions of dollars over the next few decades. An example of changing cultural preferences and eating habits is the increasing demand for more organic foods that are grown in cleaner, less polluted places. There is also an increasing emphasis on the more humane treatment of animals. Foods with these qualities command higher prices on global markets, particularly in Asia. Australia’s clean and green image provides potential to address the demands of a growing Asian middle class. But with these opportunities come risks, as described below, and government policy in these areas will need to be strengthened to ensure the country’s competitive advantage is not lost to other countries or products, or our brand damaged due to failed regulation or declining environmental health (see Chapter 5). Australia’s clean and green image provides potential to address the demands of a growing Asian middle class, but with these opportunities come risks.

Plentiful mining resources Thanks to huge demand from China, mining investment in Australia increased more than fivefold in just a decade – from 1.5 per cent of GDP in 2002 to 7.7 per cent in 2012. However, it peaked by the end of 2013, and there are predictions that it will fall below 4 per cent of GDP by 2023. ACOLA’s Australia’s Competitive Advantage report panel commissioned a comprehensive review by PricewaterhouseCoopers (PwC) to determine the performance of Australia’s mining sector. According to the report, Australian mining is predominantly focused on extracting and exporting (see Chapter 1). The same can be said for agriculture, above, with its focus on commodity exports. The PwC report notes that, for the past decade, the resources boom has been driven by the combination of Australia’s natural advantages compared to other countries and high growth in Asia, particularly China. Mining will remain a major contributor to the Australian economy due to factors such as the large and growing market in Asia. Australia will continue to win a large share of the international growth in demand for minerals for reasons including our proximity to the major buyers in Asia, our large and high-quality deposits and our world-class mining technology. Australia’s liquid natural gas (LNG) exports accounted for 8 per cent of global LNG exports in 2011. The largest importers in the region are Japan, Korea, China, Taiwan and India. Imports into all of these countries are expected to continue to rise, due to increasing domestic consumption outpacing local production. Australia’s geographical advantage in supplying these markets is likely to lead to its share of global LNG exports increasing significantly over the next two decades. An expanding education industry International education and training is one of Australia’s major exports, and international students are the source of substantial income through fees and other educationrelated services. In 2013 there were 410  925 international students studying in Australia, and the industry contributed $18.2 billion to the economy. Higher education generated the most

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income with $12.5 billion, vocational education and training was next with $2.9 billion, followed by English language courses with $1 billion; schools contributed $691 million and non-award education programs $722  million. A large proportion of education income comes from Asia: China contributes 29 per cent, India 8.8 per cent, South Korea 4.9 per cent, and Vietnam, Malaysia, Thailand, Indonesia and Nepal are also in the top 10 most represented countries in terms of the number of students. Hence, the provision of education to Asian students is already one of Australia’s largest industries. Expanding opportunities for attracting new international students will allow Australia to capitalise on the growing market in Asia. As technology improves and is taken up by Australia’s major trading partners, off-campus study will be a major opportunity for education exports. The Australian Vocational Education and Training sector is highly regarded internationally, and represents a genuine strength for Australia. Further investment in, and development of, this sector could provide many benefits for Australia, since many Asian economies, such as India, are making significant investments to develop their vocational skills sectors, and are looking for international partners to help achieve this. There is a significant economic flow on, with residential property, local consumerism and tourism. However, we are still to fully realise the advantage of international students. They cultivate international talent for Australian industries, and forge more extensive links into Asia.

Research export and collaboration There is an opportunity for Australia to expand its strategic engagement with Asia through research partnerships. This would improve our research and development capability, enforce our position as a leader in education, and provide an increase in export potential of Australian-generated knowledge. It would also provide another avenue for building relationships, through research diplomacy and collaboration. In many countries in Asia, innovation and research translation are seen as crucial contributors to economic development. The ambition of our Asian neighbours is reflected in their strategies to grow their economies through innovation. Science and research are central to their national plans. Asia is the most dynamic region for research investment and output: the Asia-Pacific region had the most rapid rise in share of global publications in the past 15 years. China is now the third largest producer of research articles, on course to overtake the top-ranked United States before the end of the decade. One example of potential research export is for provision of pollution research services to Asia. ‘Megacities’, usually defined as cities with more than 10 million people, are a growing feature of Asia. In 1950, only New York would have qualified as a megacity. There are now 33 megacities worldwide, with most in Asia, North America and Europe. Within the next decade, it is expected that Asia alone will have another five megacities. These cities will require advice on the management of pollution and understanding of its impacts on health. Cities are also vulnerable to climate change, particularly those close to the coast such as on the mega-deltas of East Asia. Australia plays an international role in climate change research and environmental science management. We too are influenced by extremes in climate, from droughts to floods, and have a sound research and development base that provides knowledge and advice to improve the resilience of our climate-exposed industries. Hence there is potential to further increase the export of climate change research to

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Research partnerships are one way to expand strategic engagement with Asia. (Source: CSIRO)

provide advice to Asian cities and nations, as well as to Pacific nations facing threats from extreme weather events and sea-level rise. Research collaborations between countries in the Asian region have increased strongly in the past decade. This is true across areas of humanities, arts, social sciences, science, technology, engineering and mathematics. However, while collaboration between Asian researchers has risen steeply, the extent of Australian researchers’ collaborations with colleagues in Asia and the Pacific is less than collaboration levels with Western countries (the exception is collaboration with China, which has risen exponentially due to the efforts of researchers of Chinese descent working in Australian research institutions). There has been a lack of government initiatives in this field, and the strategic significance of international research collaboration receives little attention in Australian foreign policy. In addition to diplomacy and furthering research, such collaboration could provide a base on which to increase research and knowledge exports. The strategic significance of international research collaboration receives little attention in Australian foreign policy. Regional funding to countries in the Asia-Pacific region, reflecting the similar approaches of European Union funding for member countries in the northern hemisphere, could focus interdisciplinary research effort on the international challenges faced in the region. Funding that promotes multinational collaboration across Asian countries to address regional issues, such as adapting to climate change or addressing refugees and migration across the region, would provide incentives to enhance research collaboration with collateral benefits to research diplomacy.

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Tourism target and business bases Tourism is one of Australia’s leading export industries, contributing $91  billion to the country’s GDP and providing almost one million jobs. The Australian tourism sector is the eighth largest in the world. In terms of competitiveness, Australia ranks 11th in the world (of 140 countries) and second in the Asian region. The Asia-Pacific region provides 64 per cent of the almost 6.8 million international visitors to Australia. The number of visitors from China reached one million in 2015 for the first time, and the number of tourists from India increased 20 per cent in the same year. Tourism Australia’s policy is to double visitor expenditure from $70  billion to $140  billion by 2020, with growing visitor demand from Asia – particularly China and India – a major objective. These tourism figures would surely grow if Australians increased their cultural awareness of Asian countries and proficiency in the languages of the dominant tourist groups. While language and cultural awareness training have been increasingly included in training for the tourism industry since 2000, particularly in Queensland, improvements are still required. For example, a survey of more than 3600 Chinese tourists showed that only about half were satisfied with the availability of Chinese language services in Australia, and more than a third cited language barriers as a reason for not recommending Australia as a tourist destination. As well as tourism, involving temporary visitors, Australia also provides an attractive location for more permanent business bases. Asia is fast becoming a focus for international commerce and competition. Australia is an attractive place to live, and could attract talented people and businesses looking for a base from which to expand into the growing Asian

Asian tourists on the Gold Coast. (Source: Chris Betcher, CC BY-SA 2.0)

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economies. Australia’s proximity to Asia and its similar time zones place us in an advantageous position to access Asian markets and customers, compared to competitors further afield such as Europe or the United States. Australia’s growing trade integration with Asia further reinforces our advantageous position as a trading partner to the growing region. Such competitive advantages to attracting new and growing business should be promoted.

Other industries Australia is traditionally strong in the above-mentioned sectors of agriculture, mining, education and tourism, attracting large proportions of our export dollars from these industries. Are there other industries that can be grown by targeting countries in our region, and yet others that have not been given any thought as yet? For example, opportunities exist for Australia to export banking services to Asian countries. We could also increase the amount of financial management and funds management services provided in Asia. There also exists an opportunity to develop skills in Islamic finance and export Islamic finance services, according to ACIL Allen. The amount of scientific and technical information is increasing at unprecedented and exponential rates. Many of the types of jobs that today’s primary school students will have when they graduate may not even exist at the moment. So a successful Australia will need to be nimble and flexible in identifying business opportunities and growth industries in the Asia-Pacific region. A successful Australia will need to be nimble and flexible in identifying business opportunities and growth industries in the Asian region.

Risky business While many opportunities exist for Australia to help secure its future through increased business in Asia, these do not come without risk. Australian agriculture will face strong competition in attempting to exploit opportunities offered from a growing Asian population with increasing affluence. There are several ways this competition will be manifested. First, there may be competition for land from other sectors, particularly as opportunities in areas such as mining increase due to the demand from Asia for Australian minerals and energy raw materials. Second, the projected increasing demand for food will affect Australia’s trading competitors and hence increase competition from other countries. Furthermore, demand for locally produced, high-quality food products from Australia’s domestic market will compete with international demand. Awareness and understanding of competing factors will be required to manage such competition. Australia will need information systems to enable analysis of gaps and niches, as well as government regulations and policies that provide market access. There are also external factors such as climate change and extreme weather that provide further risks that are beyond our control. If Australia expects to maximise its competitive advantage in agriculture, as well as other sectors such as tourism, due to its image of pristine environments, we need to ensure we can maintain this image. Our clean and green reputation can help to increase markets in Asia for tourism, high-value niche products, and bulk raw commodities. But to sustain these advantages in the face of competition from other exporters requires ongoing investment not only in research and development, but also in credible compliance indicators to maintain the environment on which Australia’s clean and green image is built (see Chapter 5).

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The Australian education sector is also subject to regional competition. Enhancing the scientific outputs of research universities, by building ‘world-class universities’ more highly placed in world rankings of research outputs, is an objective of all higher education and research systems in East and South-east Asia. World-class university programs aim to increase the number of PhD-level researchers and to use leading international universities as the benchmark for local research. The future prospects of mining are highly dependent on factors beyond Australia’s direct control – namely, export prices and growth prospects in Asia and other large trading partners. Our large dependence on a single industry, and the threats to that industry from external factors, are major strategic weaknesses that Australia will need to contend with, especially demand development in China. Australia’s beef industry is expected to enjoy major new export opportunities into Asia. This sector comprises diverse operations and different markets across the country, including live animal export, high-quality premium chilled beef, and ground beef for hamburger meat. However, logistics and adequate transport infrastructure remain significant barriers to industry growth. In relation to opportunities in providing finance services, the sector has a primarily inward focus and poor exposure to trade. The common law jurisdiction creates impediments for many potential foreign investors, particularly those in the Asia-Pacific region. This variety of risks will need to be managed as part of our efforts to increase opportunities in the Asian region. Management options will vary from basic awareness of risks that are beyond our control, through to regulatory and policy instruments implemented in partnership with our Asian neighbours and hence requiring diplomacy and a team approach.

Teaming with our neighbours While not knowing English is a disadvantage, knowing only English is a disadvantage too. – Kent Anderson and Joseph Lo Bianco, quoted in SAF03 Smart Engagement with Asia: Leveraging Language, Research and Culture

For Australia to secure our future by finding our place in the region and maximising the opportunities presented by a growing Asia as described above, we will need to address the cultural and linguistic barriers that – while improving – still remain. The depth of Australia’s linguistic and intercultural competence will be a determining factor in the future success of developments in trade relations and economic competitiveness, as well as innovation, science and technology, research capacity and international mobility.

Speaking the same language Language is fundamental to communication. No social interaction – and hence no relationship-building or business deal – can take place effectively without it. Yet, despite the promotion of Asian languages being an education policy goal since the 1990s, participation and interest in foreign languages has remained stubbornly low. Eighty-one per cent of Australians speak only in English at home. Just 13 per cent of Australian year 12 students study a language other than English. Of the ~70 000 students

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Increased proficiency in Asian languages would provide benefits to the economy, research collaboration and cultural awareness. (Source: michaeljung/Shutterstock)

enrolled in the NSW Higher School Certificate in 2014, only 2.2 per cent studied Japanese, 1.3 per cent studied Chinese and 0.3 per cent studied Indonesian. This is not to say that English is the only language spoken in Australia. There are at least 350 other languages in use, including those of Aboriginal Australians and migrants from Europe, Asia and the Pacific. Seventeen per cent of the Australian population speak a language other than English at home, the top ones including Asian languages such as Mandarin (1.7 per cent), Cantonese (1.3 per cent), Vietnamese (1.2 per cent) and Hindi (0.5 per cent), with other top languages including Italian (1.5 per cent), Arabic (1.4 per cent), Greek (1.3 per cent), and Spanish (0.6 per cent). Part of the lack of interest in studying another language may be due to many Englishspeaking Australians believing that English is a language understood around the world, alleviating the need to learn anything else. This is true to some extent: the capacity to speak more than one language is widespread in the Asian region, with many Asians learning English; it is spoken by nearly 800 million people in Asia, although the level of proficiency varies across countries. Nonetheless, knowing a language other than English is important for success, particularly in tourism as noted above and for business (especially when engaging with small to medium-sized entities), and also in medical and mental health professions where familiarity with other languages is invaluable for providing care. Evidence shows that people who speak only English are at a significant disadvantage when engaging in a multilingual world. This very likely leads to losses to the Australian economy – for comparison, the

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British Council estimates that poor language competency in the United Kingdom results in a direct loss of at least $13 billion a year to the UK’s economy due to the constraint on building international connections. Even just some familiarity with another language leads to greater sensitivity with other cultures, resulting in more effective social interactions and business relationships. The opposite is also true – an ignorance of Asian languages and culture translates into ignorance of Asian business partners and a lack of understanding of client choices based on cultural preferences (and hence markets), reducing economic opportunities. But the need for proficiency in Asian languages goes beyond the benefits to the economy. It would also benefit research collaboration, and would move Australia from being a country that projects an outdated image of isolation to one embracing mutuality and cooperation with our regional neighbours. To encourage greater interest and proficiency in Asian languages, we need policies, investment and recognition of the benefits. Continued support, incentives and fresh approaches for learning languages and intercultural skills are essential at school, university and in the workplace if Australia’s Asia capabilities are to grow. Options range from the enforced (for example, making the learning of Asian languages compulsory at school) to subtle (for example, increasing cultural activities and providing incentives to increase interest in Asian languages). The effect of government policies and intervention on Australians learning foreign languages is clear. For example, the establishment of the Federal Government’s National Asian Languages and Studies in Australian Schools Taskforce in 1995 saw an increase in schools offering Asian languages and an increase in students studying an Asian language; but after funding ceased in 2002 there were immediate flow-on effects, with a 75 per cent decline in relevant teacher training and a decline in Asian language study over ensuing years. The Federal Government in 2015 aimed to have, within a decade, 40 per cent of year 12 students studying a foreign language, preferably one from Asia. Building on this aim is the Federal Government’s New Colombo Plan (see box), which provides an example of successful policy to promote connectivity with Asia via students.

The New Colombo Plan The Australian Department of Foreign Affairs and Trade launched the New Colombo Plan in 2014, aiming to make study in Asia a rite of passage for Australian students. The five-year program supports Australian undergraduates to study, undertake internships, live and work in Asia. This initiative aims to address the largely one-way flow of students from Asia to Australia. Internships, involving government, universities and business, will enable students to benefit from the growing employment opportunities in the Asian region. Hong Kong, Indonesia, Japan and Singapore hosted Australian students in 2014, and other countries are being added. The program will also increase knowledge of the region in Australia, promoting links between people in Australia and neighbouring countries, especially among young people. To be successful, study periods will have to be long enough to enable immersion in a particular country and culture beyond a tourist experience and hence facilitate a deeper understanding of Asia.

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From learning language to comprehending culture Learning a foreign language to enable social interactions, often benefiting business, is just the start. It has a significant positive effect on knowledge and perception of another country. There is a correlation between poor knowledge and negative perceptions; that is, the more people know, the more likely they are to be positive about another country. Knowledge of Asian languages is hence critical for deep, mutual and long-term engagement with Asia. With the rise of new middle classes in Asia, and the aligned increase in travel and use of social media, there has been a massive rise in cultural understanding and connections across the Asia-Pacific region. Culture and international relations are now closely tied, with the consequence that policies need to address a country’s cultural credentials to benefit its international standing in the field of ‘cultural diplomacy’. Cultural diplomacy focuses on the outward projection of a country’s culture, to make people think about the country in a positive way, encourage visits, build trust, and influence behaviours such as business investment and political alliance. It is now an important tool for influencing international attitudes and perceptions. There has been a rapid increase in cultural diplomacy activity across the Asian region since the late 1990s. However, Australian activity has not kept up with the increased cultural diplomacy activity. This relative lack of cultural diplomacy has led to Australia having a lack of soft power – the ability to influence others through attraction rather than coercion or payment. This needs to be addressed through actions that aim to update the perceptions of Australia in the Asia-Pacific region, and bring into the 21st century the way

Sharing Aboriginal and Torres Strait Islander cultures with our Asian neighbours is one way to improve understanding of Australia as a multicultural society. (Source: ChameleonsEye/Shutterstock)

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Cultural diplomacy thanks to Bollywood Movies produced in India, particularly those from ‘Bollywood’ in Mumbai (Bombay), have contributed positively to cultural relations between India and Australia. The participation of Indian-Australians in the Bollywood industry has led to intercultural exchanges between the two countries. Facilitated by Indian film professionals working in Australia, Bollywood productions featuring Australian locations became prominent in the 1990s. Successful movies in the 2000s showcased Australian locations including the Sydney Opera House, Sydney Harbour and the Gold Coast. Tourism Australia, as well as state tourism organisations, even made use of Bollywood films to promote Australia to affluent and mobile people in India. Cultural professionals were important in mediating intercultural relations after the ‘Indian student crisis’ of 2009, triggered by attacks on Indian students in Melbourne and Sydney. The perceptions of widespread racism against Indians in Australia affected bilateral relations, and Indian film unions called for a boycott of productions in Australia. However, cultural diplomacy helped. For example, a free concert given by renowned soundtrack composer AR Rahman to a large culturally diverse audience in Sydney in 2012 sought to deepen connections between Australia and India. This and other interventions by artists were not official cultural diplomacy activities directed by governments; rather, they were enabled by the global reach of the Bollywood industry and the cultural networks generated by people of Indian descent living in Australia.

Australians see our place in the world. We need to invest strategically in cultural diplomacy through a national framework. This could add to incentives proposed in the ‘Tapping into the market while avoiding the risks’ section of this chapter (p. 28) for international research collaboration on regional issues; these would also promote research diplomacy and benefit Australia’s relationships with its neighbours. This includes continued showcasing of Aboriginal and Torres Strait Islander cultures, which are important to Australian identity, to create understanding of Indigenous cultures. There is strong fascination with Australian Indigenous art and culture in Asia, particularly Japan. However, showcasing positive cultural achievements should not be tokenistic nor hide the well-known problems of Indigenous social and economic disadvantage. Indigenous culture should also be presented in an integrated way with other traditions, rather than in isolation, to reflect Australia as a multicultural country integrated with Asia and the Pacific. Intrinsic to cultural relations are cultural exports. A study commissioned by ACOLA’s Australia’s Competitive Advantage report panel found that promotion of Australian culture and creativity on a global scale is severely lacking, which harms our international trade in cultural goods and services. Australia has a large deficit in cultural trade when compared with other advanced countries; even worse, it is reducing investment in arts and cultural economy at a time when the market in the region is growing. This is of particular concern since many Asian economies – led by China – have targeted cultural exports for largescale strategic investment. Cultural and creative institutions also contribute to cultural diplomacy and culture as exports. The importance of such institutions, and the increasing efforts in cultural activities by Asian countries, seems to be missed in discussion about exports, and is not

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receiving adequate policy attention. The rise of Asia creates opportunities for the creative industries to provide products and services that meet the demands of a growing middle class. However, major problems arise from our traditional orientation of cultural reference points towards the United States, the United Kingdom and Europe. This is not adequate for the needs of the Asian Century. The Federal Government’s 2012 Asian Century White Paper aimed to address the lack of Asian capability, but did not provide many ideas on how a cultural reorientation towards Asia might take place. Cultural institutions can contribute to the attractiveness of Australia for skilled migration from Asia, building on specific images provided by Australian arts and culture on the international stage to promote an open, welcoming, democratic and egalitarian country. For example, Australian galleries, art networks, academics and cultural entrepreneurs have developed strong connections with the Chinese visual arts, and Australia is now seen as a destination for Chinese artists to live and work.

Better business The representation of Asian-Australians in public life and politics is not proportionate to the population … when they reach their 40s and 50s they seem to disappear from public life. – Jason Yeap OAM, quoted in ‘Where are Asian-Australians in public life?’ The Age, 13 October 2014.

Australian businesses in Asia Engagement by Australian businesses in the growing Asian market is surprisingly low, with many companies complacent and not seeing a need to change. A report by PricewaterhouseCoopers in 2014, which surveyed more than 1000 Australian businesses, found that 88 per cent have no experience at all of doing business in Asia. Concerning for a future where we need to be ready to make the most of the economic opportunities presented by the rise of Asia, around two-thirds of the Australian businesses surveyed had no intention of increasing their Asian engagement in the near future. As the report states, ‘putting it bluntly, Australian business has operated in a relatively sheltered, comfortable competitive environment’. Australia invests more in New Zealand alone than in China, Indonesia or all ASEAN countries combined. According to the survey, fewer than 10 per cent of Australian businesses operate in Asia, while only 12 per cent have any experience of business in Asia at all. Large companies are better engaged than small and medium-sized enterprises, with about half of those surveyed doing business in Asia. But for large companies that do engage with Asia, activities were limited and the total contribution of it to their bottom line was only 12 per cent. Australia invests more in New Zealand alone than in China, Indonesia or all ASEAN countries combined. Meanwhile, China, Japan and South Korea have invested across Asia to a much greater extent than Australia, and global brands from Europe and the United States are also well

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established within the region. Australian companies are seen to possess only average Asia capabilities when compared to international competitors, falling behind on their understanding of, and experience operating in, Asian markets, in cultural awareness and language proficiency, and in dealings with Asian governments and regulators. They also appear to be behind competitors in the customisation of their organisations, people, and products and services to the context of each Asian market. Some large Australian companies have successfully engaged in Asia. These include the ANZ banking group, Linfox Logistics, RMIT University International, the Leighton Group, Hassell, Seek, Jetstar, and Orica. These companies demonstrate the possibility of specialisation, effective management and a successful global strategy. Engagement with Asia by Australian small and medium-sized enterprises may improve with increasing business ownership by people with strong links back to the countries of Asia. Between 2006 and 2011, businesses owned by Australians born in China rose 40 per cent, and for those born in India by 72 per cent. In 2011, 28 800 businesses were owned by first-generation migrants born in China, while 16  700 were born in India, making a combined total of 45 500 businesses (from a total of some two million businesses trading in Australia). Chinese and Indian businesses operate mainly in sectors such as accommodation and food, retail, manufacturing, health care, and professional, scientific and technical services. These business owners are in addition to the majority of Chinese and Indians in Australia who are employees, mainly in knowledge-intensive industries with strengths in science, technology, engineering and mathematics.

Changing the culture of business There is a widespread belief among Australian businesses that engaging with Asia is too hard. The PricewaterhouseCoopers report suggests Australian businesses think engagement with Asia is difficult and they are held back by a fear of the unknown. This is largely because of real and perceived differences in cultural practices, traditions and language. The Western, transactional models used in Australian businesses emphasise verbal communication and appreciate directness. Eastern businesses focus more on relationships and are comfortable with ambiguity. A further advancement of Australia’s skills capability is clearly needed if we are to realise business opportunities. In particular, an understanding and appreciation of cultural nuances and the diversity of this region, as well as an ability to handle multiple interpretations and contested narratives, are critical for Australian businesses to make significant headway into Asia. The PricewaterhouseCoopers report found that many business owners and executives think Asia is ‘very different’, and uncomfortably so. The report found that ‘Australian business is a long way from the level of engagement, investment and commitment needed to secure a long-term share of the region’s growth’. Companies are often driven by shorttermism, seeing Asia as risky and devaluing the long-term investment required to succeed in Asia. These attitudes and preconceptions need to change if Australia is to pursue smart engagement with Asia. While people doing business with Asian countries may not need to be fluent in the relevant language, an understanding of the culture and ways of doing business is a necessity for success. Cultural literacy and an awareness of business approach in Asian countries would benefit the business sector, improving the relationships that are the bedrock on which business interactions sit. The importance of changing attitudes is illustrated by a survey of 380 businesses by Asialink and the Australian Industry Group, which found that Asia, particularly China, is

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considered important to business success, with over half the respondents citing their Asian operations as highly important, and three-quarters indicating an interest in expanding into Asia. However, more than half of Australian businesses operating in Asia did not have much board or senior management experience of Asia or Asian languages. Only around 4 per cent of Australia’s top 200 publicly listed companies’ board directors are of Asian descent, with about half of these (1.7 per cent) being Chinese. Indeed, the cultural ancestry of leaders in Australia’s top companies is overwhelmingly white, with less than one-quarter having a non-Anglo-Celtic cultural origin. Chinese and Indian directors and executives are significantly under-represented when compared with Australia’s population or workforce – while 9.4 per cent of the Australian labour market are Asian born, only 4.9 per cent advance into senior management roles and even fewer progress to director positions. As expressed in one study of the cultural ancestry of leaders, Australian boards and leadership appear to be ‘pale, male and stale’. The under-representation of people with Asian or Pacific backgrounds on industry councils and business associations and in trade discussions and delegations extends beyond business. It is also apparent across government and in public office, in educational leadership, and within peak bodies that promote Australia–Asia diplomacy. This should be a major concern for a country geographically positioned in the Asia-Pacific region and with a significant percentage of its population represented by Asian and Pacific communities, especially one that has a need to strategically look to the rapidly growing region to plan for its economic future. Only around 4 per cent of Australia’s top 200 publicly listed companies’ board directors are of Asian descent.

Asian diasporas The expanding use of the internet and social media, combined with mass international travel, means that simple, one-way transmission of government information is just one small way to present a country’s national image. People seek out their own information, and the dissemination of cultural information is no longer controlled by governments. Governments wanting to pursue smart engagement should avoid one-way broadcasting of messages about national characteristics, or any other processes that can be interpreted as propaganda, as this would not only fail to convince, but also would very likely have a negative effect on cultural diplomacy. Cultural diplomacy needs to focus more on mutuality, cultural exchange and cross-cultural understanding. The role of government is not to control the cultural relations initiated within society but to create the conditions for cultural exchange to flourish. The role of government is not to control the cultural relations initiated within society but to create the conditions for cultural exchange to flourish. Many others beyond government now play a role in shaping international cultural relations. These include independent cultural, media and educational institutions, cultural NGOs, businesses, private foundations and philanthropists, and individuals such as artists and sportspeople. Communities of people of Asian descent living in Australia (referred to as Asian diasporas) play a major role, as do those with Pacific heritage. Asian diasporas are

2 – Engagement with Asia: time to be smarter

a resource for linguistic skills, cultural knowledge and social networks that can help connect Australia with various parts of Asia. About 8 per cent of Australia’s population was born in Asia, a much higher percentage than the United States (4 per cent) or United Kingdom (2 per cent). Australia’s two largest Asian populations were born in China and India. The Chinese and Indian communities have been present in Australia since the early-to-mid 1800s. By 2031 the Australian population of those born in China is expected to rise to 1.3 million, while those born in India is expected to be 1.4 million. These numbers further increase if they include not only migrants, but also their Australian-born descendants, people of mixed parentage, and temporary residents. Today, ~17 per cent (four million people) of Australia’s population identify as being of Asian origin. It is this broader catchment of people of Asian heritage that make up diasporas. The Chinese and Indian diasporas in Australia are currently estimated to be at least 1.2 million and 610 000 people, respectively. (While the ACOLA SAF03 and SAF11 reports focused on the Chinese and Indian diasporas, there are other diasporas connected to the Pacific and Asia, notably Indonesia, Vietnam and the Philippines, which are seen as the next emerging Asian economic superpowers due to these countries’ manufacturing and increased consumerism.) A transition is required to recognise – if not celebrate – Australia’s potential in Asia, with better resourcing of bodies that support trade and investment between Australia and Asia, and policies that support connectivity. Australia’s Asian diasporas already are making major contributions to the Australian economy through trade, investment, technological innovation and knowledge transfer. Asian business diasporas have a role in strengthening bilateral relationships and facilitating trade, investment and commercial opportunities between Australia and their home countries. Australia’s Asian diasporas have the advantage of language skills, cultural knowledge and global networks. Business activities are bolstered by connections, high mobility and skill in circulating ideas and resources around the world. Members of Asian diasporas should be involved regularly as informal ambassadors in areas of entrepreneurship, innovation, philanthropy and volunteerism. As Australia’s economy moves towards industries relying heavily on knowledge and technology, as well as being focused on Asia, Australia’s Asian business diasporas provide unique abilities to realise opportunities. A deeper understanding of the region and the intercultural skills essential for agile, adaptive and creative business can be drawn from people who live in Australia but are active in Asia. Governments, institutions and industry need to better support the activities of Asian diasporas and create favourable conditions for them to help Australia’s business links into Asia. A transition is required to recognise – if not celebrate – Australia’s potential in Asia, with better resourcing of bodies that support trade and investment between Australia and Asia, and policies that support connectivity, mobility and circulation for business, investment and innovation. Meanwhile, about one million Australians live overseas, mainly in Europe and North America. Only between 10 and 17 per cent of those living overseas are located in Asia – particularly China, Singapore and Japan, followed by Thailand, Indonesia, Malaysia and Vietnam. This relatively small number of Australians recognise the emerging importance of Asia as the centre of global opportunities, but often feel their recognition that Australia’s future lies in the Asian region is not adequately understood in Australia. This Australian

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Chinatown, Sydney. Australia’s Asian diasporas make major contributions to the Australian economy. (Source: Enoch Lau, CC BY-SA 3.0)

diaspora in Asia can contribute to Australia’s public diplomacy, and pass on understandings to other Australians regarding the opportunities for Australia in the Asian century. Diasporas are already being used by Asian countries to extend relationships around the world. The Chinese and Indian governments are deeply conscious of their global diasporas and plan to use the knowledge and skills of up to 65 million overseas Chinese and 25 million overseas Indians. They are developing policies that aim to increase trade, investment and research collaboration. In contrast, the policies of advanced economies such as the United States, Canada, Germany, Ireland and Singapore are mostly designed to attract skilled migrants and investors who have business networks in Asia only for improved economic productivity. The idea of ‘diaspora advantage’ suggests how the linguistic skills, cultural knowledge and informal networks around the world provide an advantage to many areas including trade. If Australia were to scale up the relationships that exist informally, all Australians would reap the benefits. An increasingly diverse Australian population with extensive links throughout the region and beyond could create global business linkages, especially in Asia. Such links would benefit the members of the Asian diasporas while helping Australia extend its economic links with Asia. There is a significant opportunity to consider the social, economic and political conditions that can further realise the advantages offered by Australia’s Asian and Pacific diasporas. This would enable a move from outdated notions of migration towards the concept of diasporas that better portray how Asians live and work here. Australia could lead the world in developing policies and programs that encourage more effective engagement of Asian and Pacific business diasporas.

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China, Australian wine and Chinese students Chinese students in Australia can help wine businesses reach Chinese markets, according to research by the University of Adelaide’s Australian Population and Migration Research Centre. The Centre found that although wine businesses are interested in starting (or increasing) exports of their wine to China, many do not know how to engage with the Chinese market. This is similar to the lack of knowledge and experience faced by businesses in other sectors, as described above. This lack of Asian capability can be assisted by Chinese students and graduates in Australia. There is great potential for Asian graduates of Australian universities, when they return to their home country, to play a key role in extending the reach of Australian businesses into Asia. Such graduates have a justifiable pride in being graduates of Australian universities but tend to be contacted only sporadically by their alma mater universities. For example, an Adelaide Hills wine business that had little engagement with China increased exports thanks to a Chinese wine business postgraduate they had employed who spoke fluent Mandarin. The student answered enquiries from China and translated wine tasting notes for the Chinese market. This made the company easy to deal with from China, enabling interactions in the customers’ native language. As a result, China now accounts for more than a third (around $2 million) of the company’s total revenue. Another Chinese wine business student helped export more than 40 containers of wine to China during his time as a university student. The strong Asian demand for quality Australian wine (and other speciality alcohol and food products) is increasing. Asian students’ language skills, networks, business connections, and familiarity with business cultures in both Australia and their home country enable them to overcome what can be perceived as a complicated market, to help established Australian businesses engage with Asia, or indeed to start up their own businesses.

Conclusion The potential role of the Asian business diasporas in Australia’s innovation agenda cannot be stressed enough. – Professor Fazal Rizvi, ACOLA SAF11 Expert Working Group

This chapter on Australia’s place in Asia draws on two key ACOLA reports (SAF03 Smart Engagement with Asia: Leveraging Language, Research and Culture and SAF11 Australia’s Diaspora Advantage), as well as incorporating cross-cutting themes about Australia’s place in Asia that appear in the other nine ACOLA reports. As noted in the introduction to this chapter, we need to address several key findings identified through the interdisciplinary research and evidence of ACOLA’s Securing Australia’s Future reports.

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This will mean providing incentives to increase the awareness of other languages and cultures at all stages of learning. It will involve improving relationships based on cultural activities and collaborative research on regional challenges. It will require investment to exploit Australia’s competitive advantages and export strengths provided by our geography and environment. And importantly, it will require an acceleration of the shift in perceptions of ourselves and our neighbours to improve business relationships and make use of the wealth of experience and networks offered by communities linked to the Asia-Pacific region. If we recognise these findings and act on the implications, Australia will be smarter in its engagement with Asia, take advantage of its place in the Asia-Pacific region, and go some way towards securing the future.

3 Boosting productivity with innovation and new technologies There is an urgent need for Australia to look at measures to increase innovation. Current measures are inadequate and Australia is lagging behind key international competitors, many of whom are rapidly growing their investment in research and innovation. Dr John Bell, co-author of SAF04 The Role of Science, Research and Technology in Lifting Australian Productivity

Golden thread Building the industries of the future will enhance productivity and ensure resilience. Adapting to change and creating new opportunities for all Australians in the future require increased investment in research and development, a commitment to innovation, better links between business and research, and the training and use of an innovation-capable workforce that effectively combines humanities, arts and social sciences (HASS) and science, technology, engineering and mathematics (STEM) capabilities for creative problem solving.

Key findings Here are six key findings designed to support productivity growth: 1. Increases in research and development lead to productivity growth. Australia needs to raise the levels of research and development in the medium term to at least the OECD average. 2. Institutional reforms coupled with increased government spending on infrastructure, on labour force participation, and on education and training would dramatically raise national productivity.

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3. Countries that do better than Australia in innovation feature policy setting and programs that encourage a culture of innovation and collaboration. 4. Research translation and application need to be a key element of Australian innovation strategy. 5. A skilled and productive workforce is essential for economic growth, with innovation requiring excellence and creativity across the range of disciplines. 6. Technology research and development support should be focused on technological areas, not on existing industry sectors.

Introduction Productivity is critical for Australia’s prosperity, economic growth and social wellbeing. Study after study reveals that increasing productivity requires research and development. But what exactly is productivity? Productivity is the efficiency with which an economy transforms inputs, such as labour and capital, into outputs, such as goods and services. Lifting productivity means producing more goods and services from the same quantity of labour, capital, land, energy and other resources. Doing so can markedly help the economy, generating higher real incomes and long-term improvements to our living standards. The Australian Bureau of Statistics tracks economic health via a comprehensive measure known as multi-factor productivity. Multi-factor productivity is largely a measure of the effects of technical progress, improvements in the workforce, improvements in management practices and economies of scale. Over the long term, this measure represents technical progress, which is the primary source of real economic growth and higher living standards. 1.90

Cumulative productivity index

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1.70

Agriculture, forestry

1.50

Financial and insurance services Retail trade Wholesale trade Construction Transport, postal and warehousing Information, media and telecommunications Market sector (12) Accommodation and food services Manufacturing

1.30

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Arts and recreation services Electricity, gas, water and waste services Mining

0.70

0.50 1989-90

1991-92

1993-94

1995-96

1997-98

1999-2000 2001-02

2003-04

2005-06

2007-08

2009-10

2011-12

Fig. 3.1.  Multi-factor productivity performance for 12 core market sectors, as well as their aggregate ‘Market sector 12’, from 1989–90 to 2012–13. (Source: Australian Bureau of Statistics (2013) Estimates of Industry Multifactor Productivity, cat. no. 5260.0.55.002, Australian Bureau of Statistics, Canberra)

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Australia’s performance has varied over the last decade. Up until 2003–04, multi-factor productivity grew strongly. Since 2004–05 however, multi-factor productivity has declined in most years (Fig. 3.1). Given the importance of productivity to Australians’ living standards, this decline is of significant concern. While many factors influence a country’s productivity, innovation is the key. Australian labour productivity (simply put, the amount of output produced by an hour of paid work) has also dropped. Between 1995–2004 and 2005–12 there was a reduction in all sectors except construction. Add our ageing population to the equation and it’s clear that if we are to have future growth in living standards, we need productivity growth.

Sources of productivity growth 1. Changes in the quality and quantity of labour and other inputs. Examples include skills, improvements through education, and improvements in physical capital such as computing. 2. Diffusion of ideas: new knowledge spreads through training and adoption of new equipment. 3. Technological improvements, including new techniques, inputs and products. 4. Sources of new knowledge. Production of economically valuable new knowledge depends, at least in part, on new scientific knowledge produced in universities and other institutions, both at home and abroad. 5. Changes in efficiency, including improvements in management and workplace organisation. 6. Changes in the functioning of markets, namely regulatory change that removes barriers to efficient market operations. 7. Returns to scale: large markets justify the establishment costs for the large-scale production of standardised goods, provide an outlet for specialised goods, and allow firms to produce multiple products for diverse consumers using the same machinery. 8. Changes in incentives, due to changes in the regulatory environment, taxes and trade opportunities.

Increases in research and development lead to productivity growth. What is the relationship between research and development and productivity? While many factors influence a country’s productivity, innovation is the key. A study in 2001 of 16 countries spanning nearly 20 years found that increases in research and development lead to productivity growth. A 1 per cent increase in business research and development creates a long-run increase in productivity of 0.11 per cent. Even more impressively, a 1 per cent increase in public research created a 0.28 per cent productivity increase. These numbers are significant compared with the average annual rate of growth of Australian multi-factor productivity of around 0.8 per cent.

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Public sector research and development expenditure by Australian government research agencies, the Australian Research Council and the universities has wide benefits and is an important source of gains in productivity. Moreover, private sector research, innovation and other intangibles benefit the community as well as business. However, Australian investment in research and development is below the OECD standard. Countries such as Sweden, Japan, Switzerland, the United States, Germany and Singapore invest significantly more in research and development than Australia. The institutional and capability reforms described in this chapter would lift Australia’s performance to OECD best practice standards; doing so would be an important policy objective.

Investing in ourselves Skilled people play a crucial role in innovation through the new knowledge they generate, the way they adopt and adapt existing ideas, and their ability to learn new competencies and adapt to a changing environment. – OECD (2011) Skills for Innovation and Research. OECD, Paris.

In Chapter 1 we saw the value of investing in education, training and research and development. ACOLA’s SAF01 Australia’s Comparative Advantage report panel commissioned detailed economic modelling that explored the impacts of the government increasing its investment in Australia’s capabilities. There were two scenarios modelled: one involving broad, institutional policy change designed to improve political, legal and market structures, and the second entailed a 10 per cent increase in spending on infrastructure, on education and training, and encouraging higher labour force participation. The forecast returns on these changes are considerable. Implementing both scenarios dramatically improves the economy, lifting gross domestic product (GDP) per capita by almost 10 per cent within years. Consumption per capita takes a little longer to improve but does so considerably. Over the long term, there are projected gains of 25 to 30 per cent 25.0 20.0

Per cent (%)

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15.0 24.9 10.0

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22.5 17.2

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Agriculture

Other services

GDP

Government services

8.1

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5.1 Mining

Fig. 3.2.  Projected industry sector GDP gains by the year 2030 from combined institutional and investment reforms. (Source: Independent Economics (2015) Australia’s Comparative Advantage: Economic Scenarios. A report for the Australian Council of Learned Academies, ACOLA, Melbourne, accessed from )

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in both GDP and consumption per capita. Employment is stronger and labour productivity higher. Real after-tax wages rise, with a gain in incomes for low, middle and high skill employees. The reforms benefit some industries more than others, although all are winners. The biggest winner from comprehensive reform is manufacturing, as economic growth increases demand for manufactured goods. Agriculture is also a bigger winner, as it is boosted by free trade agreements. Figure 3.2 shows the real GDP gains industry by industry by 2030 from the reforms. The gain in total GDP in that year is an impressive 17.2 per cent. The reforms could represent just the beginning of lifting national productivity. Furthermore, industry-specific measures, as well as wider economic and other changes, could improve performance even more. Policy changes that help us meet these objectives can bring major benefits.

Innovation In 2010 the OECD identified key elements of an effective innovation strategy. These include: •

excellence in higher education;

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strong links between universities and industry;

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international mobility and cooperation for researchers;

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excellence in public research;

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ease of market entry and exit for small firms;

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access to finance by small and medium enterprises;

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well functioning venture capital markets;

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more symmetric tax treatment of profits and losses;

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research and development tax credits;

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the availability of high speed broadband internet;

•

patent regimes that strike an appropriate balance between providing incentive and rewards to innovators and providing access to new knowledge for users.

Transforming research into value ACOLA’s SAF09 Translating Research for Economic and Social Benefit: Country Comparisons report panel sought to determine how best to convert research into applications, based on international approaches to encouraging and facilitating research translation, commercialisation and collaboration. They did this because innovation in Australia suffers from a lack of direction, short-termism and a haphazard approach. We need to urgently improve the application of publicly funded research in order to generate economic and other benefits. The 14 nations studied were Finland, Denmark, Sweden, Germany, United Kingdom, Israel, United States, Canada, South Korea, Japan, Singapore, China, Brazil and Chile. There is a clear link between national policy on innovation and innovation performance. Countries that do better than Australia in innovation feature policy setting and programs that encourage a culture of innovation and collaboration.

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Countries that do better than Australia in innovation feature policy setting and programs that encourage a culture of innovation and collaboration. In a modern knowledge-based economy, boosting the ways in which new ideas are applied is an important priority and can be facilitated by measures such as increasing the levels of collaboration between researchers, businesses, not-for-profit sectors and government sectors. There is the opportunity for Australia to leverage the skills and knowledge in universities through sponsored research, bringing about closer collaboration between publicly funded researchers, industry, government and the community. Applying the findings here should increase the uptake of all research – in humanities, arts and social sciences disciplines, science, technology, engineering and mathematics. Public sector research is a major part of Australia’s research system. Most of Australia’s researchers work in the public sector. Translation of public sector research into economic and social benefits can be difficult; this is especially so in Australia, where there are relatively few companies undertaking research and development. Researchers find it difficult to find companies with which to engage. So there is little surprise that Australian company collaboration on innovation activities with the higher education sector and public research institutions ranks lowest of the 33 countries in the ACOLA comparison. Australian company collaboration on innovation activities with the higher education sector and public research institutions ranks lowest of the 33 countries in the ACOLA comparison.

Reaping the rewards Investment in public sector research generates many benefits. University research helps to ensure that students graduate with up-to-date skills that can be applied to benefit the economy and society. Research outcomes provide us with new products and processes and help industry become more efficient and competitive. More broadly, university and public sector research helps to identify and address pressing social and economic problems in areas such as health care, energy and the environment. There are strong economic benefits from publicly funded research. The OECD economies are increasingly based on knowledge, information and technology, which drive productivity and economic growth. An important feature of a ‘knowledge economy’ is the strength of connections and collaboration. Publicly funded research institutes and universities employ and educate highly skilled individuals who have the capacity to deliver innovative technologies, services and knowledge to address national and global challenges. However, knowledge per se is of limited value: it needs be translated, communicated and applied. Recognising the importance of this flow of knowledge to application, many countries have invested in linkages that help match researchers and users. The users convey to researchers the kind of knowledge they need, and the researchers get help in finding people and businesses that may be adept at applying their ideas. Governments play a critical role in implementing polices that can support and drive innovation. Their role in ensuring public investment in science and research, and encouraging and supporting innovation within the private sector, is vital. The 14 countries studied in ACOLA’s SAF09 Translating Research for Economic and Social Benefit: Country Comparisons have a mixture of policies and programs to encourage and

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enhance the application of research. These include funding for start-ups, university-based incubators and technology parks, intermediaries, management and licensing of intellectual property, and training and mentoring for university student and faculty entrepreneurs. There are programs that help researchers collaborate, assistance to businesses, exchange and placement of researchers, technology transfer support and intellectual property support. Governments play a critical role in implementing polices that can support and drive innovation. Their role in ensuring public investment in science and research, and encouraging and supporting innovation within the private sector, is vital. There are numerous examples of stable, well-designed and funded measures in other countries that have created jobs, increased business turnover and provided other benefits. Australia would be well served by applying successful overseas incentives to encourage researchers, universities, business and other parties to work together. Small and medium-sized enterprises (SMEs) are effective converters of public sector research. They are often able to take up and adapt new ideas quickly. SMEs are an important source of future jobs and economic growth. However, they often do not know where to go to find help, or to seek research outcomes, from universities. Supporting SMEs and start-ups with high growth potential will help to increase the translation of our public sector research.

Small and medium-sized enterprises will help to translate public sector research into practical impact. (Source: Monkey Business Images/Shutterstock)

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Australia is overly reliant on indirect support for business research and development through the associated tax incentives. Greater use of direct measures such as grants, loans and procurement contracts would improve research collaboration and translation. Increasing funding for research collaboration programs and requiring rigorous engagement between the parties involved will also help. Australian research collaboration programs, such as the Australian Research Council’s Linkage Program, would benefit from expansion of the program and reforms such as adoption of leading grant administration practices from overseas. Humanities, arts and social sciences (HASS) disciplines make many contributions to social wellbeing and economic advances. For this reason, some countries have adopted specific measures to encourage HASS engagement and collaboration. HASS researchers should also be eligible for measures to encourage public sector researcher engagement with external parties.

Pathways to impact The UK Research Councils require an acceptable Pathways to Impact statement before a research grant recipient can start work. The impact sections of grant applications must explain the following: • Who is interested in the research? • Why are they interested? What are their agendas? In addition, the Pathways to Impact statement has to address the following questions: • How is the grant recipient going to engage external stakeholders? • What will the grant recipient do to connect with them? • Why are the chosen channels appropriate? • What evidence is there to indicate that this will work? • When will these activities take place and what is the rationale? • How much will these activities cost? (Sufficient provision has to be made in the budget.) • Who is going to manage this part of the project and what experience do they have?

Fostering collaboration Programs that support the placement of students and new graduates within organisations will help to transfer new creative and technical skills to the business, government and notfor-profit sectors. Work-integrated learning placements can also help build relations between universities and external agencies that can lead to future collaborations. Australia’s Cooperative Research Centres Programme represents a good model for encouraging collaboration. Projects require a joint proposal from public sector researchers and external partners (often business). The collaborating parties need to agree on their objectives and how they will work to achieve them. The external agency often brings a commercial perspective to the deal. The collaborating parties are usually expected to provide a clear indication of the outcomes that they expect to achieve and the likely value of those outcomes to business and society.

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In the United Kingdom, introducing metrics for university engagement with external parties, and rewarding this engagement, has increased research translation. We could emulate this approach. Technology transfer offices are an effective way for universities to engage with businesses and governments. Countries including Chile, Brazil, Israel and Sweden provide support for the offices, which can assist with raising funds for research and licensing and creating start-up companies. Most of the countries reviewed assist the establishment of start-up companies from universities and, in some cases, from government laboratories. To have a chance of success, start-up companies need to have intellectual property strategies and business strategies, an analysis of market prospects, finance and other commercial inputs, and researchers willing to engage in the development process. In Australia, CSIRO employs commercial and business development managers who help researchers establish relationships with companies. This is a sound approach because engaging with commercial partners from the early stages of research is more likely to lead to the eventual translation of the results into economic and social benefits. Many of the countries examined, including Singapore, Japan and Germany, have adopted measures to help the outcomes of public sector research enter the market. Such measures would address a major gap in Australia’s innovation system. Additionally, adequately funded intermediary organisations can assist public sector research agencies form productive linkages with small and medium-sized enterprises. Many of the countries examined, including Singapore, Japan and Germany, have adopted measures to help the outcomes of public sector research enter the market. Training researchers in translation, collaboration and entrepreneurship is a feature of leading universities in Europe. It is most important at the Master’s degree and PhD stages.

Checklist for encouraging research translation ACOLA’s SAF09 Translating Research for Economic and Social Benefit: Country Comparisons report panel’s extensive international and national examinations of successful research translation activities yields the following findings: ●●

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Business leadership of collaborative activities – as a general rule, the party that is to generate economic or social benefits from engagement or research translation should be the one to lead the project and receive and manage grant funds from government. Cost sharing – where business is expected to gain benefits from research translation, business should make some contribution to project costs. Research partnerships – effective research engagement and translation require the active involvement of both the public sector researchers and the would-be beneficiaries, working in partnerships. Working in industry facilities – public sector researchers engaged in research collaboration and translation should, wherever possible, spend time working in industry facilities in order to gain a better understanding of the environment in which the outcomes of the research will be applied. Support for commercialising research – there are several examples where researchers are supported to undertake further research in order to get their work to the point where an external party might support the project into an application phase.

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●●

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Appropriately skilled selection committees – grants for research claiming to have translation potential should be decided by committees that include business and translation experience. Rapid assessment of translation proposals – proposals for the support of research collaboration need to be assessed quickly and preferably continuously. Conducting calls for proposals once or twice per annum is unsatisfactory.

National innovation strategy Our review shows how our policies and supportive programs are piecemeal, opportunistic and almost invariably short-lived. – John Bell, co-author of SAF09 Translating Research for Economic and Social Benefit: Country Comparisons

Research translation needs to be a key element of a national innovation strategy. Countries achieving high levels of public sector research translation provide a sound institutional basis for this activity by making it a well-resourced, important element of a national innovation strategy. Australia can emulate overseas successes by doing the same. Research translation needs to be a key element of a national innovation strategy. To be successful, government programs to encourage research translation should include: ●●

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Program stability – most of the measures in use in other countries have been in place for many years. Business, in particular, dislikes frequent changes in the names and rules of support programs. Program continuity – businesses will not enter into discussions about research translation projects if there is any doubt over continuity of funding. Evaluation of measures – most countries reviewed undertake regular evaluations of their measures to encourage research translation. This often results in minor adjustments to eligibility requirements and levels of support.

Independent reviews and evaluations of research translation measures ensure that they are achieving their objectives. Leading practice countries regularly commission independent evaluations of innovation and research translation measures and make the evaluations public.

Innovation requires skilled labour and collaboration across disciplines While STEM expertise is necessary, deep content knowledge and technical skills need to be complemented by other disciplines. Regardless of their primary qualification, all future workers will need the broader attributes to constantly reinvent their businesses and jobs. – Stuart Cunningham, co-author of SAF10 Skills and Capabilities for Australian Enterprise Innovation

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A skilled and productive workforce is essential for economic growth. Skilled labour is one of the main contributors to productivity gains through innovation. Skilled staff and recruits have the knowledge to improve and adopt new processes to lift business productivity. Technology-based industries need science, technology, engineering and mathematics skills to innovate and compete. However, they also need staff who understand systems, cultures and the way society uses and adopts new ideas. People skilled in humanities, arts and social sciences have a vital role in supporting innovation. A skilled and productive workforce is essential for economic growth. Staff need to be flexible and continue to acquire new skills. Important workplace skills include creativity, problem solving, adaptability and preparedness to continue learning. Successful organisations need people with team-building capacity, emotional intelligence, market analysis ability and cultural sensitivity. Organisations need strategic visioning skills; that is, the ability to describe the organisation’s purpose and map out how it will achieve this in the coming years. Organisations whose performance is based on knowledge and its application require a combination of staff from science, technology, engineering and mathematics backgrounds collaborating closely with those with expertise in humanities, arts and social sciences. Organisations whose performance is based on knowledge and its application require a combination of staff from science, technology, engineering and mathematics backgrounds collaborating closely with those with expertise in humanities, arts and social sciences. An Australian study by the Council for Humanities, Arts and Social Sciences titled ‘Collaborating across the sectors’ explored characteristics that typify a successful collaboration. The study, which involved more than 600 respondents, found that cross-sectoral collaboration leads to innovative solutions to problems, development of commercial products, collaboration with community services, and stronger engagement with clients. Teams and individuals involved in these collaborations gain from the process, which also broadens social and professional networks. One of the study participants explained: We make sure we employ people who are open, like working in teams, curious, are not really precious about their favourite method – because the sort of work we do is very applied. You have to be able to give up a lot of your adherence to the norms of your discipline – to be willing to do what it takes to help the client – to step outside what you are comfortable with. A lot is happening at the boundaries of what is already known. The study concluded that ‘cross-sectoral collaborations will not flourish in Australia without positive actions by government, funding institutions, researchers and industry’. Collaboration can be expensive and time consuming. Hence, cross-sectoral collaboration is ‘most likely to be profitable when the issues or problems being tackled cannot be dealt with by one sector alone’. The main message from the study is that paying close attention to clients and users should help organisations develop successive waves of innovation. The information

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Cochlear: hearing the need for cross-sectoral collaboration Cochlear is a $6 billion Australian-founded company that develops electro-acoustic implants to restore hearing to the deaf. The company offers a lifelong commitment to upgrade and service its technology. Since its establishment in 1978, Cochlear has gained more than 70 per cent of the global market, with operations extending to the United States, Europe, India, Korea and Japan. Through innovation, internationalisation and an appreciation of cultural diversity, the company offers autonomy to regional operations and encourages locally developed engagement programs. Cochlear prizes technical expertise. The quantum of medical knowledge is doubling every two to three years. In an interview for ACOLA’s SAF04 The Role of Science, Research and Technology in Lifting Australian Productivity report, then CEO Chris Roberts said that the role of the company ‘is on the side of technological innovation, to scan the horizon for what technologies can be applied in combination with developing trends in clinical and medical knowledge so that innovation may change intervention’. A diverse range of disciplines and collaborations is vital to Cochlear’s success. Non-technical skills include design thinking, social science (studies on social isolation), communication, understanding cultural diversity, marketing and community engagement. To foster interdisciplinary collaboration and gain access to a wider range of skills and expertise, Cochlear relocated to Macquarie University in New South Wales to form part of the world’s first precinct dedicated to hearing and related speech and language disorders. The collaboration concentrates on trend analysis and prediction, but the potential for innovation is widened by nurturing relationships with all faculties.

Cochlear has demonstrated success for over 30 years in developing hearing implants. (Source: Elsa Hoffmann/Shutterstock)

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Halfbrick Studios: more than a game Fruit Ninja and Jetpack Joyride bear witness to the power of collaboration. These globally popular titles are the products of Halfbrick, a games developer founded in Brisbane in the early 2000s. Halfbrick began as a developer of licensed titles for platforms such as GameBoy Advance, Nintendo DS and PlayStation portable. The company then transformed into an independent games developer and publisher of its own titles for mobile devices. The business depends on high-volume sales of games via micro-purchased app downloads. The company has grown from a predominantly engineering background into one that includes software engineering, creative design, user-centred design, art design, storytelling, community relations management and advanced technical skills in cloud computing and social media analytics. Forty per cent of staff have an engineering background, while 20 per cent have training in art and 10–15 per cent in design, with the remainder a mix of sound specialists, quality assurance, community managers and administration.

gleaned from the clients will also help dictate the right skills mix for an organisation. Getting the relationship right between technical staff and those with humanities and social sciences skills is a critical factor for efficiency and productivity. The balance will play a major role in achieving alignment between production inputs, the production process and uptake in the market. Building effective and productive multidisciplinary teams is not easy, but it is vital. Building effective and productive multidisciplinary teams is not easy, but it is vital.

Bringing it all together Unsurprisingly, given all the evidence provided by ACOLA’s multidisciplinary research, countries investing more in skills report higher rates of innovation activity. Improving cross-sectoral collaboration entails far more than increasing the supply and diversity of skills at the individual level. Rather it is about how skills can be combined within organisations, industries and innovation ‘ecosystems’. It is also about how these skills can be combined with physical capital and effective organisational systems to yield new ideas that generate new products or services, new applications of technologies in production and new ways of marketing and distributing those goods and services. The way in which Australian enterprises use and manage skills and capabilities is a critical component of the broader strategy needed to enhance our innovation performance. We need to improve the way we turn knowledge into products to become more efficient and successful innovators. ACOLA’s SAF10 Skills and Capabilities for Australian Enterprise Innovation report panel has undertaken the first in-depth investigation of how Australia’s best-known innovative enterprises build and combine technical and non-technical skills to develop new products and services and to capture new markets and consumers.

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Westpac: banking on collaboration Westpac has a team dedicated to customer-centred design. The company’s Digital Customer Experience Team consists of 20 people from varying and remarkably eclectic backgrounds – including fashion design, anthropology, web design, product and technology design, and French philosophy. The team is supplemented by external contractors depending on workload or project-specific specialist skill sets requirements. Chief Experience Officer, Ian Muir, says that the team’s practice ‘has evolved into collaborative design, customer experience design and a more service design approach, which asks, ‘What are the services that customers might be wanting to achieve? How do we look at this from an end-to-end perspective? And, what is the journey that they might go on?’ The team dealt with many ‘conservative, complex and legacy based systems and processes’ associated with customers and the manner in which they needed service. However, the team soon established that a style of open innovation was the most effective strategy in addressing fundamental issues and targeting the appropriate audience. A design anthropologist applied his skills to help develop a radical new approach that sought to find the right solution for customers by identifying what they actually ‘needed’. Westpac has a design principles group that specialises in disseminating successful initiatives throughout the organisation. The approach, according to Muir, is to ‘identify and learn best practice, keep pace with appropriate levels of technique, and establish best practice in applying these techniques’. For example, the group trains more than 500 people annually in developing a ‘more customer-centred approach’, encouraging an understanding of customer mind-set in a variety of ways, including the development of competencies in data analysis and synthesis, prototype development and app design. The design group has been lauded for its ability to use reflexive practices (critical analysis of everyday working practices to improve competence and promote professional development) to develop techniques and tools that can be used across the organisation.

The 2015 Global Innovation Index reveals that Australia is a relatively inefficient innovator. Our overall ranking for innovation inputs is a reasonable 10th. However, our ranking for innovation outputs is 24th. The index shows that Australia has the relevant skills but lacks the capacity to manage and use these skills and other inputs for innovation. This issue should be a considerable concern to any government seeking to support and sustain innovation. The Australian Bureau of Statistics’s Business Characteristics Survey identifies barriers for applying innovation. The single most often stated barrier is the lack of access to the funds needed to develop and implement innovation: almost one-third of all innovation active businesses reported the problem. However, the single most significant barrier overall was a lack of access to skills. The skills shortages include those within businesses, in the catchment area and, more generally, in the labour market. ACOLA’s SAF10 Skills and Capabilities for Australian Enterprise Innovation report panel commissioned Swinburne University of Technology to undertake a statistical

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analysis of the factors associated with innovation performance among Australian businesses. The analysis confirms that different types of skills are more important for different types of innovation. Science, technology, engineering and mathematics skills are more strongly associated with innovation in products and processes, while business skills are associated with process, organisational and marketing innovation. Many Australian enterprises need to develop a different type of workforce with a different skills profile. For example, engineers not only need to know how to construct a sound apartment building – they also need to understand market conditions and customer preferences and how these might change in the future. They need to understand design and aesthetic aspects, and they require the communication and negotiation skills to ‘sell’ their idea to superiors. Our future workforce needs to combine technological expertise with the ability to effectively and efficiently integrate various knowledge bases and skill sets, and deploy ‘soft skills’ including team-building capacity, emotional intelligence, strategic visioning, market analysis and cultural sensitivity.

Skills for innovation • Basic skills – covering numeracy, reading and comprehension, written expression (literacy), active learning, oral expression, problem solving, critical thinking, self-awareness and digital literacy. • Knowledge skills – knowledge drawn from science, technology, engineering and mathematics and the humanities, arts and social sciences. Knowledge skills lie at the foundation of ‘knowledge organisations’ (that is, organisations that create, manage, use and transfer knowledge-based products/services). These skills are now essential features of businesses in manufacturing and in the mining, agricultural and service industries. • Technical and technician skills – areas such as equipment maintenance, installation, repair, operation and control, machine programming and software maintenance, quality control, technology and user experience design, and troubleshooting. • Creativity, design and cross-cultural skills – idea and opportunity creation (which may or may not be sourced from science and technology), problem solving, integrative thinking, ingenuity, and customer orientation including cross-cultural understanding within and across multiple global markets. • Entrepreneurial skills – abilities related to starting a business, whether as a start-up company or as a new venture in an established organisation, including an ability to focus on satisfying customer needs and wants. • Business skills – implementation and administration of critical business systems and processes, including sales and marketing, accounting and finance, materials procurement and supply, project delivery, recruitment and motivation of employees and contractors, and management of time. • Management and leadership skills – judgment and decision making, communicating and coordinating with others, emotional intelligence, negotiation, persuasion, organisation culture, training and teaching others.

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ACOLA’s SAF10 Skills and Capabilities for Australian Enterprise Innovation report panel has examined the role of government, industry, and education and research institutions in developing innovation skills and capabilities. Drawing on prior studies and extensive interviews with industry leaders and innovation experts, the commissioned work identified sets of skills for innovation (see the box, ‘Skills for innovation’). Innovation requires a wide range of technical and non-technical skills. Most of the skills relate to managing oneself and others (for example, leadership, collaboration and organisation) and combine knowledge and skills from different disciplines. Innovation requires a wide range of technical and non-technical skills. Thankfully, an organisation does not need to have all of the skills and competencies to initiate and sustain innovation. Organisations can profit from working cooperatively and in competition, developing and even sharing capabilities relating to new innovations.

Tinkering, failing and adapting: working with new technology All new technologies disrupt the current way of doing things; this brings both benefits and disadvantages. The challenge is to leverage and share as many of the rewards while limiting any damage. – Robert Williamson, co-author of SAF05 Technology and Australia’s Future

3D printing is one new technology that is already driving innovation in health, manufacturing and other sectors. (Source: CSIRO)

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Technology is all around us. Every home, every school, every workplace and every entertainment venue incorporates technology, much of which would have been unimaginable a generation ago. We intuitively understand what the term ‘technology’ means, although producing a succinct definition is no simple task. ACOLA defines technology as ‘knowledge of everything – products, processes, and forms of organisation – that can create economic value’. Listing examples of technology is an easier task than trying to robustly define the term. ‘Technology’ includes a broad selection of processes, products, materials, structures, information and practices. The word can encompass groups of similar things such as furniture, clothing, genetically modified organisms or calculators. It may be captured by sector-specific terms, such as biotechnology, transport infrastructure, public health and mining technology. It might describe collective needs or uses such as information and communication, energy generation and storage, fabrication, transport or sanitation. Technological development has been the prime driver of economic transformation and a major force for social change throughout much of human history. Economic, social and cultural activities drive technology diffusion, adoption and innovation, all of which take place in an environment of change and uncertainty.

A history of invention The outstanding characteristic of our civilization is its complete dependence on invention. We are entirely surrounded by inventions and their resulting products. Our very existence, our comfort, and happiness are at the mercy of invention. Every fiber of our social system is permeated with invention. It is the cornerstone of our civilization and a very life-blood of its existence. It is now universally acknowledged that the tremendous progress of this country … is due to invention. These words apply just as much today as when Joseph Rossman, a patent examiner based in Washington DC, wrote them almost 100 years ago. Rossman wanted to know why inventors invent. He surveyed 710 inventors and described the findings in his 1931 book, The Psychology of the Inventor: a Study of the Patentee. The number one response that inventors gave in answer to Rossman’s question, ‘What motives or incentives cause you to invent?’ was a love of inventing. The patent examiner concluded: ‘The sheer joy of inventing, resulting from an irrepressible urge to invent, has been felt as the greatest urge by the inventors of this study. The pleasure resulting from manipulation and experimentation, the satisfaction of solving problems and the desire to create, were considered sufficient in themselves as objectives by the inventors.’ Later studies on independent inventors and professional research scientists found that both score abnormally high on aesthetic personality values. They value beauty and elegance for its own sake. In other words, creativity is central to technological change.

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Technology reports ACOLA’s SAF05 Technology and Australia’s Future: New Technologies and their Role in Australia’s Security, Cultural, Democratic, Social and Economic Systems report panel commissioned 13 reports on various aspects of technology. The reports, available online, are part of a detailed investigation of how technology changes, whether these changes can be predicted, what the consequences or impacts of those changes might be, what technology means to people, and ways to evaluate and make technological interventions. The reports include: •

Bottling sunlight: using energy storage technology as a lens to view the factors affecting technological change in the electricity supply industry;

•

Collective technologies: autonomous vehicles;

•

Digital computing, modelling and simulation;

•

From Frankenstein to the Roomba: The changing nature and sociocultural meanings of robots and automation;

•

Genetically modified crops: how attitudes to new technology influence adoption;

•

Printing the future? An analysis of the hype and hope of rapid prototyping technology;

•

Technology and work;

•

Performance-based research funding – an overly simplistic technological intervention.

Australia’s technology capacity Technological change supports long-term economic growth. It is an intrinsically uncertain process. Nations have differing capacities to adapt to it, and skills underpin this difference. Technological change supports long-term economic growth. Technological innovation and progress result from trial and error, mistakes and unexpected successes. Technology is developed and improved by trial and error: no new technology product or artefact is perfect. Technologies fall in and out of favour. Australia’s capacity to adopt emerging technology will, in part, depend on the approach of the public, governments, industries and businesses to uncertainty and failure (see Chapter 5). Australians are just as entrepreneurial and risk taking as citizens of equivalent OECD countries. The RAND Corporation, a US global policy think tank, published The Global Technology Revolution 2020, which concluded that Australia has an excellent capacity to acquire a broad range of technologies. The report assessed 29 countries on their capacity to adopt selected emerging technologies to promote economic and social progress, ranking Australia as having the capacity to acquire all 16 of the report’s chosen technologies. Factors important to the uptake of technology by Australian business and industry include cost; policies, regulations and laws; collaboration; open data; and privacy and security. It is better to focus on the desired goal rather than trying to pick a technology winner. For example, a policy goal of decreasing carbon emissions is best achieved by allowing innovative solutions to emerge. Policy stability will encourage long-term investment in

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most industries. Collaboration between research, university, business and industry sectors is crucial to solving major problems and creating a highly skilled workforce. Collaboration between research, university, business and industry sectors is crucial to solving major problems and creating a highly skilled workforce. A consistent message throughout this book is the importance of skills. Skills are needed to develop, adapt and apply new technologies. A study of technology adoption internationally by Comin and Hobjin in 2004 stated that ‘the most important determinants of the speed at which a country adopts technologies are the country’s human capital endowment, type of government, degree of openness to trade, and adoption of predecessor technologies’ (Journal of Monetary Economics 51, 39). A better understanding of basic scientific knowledge and quantitative skills can help people to deal with, and apply, technology. Preparing students in science, technology, engineering and mathematics courses will improve their understanding of basic scientific and technological knowledge. Technology, of course, involves far more than science and maths, and often entails value decisions. Many emerging technologies trigger debate about ethical, legal and social implications from invention to use. The humanities disciplines are vital in helping us decide when, how and in what circumstances it is appropriate to use new technologies. The context in which technology is deployed affects its impacts. Technology and human nature are closely related: just as we change technology, using technology changes us. Technology changes the way we act, think, learn and socialise. We are part of an increasingly connected international system. Globalisation is an impact of technology, with implications for security, culture, democracy, governance, society and the economy. Information and communications technology and transport technologies, in particular, facilitate globalisation. Globalisation and technology have differentially affected Australians, producing costs and benefits to the nation. Some people have benefited and some have been disadvantaged, both domestically and internationally. Technology and economic policy are inextricably linked. Government needs to explicitly consider the benefits as well as the risks of new technology. Saying ‘no’ is often an easier choice for government than permitting innovation. However, blocking or delaying new technology due to excessive fear of the risks relative to the benefits (such as with new medical drugs) can slow economic growth and lower living standards.

The role of education To tinker is to test, experiment, make mistakes and keep trying. As such, it is a valuable skill for innovation. Tinkering entails trying to improve or repair something in a casual way. Making things and then making them better is what we and our ancestors have been doing for millennia. Schools and universities can encourage creativity by providing greater opportunities for hands-on tinkering and building. We don’t need to be able to build a mobile phone in order to use one. But for a country to embrace mobile telephony, it needs people who have the skills to design, install and maintain the requisite infrastructure. These skills turn out to be little different from those needed to develop mobile telephony in the first place. The skills needed for technological creation and engineering include deep scientific knowledge, understanding of business and entrepreneurship and, perhaps most importantly, the ability to deal with uncertainty and open-ended design problems through

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‘optimism and resilience in problem solving’. ‘Resilience in problem solving’ is code for failing, but jumping up again. As the maxim says, ‘Failure is the stepping stone to success’. Engineering education should make creativity a deliberate focus and complement scientific facts-based education with hands-on ‘tinkering’, recognising the ‘craft’ component of engineering. A greater focus on the creative and tinkering aspects of engineering (technology creation), without diminishing scientific rigour, would not only attract more students to the field, but would also create better technologists and thus eventually better technologies. New technologies require professional engineers and technologists for their creation, as well as a technologically skilled workforce for their adoption. Educating for skills in creativity and tinkering is crucial. Educating for skills in creativity and tinkering is crucial. Technology is constantly changing the nature of our work. Old jobs disappear and new ones arise. The workforce needs to thrive with tomorrow’s technologies; it needs to be adaptable. A 1988 report from the US Office of Technology Assessment considered the employment impacts of new technology and concluded that: People most likely to prosper in these networks are … able to change, adapt to unfamiliar work, and learn new trades as a continuous part of working experience. The talents needed are not clever hands or a strong back but rather the ability to understand instructions and poorly written manuals, ask questions, assimilate unfamiliar information, and work with unfamiliar teams. In short, the new networks require the skills provided by a solid basic education. An educated population is the most critical infrastructure of the emerging economy. It is critical for both the economic growth of the nation as whole, and the success of individuals acting as either consumers or employees. Educated workers are more adept at implementing new technologies. Technological change favours the more highly skilled workers. Although a traditional university degree provides no guarantee of being able to adapt to technological change, the ability to think in a non-routine manner is likely to be most helpful.

The importance of being wrong Failure is an ever-present partner of inventing, of new technology, and of trying out a new policy. But rarely should it be an excuse not to try. Acknowledging the possibility of failure, and dealing with it in an effective manner, is often a recipe for success. Acknowledging the possibility of failure, and dealing with it in an effective manner, is often a recipe for success. To quote JK Rowling, the creator of the Harry Potter series: ‘Failure is so important. We speak about success all the time. It is the ability to resist failure or use failure that often leads to greater success. I’ve met people who don’t want to try for fear of failing.’ JK Rowling

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speaks from experience. UK’s best-selling living author received many rejections from book publishers when she first sent out her Harry Potter and the Philosopher’s Stone manuscript. New technologies are born imperfect. Their improvement takes time and many failures. Such failures are often simply inevitable steps along a path that ends in a mature, polished and functioning technology. Engineers can learn from technological failures just as scientists accumulate knowledge through undertaking experiments that falsify a theory. Fear of failure also manifests itself in business and government. Changing any aspect of an existing policy approach or innovation always carries with it a risk of failure. Riskaverse leaders and governments are often more content to do nothing or little rather than initiate an action that might see them blamed for a failure. Media reports on technological failures can reinforce the idea that ‘playing it safe’ may be more desirable than being bold and taking a risk. There are processes and practices that can be adopted to improve the response to failures. If failures arising from the development and adoption of new technologies were viewed as system flaws (to be fixed) rather than flaws in the characters of those involved, it could encourage people to try out new, and even risky, technologies. Governments can play a central role in encouraging experimentation and entrepreneurship. Additionally, there’s a place for education systems to present the ‘journey’ of discovery and the often associated failures on the road to seeking ultimate success. There’s a place for education systems to present the ‘journey’ of discovery and the often associated failures on the road to seeking ultimate success.

Investing in our future The Australian Government’s 2015 innovation agenda was developed by examining the industries that were excelling in their trade performance. Maintaining competitiveness in these industry sectors is crucial, and requires improving their efficiency and productivity through the effective application of technology and innovation. The major problem with using existing industry sectors as a way of focusing technology research effort is that today’s sectors are a poor guide for future large-scale industry developments. This is especially true when it comes to fundamental transformations, which can create entirely new industries. Governments that insist upon neutrality of interventions tend to favour existing industries, which are typically least able to adapt. Technology is complex and dynamic. Technologies and industries that have performed well in the past will not necessarily perform well in the future, at least without substantial adaptation and transformation. Adaptation involves innovation, change, and new technologies. Governments that insist upon neutrality of interventions tend to favour existing industries, which are typically least able to adapt. Acknowledging that the world is changing, and embracing that change as a valuable business opportunity, can lead to growth and prosperity. We are competing with other high-performing countries that are prioritising their research and innovation support for future growth areas such as green technologies and health and to help address global challenges.

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Technology research and development support should be focused on technological areas, such as information and communications technology, advanced materials, biotechnology and nanotechnology, not on existing industry sectors. To achieve advances in human health, government cannot just invest in the medical sector; to achieve advances in transport, government cannot just invest in roads. If large economic impact is desired, the underpinning sources are likely to come from a wide range of disciplines. Technology research and development support should be focused on technological areas, not on existing industry sectors. We don’t need to try the impossible and pick specific technology winners. The largest economic impacts are likely to come from general-purpose technologies, which can transform all industry sectors. So government support of technology research and development for this, especially information and communications technology, is valuable. Other important general-purpose technologies are advanced materials, biotechnology and nanotechnology. In 2016, the Australian Government commissioned the 2016 National Research Infrastructure Roadmap to support future investment decisions in research infrastructure. The Chief Scientist for Australia will lead the project.

A prototype chip that incorporates nanotechnology to detect disease. Nanotechnology is one area likely to be a major driver of innovation in multiple sectors. (Source: EPSRC IRC in Early-Warning Sensing

Systems for Infectious Diseases, CC BY 2.0)

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Conclusion Innovation lies at the heart of securing Australia’s future. Properly nurtured, innovation (meaning far more than simply commercialisation of new technologies and products) can help Australia considerably improve its overall productivity, with benefits to us all. That nurturing would include increased government investment and a series of institutional policy changes. Commentators – especially those promoting a particular agenda – often use the term ‘investment’ as a synonym for ‘spending’. But in the case of priming the economy for improvements to Australia’s productivity, the findings from ACOLA’s Securing Australia’s Future reports really do represent a solid investment, one with a profound return on outlay. There are projected gains over the long-term of up to 30 per cent in both gross domestic product and consumption per capita. The dividends include more jobs and wage rises for all workers. We can learn much from other countries, such as policies and programs that encourage and enhance the application of research. Drawing research agencies closer to businesses is an essential step in enhancing the take-up of discoveries. There are domestic models – in addition to those from overseas – that show how this can be done well. Skilled labour is vital. Organisations need to employ and develop staff with broad knowledge bases and strong integrative skills; our education system needs to support the development of these suites of skills. Technical skills alone will never be sufficient. Collaboration, nationally and internationally, is important. Strengthening management and leadership capabilities is also crucial. Australia needs to adapt to the shifting foundations. We need to change our strategy from focusing upon what worked well in the past, or on business sectors that in the past have been strong. Instead, we should create and sustain the capacity, skills, culture and the will to adopt, adapt and develop our future source of prosperity and wellbeing. Australia’s bright future can be envisaged, created and achieved through innovation and new technology. This chapter on lifting national productivity draws on key ACOLA reports (SAF01 Australia’s Comparative Advantage; SAF04 The Role of Science, Research and Technology in Lifting Australian Productivity; SAF05 Technology and Australia’s Future; SAF09 Translating Research for Economic and Social Benefit: Country Comparisons; SAF10 Skills and Capabilities for Australian Enterprise Innovation) as well as incorporating cross-cutting themes that appear in the other ACOLA reports.

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4 Recharging education to power the nation Australia lacks a sense of national urgency around STEM performance in contrast to some of our closest competitors. Russell Tytler co-author of SAF02 STEM: Country Comparisons

Golden thread Australia must maintain its strong and broad foundations in education, including in science, technology, engineering and mathematics (STEM). We should nurture and challenge those who are enthusiastic in STEM, by better engaging primary and secondary school students, and supporting teachers. A major objective should be increasing participation in STEM by girls, those from lower socioeconomic backgrounds and Indigenous students. One immediate initiative would be a well-funded national STEM coordinating agency.

Key findings Here are five key findings designed to improve education in general and to encourage Australian students to consider choosing STEM subjects and associated career choices: 1. The status of teachers in Australia needs to be lifted, they need ongoing support and training, and Australia needs to attract more science and mathematics teachers. 2. An innovative workforce relies on a strong education system that fosters academic skills across all disciplines, and analytic and social skills.

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3. Mathematics and science experiences before the early middle years of schooling need to be positive and engaging. Mathematics could be made compulsory for everyone to the end of year 11 or even year 12. 4. Effective partnerships need to be fostered between civil and business organisations and education institutions that support innovation in school mathematics and science. 5. Australia would benefit from national coordination of approaches to improving participation in STEM.

Introduction The Academy of Science asked a representative sample of Australians how long it takes for the Earth to go around the Sun. Almost a third said it takes a day. (The correct answer is that it takes a year to orbit the Sun. If it’s any consolation, older Australians were more likely to give the wrong answer than younger ones.) Innovation, science and research are critical to Australia’s productivity and the securing of future industries. This chapter explores how we can foster and enhance innovation, science and research through improvements to education in science, technology, engineering and mathematics and across the humanities, arts and social sciences. We begin by looking at spending on education in Australia – which is acceptable by Organisation for Economic Co-operation and Development (OECD) standards – and how our school students fare in international assessments on science and maths literacy – acceptable, but declining. Also declining is student participation in senior secondary science and maths. A growing number of high-achieving students, especially girls, study no maths at all in year 12. There is little surprise, then, that the Australian population has low scientific literacy. At tertiary level, Australia is well represented in the sciences but weak in mathematics and engineering. School participation in science and maths is declining at the very time when studies here and overseas are pointing to technology and innovation as vital to productivity growth. Overall, the message is that Australian students are engaged in the STEM disciplines at levels comparable to those internationally, but we are not keeping pace with comparable countries that are lifting their performance. We know this thanks to international comparisons undertaken by ACOLA’s SAF02 STEM: Country Comparisons report panel. The researchers examined strategies, policies and programs used to enhance STEM at all levels of education and in the interface between education and work in over 20 countries. The interdisciplinary report examined solutions to the STEM skills shortage in comparable countries to determine which, if any, could be usefully applied in Australia to overcome similar shortages here. Nations with leading and dynamic economies tend to be those with the strongest performing education and/or science research systems. These countries regard the STEM disciplines as essential for global economic positioning and social creativity.

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There are five distinguishing characteristics of countries strong in STEM: 1. School teachers are held in high esteem, are well paid and are rewarded for performance and professional development. 2. Compared with Australia, STEM teachers are expected to be fully qualified in their discipline and to teach solely in that field. 3. The most successful countries have instituted active curriculum programs that make science and mathematics more engaging and practical. 4. Many of the successful countries have implemented innovative policies to lift STEM participation among formerly excluded groups, such as low-achieving and Indigenous students. 5. There are national STEM policy frameworks that support centrally driven and funded programs; world-class university courses; the recruitment of foreign science talent; and partnerships that link STEM activities in schools, vocational and higher education with industry, business and the professions. Frequently, there are agencies that have been specifically created to advance the national STEM agenda. Despite the need for strong STEM foundations, many recent science and information technology graduates are failing to find full-time work. Some disciplines are in greater demand than others, such as IT and engineering. Demand for specific disciplines will vary in future, as the Australian workplace changes and new jobs emerge. A well-rounded education incorporating a range of disciplines will provide a strong basis for an ever-changing employment environment. Undoubtedly, STEM skills will continue to be needed, and relevant knowledge essential to engage in a technologically advanced society and contribute to decisions regarding the extent to which innovations should be implemented. This chapter follows the discussion in Chapter 3 on the role of innovation and new technologies in lifting national productivity, sets the scene for how education must provide the foundation for our innovative farming, energy and urban industries of the future as described in Chapter 5, and provides context for our role in the Asian region as described in Chapter 2.

Achieving an innovative, flexible and creative workforce Greater commercialisation of research doesn’t happen spontaneously – it can only be led by STEM professionals who have not only technical skills and training but also business acumen, an understanding of how IP incentivises innovation, leadership and team management skills, cross-discipline skills and the creativity and motivation to drive the commercialisation process and closer ties between industry and the research sector. – Professional Scientists Australia, quoted in SAF10 Skills and Capabilities for Australian Enterprise Innovation

Educational achievements and challenges The Australian Bureau of Statistics reports that in 2015, 59 per cent of people aged 15 to 74  years had completed a non-school qualification. People aged over 55 years were less likely to have a non-school qualification than those aged 25 to 44 years. The proportion with a non-school qualification in both the 25 to 34 year age group and the 35 to 44 year

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age group was 73 per cent, compared with 58 per cent for people aged 55 to 64 years and 45 per cent for people aged 65 to 74 years. Of the 10.4 million people aged 15 to 74 years with a non-school qualification, almost one-third (29 per cent or 3 million) had a Bachelor degree. However, the Standing Council on Tertiary Education Skills & Employment reported in 2012 that ‘44 per cent of Australia’s working age population (around 6 million people) have literacy levels below … the level needed to meet the complex demands of work and life in modern economies’. Outside the labour force the figure is 70 per cent, which ‘lend[s] weight to concerns about our ability to meet projected skills demands in coming years’. Furthermore, a large fraction of the Australian population has low scientific literacy. 44 per cent of Australia’s working age population (around 6 million people) have literacy levels below … the level needed to meet the complex demands of work and life in modern economies. This disturbing finding highlights the need for improvements in Australian education at primary and secondary level.

Interdisciplinary skills In a 2016 report entitled Promising Practices for Strengthening the Regional STEM Workforce Development Ecosystem, the US National Academies of Sciences, Engineering and Medicine stated that: Employers are increasingly focusing on the skills and abilities new hires possess, rather than the specific field in which an individual has obtained a degree or credential. While there is a need for STEM graduates who will work as professional research and development scientists and engineers (so-called STEM narrow skills), there is a growing need for individuals who apply STEM knowledge and skills in technologically sophisticated occupations that require a facility with STEM concepts, but not necessarily a bachelor’s degree (so-called STEM broad skills). There is also a growing need for students with a breadth of skills outside of their core STEM discipline, including skills that are perhaps best developed through a well-rounded liberal education that includes STEM courses, humanities courses, and experiences in the arts. These include problem solving, critical thinking, teamwork and collaboration, communication, and creativity. The attributes most often identified as requirements for an innovative workforce are: ●● ●● ●●

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basic reading, writing and numeracy skills; information and communications technologies; academic skills (including qualifications in science, technology, engineering and mathematics, and in humanities, arts and social sciences); analytical skills (including problem solving, critical and creative thinking, ability to learn and manage complexity); social skills (including the ability to work in teams, communication, and receptiveness to new ideas); and management and leadership skills (including the ability to form and lead teams, negotiation, coordination and ethics).

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The value of teamwork The Council for the Humanities, Arts and Social Sciences (CHASS) commissioned work to explore the relationships between the humanities, arts and social sciences (HASS) and the science, technology, engineering and medical (STEM) sectors. In the resulting report, researchers identified several ingredients to maximise the success of crosssector collaborations. The most important ingredient turned out to be the characteristics of people on the collaborative team. The report quoted an interviewee with experience in cross-sector collaboration: Those groups of people have worked best when there have been great skills in working in a group. Great interpersonal skills – this depends on the group – inclusive or exclusive (hierarchy). Also, the willingness of people to reflect on their part in the project. The communication – bringing those [skills] together with some of the other skills. Being prepared to let things evolve – go in a direction you may not have initially thought of – that is hard but often you get to the best outcomes. Being prepared to try anything once and if something doesn’t work – so what? It didn’t work. I think it needs to be about being adventurous.

Future innovation depends on students gaining both STEM and HASS skills, including analytical and creative thinking, the ability to communicate ideas and work in teams. (Source: Monkey Business Images/Shutterstock)

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Australian enterprises – and education and government institutions concerned with innovation – need to move beyond a focus on technical skills alone and consider what other sets of skills will be needed for successful innovation in the future. Technical skills are necessary, but not sufficient for continued and successful enterprise innovation. Research shows that innovative businesses need staff with a range of skills. STEM as well as business skills are important. STEM skills were more strongly associated with businesses that innovate with products and processes, while business skills were linked with companies that undertake process, organisational and marketing innovations. Innovation now depends on ‘bundles’ of skills that are provided by people having broader skills (technical and non-technical), by people endowed with diverse sets of skills working in teams, and by organisations working in alliances and networks that bring together different skills and experiences across different types of innovation, and different activities in the innovation cycle. The Australian Bureau of Statistics’s Business Characteristics Survey found that skill shortages were the most significant barrier to innovation among innovation businesses. A quarter of all businesses active in innovation reported that skills shortages were a significant barrier to innovation. There is an argument for broadening the skills of STEM trained and qualified employees, including managers and business leaders. Business will need to take on some of this responsibility, but educational institutions also have a role to play. There is a need to emphasise broad relational and problem-solving skills that are applicable across all disciplines. For tertiary education, this may require new curriculum developments that build skills mixing by: ●●

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integrating management subjects in non-business degrees, and embedding technical programs in business and arts degrees; providing internship opportunities, and practical application within academic programs; creating opportunities to complete practical certificate-level programs while completing a degree program; developing industry-based and ‘translational’ PhD programs that enable students to apply research in solving industry problems and developing products and services that can be taken to commercialisation.

More direct involvement with enterprise workplaces during their studies will help tertiary students develop a more holistic understanding of the skills needed for innovation. There is always choice in the development and adoption of new technologies, and education relating to technological change is essential to facilitating adoption. Education and training – even from an early age – that focuses on problem-based learning and critical thinking is more likely to create a workforce that is better adaptable to new technologies and more likely to benefit from restructuring caused by technological change. While much of this chapter examines STEM education and its application, Australia will benefit immeasurably from a rigorous approach in schools and universities to humanities, arts and social sciences, and to their active application in the workforce and in helping make decisions about the adoption of new technology.

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Science, technology, engineering and mathematics education: a national report card STEM education is almost universally recognised as important. A key problem for Australia lies in the distribution of student achievement with a long tail of underperforming students when compared to our major competitors. – Russell Tytler, co-author of SAF02 STEM: Country Comparisons

In 2015, there were over 3.7 million students enrolled across more than 9400 schools in Australia. Government schools were responsible for 65 per cent of all students. Under the Australian Constitution, states and territories have responsibility for education, although the Commonwealth also contributes funds to school and tertiary education. The OECD estimates that Australia’s 2011 government expenditure on school and nontertiary post-school level education (3.5 per cent of GDP) matched the OECD country average. Total spending on school and non-tertiary post-school education was 4.1 per cent of GDP compared to the OECD country average of 3.9 per cent, reflecting high investment in Australia’s large private school sectors.

Student performance in science and mathematics Australia’s school student science and mathematics performance is declining in some instances, and remaining static in others. The 2012 study by the Program for International Student Assessment (PISA) ranked Australia 16th in science and 19th in mathematics. Scientific literacy Australia’s average score in the PISA 2012 scientific literacy assessment was significantly higher than the OECD average. Australia’s average score in the PISA 2012 scientific literacy assessment was significantly higher than the OECD average. Thirteen per cent of Australian students were low performers in scientific literacy compared to 18 per cent of students across the OECD. We were outperformed by China, Singapore, Japan, Finland, Estonia and Korea – for example, just 2 per cent of students in China were low performers. The performances of Australian girls and boys in scientific literacy were similar, while across OECD countries boys performed slightly better than girls. Australia’s average score in scientific literacy did not change significantly between PISA 2006 and PISA 2012.

Mathematical literacy Australia’s score in the PISA 2012 mathematical literacy assessment was significantly higher than the OECD average. We were outperformed by 16 countries, including China, Singapore, Korea, Japan, Liechtenstein, Switzerland, the Netherlands, Estonia, Finland, Canada, Poland, Belgium and Germany. Australian boys achieved an average score in mathematics significantly higher than that for girls. This difference is equivalent to about one-third of a school year.

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Between PISA 2003 and PISA 2012, mean mathematical literacy performance dropped significantly in 13 countries including Australia, while the OECD average performance held steady. Our performance in mathematics is concerning: Australian top, average and low-performing students all recorded significant declines between 2003 and 2012. The performance of girls fell more than that of boys. The gap between our lowest and highest performing students is wider than the OECD average for each of mathematical, scientific and reading literacy. Our performance in mathematics is concerning: Australian top, average and low-performing students all recorded significant declines between 2003 and 2012.

School science and maths continues to fall out of favour Participation in senior secondary science and mathematics has been declining for decades. Participation in senior secondary science and mathematics has been declining for decades (Fig. 4.1). From 1992 to 2012 the proportion of year 12 students studying biology fell from 35 to 25 per cent, chemistry from 23 to 18 per cent and physics from 21 to 14 per cent. There was a lesser decline in mathematics but most students were enrolled in elementary mathematics subjects. Only 10 per cent participated in advanced mathematics at year 12 level. A growing proportion of high-achieving year 12 students, particularly girls, study no maths at all. Intermediate and advanced mathematics (calculus-based subjects) are prerequisites for many university STEM-discipline courses, so decreased participation in these subjects in year 12 means fewer students can progress to university STEM disciplines. Coincidently, increased competition among universities for high-achieving students has led to the lowering of entry prerequisites for courses. Many commentators attribute the decline in mathematical ability to a lowering of entry standards for engineering degree programs; the majority of universities have removed the higher level secondary school mathematics prerequisite.

Tertiary participation: strong in sciences, weak in maths and engineering From 2002 to 2008, the number of domestic students commencing higher education in natural and physical sciences was fairly constant. However, numbers grew by 29 per cent from 2008 to 2010. The largest increase in science-related enrolments was in health, which experienced a 73 per cent rise from 2002 to 2010, helped by nursing being made a university degree program. From 2002 to 2010 engineering commencements grew by 21 per cent, albeit from a low base. In Australia in 2010, fewer than 9 per cent of new tertiary education students were in engineering, manufacturing and construction, compared with 15 per cent in the average OECD country. The comparison is more stark in mathematics: 0.4 per cent of Australian new tertiary entrants chose the subject, compared with the OECD country average of 2.5 per cent. During the same period, undergraduate enrolments in information technology halved, and agriculture and environment enrolments more than halved.

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Fig. 4.1.  Australian participation rates for science and maths subjects, 1992–2012. Modified with permission from Kennedy J, Lyons T, Quinn F (2014) The continuing decline of science and mathematics enrolments in Australian high schools. Teaching Science 60(2), 34–46.

In other words, Australia is relatively strong in participation in the sciences but weak in mathematics and engineering. The 2011 Australian Census showed that employment rates are high among all STEMqualified people (81 per cent), and that unemployment remains low (less than 4 per cent). From 2007 to 2011, the number of employed people across the Australian economy grew by 8.1 per cent, while the top eight STEM occupations grew by an average of 11.1 per cent. The strongest growth in employment among STEM occupations was in design, engineering, science and transport and information and communications technology. In most countries the role of STEM is larger at doctoral level than first degrees. In Australia, 26 per cent of PhDs awarded in 2008 were in science, with 14 per cent – low by international standards – in engineering. International students are responsible for any growth: the number of Australian students commencing a PhD in science and engineering in 2010 was below the 2004 level. By contrast, many countries are experiencing rapid growth in STEM doctorates. Tertiary enrolments in STEM continue to be dominated by men, as happens in many countries, especially in engineering. In 2010, just 25 per cent of Vocational Education and Training STEM students were women. In higher education, 44 per cent of STEM students were women, compared to 56 per cent in all disciplines. If you remove health sciences and nursing, the imbalance becomes more extreme. Participation rates of Australian students in the STEM disciplines are good on the international scale and provide something of a competitive advantage. However, Australia

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needs to undertake significant improvement in order to keep pace with comparable countries that are lifting their performance. Australia needs to undertake significant improvement in order to keep pace with comparable countries that are lifting their performance.

Strong STEM push overseas A useful way of assessing Australia’s performance in education and ways in which we can improve is to compare efforts and results here with those overseas. ACOLA’s SAF02 STEM: Country Comparisons report panel examined strategies, policies and programs used to enhance science, technology, engineering and mathematics at all levels of education. The countries, regions and groups studied were Argentina, Belgium, Brazil, Canada, Canada indigenous, China, Denmark, Finland, France, Germany, Israel, Japan, Korea, The Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, South Africa, Sweden, Switzerland, Taiwan, United Kingdom, United States, and United States indigenous. The many overseas countries examined were preoccupied with the level of STEM participation in senior secondary school. The governments of the many overseas countries examined were preoccupied with the level of STEM participation in senior secondary school, and the level of achievement in the STEM-related disciplines in both secondary and higher education. These governments strive to build high-end STEM skills, linked to research and development, and industry innovation. The view is that achieving quantity and quality in STEM competencies lifts economic performance. Most government action is directed at lifting STEM take-up in schools, via curriculum, pedagogy, student motivation and teaching. The approach is understandable as schooling is subject to direct government regulation and responsibility, while universities are more autonomous and largely beyond governmental reach. Many countries view STEM-related education as fostering broad-based scientific literacy. STEM disciplines lift the general level of understanding of science and technology, and disseminate quantitative, reasoning and problem-solving skills of a high order across the economy. Curiously, despite the widespread assumption and expectation that STEM contributes strongly to productivity and innovation in the workplace, little genuine effort is made to establish whether, and to what extent, these expected benefits of STEM are manifest in the economy. Policy focuses largely on the supply side, on tuning the education system to turn out more STEM students, with demand for such skills expected to appear spontaneously. PricewaterhouseCoopers assessed the importance of STEM subjects in a 2015 publication, describing technology and innovation as ‘the solution to our workforce and growth challenge’. PricewaterhouseCoopers reported that 75 per cent of fast-growing occupations in Australia require STEM skills and that moving 1 per cent of the workforce into STEM roles would add $57.4 billion to our gross domestic product. There is a strong link between cognitive ability levels in the population – as measured by tests of scientific, mathematical and reading literacy – and long-term economic growth and competitive advantage, as well as overall wellbeing. Economic modelling has

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consistently identified a relationship between direct measures of cognitive skills and longterm economic development. In trying to apply lessons from overseas, we could focus on nations that have much in common with Australia, such as English-speaking countries and the affluent countries of north-western Europe. But that’s not where the strong performances are in education and in STEM more generally. It is countries with quite different languages, histories and cultures from our own, such as Finland and East Asian nations such as Korea, Taiwan and China that are the star performers. Other standouts are Singapore and Hong Kong. These are the places to learn from, where there are successful programs that are lifting STEM performance in schools and in research. Finland has exceptional STEM indicators in all domains including school performance, the proportion of doctoral enrolments, teaching and the workforce. ‘Science for all’ is the international mantra. Many countries pursue this aspiration through changes to the junior and middle secondary curriculum, and an increasing focus on science-specific education in primary schools. There are strong arguments for making mathematics a compulsory subject at high secondary school year levels. There are strong arguments for making mathematics a compulsory subject at high secondary school year levels. Higher order mathematics such as statistical modelling is increasingly useful in a broad range of areas. A goal of science for all also requires stronger mathematical skills. In China, maths is compulsory until the end of school. Long-term planning abounds, with a broad governmental consensus about the importance of science, technology, research and STEM. There are strong programs to lift international rankings of the top science universities. Policy focuses on quantitative benchmarks, achieves them and moves the standard to a higher level. There are comprehensive programs of reform in every schooling system with a common movement towards more student-centred, inquiry-based and problem-solving learning and an emphasis on creativity. Careers in research and development and technology management draw high-achieving STEM students. Where do we find the largest number of top performers in PISA? In mathematics it’s the Shanghai region of China, Singapore, Hong Kong and Taiwan. The places with the largest group of students in the top three proficiency levels are Shanghai, Singapore, Hong Kong, Taiwan, Korea, Finland and Switzerland. Interestingly, these are also the systems with the smallest proportion of underperformers. These countries are lifting student achievement across the entire population. The notion of science for all accompanies an emphasis, in nearly all countries, on fostering high-end STEM achievement: increasing the size of the high-performing cohort, retaining more bright students in STEM, lifting the level of performance of top students, and fostering research and world-class universities. The United Kingdom Treasury Ten-Year review says: [T]he Government’s overall ambitions are to achieve a step change in: the quality of science teachers and lecturers in every school, college and university; the results for students studying science at GCSE level; the numbers choosing SET subjects in post-16 education and in higher education; and the proportion of better qualified students pursuing R&D careers.

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High-performing Asian countries often feature specialist science and mathematics schools providing elite education.

Wealthy country students have lowest interest in science Worryingly, students in the wealthiest countries – who coincidently achieve high scores on international mathematics and science texts – tend to have the least interest in science. Just 25 per cent of girls and 40 per cent of boys in Norway, for example, agree they like science better than most other school subjects. Eighty per cent of students in Uganda like science better than most other school subjects. (There are no comparable figures for Australia.) The findings highlight the challenges in post-industrial societies such as Australia of engaging students in science.

Encouraging and improving STEM teaching STEM strong countries have a strong focus on teachers and teaching with teachers held in high esteem and expected to teach in their qualified field and not others. – Lesley Johnson, University of Technology Sydney and Griffith University

We saw in the previous section the international moves towards inquiry-based and problem-solving education. Australia has a long-standing commitment to these and to scientific and mathematical literacy. Our educators have been at the forefront of these ideas internationally. However, many schools and teachers adhere to traditional teaching approaches. This situation is reinforced by assessment that entails testing of concepts at low levels of reasoning and problem solving. The situation is often worsened, particularly in mathematics, by the number of out-offield teachers. The solution lies in dedicated teacher professional development that supports significant changes in the teaching of mathematics and science. We certainly don’t have enough mathematics and science teachers. There are shortages, especially in rural and remote communities. However, a larger problem is where teachers take classes for which they have little, or even no, university training. Our ageing secondary teacher population exacerbates the problem. The status of teachers in Australia needs to be lifted, and entry into the teaching profession should be more competitive. There are a few overseas examples of differential salaries or incentives to attract and retain science and maths teachers, particularly in hard-to-staff schools. One option is to provide higher pay for teachers with Honours or higher degrees. Another strategy is to provide bonus starting pay for maths and science teachers in low socioeconomic status schools and regional and remote schools. The United Kingdom does this with its ‘golden welcome’ scheme. In high-performing Asian countries in particular there is a strong tradition of school-based professional learning through collaborative planning. Discipline-specific professional development in Australia could address methods of problem-solving, inquiry-based approaches, critical thinking and creativity, and other ways of increasing student learning and engagement with science and mathematics. Australian primary schools include only a small proportion of teachers with major studies in science or mathematics, compared to our major comparator countries. An enthusiastic and knowledgeable primary school science or mathematics teacher can increase the quality of the curriculum and pedagogy.

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Australia needs to increase its numbers of mathematics and science teachers to decrease out-offield teaching. (Source: Iakov Filimonov/Shutterstock)

We need to improve the confidence and competence of primary teachers in the teaching of science and mathematics. The United Kingdom offers a promising model. There, trained specialist mathematics leaders are responsible in their schools for overseeing mathematics teaching skills and approaches, and for developing learning resources. There is far too much teaching ‘out of field’ for mathematics and science in Australia, especially in regional and rural areas. We need to quickly attract more qualified teachers into the profession. It is unacceptable to have our primary school children taught by staff without the requisite knowledge and skills.

Too few women in STEM The main issue in Australia is the lack of women between entry and senior levels in STEM fields. Changing this situation is about local actions at all levels. – Nalini Joshi, co-chair of Science in Australia Gender Equity program

The proportion of women employed in STEM fields in Australia is too low. Women and girls are under-represented in STEM fields throughout their education and careers. Underrepresentation of women in science and other STEM fields is problematic for several reasons. When the gender balance in STEM matches the gender balance in the real world, the STEM research is more likely to be productive and relevant. Women can boost the quality of STEM research; diversity leads to creativity and reduces bias. Additionally,

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greater participation by women yields a larger talent pool from which to source the best and brightest. Student attitudes and career ambitions at secondary school level are critical in determining engagement in tertiary level science courses. Almost three-quarters of students who studied two science subjects in their final year of secondary school continued on to study science-related areas at university. Young women are less positive about STEM study. In New South Wales, the participation of girls in at least one mathematics and one science subject after year 10 has been declining since 2001. Between 2001 and 2011, the proportion of girls who elected to study no mathematics whatsoever after year 10 tripled from 7.5 per cent to 21.5 per cent. The corresponding proportion of boys also tripled but from a much lower base level, from 3.1 per cent to 9.8 per cent. At tertiary level in Australia, men outnumber women in mathematics, statistics, sciences (particularly physics), engineering, manufacturing, construction and computing. Women outnumber men in the study of health, welfare, education, humanities, arts, agriculture, life sciences, services, social sciences, business and law. There are similar patterns internationally. Not only is female participation in STEM education and employment low, but the attrition rate is high, with women leaving science and other related disciplines in disproportionate numbers at each stage of the career cycle. This happens most at the post-doctoral level.

Lifting STEM participation by women Countries are pursuing a variety of gender equity policies and strategies to address the under-representation of women and girls in STEM fields. In Australia, a good start would be system-wide targets to lift numbers. Changes should begin with schools and with teacher training. Primary school children need to be engaged from an early age in science experiences. Most children thoroughly enjoy being actively involved in experiments and technology. This engagement logically leads to an increased focus on inquiry-based science teaching, with mathematics integrated throughout the curriculum. Curriculum design and professional development can generate greater teacher awareness about encouraging girls to consider STEM pathways. The design should include content, pedagogy and resources suited to the learning styles and preferences of girls as well as boys. Mentoring programs lift female participation. A sound model is to bring together young women and successful female STEM professionals to provide understanding of STEM careers, and access to female role models. Such contact with STEM professionals could start as early as primary school and continue through education and early career training. Allocation of targeted funding will help, such as scholarships and fellowships specifically reserved for female students and researchers, in areas such as engineering where women are grossly under-represented. There is merit in reserving funds for women to assist their study and establish themselves as researchers, and allocating greater points in funding selection processes to projects that include women researchers. In 2015, the Australian Academy of Science and the Australian Academy of Technology and Engineering established a program of activities designed to improve gender equity and diversity in STEM and in medicine. Science in Australia Gender Equity (SAGE) is funded by the Australian Government and involves 40 universities, research institutes and

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organisations. A pilot project requires participants to collect, analyse and present data on gender equity policies and practices in relevant departments, as well as identify gaps and opportunities for improvement.

Lifting Indigenous engagement in STEM While there have been some improvements over the past decade, the gap between Indigenous and non-Indigenous educational outcomes remains unacceptably large. – Geoff Masters, Chief Executive, Australian Council for Educational Research

What lessons can we take from overseas to increase the involvement of Indigenous Australians in STEM, and in education generally? Australia has many educational support structures for Indigenous people. Below Level 1

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Fig. 4.2.  There is a significant level of disadvantage for Indigenous Australians in mathematical and in scientific literacy, with 62 per cent of Indigenous children in Level 4 working at Level 2 or below (13 per cent have virtually no competency) compared with 3 per cent of non-Indigenous children. (Source: Thomson S, Hillman K, Wernert N, Schmid M, Buckley S, Munene A (2012) Monitoring Australian Year 4 Student Achievement Internationally: TIMSS and PIRLS 2011. Australian Council for Educational Research, Melbourne.

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Overseas studies identify two culture-related issues that act against Indigenous participation in STEM. First, there is a mismatch between cultural beliefs about the world and science and mathematics curriculum beliefs and teaching approaches. Second, Indigenous students often have problems in dealing with institutional cultures, particularly at university level. The disadvantage that Indigenous students face in scientific literacy is shown in Figure 4.2. Australia can learn from Canadian experiences in indigenous STEM education. There, ‘culturally responsive teaching’ involves the recognition of indigenous knowledge as part of the study of science. We can recognise Indigenous Australian knowledge in science and mathematics curricula, involving Indigenous elders, and in the ensuing development of curriculum and teacher professional learning support. Programs and activities to facilitate Indigenous students’ learning and work in STEMrelated disciplines could include courses facilitating the transitions between schooling and tertiary education, and between education and work; outreach activities between tertiary education and schools; and working with industry to establish processes for engaging Indigenous students and graduates into the workforce, including local work placements that draw on STEM education and training. Scholarships leading to university and/or employment would help, as would specialist societies, mentors and career counselling in tertiary education institutions. Professional development could include recognition and respect for Indigenous ways of knowing; culturally responsive teaching, in which students from Indigenous backgrounds are supported in engaging effectively with scientific thinking and practices; and programs that facilitate Indigenous students’ learning and work in STEM-related disciplines.

Partnering and enriching I love seeing threw [sic] the microscope and I saw algae and it moved. – Year 1 boy, during Scientists in Schools lesson on microbiology

There are numerous international examples of informal support for STEM education, including partnerships between civil and business organisations and education institutions; and a plethora of enrichment programs. While partnership activities, especially local ones, are common in Australia, often there is no clear understanding of their nature and their effects. Developing such an understanding would be helpful, as would sharing of details about the relevant initiatives. The next step would be to develop advice for science organisations, business and industry and school authorities regarding how best to develop and manage partnerships. Learning experiences outside the classroom include National Science Week, camps, science centres, museums, zoos, planetaria, aquaria, botanical gardens, science parks, science fairs, historic parks, and performing arts and science centres. There are science awards and competitions such as Olympiads in physics, mathematics, chemistry, geoscience and engineering. These activities are often aimed at high-achieving school students. Real-world science activities include ‘Meet the Scientist’, excursions and work experience. Again there is a lack of coordination and oversight of these programs. There is strong anecdotal support, but little clarity about their impact on students. Often the programs have not been formally assessed.

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Science by Doing, the Australian Academy of Science’s comprehensive online science program, is available free to all Australian students and teachers (https://www.sciencebydoing.edu.au).

A particularly successful example of support for school teaching and learning of science is the Academy of Science’s ‘Primary Connections’ project for primary schools, and its ‘Science by Doing’ online science program for years 7 to 10. The Scientists and Mathematicians in Schools program, run by CSIRO, has been very positively evaluated. The Australian Academy of Technology and Engineering runs STELR, a hands-on, inquiry-based, in-curriculum program designed for year 9 or year 10 students, on the theme of global warming and renewable energy.

National STEM coordination STEM strong countries were all found to share a focus on curriculum reform to make STEM engaging; a strong commitment to learning and achievement for all; guided by a national STEM policy framework. – ACOLA media release

The country comparisons suggest possibilities for productive approaches to improving participation and performance in STEM at many levels, relating to teaching and teacher education, curriculum and pedagogy at primary through tertiary levels, public perceptions, and participation by particular groups including girls and women, low socioeconomic status communities and Indigenous communities. Individual programs and activities can themselves be valuable, but to maximise the benefits for Australia we need national level coordination. Almost all countries studied feature a single coordinating process or agency. There is a strong case to be made in

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Australia for coordination at national level of the various aspects of STEM participation. National coordination would bring coherence, enhance the status of STEM, and draw on significant Australian expertise. It might even succeed in developing approaches that would operate beyond election cycles. There is a strong case to be made in Australia for coordination at national level of the various aspects of STEM participation. In Australia, STEM policy in schools is vested in the states. The Office of the Chief Scientist appointed a science and maths education and industry advisor to oversee coordination across the country. However, compared to the situation in similar countries, where significant structures including centres are common, the level of input of advice and the capacity to commission studies and generate resources seems limited. Coordination could be via a specially constituted national STEM agency or centre reporting to an appropriate government office or department. Options include an advisory body with state and territory government representation, and an advisory body with broad representation of peak stakeholder groups including industry, STEM educator and research bodies, and education systems. Useful tasks for the coordinating agency include compiling data on participation and performance in STEM education, and coordinating approaches to STEM-related teaching and learning in tertiary education, including outreach and placement activities in partnership with schools and with industry. In fact, the agency could play a pivotal role in Australian STEM education by seeking to implement all the suggestions in this chapter.

Lessons for Australia and STEM By doing a science or engineering degree, [students] are going to learn a way of thinking and understanding of the world around them that I think will serve them very well, whether they go into science or business or politics or the public service. – Alan Finkel, Chief Scientist for Australia

Overseas experience shows that Australia should aim to increase the pool of students undertaking STEM subjects, and nurture and challenge those who are enthusiastic. We need effective remedial programs, especially in mathematics. We need more of our high-achieving year 11 and 12 STEM students to continue with these disciplines in higher education. If Australia is to produce a strong STEM educated population, we need to pay serious attention to students who are currently performing poorly in this area, including those from low socioeconomic backgrounds and Indigenous students. Our increasingly fragmented education system with the concentration of STEM students in wealthy suburb public schools and in private schools is at odds with overseas approaches that feature wide community participation with STEM for all students. The Australian education system maximises the choice of subject offerings. In Victoria, for example, students can choose from more than 100 subjects for their final years of secondary school education. There has been a relaxing of prerequisites for tertiary education,

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allowing students to delay career choices. The disadvantage is that students can choose ‘easy options’ and shy away from challenging subjects such as science and mathematics. We can learn from some other countries’ more stringent approaches to STEM education. It is likely that the increased range of choices in Australian schooling, the reduced role of science and mathematics prerequisites for university entrance (and the corresponding greater emphasis on aggregate score rather than subjects completed), and thus the ease of opting out of harder STEM subjects, are associated with fewer students taking STEM subjects and fewer students tackling the most challenging subjects. One way to increase the proportion of students doing STEM, while not compromising the rigour of the STEM subjects, is to introduce mandatory mathematics and/or science to either year 11 or 12. Such an approach would need a commitment to providing enjoyable and rewarding learning experiences in the middle years of secondary education. In several high-performing countries, STEM subjects at upper secondary school level are strongly linked to university entrance. One way of encouraging the study of STEM in both senior secondary and higher education would be the reintroduction of more comprehensive prerequisite requirements for university programs requiring advanced STEM knowledge. One way of encouraging the study of STEM in both senior secondary and higher education would be the reintroduction of more comprehensive prerequisite requirements for university programs requiring advanced STEM knowledge. In 2016, for example, the four public Western Australian universities offered an incentive to students to study advanced maths at school – a 10 per cent bonus on their score in this subject. Professor Arshad Omari, Deputy Vice-Chancellor at Edith Cowan University, explained the initiative to The Australian: ‘Maths is a bugbear for all universities. We all want students to have had better exposure to maths before they get to university. On top of that, we all know the jobs of the future will revolve around being numerate.’ One way to improve STEM adoption is to have some STEM skills incorporated into a range of apparently non-STEM subjects. The opposite applies as well. Science subjects can consider the ethics of various technological advances, such as biotechnology. Overseas comparisons lead to some options for structural change in Australia that could develop further the reach and educational effects of the STEM disciplines and increase their social and economic contributions to Australia: 1. STEM tracking: separating students into STEM streams early in their secondary education may lift achievements in these fields and attract more students. Many of Australia’s comparator countries achieve strong participation in STEM through separation at secondary school level between STEM and non-STEM tracks, and vocational tracks leading to significant STEM training. 2. Academic and technical-vocational institutions: the development of a group of STEM-intensive schools and tertiary institutes. 3. An integrated secondary curriculum: a less specialised and more integrated upper secondary curriculum, in which all students would pursue mathematics, science and humanities. This would strengthen ‘science for all’, and it may broaden the intellectual formation of high achievers. 4. Mandatory STEM in years 11 and 12.

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These changes don’t all have to occur together; they can be considered independently. Indeed, the first and third are contradictory.

School student interest in science and maths declines with age Over half of Australian year 4 students say they like science. Only a quarter say so in year 8. Almost half of those year 4 students profess fondness for mathematics; by year 8 just 16 per cent enjoy the subject. The trend of declining attitudes to mathematics and science with age, from primary through the secondary school years, happens overseas too. Any initiatives designed to encourage STEM participation need to be broad and focus on primary and secondary schools. The primary and lower secondary years are crucial in determining students’ intentions to continue or not with STEM-related subjects and careers. Student experience and developing intentions through these years are strongly indicative of their eventual choices. The implications are clear – if we are to encourage students to consider the possibility of STEM subjects and eventual career choice, or even to encourage them to engage productively in the future with science and mathematics, then their mathematics and science experiences before the early middle years of schooling need to be positive and engaging, and they need to be made aware of the range of people and activities comprising STEM work in society. Personal identity: a powerful way of engaging students Better understanding students’ identities – how they perceive themselves; their experiences, relationships and aspirations – is a powerful way of examining the factors affecting student commitment to STEM. It’s also a good way of studying the issues associated with Indigenous people learning science, and also the experiences of other minority groups, low socioeconomic status students, and girls. Identity helps to determine strategies needed to support a broader cohort of students engaging with, and valuing, science and mathematics. Encouraging STEM participation from an identity perspective entails: ●●

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emphasising role models, whereby students are introduced to people working in and enthusiastic about STEM, with whom they can relate; curriculum diversity to cater for many students, so that STEM ideas and practices are seen as sufficiently varied to allow for individual commitments; the inclusion of values in the curriculum, so that technological objectivity and determinism (the belief that people have no real ability to make choices or control what happens) is not seen as defining of STEM – instead, students see that social good and personal values can be associated with STEM ideas and practices; inclusion of career information and images as part of the school curriculum, so that students have identity models to work with, offering a range of possible identity futures; and teaching that takes on and values science ideas, as critical in learning science.

Building student awareness of STEM disciplines and occupations Many countries run programs aimed at student attitudes and identity, including initiatives to increase awareness of the nature of STEM professions. Australia could do similar work to encourage positive attitudes to study of mathematics and science, and to STEM-related work and careers.

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US seventh grade student drawings of a ‘scientist’ before (left) and after (right) a student visit to a scientific research laboratory. (Source: European Communities (2008) Mapping the Maze: Getting More Women

to the Top in Research. Scientific Culture and Gender Issues, Directorate of Science, Economy and Society, European Commission, Brussels. Document Number: EUR 23311 EN, p. 13)

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awareness campaigns to enrich public understanding of career options in STEM and the nature of STEM work; school programs that involve families in maths and science learning and in building positive attitudes to STEM-related careers; role models, in the form of student interaction with practising STEM professionals, or web-based presentations of narratives of STEM professionals; career advice that includes images of people working in STEM-related careers, delivered through information workshops for careers teachers and mathematics and science teachers; the inclusion in curriculum resources of images of people working in STEM-related careers; and the inclusion in curriculum resources of materials that meet the identity needs of the diverse range of students.

Learning, not teaching All of the advanced industrial countries comparable to Australia favour similar kinds of curriculum reform, shifting from a heavy content focus in science and a rules-based approach to maths, towards inquiry, problem solving, creativity and critical skills.

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Countries are establishing pedagogies that are student-centred and inquiry-based. All these countries are establishing pedagogies that are student-centred and inquirybased, with support for a variety of student competencies. High-performing Asian countries such as China are incorporating inquiry-based, creativity-focused, student-centred learning with reforms supported by textbook revision, teaching resource material preparation, and professional development for teachers. Many countries in Western Europe have embraced inquiry-based education, particularly with the sciences, and learning which involves real-world contexts.

Findings for the future Based on the research and evidence presented in the relevant ACOLA Securing Australia’s Future reports, there are several actions that we could implement to encourage Australian students to consider choosing STEM subjects and associated career choices. A sound start would be national coordination of approaches to improving participation in STEM. These actions include making students’ experiences in mathematics and science more positive and engaging, including highlighting the many applications of these subjects in society. There is a variety of partnerships between schools and external agencies including business that could help support this link between the classroom and the workplace. Implementing these changes – and additional findings presented in the reports – will help make Australia more competitive, contribute to innovation and help us cope with technological change in the coming decades. The SAF program addressed STEM education needs, challenges and solutions throughout several reports, particularly SAF02 STEM: Country Comparisons. Given the consistent findings about the integral place of the humanities, arts and social sciences (HASS) disciplines to Australia’s innovation future, there is a need to better understand the types of skills and knowledge delivered by education in HASS, and the opportunities and challenges facing these disciplines, including the contribution they have to make to improving Australia’s literacy levels.

Engaging with the world If we are going to negotiate future challenges, and make the most of any opportunities that might come our way in the Asian Century, we want to give our children the best education to do so. – Ross Tapsell, Australian National University

We are operating in a truly global economy. As highlighted in Chapter 2, for example, the rise of Asia will have large implications for Australia through the 21st century. Successive Australian governments have made Australia’s relationship with Asia a policy priority since at least the 1990s, and Australia’s economic prosperity is increasingly driven by two-way trade with the region, which now accounts for 55 per cent of total trade with the world.

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There are several ways of strengthening relationships with our neighbours. Taking advantage of language, research and cultural capabilities will provide the basis for deep, long-term engagement that will return social, economic and political benefits to Australia and its partners in the region. Improving cultural literacy will bring many benefits to Australia. While English may have the status of a world language, being monolingual in English is insufficient for deep engagement internationally. Bilingual or plurilingual capability is the norm in most parts of the world. Foreign language learning has a significant positive effect on knowledge and perception of another country. A 2013 Newspoll survey of Australian attitudes towards Indonesia found that those who have studied the Indonesian language have a higher level of awareness and understanding of the country, have more positive perceptions of Indonesia, are more likely to think Australia and Indonesia have things in common, and are more supportive of increased links between the two countries. STEM is a central preoccupation of policy makers across the world. Many Asian countries are strong in these fields and aspire to be stronger. Most successful countries have instituted active programs of reform in curriculum and pedagogy that are focused on making science and mathematics more engaging and practical, through problem-based and inquiry-based learning, and emphases on creativity and critical thinking. These themes also run through the best Australian classrooms. Perhaps here is a further opportunity for engagement with Asia: smart STEM engagement.

The power of language The importance of language – and language differences – is often underestimated, especially in a largely single-language, English-speaking country such as Australia. Efforts over recent decades to promote Asian languages have not been particularly successful. Levels of interest have remained low. Of the 70 000 students enrolled in the NSW Higher School Certificate in 2014, only 2.2 per cent studied Japanese, 1.3 per cent studied Chinese and 0.3 per cent studied Indonesian (see Chapter 2). Diversity Council Australia’s nationally representative survey of 2000 Australian workers uncovered the following: one in three has no or very little understanding of Asian languages or culture; two out of three have no or very little operational knowledge of how to manage in Asian business contexts; and just one in 20 is fluent enough in an Asian language to comfortably communicate on complex business matters with colleagues or clients. A significant increase in uptake of foreign language learning will be difficult to achieve in Australia. We need to stimulate demand for language learning, especially of Asian languages. Options include integration into the curriculum, an example of which is the International Baccalaureate where language study is mandatory as part of the program’s commitment to multilingualism. While such integration offers the possibility for students to learn a language more thoroughly, sufficient resources would need to be allocated across both primary and secondary school programs. Language study in senior secondary school could be made compulsory for university entrance, or be made a requirement for some university courses. Alternatively, tertiary admission scores could include a bonus for studying an overseas language in year 12. Learning a language could also be made compulsory at university regardless of the course followed, similar to practices at US universities.

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Conclusion Australia is unique in many ways, including our natural resources. To maximise our many advantages we need to make use of a wide range of skills. Our approach will necessarily be different from that undertaken by countries with fewer resources. We should learn from other countries’ approaches, including to STEM education, but success will not come from simply emulating them. But we do need to approach and plan for our future every bit as seriously as our competitors. This chapter on revitalising education draws on key ACOLA reports (SAF02 STEM: Country Comparisons; SAF03 Smart Engagement with Asia: Leveraging Language, Research and Culture; SAF04 The Role of Science, Research and Technology in Lifting Australian Productivity; SAF10 Skills and Capabilities for Australian Enterprise Innovation; SAF11 Australia’s Diaspora Advantage) as well as incorporating cross-cutting themes that appear in the other ACOLA reports.

5 Green and clean: securing a sustainable future Sticking with what currently works will not be as profitable when the broader environment changes. What seems valuable now, will not remain so. ACOLA, SAF01 Australia’s Comparative Advantage

Golden thread Providing global leadership on environmental sustainability and adaptation is an area of great opportunity for Australia. With strengths in innovative research and a focus on community adoption consistent with a need to achieve a social licence to operate, Australia can seek to develop its own capabilities and give global advice on urban planning, transport and clean energy solutions. Achievement will protect our clean and green environment and international reputation.

Key findings This ambitious and multifaceted objective draws on the research-based interdisciplinary evidence from ACOLA’s Securing Australia’s Future reports. Underpinning this objective are five detailed key findings for securing a sustainable future for Australia: 1. We must protect the environment servicing potential growth areas and industries to maintain our clean, green reputation and our global competitive advantage in agriculture and food, energy and minerals, tourism and other industries; and also develop information systems and marketing strategies to understand consumers’ views on ‘clean and green’ attributes.

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2. The century-old model of electricity generation requires a more radical update, using current and future developments in local energy storage, low-power wireless energy distribution, smart grids, and microgenerators to transform how electricity is distributed, drawing on alternative fuels such as shale gas and renewable energy sources wherever possible. 3. The structure of cities and their transport options needs to be reconsidered, with sustainable urban planning and a new approach to urban transport, including the establishment of areas such as innovation clusters, high-tech nodes and creative sectors. 4. There is an urgent need to equip the workforce of the future with scientific and technological knowledge, and to communicate the positive prospects and technological future of the agriculture sector, focusing on skills and innovation and complementary skills in humanities and social sciences. 5. Innovative and interdisciplinary approaches by Australian researchers, underpinned by sustained public investment and supportive, bipartisan government policies, could create opportunities for Australia to research, produce and deliver solutions – whether ideas, services or products, particularly for transport solutions and climate change adaptation – needed by countries around the world.

Introduction Australians enjoy a relatively clean environment with unique biodiversity and plentiful resources, shared by a small population. We are known for products, particularly in the food industry, that are clean and green, sustainable and ethical, safe and affordable. There are potential growth areas but we need to protect the environment servicing these so that economic and environmental protection can proceed together sustainably. This chapter looks at the clean and green environment and products that provide Australia with a market advantage in agriculture and other sectors; at the challenges to our internationally renowned green image; and at options to overcome these challenges through new energy sources, sustainable urban design, smart farming, and underpinning interdisciplinary research. We begin with a description of Australia’s relatively clean (by global standards) environment. Australia manages its forestry and water resources well, but can do better with its care of biodiversity and habitat, agriculture and fisheries, and climate, energy and associated greenhouse gas emissions. Any consideration of securing Australia’s future needs to include an understanding of the risks and costs of the impacts of climate change and other changes to the environment. Climate change crosses international boundaries and Australia has an opportunity to apply its considerable climate knowledge to be an international leader in adapting to climate change. The chapter proceeds to look at how to decarbonise our energy supply. The centuryold, centralised, coal-powered method of supplying electricity requires a transformation in

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light of increasing environmental concerns and higher energy prices, affordable energy storage, renewable energy technologies, and additional energy sources such as shale gas, which could become economically important in Australia. We then examine urbanisation, transport, and sustainable urban design. Although our cities are renowned for being among the most liveable in the world, Australia is one of the most urbanised countries in the world. If roads, transport infrastructure and other urban planning activities are not properly managed, the cost of congestion in our capital cities could increase fourfold. Furthermore, increasing urbanisation will put pressure on water and energy resources. As the Australian population increases, and is further concentrated in major cities with an increasing proportion of older people, a new approach to urban transport is needed. For truly sustainable urban design, the whole structure of cities and their transport options needs to be reconsidered. Sustainable urban planning can reduce or even avoid the need for travel by improving transport links between work and home, bringing workplaces and homes closer together. Increasing broadband speeds will enable a growth in telecommuting and shopping from home. Australia has a large and rising number of motor vehicles, which are used inefficiently: the average car is parked 96 per cent of the time; the cost of moving freight by road is more than double the cost of transporting goods by train; and greenhouse gas emissions by road transport of goods are more than triple those of rail. Australians rely on cars, so it is surprising that we hold no more than three weeks’ worth of oil and refined fuels onshore; this represents a significant fuel security risk. Research, new technologies and interdisciplinary studies of social barriers to change can address the country’s fuel security risk, transport costs, inefficiencies in road transport, and environmental impact. Australia’s interdisciplinary research activities are important for the development and adoption of smart farming, and for providing the technologies, workforce and social understanding to enable a prosperous farming future. We need to change from concentrating on products low in the value chain to those higher. Furthermore, for Australia’s future agriculture, energy and environment workforce, we will need a growing proportion of workers to be trained in scientific and technological literacy. The chapter concludes with mention of the importance of social sciences playing a transformative role in dealing with the issues associated with energy, water, biodiversity, land use, urbanisation, and other environmental changes covered here, to secure a green and clean sustainable future. It echoes the themes from other chapters regarding the importance of investing in, and drawing on, Australia’s interdisciplinary research capability, supported with adequate policies and business buy-in, to address environmental issues and enable Australia to contribute to the solution of global problems and maintain its clean and green competitive advantage.

Environment and energy Avoiding unconstrained climate change would provide important benefits and opportunities to Australia. – Australian Climate Roundtable, 29 June 2015

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Protecting Australia’s natural advantage Australians are fortunate to benefit from a natural environment endowed with resources to use and land to enjoy. Australia’s huge area, as the sixth largest country on the planet, provides a diverse variety of landscapes – from tropical rainforests in northern Queensland, to snowy alps in Victoria and New South Wales, rugged mountain ranges in southwest Western Australia and along the east coast, and deserts in central Australia. On the coastlines are pristine beaches perfect for surfing and swimming, and coral reefs. The country enjoys a comfortable climate, is home to unique plants and animals in a wide range of habitats, and has extensive mineral resources. Our share of global natural assets is especially high relative to our number of residents, who enjoy relatively low population densities in urban centres hugging the temperate coastlines. Against this natural background, Australia is world-renowned for agricultural products that are clean, green, safe, affordable, sustainable and ethical. Australian agricultural goods come from an unpolluted landscape, have a pest-free and disease-free status, and are produced within accountable and traceable processes such as the Maximum Residue Limits for chemicals in grains, and the National Livestock Identification System. Furthermore, Australian farmers have a reputation for looking after the land. Such an international image enables Australia to be very competitive in global markets. Our natural environment provides opportunities for growth. Industries in areas such as farming, fisheries and forestry, as well as oil and gas, are likely to expand in coming years. For example, only ~3 per cent of the country’s 761 million hectares of land available for agriculture is currently used for cropping and horticulture. This is mainly because of highly variable rainfall and low annual rainfall totals over much of the continent, and

Australians benefit from living in a country rich in natural assets. (Source: CSIRO)

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limited access to water for irrigation in many regions. New areas of land, such as in northern Australia, could be farmed if there was substantial public investment in irrigation, energy and transport, as well as in new technology and skills. Of course, such opportunities and potential for growth cannot be taken for granted, and our environment cannot be used without care and responsibility. We need to protect the environment, both for itself and for servicing these potential growth areas to maintain our global strengths in agriculture and food, energy and minerals, tourism and other industries. This is a significant challenge in the face of climate change, population growth and urbanisation, and other threats that impact on the environment and environmentrelated industries. Our excellent national and global reputation must be supported by evidence and accreditation, and be protected as production in sectors relying on the environment increases and improves.

A sustainable environment Our rising and increasingly urbanised population combined with economic growth puts pressure on the sustainability of our environment. An awareness of environmental pressures, and the policies, technologies and community approaches that can manage such pressures, is vital for combined economic growth and environmental protection to proceed hand-in-hand – as so-called sustainable development. An awareness of environmental pressures, and the policies, technologies and community approaches that can manage such pressures, is vital for combined economic growth and environmental protection to proceed hand-in-hand. While we need to maintain our clean, green reputation to secure our future in agriculture, tourism and other areas, looking after nature for future generations is also important for a sustainable environment, to maintain diverse plants and animals, and to ensure human wellbeing. Compared with other countries, Australia manages its forestry and water resources reasonably well, especially in recent years. But it does not rank well in its care of biodiversity and habitat, agriculture, fisheries, climate and energy. Since Australia signed the Convention on Biological Diversity following the Rio Earth Summit in 1992, there has been an increase in the number of areas on land and sea that are protected in order to conserve Australia’s unique and irreplaceable biodiversity. However, biodiversity experts are pessimistic about how successful these measures have been in preventing loss of biodiversity. Gaps in data and measurements prevent a clear picture of the state or trends in biodiversity protection. Australia has performed poorly compared with Organisation for Economic Co-operation and Development (OECD) countries for emissions of air pollutants since 2009. These air pollutants mainly come from fossil fuel burning, transport and other industrial processes. While carbon monoxide and volatile organic compounds decreased, sulfur oxides, nitrogen oxides and particulate matter have increased. Similarly, Australia’s total carbon emissions increased between 1990 and 2010 by more than 40 per cent. Contrast this with, for example, the group of 15 European countries whose emissions decreased by more than 10 per cent. Australia’s increase can be explained by rising population and, more so, rising GDP per person. These rising greenhouse gas emissions lead to ever-increasing atmospheric concentrations of greenhouse gases, contributing to climate change.

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The changing climate adds further threats to the Australian community, economy and environment. Australia is the driest inhabited continent on Earth so it is particularly vulnerable to changes to rainfall patterns. Any consideration of securing Australia’s future needs to include an understanding of the risks and costs of the impacts of climate change, including changing rainfall patterns affecting water availability, increasing bushfire risk, rising sea levels, and more extreme weather events such as tropical cyclones and floods. This is particularly the case because most of the population, commercial activity and urban infrastructure is located near the coast. It is already clear that southern Australia’s rainfall is decreasing, particularly in the autumn when winter crops are germinating; this threatens Australia’s international competitiveness in dryland farming. Irrigated agriculture uses between 50 and 65 per cent of the water consumed in Australia, with about half of this in the Murray–Darling Basin. Water use has become more efficient in recent years in both agriculture and urban areas (due to increases in technology, improvements in water-use efficiency to reduce water use, and policy responses, all partly in response to the Australian drought conditions of the 1990s and 2000s). However, the impact of climate change and climate variability on water resources will cause risks relating to prolonged drought that need to be managed. For example, in agriculture, less water, higher temperatures and different soil conditions will require research and development to provide transformational changes such as new types of seeds that can survive in the future climate. In urban areas, desalination plants could supply up to half the water needs of Adelaide, Melbourne and Perth. Constitutional and political issues are a confounding factor in Australia’s environmental performance. The different federal, state, territory and local government roles in environmental protection bedevil this area. For example, the separation of immigration responsibilities from infrastructure, and health and education responsibilities from zoning responsibilities, makes seamless government difficult. As well as leading to barriers for environmental health, such separation of roles also leads to disenchantment with political governance. Social science integrated with other disciplines could lead to improvement in understanding and outcomes about these importance issues. Table 5.1.  A summary of the impact of Australia’s economic growth on the environment Environmental impacts of growth Environmental improvement (reductions) • Carbon monoxide (CO) • Volatile organic compounds (VOC) • Applied nutrients (water pollutants) Mixed outcomes • Carbon dioxide (CO2) • Particulate matter 2.5 (PM2.5) • Water in agriculture Environmental deterioration • Particulate matter 10 (PM10) • Waste • Nitrogen oxides (NOx) • Sulfur oxides (SOx) Inconclusive impact • Protected areas/biodiversity

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Table 5.1 shows environmental indicators that have deteriorated as Australia’s economy has grown, those that have improved with growth, and those not linked to growth. Despite the overall health of Australian ecosystems improving over the past decade or so, Australia’s environmental ranking is well below global standards. This presents a problem in securing Australia’s future. While the threats of climate change are overwhelmingly negative, there are opportunities. Some sectors and regions may benefit from higher carbon dioxide levels, increases in temperature, and changes to the rainfall regime. More importantly, Australia has an opportunity to apply its considerable knowledge of living with extreme climates to be an international leader in adapting to climate change. Indeed, climate change is a challenge that crosses international boundaries and is a research priority for many countries. It is also a research goal with a long history in many science, technology, engineering and mathematics disciplines – a major motivation for scientists is to improve human wellbeing on a global scale through understanding and subsequent improvement of environmental challenges such as land degradation, food security and low-carbon energy technologies. If supported with appropriate policies, investment and commercialisation, our climate adaptation expertise could be applied to global advice and leadership in innovation that supports adaptation to climate change (particularly in agriculture), and reduction in emissions through new and renewable energy sources. Our climate adaptation expertise could be applied to global advice and leadership in innovation that supports adaptation to climate change. Such global leadership in research advising adaptation to, and mitigation of, climate change would require a bipartisan approach and buy-in from industry. It is thus encouraging that major business groups, unions, research organisations, environment NGOs, investors, social groups and others came together in mid-2015 under the umbrella of the Australian Climate Roundtable. Members of the roundtable include organisations as varied as the Australian Aluminium Council, the Australian Conservation Foundation, the Australian Council of Social Services, the ACTU, the Australian Industry Group, the Business Council of Australia, the Energy Supply Association of Australia, the Investor Group on Climate Change, the Climate Institute and WWF Australia. The Australian Climate Roundtable stated that ‘Australia should play its part in global efforts’, and noted that ‘avoiding unconstrained climate change would provide important benefits and opportunities to Australia’. This is particularly the case in the energy sector. The roundtable states that policy should ‘be capable of achieving deep reductions in Australia’s net emissions’ and ‘provide confidence that targeted emissions reductions actually occur’.

Decarbonising energy Australia’s electricity supply began in the late 1800s as isolated networks established by local governments. These networks became connected and supplied by central power stations as demand for power grew. As in most other countries, Australia’s electricity generation relied on fossil fuels, especially coal. This centralised, coal-powered method of supplying electricity for immediate use has continued for more than 100 years. Coal is still our main source of electricity generation (73 per cent), followed by natural gas (13 per cent) and renewables (14 per cent, about half of which was hydro, as well as wind, solar and

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bioenergy). With increasing environmental concerns, higher energy prices, more affordable energy storage (although large-scale energy storage is not yet affordable for most people), improving renewable energy technologies, and policies to reduce carbon emissions, the century-old model of coal reliance needs an update. Over the period of fossil fuel generated electricity, carbon emissions have increased as more energy is used. However, the efficiency of energy production has risen – globally, carbon emissions per unit of energy produced have dropped by 0.3 per cent a year since 1850. This trend will need to continue, assisted by improvements in energy technologies. While the current electricity infrastructure may continue to be used, local energy storage, low-power wireless energy distribution, smart grids, and microgenerators could transform how electricity is distributed to consumers in the future. Instead of using coal for the generation of electricity, alternative and renewable energy sources, and the increased and more efficient use of gas available in Australia (including shale gas: see below), would emit less carbon dioxide into the atmosphere, as long as the emissions associated with gas production are minimised. The generation of renewable energy will become more reliable and affordable, using advanced prediction and technologies that manage supply and demand, as well as benefiting from advances in the storage of energy. Continuing to rely on current technology and processes because it works and does well fails to recognise that the evolution of global energy technology and processes will lead to the status quo being less profitable. Storage of energy will play an increasingly important role in Australia’s future electricity grid. Improvements in storage can address the variability between peak and low electricity demands, and provide the flexibility required due to the peaks and troughs in electricity generated by sources influenced by the weather (such as wind and solar power). Energy can be stored using technologies ranging from small rechargeable batteries to large pumped hydro systems, where water is pumped to a higher level dam at off-peak times and released to a lower level dam to drive turbines and generate electricity during peak demand. The specific type of energy storage depends on a location’s infrastructure, energy resources and challenges. However, while it is well recognised that carbon emissions need to be reduced, and apparent that improvements in technology can deliver such reductions, barriers to adopting new technologies exist due to inertia in the system and ‘technological lock-in’. That is, there are delays in adapting current infrastructure and related systems, as well as community resistance to change (see below) and the influence of vested interests. These can cause a persistence of current and inferior technologies and approaches despite the availability of advantageous alternatives. Continuing to rely on current technology and processes (that is, using and exporting the world’s primary source of energy, coal) because it works well fails to recognise that the evolution of global energy technology and processes will lead to the status quo being less profitable. There is the issue of cost, which should not be ignored and which has been highlighted by experiences in South Australia in recent times. Nonetheless, as affordability of new ways of generating and distributing electricity increases, what is valuable today will be devalued in future. As noted in ACOLA’s SAF01 Australia’s Comparative Advantage, ‘sticking with what currently works will not be as profitable when the broader environment changes. What seems valuable now, will not remain so’.

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Solar research facility, Newcastle, New South Wales, Australia. Renewable energy sources, including solar, provide ~14 per cent of our current energy generation. (Source: CSIRO)

Australia and indeed the world can overcome this inertia – but it takes commitment from government, acceptance by the community, and changing legal and regulatory requirements in addition to the changes in technology, performance and cost. Although these take time – sometimes decades – there are numerous past examples of global transitions from outdated and cumbersome technologies to new ways of doing things. These include the change from using inland canals to trains and then trucks for goods transportation, the evolution from vacuum tubes to microchips in electronics and computing, the move from analogue to digital broadcast technologies, and the change from fixed phone lines to mobile phones for telecommunications.

Natural gas: availability, technology and economic feasibility There is great potential for shale gas in Australia but the benefits will not be easily won. It … will require great skill, capital and careful management of any impacts on ecosystems and natural resources. – Peter Cook, ACOLA SAF06 Expert Working Group

The use of natural gas has increased over the past decade to represent about one-fifth of Australia’s energy supply, with ~59 billion cubic metres of gas produced in total in 2012–13. The geology surrounding the gas and how the gas is trapped dictates whether it is

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‘conventional gas’, such as natural gas in permeable subsurface sandstones, or ‘unconventional gas’ in relatively impermeable structures, such as shale gas and coal seam gas (CSG). Australia has ~3.8 trillion cubic metres of shale gas, although this figure is based on just four known shale gas basins. Undiscovered resources could push the figure to over 1000 trillion cubic metres. Shale gas is found at depths more than a kilometre underground. Undiscovered shale gas resources in Australia may be large compared to conventional gas, but as yet there are no identified economic shale gas reserves in Australia. Shale gas could be an economically important additional energy source in Australia, provided capital costs and the costs of extraction can be brought down. There is significant potential for shale gas in parts of Western Australia, Queensland, South Australia and the Northern Territory. Shale gas in the Cooper Basin (which straddles Queensland and South Australia) could be the first to be developed at a large scale because of the established infrastructure. Australia is already a major producer of conventional gas and CSG. As technology and geological knowledge develop, we could be in a position to produce shale gas. Producing electricity using shale gas fired power stations produces less than half of the greenhouse gas emissions of black coal fired power stations (although shale gas produces ~20 per cent more emissions than conventional gas). However, while there is no questioning the resource availability and potential for exploitation, the costs are currently relatively high (see the box, ‘The economics of shale gas’). Also, the success of an Australian shale gas industry would require consideration of scientific, social, community, technological, environmental and economic issues and impacts.

Fracking rig in a Colorado field. Shale gas could be an economically important energy source in Australia, if it earns a social licence to operate. (Source: Lonny Garris/Shutterstock)

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The economics of shale gas ACOLA’s study of shale gas in Australia (SAF06 Engineering Energy: Unconventional Gas Production, http://acola.org.au/wp/project-6/) concluded that any technical barriers to producing shale gas could be overcome. Shale gas is likely to be plentiful, with undiscovered resources in Australia larger than conventional gas. However, shale gas won’t be cheap in Australia. Costs to produce the gas are likely to be higher than in North America, where development of the shale gas industry over the past 15 years has benefited the US energy market and economy. Australia’s lack of infrastructure will further add to costs. Nonetheless, if drilling costs could be significantly reduced through an innovative and large-scale effort (as in the United States), shale gas has every prospect of being a viable lower carbon energy source for Australia in the future. World demand for natural gas is expected to increase over the first half of the 21st century, primarily due to industry’s demand for electricity. The extent to which Australia’s shale gas potential is realised will depend on the price of shale gas compared to the cost of other energy sources. In Australia, shale gas will require a price around $6–9 a gigajoule to make its production and transport profitable. By comparison, the Australian east coast wholesale gas price in 2013 was about $6 a gigajoule. More information and exploration and favourable economics is required to turn the prospective resource estimates into proven reserves, but if momentum in this industry does indeed gather, it will affect the Australian gas market and gas prices, and have significant impacts on jobs and the economy.

This is particularly the case in farming areas. There are issues of contested land use in farming areas relating to ground water contamination and water use, and concern about unknown impacts. The issues are also acute on land traditionally owned by Indigenous communities where exploration and extraction are planned or which will be crossed by pipelines. Much of Australia’s potential shale gas development is likely to occur in remote locations on lands associated with Native Title or Aboriginal Lands. Development of shale gas projects on the lands of traditional owners must, from the start, include an understanding of Indigenous peoples’ aspirations, land use and management. Informed understanding by all parties of the scale and expected impacts of a proposed project is required. Shale gas extraction also would need careful management of impacts on ecosystems and natural resources due to its environmental impacts – although many impacts have a low likelihood of occurring and may be remediated, except for biodiversity impacts. Increased exploration and production of shale gas could adversely impact landscapes, ecosystems (including vegetation, flora and fauna species, and soils), surface water supplies and groundwater, and communities. It may result in habitat fragmentation and some environmental contamination. Water will need to be managed, to minimise the volume extracted from the surface and groundwater resources. Additionally, there will be a need to minimise contaminated water being discharged into streams and groundwater aquifers. Hence a shale gas industry would need informed and supportive communities, and transparent and effective regulations and codes of practice. If the shale gas industry is to earn

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and retain the social licence to operate, there must be a transparent, adaptive and effective regulatory system in place, backed by careful monitoring, and credible and high-quality baseline surveys. If best practice is followed, many of the potential problems can be avoided.

Cities and mobility The lack of investment in transport over the past 40 years means Australia has a major infrastructure deficit. – Bruce Godfrey, ACOLA SAF08 Expert Working Group

Liveable cities Only 3 per cent of the world’s population lived in urban centres 200 years ago. Today, 50 per cent of the world’s population lives in cities. This is expected to increase to 75 per cent by 2050, when global population is likely to reach nine billion. Australia is renowned for having some of the world’s best and most ‘liveable’ cities, although the term is potentially a subjective one. The quality of Australian cities is partly due to investments in infrastructure during the 1800s that delivered one of the highest living standards in the world at the time, and which continues today. But this investment of wealth derived from the country’s natural resources contributed to the building of cities that made Australia one of the most urbanised countries in the world from its very early stages of European development. Significant congestion could harm the world-renowned liveability of our cities and quality of life. Despite Australia’s rural heritage and famed liveability, it is highly urbanised. Almost two-thirds of the population is concentrated in five state capital cities, each with populations surpassing 1 million: Sydney (4.8 million), Melbourne (4.4 million), Brisbane (2.3 million), Perth (2.0 million), and Adelaide (1.3 million). Today, Australia is one of the most urbanised countries in the world in terms of percentage of total population living in cities, and our trends of rising population and increasing urbanisation point to this not changing any time soon. Australia’s population is forecast to increase 40 per cent in just 20 years, from 21.5 million in 2011 to 30.5 million in 2031. By the end of the century, Melbourne and Sydney’s combined population is expected to exceed 14 million. Planning is required to prevent this increasing population and urbanisation from causing significant congestion. If roads, transport infrastructure and other urban activities are not properly managed, the cost of congestion in our capital cities is forecast to almost quadruple from $13.7 billion in 2011 to around $53.3 billion in 2031. But planning to cope with this increasingly urbanised population is not just about reducing the economic costs. Significant congestion could harm the world-renowned liveability of our cities and quality of life for those large future populations. People will expect, and deserve, reliable and cost-effective ways to get around. Populations that live in outer urban locations (where transport options are usually limited to a car) should have equal transport choices to people in inner cities. This has implications for the design of urban centres, as described in more detail below.

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Morning peak hour traffic, Melbourne. (Source: Soham Banerjee, CC BY 2.0)

Increasing urbanisation will also put pressure on water and energy resources. Cities cover less than 2 per cent of the Earth’s surface, but use 78 per cent of world energy. Although Australian cities generally rate highly for liveability, they have unsustainable environmental footprints. The urban sprawl of Australia’s largest cities affects water, air and ocean quality. The expansive nature of our cities is related in particular to increasing transport of goods and people. This has led to road congestion, despite more and more land being appropriated for roads. Automotive transport contributes significantly to pollution of the water and air, and to greenhouse gas increases (as detailed above). Indeed, Australia has one of the highest levels of transport-related greenhouse gas emissions in the world. As well as the health impacts of increased pollution and climate change, reliance on road transport contributes to an increasingly sedentary lifestyle and a subsequent increase in mortality, not to mention the contribution to deaths, injuries and trauma by road accidents. The relationship between cities and climate change is two-way, because as well as contributing to climate change, our cities and related infrastructure and transport systems are affected by the impacts of climate change. All of Australia’s – and many of the world’s – cities with populations of more than one million are on the coast and hence are vulnerable to sea-level rise combined with increasing extreme weather events. Furthermore, urban populations are susceptible to the impacts of extreme heat, with cities amplifying global warming through urban heat island effects. Adaptation to climate change is being considered, with many cities introducing trees and green spaces to reduce local temperatures, but cities have limited capacity to withstand the combined pressures of population expansion and climate change.

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Cars v. horses Not everything should be blamed on the technological progress of the car. As John McCarthy and Peter Wright note in their 2004 book, Technology as Experience, ‘per vehicle and per mile, it seems highly likely that the environmental problems caused by the horse were far greater than those of the modern car’. Values and beliefs influence whether people welcome technology as a saviour (in the case of cars, saving cities from being fouled by manure and dead horses, avoiding injuries and deaths, and alleviating animal welfare issues) or a destroyer (creating potential for new and unknown harms, such as injuries and deaths from road accidents, health impacts from pollution, environmental effects of greenhouse gas emissions, and challenges relating to the supply of fuels).

Sustainable urban design Adapting to the increasing heat in cities by addressing the porosity of urban surfaces is just one aspect of urban design that is evolving sustainably. However, for truly sustainable urban design, the whole structure of cities and their transport options needs to be reconsidered. Transport provides access to jobs, homes, and goods and services, and opens up isolated regions. Access to transport and the ability to move across cities influences perceptions of quality of life and plays an important role in economic and social development. There are some elements of Australia’s city transport systems that are more than a century old. The urban sprawl of several Australian cities has caused them to extend well beyond the reach of public transport. Adding roads is not necessarily the solution to the problem of moving large urban populations of the future. As the population increases, and is further concentrated in major cities with an increasing proportion of older people, a new approach to urban transport is needed with a focus on people rather than particular modes of transport. In cities around the world, people’s average travel time is an hour a day – 30 minutes commuting in the morning, and then again in the evening. Of course, some people choose to travel more than this, while others travel less, but the average is 30 minutes. This leads to the concept of the 30-minute city. If people find they are spending more time than this travelling each day, they are likely to move to reduce their commute. Historically, cities extended only ~2 to 4 kilometres across when people could walk this far in 30 minutes; trains extended this spread to ~20 kilometres across; cars then created an urban sprawl of 40 to 50 kilometres across. However, cities such as Sydney and Melbourne, as well as Brisbane and Perth, have extended beyond 50 kilometres; hence the concept of the 30-minute city has become topical in urban planning. Throughout the 1900s there were examples of urban planning in Australian cities that were forward-thinking and successful within the period’s constraints and priorities, but in the past few decades the range of transport options required for long-term sustainability has not been delivered. Twenty-first century urban planning needs a rethink to ensure mobility is achieved with low environmental, social, and economic costs – for individuals and collectively. Sustainable urban planning can reduce or even avoid the need for travel. For example, workplaces can be brought closer to homes, the number of homes can be increased in areas

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with the greatest number of jobs, and transport links between work and home can be improved. A ‘compact city’ plan reduces urban sprawl by providing city centres that can be navigated on foot or by bicycle. Central business districts and the inner city traditionally have been the primary employment hubs, but there has been recent growth in employment in suburban locations. There is potential for future employment growth in suburbs away from the city centre, where there is bicycle-friendly land use and neighbourhoods with a mix of houses, businesses and industries. This can be further encouraged through the establishment of areas such as innovation clusters, high-tech nodes and creative sectors, similar to Silicon Valley in the United States. For truly sustainable urban design, the whole structure of cities and their transport options needs to be reconsidered … Twentyfirst century urban planning needs a rethink to ensure mobility is achieved with low environmental, social, and economic costs. As the Federal Minister for Cities and the Built Environment observed in the launch of ACOLA’s report SAF08 Delivering Sustainable Urban Mobility (http://acola.org.au/wp/8delivering-sustainable-urban-mobility/), ‘it is a matter of shame that 20,000 of our finest, smartest, and most entrepreneurial people base themselves in Silicon Valley in the United States … We need to continue to find ways to ensure that those people, and many thousands of others who leave our shores every day, are attracted to stay in our great cities, which are regularly rated as some of the most liveable across the globe’. Online shopping and teleworking in Australia are rapidly increasing. These digital activities employ less than 10 per cent of Australia’s workforce at the moment. As broadband speeds increase and enable a growth in telecommuting and shopping from home, cities will have less need for a central business district, and may head towards a decentralised design that reduces our reliance on cars and road transport.

Environmentally friendly future transport There are ~1.2 billion cars in the world, a figure expected to double by 2030. In Australia there were 18.0 million motor vehicles registered in 2015, including more than 13.5 million passenger vehicles, with the number increasing at a rate of ~2.5 per cent each year. About three-quarters of Australians’ journeys to work in 2011 were by car. However, car use is inefficient, with the average car parked 96 per cent of the time – 80 per cent of this at home. Such inefficiencies extend to goods transport. The cost of moving freight by road is more than double the cost of transporting goods by train. Greenhouse gas emissions by road transport of goods are more than triple those of rail. Despite the obvious increased financial and environmental cost, the proportion of road freight compared to rail freight has steadily risen in Australia over the past four decades. Furthermore, Australia lacks fuel security. Australians rely on cars for mobility within our urbanised population centres, as well as having a disproportionate reliance on heavy vehicles for goods transport. Therefore, it is surprising that Australia has small and declining fuel stock holdings. In fact, the country holds no more than three weeks’ worth of oil and refined fuels onshore. In 2013–14, Australia’s net import bill for crude oil and petroleum products was $30.7 billion, or 2 per cent of GDP. Australia’s dependence on imported

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fuel for transport is more than 90 per cent of our transport fuel demand, and it may well grow to 100 per cent. This leads to Australia having a significant fuel security risk. It is surprising that Australia has small and declining fuel stock holdings. In fact, the country holds no more than three weeks’ worth of oil and refined fuels onshore. Development of more environmentally friendly transport options, as well as improved energy efficiency of transport, could address the country’s significant fuel security risk, transport costs and environmental impact. Examples include increased uptake of electric cars, provided they recharge using renewable energy grids; the use of alternative fuels such as biofuels, gaseous fuels and synthetic fuels, especially for public transport; new and efficient powertrains for vehicles; and greater use of new energy technologies such as fuel cells. Research also can address inefficiencies in road transport, which if improved will lead to reduced traffic congestion, decreased greenhouse gas emissions, and improved public health. For example, the efficient flow of people, vehicles and goods through cities could be facilitated by increased use of high-speed data transmission, digital sensors and data analytics that provide real-time information for management decisions – both computerautomated and human-assisted. However, technology alone will not be enough to solve transport and urbanisation problems. Interdisciplinary research will be required to address problems such as social inertia to change (see below). Supportive government policies and sustained investment in innovative transport infrastructure also will be required. Urbanisation and transport infrastructure are challenges around the world. New, efficient and renewable transport technologies are being adopted internationally. And, of course, many environmental problems, such as climate change, do not stop at international borders. Mobility and urbanisation are major long-term challenges for countries in Asia in particular. With global research priorities and societal challenges aligned to those in Australia, we could lead, or at least contribute more to, global transport solutions.

Collaborative research for sustainability Questions such as food safety, product labelling, gene technology in plant and animal breeding, foreign investment and foreign workers, and farm ownership structures call for informed and respectful conversations. – Joanne Daly, ACOLA SAF07 Expert Working Group

Australia’s interdisciplinary research activities can contribute to global sustainability goals beyond those relating to transport. For example, science research has provided vital contributions to Australian agriculture over many decades, and still provides innovation input today. Science, innovation and technological research and development will continue contributing to future farming, with new technologies helping agriculture remain successful and sustainable, to adapt to climate change, and protect against the introduction of pests and diseases. Research that delivers anything from new types of seeds to new types of machines would be of value in Australia and beyond.

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Australia can develop solutions to – or at least to help manage – our country’s challenges such as climate change; the security of food, water and energy; and an ageing and growing population. Most challenges that we face require an interdisciplinary approach, drawing on humanities, arts and social sciences to address issues of change, technology adoption and quality of life in addition to technical and engineering solutions to sustainability challenges. Priorities relating to sustainability include: ●● ●● ●● ●●

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optimising food production and processing and agricultural productivity; improving the use of soils and terrestrial and marine water resources; increasing alternative fuels in transportation and lowering emissions; supporting development of reliable, low cost, sustainable energy supplies and enhancing the long-term viability of Australia’s resources industries; and mitigating, managing or adapting to environmental changes.

All of these priorities are also global challenges. Innovative approaches by Australian researchers, underpinned by public investment, could create opportunities for Australia to research, produce and deliver solutions – whether ideas, services or products – needed around the world. This would improve our competitiveness, maintain our wealth and liveability, and help to secure our future (see Chapter 3). Researchers already collaborate on global challenges relating to complicated problems such as energy security, food security, preventing and curing infectious diseases, and ensuring environmental sustainability. Here the scale of the problem and size of the associated research budgets are beyond the capacity of countries to address individually. Such research questions cross multiple disciplines and require the world’s best knowledge, institutions and equipment to come together across international boundaries. Just as opportunities should be sought to export Australian research to the world, we need to adopt international advances. The relatively small size of research and development investment in Australia – the majority of research and development is funded by federal and state budgets, and public spending on research and development has declined in the past few decades – is another reason for us to draw on international research. We need to put more emphasis on linking with other countries to obtain new research. Such thinking would provide opportunities across many sectors, a prime example being in agriculture.

Moving up the value chain with smart farming Field robotics are becoming an integral part of many farming systems, reducing labour and input costs and increasing output quality and productivity. – Salah Sukkarieh, University of Sydney

Farming is our oldest and still one of our most important sectors. However, agriculture’s relative contribution to our economy has declined over the past century. As introduced in Chapter 2, there are really two agricultural economies. One is highly productive and innovative, and includes the 25 per cent of farms that produce 80 per cent of production. They are innovative and adaptive, and are considered agribusiness. The other 75 per cent of farms consist of a mixture of lifestyle and hobby farms, and other farms that are sub-optimal in size and level of investment. The narrative in Australia about farming tends to reflect the latter, lifestyle farms rather than the vibrant agribusiness sector. The two should not be confused.

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Population growth and rising standards of living here and overseas will drive an increased demand for agricultural products. Agricultural industries around the world will need to provide food for a world population of nine billion by the middle of this century. This population growth and changing dietary preferences – particularly in China, India, Indonesia and other parts of Asia – provide Australia with export opportunities worth many hundreds of billions of dollars over the next few decades. This should change the perception of agriculture being a sector in decline to one of renaissance in light of growing demand. More than half of our exports in 2014 went to Asia, with eight of the top 10 destinations being Asian countries. Our historical capability in agriculture, combined with our global agricultural brand for pest- and disease-free produce from a clean and green environment, can be used to increase demand and create new value-added products. Already in the upper end of the food market, the Asian appetite is increasing for quality Australian primary produce, wine, craft beer and whiskey, and cottage industry speciality food products. A traditional sector such as agriculture will remain an area of strength for Australia. But the current prosperity has partly been due to some low-value parts of the value chain; that is, growing and exporting basic agricultural commodities. Our current focus on commodities instead of value-added products needs to change for the longer term future. Our reliance on low-value agricultural exports leaves us vulnerable to currency fluctuations, commodity prices and global demand. Australian industries rarely focus on adding value to products, even though that is what a highly developed country with a highly skilled workforce should be doing. Rather than aiming to offer commodities at globally competitive prices in the face of competition from lower cost international markets, a better strategy would be to offer quality, environmentally friendly, clean and value-added products. We can deliver specialised, high-value products for consumers who value safety, sustainable production, high quality and perceived health benefits over price (see Chapter 3). We can build a culture of high value-adding and technological innovation, especially in agriculture. However, it is crucial to develop sophisticated information systems and marketing strategies to get a better understanding of domestic and international consumers’ views on ‘clean and green’ attributes, including nutrition and environmental impacts, and the premiums people are willing to pay for such products. Rather than aiming to offer commodities at globally competitive prices in the face of competition from lower cost international markets, a better strategy would be to offer quality, environmentally friendly, clean and value-added products. Australia has the potential to deliver specialised, high-value products for consumers who value safety, sustainable production, high quality and perceived health benefits. A move to more profitable commodities and an increase in productivity of traditional commodities will require existing and new technologies, improvements in breeding made possible through advanced genomics, and better management practices. Farmer-driven innovation has always been a feature of Australian agriculture, which has a long history of innovation, resilience, adaptability and productivity growth. New and continuing partnerships between farmers, researchers, communities and others will help provide the innovation to deliver to new niche markets.

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Partnerships between farmers and researchers help to drive innovation. (Source: CSIRO)

Such advances can help Australia move further towards smart farming and valueadded products, but require a higher level of research and development investment. Australian exports that have been traditional sources of strength and prosperity have tended to be unprocessed, including wheat, beef, cotton, wool, oilseeds, wine, lamb, sugar and barley. This has been driven by our natural endowment in these commodities, combined with the international trust in the quality and safety of Australian products. Australia is now a net importer of processed food. Concentrating on products low in the value chain will not be a wise strategy. Innovative, value-added enhancements to food products, combined with links to global production networks, could create new

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opportunities and employment in agriculture, as well as other sectors. We need to contribute more to products high in the value chain to provide growth potential for Australian industries linked to smart farming, such as advanced manufacturing and information and communication technologies. The agriculture, forestry and fishing sector improved its productivity by 72 per cent between 1989 and 2013, in part because of investment in research and uptake of new technology. However, many of the current technologies and techniques used in Australian agriculture, as well as areas that support farming such as engineering, communication technologies, electrification and automobiles, are centuries or even millennia old. Paradigm shifts in technology can sometimes take decades, particularly when changes in infrastructure are required. Companies may not be able to adapt quickly, as agriculture has long lead times in growth and production processes, and organisations may be tied to contracts with equipment suppliers. Nonetheless, new technologies are improving productivity, such as GPS-guided tractors to allow farmers to work on other tasks. There is potential to draw more heavily on technology, such as greater use of ‘big data’ and data analytics, precision agriculture, and smart water resource management. Developments in information and communication technologies can provide sensor networks and data to improve agricultural processes. Furthermore, increasing demands for sustainability and environmental stewardship, and changes in cultural preferences and eating habits, are raising demand for organic foods grown in less polluted places with humane treatment of animals. Increased agriculture in future needn’t lead to degradation of the environment through, for example, soil erosion and nutrient depletion. We could produce more from less by improving water use efficiency, or increasing productivity through innovation.

Botanical Resources Australia’s high-value products for the world Tasmanian company Botanical Resources Australia Pty Ltd (BRA) produces over 60 per cent of the world’s pyrethrum, which is made from dried chrysanthemum flower heads and used in a range of pesticides. This puts BRA in a high-value part of an international chain of the world’s consumer pesticide manufacturers. The high quality and reliability of BRA’s products have maintained its position of supplying more than half of the global pyrethrum supply. BRA undertakes research and development across all of its operations, and is the only company in the world that harvests the chrysanthemum crop mechanically. BRA originated from publicly funded research through the University of Tasmania and the Tasmanian Government in the early 1980s, where researchers bred plants suitable for local conditions. Ongoing close collaboration with the University of Tasmania and CSIRO has enabled BRA to develop new methods and processes, such as one for the analysis of a compound extracted with the pyrethrum that may provide more market share and commercial gains. Funding support from the Commonwealth Government, research and development and highly focused management practices have contributed to BRA’s success.

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Preparing for the future Global policy challenges must be addressed in a holistic way, drawing not only on science and technology, but also on economic, social, political and behavioural sciences. Interdisciplinary collaboration will be crucial. – The UK Royal Society, New Frontiers in Science Diplomacy, 2010

Workforce for the future Australia will need to train a future workforce to be equipped with skills for the new technology in smart farming, clean energy, natural resources management, and other sectors. Farms of the future will be unrecognisable compared with those of today. Robots will harvest and prune, while drones will survey fences and monitor high-value crops. Farmers will use real-time information to decide on levels of fertiliser, water and other inputs. Automation could see reduced demand for some labour while increasing the need for new skills; for example, engineers and computing experts will be needed to run machinery, which will place agriculture in competition with other sectors for these skills. With such developments in technology, and an ageing population, Australia faces shortfalls in skilled workers. Farms of the future will be unrecognisable compared with those of today. Robots will harvest and prune, while drones will survey fences and monitor high-value crops. For Australia’s future agriculture, energy and environment workforce, we will need a growing proportion of workers to be trained in scientific and technological literacy. These industries will need increasing numbers of skilled workers who can work with and maintain complex equipment; for example, managing large farms remotely using information technologies, or using precision agriculture technologies. However, current trends in education point in the opposite direction. In the first decade of the 21st century, enrolments in agriculture and environment undergraduate courses decreased to just 1.7 per cent of all domestic undergraduate enrolments. Enrolments in higher research degrees in agriculture, environment and related studies remained fairly steady, but at a low base of ~350. In 2010, there were ~285 000 course completions in all fields of education and at all levels (undergraduate and postgraduate), for domestic and international students together. Of these course completions, ~90  000 were in sciencerelated fields but the smallest numbers completing courses were in agriculture and environmental sciences (approximately one-tenth of those completing studies in health). These decreases in agricultural and environmental sciences may lead to shortages of skilled labour in these sectors, while on the other hand the requirement for unskilled labour is likely to decline as manual labour is replaced by technology. Already there is a decline in employment numbers in agriculture, which have dropped by 1 per cent a year on average from 1975 to 2013, despite the farm gross product increasing by 3 per cent over the same period. The education and subsequent labour shortages may be related to the negative image agriculture can have in Australia (contrary to the positive image Australian

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agriculture has overseas). There is an urgent need to communicate the positive prospects and technological future of the agriculture sector, focusing on skills and innovation that can add to the country’s natural advantage, historical track record and international reputation. Furthermore, equipping students with scientific and technological knowledge and confidence provides the basis for participation in the most significant national and international debates of today, including climate change, ecological transformation, and new and renewable energy sources. Understanding of, and participation in, these discussions will enable the next generation to better shape the course of their own lives. Growth in value-added agriculture industries will require increased skills and knowledge in humanities, arts and social sciences, and in science, technology, engineering and mathematics fields. These complementary skills will be essential to help communities adapt to the evolving industries and adopt new products and services.

Evolving communities There are myriad social consequences when it comes to acceptance of changes in technology. For example, the evolutions and revolutions in agriculture greatly affect farming communities, where aspects of foreign ownership and an ageing population add to the changes. While Australian agriculture’s history of resilience, innovation and adaptability encourages optimism, its future development – like other sectors – will require highly skilled and technically knowledgeable workers; access to high-quality transport, telecommunications and other infrastructure; and access to funds to enable change. The sector also will need to maintain healthy soil, water and biodiversity, including managing the risks associated with climate change and climate variability described above, in order to capitalise on increases in demand. The Australian bush plays an important role in Australian lives and has a special place in the traditional Australian identity. Aligned to this identity is the contribution from farming, and managing on the land through droughts and flooding rains. But the sector is evolving, and there is potentially a tension between its past image and future role. Understanding the changes in Australia’s agricultural sector is essential for securing its future wellbeing. In 2013–14, some 270 000 people had farming-related jobs, representing ~2.3 per cent of Australia’s workforce. This number is greater when forestry and fishing are included. However, it is just half of what it was in 2000. The median age of Australian farmers is increasing at a faster rate than that of the general population, although Australia still has the second highest proportion of farmers under 35 years of age (14 per cent) compared with other developed countries. As noted above, there has been a decline in employment numbers in agriculture and labour shortages remain a problem in rural areas. The sector contains a wide variety of farms, including tiny lifestyle farms, long-run family farms and large corporate farms. Family-owned farms account for 95 per cent of farms and 77 per cent of farmland. Many people have concerns about the extent of foreign ownership and foreign labour in agriculture. But without more foreign investment in farms and agribusinesses, alternative models of farm financing will need to be developed to meet the needs for farm businesses faced with fluctuating incomes and reduced capacity to borrow. Local superannuation funds and other Australian funders may need to be encouraged to invest in potentially risky farming enterprises. Communities and consumers are concerned about production methods (for example, pesticide usage) and technological innovations (for example, genetically modified crops

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and foods). These views have attracted considerable political attention, in part because they are connected deeply to our perception of national identity and because food and its safety are fundamental parts of life. Media stories relating to animal welfare, food safety and labelling, combined with perceptions of agriculture as damaging to the environment and historically based romanticised views of agriculture and food production that are incompatible with modern technologies and processes, have all contributed to an erosion of farming’s social licence to operate. These perceptions and concerns need to be addressed using humanities and social science skills to help understand how communities – and agriculture – can adapt. The industry itself needs to consider private regulatory structures, marketing and voluntary labelling practices relating to genetic modification. Small family farm businesses may lack the ability to adopt advanced technologies and adapt to environmental and market changes. This, combined with the social and business inertia when it comes to paradigm shifts in innovation, raises issues associated with resistance to new technologies.

Are we ready for the future? It is important to understand people’s resistance to technological changes in the way we manage and interact with the environment, including our water, food and energy. Technology can be the catalyst for change, but is not necessarily always the answer to our problems. Technology and its products often punctuate the record of historic cultural change. For example, the transition ~12 000 years ago between the Palaeolithic (‘old stone’) and Neolithic (‘new stone’) periods describes a change in the technology of stone tools and new activities such as animal husbandry, while the ‘Green Revolution’ from the 1940s to the late 1960s describes research, development and technology transfer that increased agricultural production. Other technological developments include the development of highyielding cereal varieties, the expansion of irrigation, and the distribution of seed, synthetic fertiliser and pesticide. These changes improved the health and nutrition of billions of people, and probably saved more than a billion lives. While these developments were met with opposition at times, they led to profound social, economic, demographic and physiological changes. The development of genetically modified ‘Golden Rice’ in the 2000s is an example of technology, health benefits, the influence of big business, and challenges to social acceptance linked to values, beliefs and perception of risk. Values relate to a person’s principles and priorities in life; beliefs are firmly held opinions people accept as true and real; and these are reflected in a person’s perception of risk. People opposed to genetically modified food focus more on ‘tinkering with nature’ and corporate power than on the scientific evidence and improvements resulting from research. Golden Rice was developed at the Swiss Federal Institute of Technology and the University of Freiburg to help address vitamin A deficiency in developing countries. Despite having been developed as a humanitarian tool and winning a Patents for Humanity award, there has been opposition from some environmental groups, with debate about the scientific evidence being a proxy debate about the influence of big business and commercial impartiality of scientists. The advent of Golden Rice followed the increase in distrust of genetic engineering through the 1990s, particularly in Europe. In 1996, Monsanto introduced genetically modified soybeans without labelling them as GM, claiming that as there are no dangers associated with genetically modified soybeans there is no need for labelling. However, some groups saw this as concealing the origin of the product, and evidence of corporate manipulation.

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Golden rice (right) is genetically engineered to biosynthesise ß-carotene, a precursor of vitamin A. (Source: International Rice Research Institute, CC BY 2.0)

Away from Europe, genetically modified crops have been received more favourably in developing countries due to their urgent need for food and improved nutrition. In Australia, while recycled drinking water was rejected by the Toowoomba community in 2006, a more recent study during severe drought found people more open to the idea. Hence, before the introduction of technology, resistance to or uptake of new technologies needs to be seen in the social context of values and beliefs, as well as the environmental context. Furthermore, the costs of a technology are not always clear when they are first introduced. For example, the impact of greenhouse gas emissions from fossil fuel generated electricity on the climate was not clear until decades after the technology was adopted. Coal drove the Industrial Revolution from the late 1700s and provided wealth and security to many millions of people, but coal mining led to mine accidents, and coal burning caused respiratory diseases and other long-term health effects for the ensuing two centuries, and will continue to cause climate change for decades to come. As well as the social and economic perspective, an evaluation of technology using different, objective measures of costs can be helpful. For example, safety concerns relating to nuclear power could be crudely quantified as the number of deaths associated with the technology compared with the amount of energy generated. Although such a measure

5 – Green and clean: securing a sustainable future

may appear odd in light of environmental and other concerns, a comparison of deaths per unit of energy generated for a range of current primary energy sources generates some surprising results (see Table 5.2). By this measure, nuclear power is much safer than coal – by a factor of 4000, based on world averages. This kind of evaluation provides the opposite finding to what one would expect based on common community perceptions and social values. Table 5.2.  Number of deaths per unit of energy generated (terawatt-hours (TWh)) for various energy sources Energy source Coal – world average

Percentage of world’s energy

Deaths per TWh

26

161

Coal (China)

278

Coal (US)

15

Oil

36

36

Natural gas

21

4

Biofuel/biomass/peat Solar (rooftop)

12 0.1

0.44

Wind

1

0.15

Hydro

2.2

0.1

Nuclear

5.9

0.04

While the economic and other opportunities generated by the development of shale gas reserves will be widely welcomed, there are likely to be concerns about possible adverse impacts, as described earlier. Governments and industry must address these concerns while exploration is at an early stage, by engaging with affected and interested parties, building confidence in the science and technology, and demonstrating a preparedness to adopt and enforce strong regulatory and internal controls. Most, if not all, of the potential negative impacts could be minimised if these are in place. Robust and transparent regulation, underpinned by effective and credible monitoring, is key to public acceptability. A 2009 report by the International Council on Science on the future of the Earth system highlighted ‘the complex inter-relationships between biological, geochemical, climate and social systems’ and suggested that ‘natural science should no longer dictate the Earth system research agenda; social science will be at least as important in its next phase’. Indeed, many factors influencing our future are entwined, and these require a holistic, interdisciplinary approach to unpick, understand and prepare for. The social sciences can play a transformative role in dealing with issues associated with energy, water, biodiversity, land use, urbanisation and other environmental changes, to help secure a green and clean sustainable future.

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Conclusion The principle of decentralised concentration has long been advocated in Australian planning but rarely implemented with any will and therefore effectiveness. It guided the historical development of Canberra and has informed the planning of cities during periods of active metropolitan planning … This planning legacy has, arguably, been squandered in many of our cities. .

– B Gleeson, J Dodson and M Spiller, quoted in SAF08 Delivering Sustainable Urban Mobility

This chapter on securing a clean, green and sustainable future for Australia draws on three key ACOLA reports (SAF06 Engineering Energy: Unconventional Gas Production; SAF07 Australia’s Agricultural Future; and SAF08 Delivering Sustainable Urban Mobility), as well as incorporating cross-cutting themes about environmental sustainability that appear in the other eight ACOLA reports. Similar to the approach of other chapters, and as noted in the introduction to this chapter, for a strong future we need to successfully address a range of findings identified through the interdisciplinary research and evidence of ACOLA’s Securing Australia’s Future reports. We need to make choices and address challenges in the agriculture and energy sectors, and in cities, to enable sustainable growth in a changing market. This chapter presents opportunities to increase productivity, improve our competitiveness, protect the environment, and support communities during change. We can realise opportunities for growth in local sectors while playing a global role in providing advice and leadership in sectors that depend on natural resources. This will require preparing the workforce for the future, focusing on skills in innovation, humanities and social sciences. We need to develop innovative new technologies that draw on scientific research, and on the humanities and social sciences to enable adoption. We must improve our planning of urban centres and transport choices, such as establishing innovation clusters and high-tech nodes. We need to update our energy sources to protect our clean and green environment, for example by using local energy storage and smart grids to change electricity distribution and draw on alternative fuels where possible. In the production sectors, from agriculture to manufacturing, we need to look at producing more sophisticated, high-value products. That’s where the markets will be; and that’s where the profits lie. If we recognise these findings and act on the implications, Australia will be able to balance its potential for growth with the protection of our environment and quality of life, achieving sustainable development in a secure future.

6 Conclusion: challenges and opportunities for Australia Alfred Hitchcock trained as an engineer. Margaret Thatcher trained as a chemist. People who combine deep learning in a discipline with the insight to think and work beyond it can catch opportunities that others miss. The same is true of teams in the modern workplace: they need to mix depth of expertise with breadth of perception and skills. Alan Finkel, launch of SAF10 Skills and Capabilities for Australian Enterprise Innovation, 21 July 2016

Advice for an unknowable future The interdisciplinary Securing Australia’s Future research program, as synthesised in the preceding pages of this book, brought together researchers to identify Australia’s distinctive strengths and advantages; it highlighted the contexts and policies required to encourage creativity, innovation, adaptability and resilience; and its 11 reports explored the natural, geographical, economic, social, cultural and scientific characteristics and capabilities that Australia needs to succeed and thrive. ACOLA’s ability to pull together messages from across disciplines has provided a rich understanding of opportunities and challenges in Australia. Securing Australia’s Future drew on Australia’s leading experts, scholars and practitioners across a wide range of disciplines from science, technology, engineering, mathematics (STEM), humanities, arts and social sciences (HASS). The characteristics of our environment, biodiversity, region, population and culture, and other attributes that define the unique domains where Australia can succeed in an evolving global environment, were examined thoroughly. In summarising this immense undertaking, we have aimed to identify the advantages Australia has and can build on to help the country enhance productivity, innovation, fairness and equity. Admittedly, the future is unknown and, in many ways, unknowable. But we do know that the future will not simply be a more technologically advanced version of today. We need to prepare to make opportunities out of whatever happens in that unknown future. A decade ago, Australian agriculture was in decline; it is now showing renewed promise. Who knows what the growth industries of 2030 will be? It is important for Australia to look at education, technology, society and other factors to keep our options open.

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The future needs more than just science, or just engineering. We need all research, working together in an interdisciplinary way. We need to draw on new knowledge and ideas, and consider what to continue doing, stop doing and what to do differently. We need strong leadership and proper policy foundations. Securing Australia’s Future aimed to craft a national roadmap for decisions about the future and the conditions that can underpin achieving the nation’s best, and achieve higher living standards, increased equity and greater sustainability.

Past performance ≠ future success

Australia performs well internationally in measures such as government-provided services (such as health and education), global engagement of government and business, economic freedom and workforce flexibility, life expectancy and education. However, our main employment, production and export sectors – agriculture, mining, manufacturing and services – need to prepare for the future in a rapidly changing global economy. Agriculture, one of our oldest and most important sectors, has steadily declined in its proportion of economic contribution over the past 100 years. Thankfully it has seen dramatic increases in productivity in recent years due to increased technology use and innovation investment. Similarly, the mining industry has been a leading contributor to Australia’s economic growth and international impact. It represents Australia’s largest export earner, and while economically it is in a period of decline, the volume of minerals extracted continues to be high and the mining sector will continue to be important to the future of Australia. It will also continue to be an innovative and globally connected industry. In both mining and agriculture, we do not yet have much of an advanced, high-valueadded approach. This leaves these sectors, and hence the Australian economy, vulnerable to global price changes. Historically, Australia has grown and sold produce, and dug up and exported minerals. We haven’t had to excel at development and commercialisation as our land has been productive and prices high. While we need to continue to supply countries such as China with raw materials for their steel industries and other sectors, to secure our place as a 21st century knowledge economy we need to move away from an extractand-export focus. Historically, we have also built things. The manufacturing sector has played an important role in Australia’s economy, but its contribution has also declined. The success of Australia’s future manufacturing industries will depend on technological innovation, a shift to advanced manufacturing, integration with services, international connectedness and enhanced participation in global value chains. It is Australia’s services industries – encompassing anything other than agriculture, mining and manufacturing – that now dominate the Australian economy. In particular, well-established areas including post-school education, health services and financial services are renowned for their quality, resilience and outcomes, and could draw on innovation to drive Australia’s productivity growth in all other sectors.

Smart farming, smart engagement Agriculture will remain an area of strength for Australia, with our world-renowned clean, green, safe, affordable, sustainable and ethical agricultural products. But the domain’s prosperity has partly been due to growing and exporting basic agricultural commodities

6 – Conclusion: challenges and opportunities for Australia

that play a low-value part in the value chain. Our focus on commodities instead of valueadded products needs to change. Australian industries too rarely focus on adding value to products, even though that is what a highly developed country with a highly skilled workforce should be doing. Rather than aiming to offer commodities at globally competitive prices in the face of competition from lower cost international markets, we need to offer quality, environmentally friendly, clean and value-added products. Not all innovations will be successful. But failure is an ever-present partner of inventing, of new technology, and of trying out a new policy. Acknowledging the possibility of failure, and dealing with it in an effective manner, is often a recipe for success. If failures arising from the development and adoption of new technologies were viewed as system flaws (to be fixed) rather than flaws in the characters of those involved, it could encourage people to try out new, and even risky, technologies. Australia could capitalise on the growth in demand for high-value agricultural products in Asia. Even in the trade of basic commodities, our proximity to Asian countries provides a strong advantage in trading bulky primary products that are expensive to transport. However, many Australian businesses consider engagement with Asia too hard. Australia invests more in New Zealand alone than in China, Indonesia or all ASEAN countries combined. Australia needs to be smarter in its engagement with the countries of Asia to benefit from the global power shift towards Asia, which is the biggest economic trend and defining characteristic of the 21st century. For Australia to find its place in the region and maximise the opportunities presented by a growing Asia, we will need to address the cultural and linguistic barriers that – while improving – still remain. Advances in Australians’ understanding and appreciation of cultural nuances and diversity are required if we are to realise business opportunities. Australia’s relationships with the countries of Asia and the Pacific have sometimes been distant and relatively cold, while most people in Asian countries lack detailed knowledge of a 21st century Australia and have impressions based on outdated stereotypes. To overcome this distance, the 19th and 20th century behaviour of Australia, which involved turning to the English-speaking nations and Europe for culture and trade, needs to evolve to meet the needs of a 21st century economy embedded in the Asia-Pacific region. Smart engagement with Asia and the Pacific involves building relationships for the long haul. Our engagement with countries in our region has too often been short term, opportunistic and piecemeal. Smart engagement, by contrast, involves scaling up current activities and nurturing wide-ranging, long-term, mutually beneficial relations between Australia and the diverse countries of the region. Smart engagement promotes active interactions between Australians and Asians, through business associations, community groups, cultural non-government organisations, private foundations and philanthropists, individuals such as artists and sportspeople, and independent cultural, media and educational institutions. In particular, Asian diasporas – communities of people of Asian descent living in Australia – are a resource for linguistic skills, cultural knowledge and social networks that can help connect Australia with various parts of Asia. Australia could lead the world in developing policies and programs that encourage more effective engagement of Asian and Pacific business diasporas. However, most Australian businesses have little board or senior management experience of Asia or Asian languages. The cultural ancestry of leaders in Australia’s top companies is overwhelmingly white. Only around 4 per cent of Australia’s top 200 publicly listed companies’ board directors are of Asian descent. This should be a major concern for a country geographically positioned in the Asia-Pacific region and with a significant

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percentage of its population represented by Asian and Pacific communities, especially one that should look to that rapidly growing region to plan for its economic future.

Educating the future workforce People who speak only English are at a significant disadvantage when engaging in a multilingual world. Even a little familiarity with another language leads to greater sensitivity with other cultures, resulting in more effective social interactions and business relationships. Despite the promotion of Asian languages being an education policy goal since the 1990s, participation and interest in foreign languages has remained low. But the need for proficiency in Asian languages goes beyond the benefits to the economy. It would also benefit research collaboration, and would move Australia from being a country that projects an out-dated image of isolation to one embracing mutuality and cooperation with our regional neighbours. But we are not just calling for more language education. We need improved science education to supply technical knowledge as well as cultural understanding to the future workforce. Australia needs to lift its performance in literacy, numeracy and maths, physics, chemistry and general scientific literacy. Participation in senior secondary science and mathematics has been declining for decades. Australia has too few science and maths teachers. We need to improve in all these areas if we want to keep pace with our competitors. Australia needs national coordination of its approach to encouraging science and maths participation. Australia will need to train a future workforce to be equipped with skills to work with and maintain complex equipment and new technology in many sectors. An innovative workforce requires a strong education system that fosters academic skills across all disciplines. Technology is constantly changing the nature of our work. Old jobs disappear and new ones arise. The workforce needs to thrive with tomorrow’s technologies; it needs to be adaptable. A skilled and productive workforce is essential for economic growth, and is one of the main contributors to productivity gains through innovation. Australia faces shortfalls in skilled workers due to developments in technology and an ageing population. For agriculture, energy, environment and other sectors, we will need a growing proportion of workers to be trained in scientific and technological literacy. Furthermore, equipping students with scientific and technological knowledge, understanding and awareness provides the basis for participation in the most significant national and international debates of today, such as climate change, renewable energy and genetic modification. Many emerging technologies trigger debate about ethical, legal and social implications from invention to use. Understanding of, and participation in, these discussions will enable the next generation to better shape the course of their own lives. However, education improvements are required beyond science, technology, engineering and maths: STEM is necessary, but not sufficient. It is not an either/or situation. The humanities disciplines are vital in helping us decide when, how and in what circumstances it is appropriate to use new technologies. Australia needs to revitalise education more generally in order to have the best opportunities to develop aptitude in students. Innovation is not just about commercialising technical products: all sorts of people can be innovative, beyond science technology. Australian enterprises – and education and government institutions concerned with innovation – need to move beyond a focus on technical skills alone and consider what other sets of skills will be needed for successful innovation in the future. Important

6 – Conclusion: challenges and opportunities for Australia

workplace skills include creativity, problem solving, adaptability and preparedness to continue learning. Successful organisations need people with team-building capacity, emotional intelligence, market analysis ability and cultural sensitivity. Our future workforce needs to combine technological expertise with the ability to effectively and efficiently integrate various knowledge bases and skill sets, and deploy a range of communication capabilities and other ‘soft skills’ including team-building capacity, emotional intelligence, strategic visioning, market analysis and cultural sensitivity. Innovation now depends on a range of technical and non-technical skills, with people endowed with diverse sets of skills working in teams, and organisations working in alliances and networks that bring together different skills and experiences across different types of innovation and different activities in the innovation cycle. Building effective and productive interdisciplinary teams is not easy, but it is vital. Building effective and productive interdisciplinary teams is not easy, but it is vital. In addition, Australia needs to lift our performance in equity of opportunity and access for women and minority groups; inequity can lead to gaps in the workforce. A diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation. The participation rate of women in engineering professions was just 21.5 per cent in 2011, and women working in science remain hugely under-represented in leadership roles. For example, Australian boards and leadership appeared to be ‘pale, male and stale’, with there being more men named Peter in chief executive and chair positions in ASX 200 companies than there were women! Also, despite improvements in the past decade, there is an unacceptably large gap between Indigenous and non-Indigenous educational outcomes – two culture-related issues act against Indigenous participation in STEM, including a mismatch between cultural beliefs about the world and science curriculum beliefs, and Indigenous students often having problems dealing with institutional cultures.

Exporting knowledge As well as serving to prepare Australia for the future, education is also one of our biggest export earners. The provision of education to Asian students is already one of Australia’s largest industries and international students are the source of substantial income through fees and other education-related services. In 2013 there were 410 925 international students studying in Australia, and the industry contributed $18.2 billion to the economy. There is an opportunity for Australia to expand its international engagement through research partnerships. Such collaboration could enforce its position as a leader in education, and provide a base on which to increase research and knowledge exports. This would provide an increase in export potential of Australian-generated knowledge, and improve our research and development capability. There has been a lack of government initiatives in this area, and the strategic significance of international research collaboration receives little attention in Australian foreign policy. Improving attention to this area would provide another avenue for building relationships with Asian and Pacific countries, and countries further afield, through research diplomacy and collaboration. Indeed, climate change is a challenge that crosses international boundaries and is a research priority for many countries. If supported with appropriate policies, investment and commercialisation, our climate adaptation expertise could be applied to global advice and leadership in

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innovation that supports adaptation to climate change (particularly in agriculture), and reduction in emissions through new and renewable energy sources. Australia’s interdisciplinary research activities can contribute to sustainability goals around the world, including climate change, the security of food, water and energy, and an ageing and growing population.

Securing Australia’s environment Any consideration of securing Australia’s future needs to include an understanding of the risks and costs of the impacts of climate change and other changes to the environment. We need to maintain our clean, green reputation to secure our future in agriculture, tourism and other areas. Environmental performance and sustainability are fundamental to the nation. They represent the legacy that the current generation will leave. We need to look after nature for future generations to ensure a sustainable environment, diverse plants and animals, and human wellbeing. Instead of using coal for the generation of electricity, there is a range of energy alternatives; renewable energy sources and increased use of gas (including shale gas, one option examined by ACOLA’s Securing Australia’s Future project) would emit less carbon dioxide into the atmosphere. Planning is required to prevent increasing population and urbanisation from causing significant congestion, which could harm liveability and quality of life. For example, a ‘compact city’ plan reduces urban sprawl by providing city centres that can be navigated on foot or by bicycle. This can be further encouraged through the establishment of areas such as innovation clusters, high-tech nodes and creative sectors. Furthermore, as broadband speeds increase and enable a growth in telecommuting and shopping from home, cities will have less need for a central business district, and may head towards a decentralised design that reduces our reliance on cars and road transport. Australians rely on cars for transport, and we have a disproportionate reliance on heavy vehicles for goods transport. Therefore, it is surprising that Australia holds less than a month’s supply of oil and refined fuels onshore. This leads to Australia having a significant fuel security risk. Research and new technologies can address the country’s fuel security risk, as well as transport costs, inefficiencies in road transport, and environmental impact. However, technology alone will not be enough to solve transport and urbanisation problems. Interdisciplinary research will be required to address problems such as social barriers to change. It is important to understand people’s resistance to technological changes in the way we manage and interact with the environment, including our water, food and energy. Technology can be the catalyst for change, but is not always the answer to our problems. Prior to the introduction of technology, resistance to or uptake of new technologies needs to be seen in the social context of values and beliefs, as well as the environmental context. Many factors that will influence our future are entwined, and we require a holistic, interdisciplinary approach to unpick, understand and prepare for them.

Taking it home: key messages How can Australia address these opportunities and challenges? While the Securing Australia’s Future program did have some notable gaps – it lacked a significant focus on climate change and subsequent socioeconomic impacts (such as immigration policy), investigation of the specifics and details of other new and renewable energy sources beyond shale gas,

6 – Conclusion: challenges and opportunities for Australia

and addressing Australia’s ageing population and changing demographics – the program did identify many important findings to consider for Australia’s future. The following key findings distil the interdisciplinary evidence-based research from the 11 reports published as part of ACOLA’s Securing Australia’s Future project. A. To position Australia for long-lasting improvements to growth and living standards: 1. Industry policy that relies only on past strengths will not provide the desired results unless complemented with new policies. This is due to the realities of globalisation, and the ongoing revolution in information technologies and other enabling technologies. 2. Lower value activities, such as extracting and exporting minerals and ores or growing and exporting basic agricultural commodities, cannot be a viable strategy for the longer term future. Instead, we should also focus on adding value to these activities through economic value-creating innovation. 3. Australia needs to have world-class infrastructure, not just in physical terms (such as roads, ports and utilities, and for research), but also digital infrastructure that supports large data transfers and high speeds. Infrastructure brings substantial economic benefits. 4. Australia needs to further develop its workforce’s skills to increase productivity. We require multidimensional skills capabilities, where a strong STEM capability is complemented by capability in management, creativity and other humanities and social sciences. 5. Australia’s taxation and legal system should be modified to encourage innovation and risk taking, and we need improved innovation finance arrangements. B. To improve Australia’s smart engagement with Asia and the Pacific: 1. Incentives are required to improve Australia’s linguistic and intercultural competence at school, university, and in the workplace. 2. We need to increase Australia’s soft power through cultural diplomacy that updates perceptions of Australia in the Asia-Pacific region, and brings into the 21st century the way we Australians see our place in the world. 3. Multinational research initiatives should be encouraged to promote collaboration between countries in Asia and the Pacific to address regional issues, as well as increase research diplomacy opportunities that add to Australia’s soft power. 4. Australia needs to make the most of our regional proximity to the growing markets of Asia, building on current export strengths such as agriculture, exploiting niches created by our competitive advantage, and identifying new strengths, ensuring a strategic approach by government and industry through ongoing investment and clear policy directions. 5. Century-old corporate behaviour of turning to historical markets for trade needs to evolve to meet the needs of a 21st century economy located in the AsiaPacific region. Australian business attitudes and preconceptions need to change to gain a better understanding and appreciation of how to do business with Asian cultures.

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6. Governments, institutions and industry need to better support the activities of Asian and Pacific diasporas and better employ the invaluable resources (including language skills, cultural knowledge and global networks) presented by Asian and Pacific communities living in Australia. This includes the improvement of representation of people with Asian and Pacific backgrounds on industry councils and business associations and in trade discussions and delegations, to reduce the mismatch in particular between the large size of Asian diasporas in Australia and the small number of their representation on relevant boards and professional bodies. C. To position Australia for productivity growth: 1. Increases in research and development lead to productivity growth. Australia needs to raise the levels of research and development in the medium term to at least the OECD average. 2. Institutional reforms coupled with increased government spending on infrastructure, on labour force participation, and on education and training would dramatically raise national productivity. 3. Countries that do better than Australia in innovation feature policy setting and programs that encourage a culture of innovation and collaboration. 4. Research translation and application need to be a key element of Australia’s innovation strategy. 5. A skilled and productive workforce is essential for economic growth, with innovation requiring excellence and creativity across the range of disciplines. 6. Technology research and development support should be focused on technological areas, not on existing industry sectors. D. To encourage Australian students to consider choosing STEM subjects and associated career choices: 1. The status of teachers in Australia needs to be lifted, they need ongoing support and training, and Australia needs to attract more science and mathematics teachers. 2. An innovative workforce relies on a strong education system that fosters academic skills across all disciplines, and analytic and social skills. 3. Mathematics and science experiences before the early middle years of schooling need to be positive and engaging. Mathematics could be made compulsory for everyone to the end of year 11 or even year 12. 4. Effective partnerships need to be fostered between civil and business organisations and education institutions that support innovation in school mathematics and science. 5. Australia would benefit from national coordination of approaches to improving participation in STEM. E. To secure a clean, green and sustainable future for Australia: 1. We must protect the environment, servicing potential growth areas and industries to maintain our clean, green reputation and our global competitive advantage in agriculture and food, energy and minerals, tourism and other

6 – Conclusion: challenges and opportunities for Australia

industries; and also develop information systems and marketing strategies to understand consumers’ views on ‘clean and green’ attributes. 2. The century-old model of electricity generation requires a more radical update, using current and future developments in local energy storage, low-power wireless energy distribution, smart grids and microgenerators to transform how electricity is distributed, drawing on alternative fuels such as shale gas and renewable energy sources wherever possible. 3. The structure of cities and their transport options need to be reconsidered, with sustainable urban planning and a new approach to urban transport, including the establishment of areas such as innovation clusters, high-tech nodes and creative sectors. 4. There is an urgent need to equip the workforce of the future with scientific and technological knowledge, and to communicate the positive prospects and technological future of the agriculture sector, focusing on skills and innovation and complementary skills in humanities and social sciences. 5. Innovative and interdisciplinary approaches by Australian researchers, underpinned by sustained public investment and supportive bipartisan government policies, could create opportunities for Australia to research, produce and deliver solutions – whether ideas, services or products, particularly for transport solutions and climate change adaptation – needed by countries around the world. The Securing Australia’s Future (SAF) program was underpinned by fundamental questions: what sort of future do we want for Australia, and how do we achieve that? With visionary political leadership, and if we (not only governments) act on the implications of the findings of the SAF projects, Australia has the opportunity to secure a future that will build on its advantages to further create a society characterised by cultural diversity and social wellbeing, as well as one that is strong economically and more innovative. While attention to these things will not guarantee success, it will help Australia to be more innovative, cope with technological change and regain world-leading competitiveness. This future Australia will be secure, confident of its place in the Asia-Pacific region, and able to balance the potential for growth with the protection of our environment and quality of life. It will be a place where future generations of Australians can thrive in a culture that appreciates diversity, values productive endeavour, and respects a unique environment. That is the future the SAF program has sought to secure.

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Segue: Securing Australia’s Future compendium

Dr Alan Finkel AO FAA FTSE Chair, Program Steering Committee (June 2012–December 2012) Securing Australia’s Future program Australian Council of Learned Academies President, Australian Academy of Technology and Engineering (2013–15) Australia’s Chief Scientist (2016–20) It is far too early to have the final word on Securing Australia’s Future (SAF). The conversations the series sparked have a long way to run, the evidence remains fresh, and the insights remain relevant. That is precisely the outcome we sought when we embarked on this great endeavour in 2012. SAF’s goal, after all, was not simply the production of a million words – as impressive as that tally now appears. It was to engage some of the nation’s most respected minds on perhaps the country’s most critical brief: the path to prosperity in the decades ahead. That mission, once begun, is a never-ending task. In one important respect, however, we can say that SAF’s task is done: it has laid the foundation for a follow-up phase of horizon-scanning reports, with the Commonwealth Science Council’s strong support. Five projects have already been commissioned and will be underway at the time this volume goes to print. Now we will have the opportunity to pinpoint those high-impact developments in science which could radically reshape our lives and position policy makers to act wisely in anticipation. We have also created an outstanding model of expert interdisciplinary research that can undoubtedly be adapted and used in other fields of endeavour. Other parties should and will come to the Australian Council of Learned Academies with project ideas of their own, if they see the benefits writ large in these reports. So I write not so much SAF’s ‘epilogue’ as a segue to the important mission that lies ahead. What have we learned since SAF began, and how will that knowledge now shape the Commonwealth Science Council horizon-scanning reports? We might begin with a reassertion of our time-tried definition of ‘quality’: excellence and impact combined. We read in the newspapers that ‘excellence’ – in the sense of genuine expertise, rigorously applied – can now be considered dispensable, in a world that prefers common sense to inconvenient facts. I don’t believe it. And if I did, it would be all the more reason for experts to stand up for the principles of objectivity, integrity and transparency. Excellence and impact must not be mutually exclusive. On the contrary, it is the promise of excellence that gives a learned academy its capacity to be influential. That does not mean that impact takes care of it itself. In my experience, any foresighting project needs four things to interest influential people in a topic beyond their urgent concerns. 131

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First is a receptive audience with an interest in the topic and, ideally, some connection to the project. Second is exquisite timing, to catch that window when an issue is compelling but time still remains to act. Third is optimal form, picking the right medium to make helpful conclusions abundantly clear. And fourth is ongoing commitment, recognising that reports without explainers and advocates will simply sit on shelves. On the first count, we enter with the benefit of interested leaders, already engaged with the horizon-scanning topics through the Commonwealth Science Council. As a collaborative body of decision makers in government, industry and research, chaired by the Prime Minister, the Council is well placed to identify the priority concerns for the country. My role as Executive Officer creates the conduit for ACOLA’s work, and I look forward to tabling reports which excel against all three remaining criteria: timely, well constructed and well explained. The experience of SAF demonstrates that the existing frameworks have many strengths in promoting reliably good results. In particular, the reports are living documents that show all the hallmarks of collaboration across disciplines and institutions. They are widely perceived as comprehensive, balanced and reliable, free from the suggestions of any ingoing ideology. In today’s public policy landscape, that is no mean feat. The challenge has been to achieve that rigorous standard, sometimes across very broad terms of reference, before the audience drifts – factoring in the time required to present the complex information in a succinct and compelling way. Concise reports, as we know, invariably take longer than weighty tomes. I do not believe that efficiency needs to come at the expense of quality. We can deliver a high-calibre result within a 12-month window if we focus the inquiry on a high-value target, make on-time delivery a non-negotiable goal, and arrange the process to suit. We will then be in a position to present the document to the public through the auspices of the Commonwealth Science Council – and we should not underestimate the amplifying role that such a high-level forum will play. Finally, let me project forward to that day when the next segue will be written – reflecting on all that the horizon-scanning reports will have achieved. How is Australia better as a result of the contributions that so many intelligent minds have made? Will we have put forward evidence that has prompted national leaders to act in perceptive ways? Will we have brought together researchers across disciplines, in new patterns of collaboration, from which truly novel ideas have formed? Will we have fostered the interest of students and early career researchers in national policy concerns – and empowered them as a new generation of national thought-leaders? That would be a future worth securing, and I look forward to working with you to point Australians on the way.

Appendix 1. Australia’s Comparative Advantage

Introduction Establishing proper policy foundations now, combined with public support and effective leadership, will better place Australia on a trajectory for national wellbeing. While change is challenging, the benefits of systematic reform and investment in our future to build Australia’s comparative advantage will mean higher living standards, increased equity and greater sustainability. A reform package entailing institutional change and investment could add more than 20 per cent to living standards by 2030 above trends based on current policy settings. The interdisciplinary report by the Australian Council of Learned Academies (ACOLA), SAF01 Australia’s Comparative Advantage (http://acola.org.au/wp/project-1/) explores how to build and secure Australia’s future through comparative advantage. For the report, this means creating and taking advantage of Australia’s strengths, and ensuring flexibility and resilience in the pursuit of this ambition. The report provides a national roadmap for decisions about the future and the conditions that can underpin achieving Australia’s best.

Rating our performance We perform strongly against other countries on a range of social measures. For example, Australia is an attractive place to live. Four state capitals are considered among the most liveable cities in the world. We rate as one of the highest on the UN’s Human Development Index. Conversely, several international assessments have found weaknesses. People believe that regulation and taxation, for example, place a high burden on business, and Australia rates poorly on competitiveness against similar advanced economies. Various rankings rate Australia as competent at basic innovation, but weaker at the next stage of developing or commercialising those ideas. The Australian education system rates highly at the school, tertiary and vocational stages, and is particularly good at attracting foreign students. Government education expenditure, however, is parsimonious compared to our international peers, especially in pre-school and post-school education. Australia does well on environmental measures such as health impacts (child mortality), water and sanitation, water resources and air quality. We rank well or reasonably well on key aspects of ecosystem health such as forestry and water resources. However, we rank more poorly on biodiversity and habitat, agriculture, fisheries, climate and energy environmental measures. Respondents to surveys for the project by the Committee for Economic Development of Australia and the Institute of Public Administration of Australia rated the ability of various industries to innovate. Highly rated were arts and recreation services, retail trade,

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transport, postal service and warehousing. Rating low on innovation capability were public administration and safety, and electricity, gas, water and waste services. There are perceived problems with leadership in industry and government, though research for the study found that we rate ourselves less highly than do overseas executives who know Australia. There is value in government and the public service improving their awareness of global and other country directions.

Sector performance and opportunities The services sector dominates the economy. In 2013, it accounted for close to 60 per cent of Australia’s GDP and for 78 per cent of employment. Education (post-school), health and financial services have the potential to drive productivity growth in all other sectors. The economic rise of Asia provides a significant opportunity for Australia to increase its net trade in the service sectors. Agriculture is one of Australia’s oldest and most important sectors, yet its relative contribution to the Australian economy has steadily declined over the past century. The decline is due in part to a long-term reduction in agricultural terms of trade and an increase in global agricultural production, but also to structural and systemic factors. The ACIL Allen report for this project identified three main ways in which Australia could expand its supply capacity: farming new areas of land; moving from low-input, low-production systems into high-input, high-production systems; and producing more from less by increasing water-use efficiency or employing innovation-based productivity. Although the mining industry has been a leading contributor to Australia’s economic growth and international impact, we do now need to adjust to reduced future reliance on mining. However, proactive policies would allow the sector to move into higher valueadded downstream activities and to create value through collaboration with non-mining sectors such as manufacturing and services. The manufacturing sector itself still plays an important role in our economy but its contribution to GDP has declined. Australia has a growing advanced manufacturing sector, which is poised to build on Australia’s comparative advantages and increase its contribution to economic growth and global trade. The focus now should be on collaboration to develop an innovative workforce, and improving entrepreneurship and business management skills, especially in the formerly protected non-traded sectors.

Institutions, investment and society The long period of sustained income, employment growth and economic resilience in recent decades has been much underpinned by a process of microeconomic reform that began in the 1980s and continued into the current century. Reform entailed substantial review of legislation, regulation and public finances to free up market operations and make the role of government more market consistent. Australia has an experienced, educated and highly skilled population. Maintaining and enhancing strength across educational skills should be a major national priority. Investment in education and in skills training is a core principle for building comparative

Appendix 1

advantage; it is also a key to addressing issues of equity such as Indigenous disadvantage and intergenerational poverty. The rise of Asia is the biggest economic trend of the 21st century. This presents great opportunities for Australia; modelling shows that, in addition to resources-related business, Asia could contribute an additional $275 billion to the Australian economy over the next 10 years. A vibrant immigration program can help underpin this and provide wider benefit, as it did in helping Australia weather the GFC better than most countries. Lack of access to adequate finance is a major contributor to poor innovation outcomes in Australia, and may even be the biggest impediment to innovation in Australian firms, over 90 per cent of which are classed as small to medium-sized enterprises.

Policy directions Change is difficult for government and society. However, change becomes easier to implement if the benefits can be shown both for the economy and for people’s wider prospects and living standards. Broad policy change and reform as well as increases in investment for the future would have real sustained benefits for the economy and society. They can stimulate private initiative and underpin all of the industry sectors that are crucial to Australia’s future. These will provide the foundations for future progress. Policy reforms require support from the public. People need to be convinced that reforms are necessary and sensible. In 2015, ACOLA commissioned a public opinion study on expenditure, tax and policy reform. All age groups and most educational levels agreed on the following priority areas for increased government spending: health, schooling and tertiary education, transport and communications, social security for seniors, and public order and safety; and were willing to see appropriate tax support.

Institutions

Skills

Infrastructure

Innovation and entrepreneurship

Society Foundation for creating advantage.

Economy

Environment

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Conclusion Building Australia’s comparative advantage will require steps that include: 1. ensuring the necessary leadership and partnerships; 2. maintaining and enhancing Australia’s strengths, and guarding against emerging challenges that could undermine them; 3. complementing past strengths with opportunities, such as globalisation, Asia links and information technology advances; 4. a more effective taxation and legal system that encourages innovation and risk taking; 5. realignment by institutions, including our federation, to adapt to a changing strategic environment and 21st century imperatives; and 6. boosting investment in our capability to compete.

Expert Working Group Members Professor Glenn Withers AO, FASSA (Chair) Peter Laver AM, FTSE, HonFIEAust, FAusIMM (Deputy) Professor Graham Farquhar AO, FAA, FRS Professor Chris Gibson Associate Professor Sally Gras Professor Joseph Lo Bianco AM, FAHA Professor Rodney Maddock Dr John Prescott AC, FTSE

Appendix 2. STEM: Country Comparisons: International Comparisons of Science, Technology, Engineering and Mathematics (STEM) Education

Introduction STEM is a central preoccupation of policy makers across the world. A robust capacity in science, technology, engineering and mathematics (STEM) is pivotal to increasing Australia’s productivity. Governments seek to lift the overall scientific literacy of their populations and to draw most, or all, students into senior secondary school studies in STEM. For most countries, initiatives targeted at student attitudes and identity were a significant part of the strategic mix. This included initiatives to increase awareness of the nature of STEM professions. The ACOLA report, SAF02 STEM: Country Comparisons: International Comparisons of Science, Technology, Engineering and Mathematics (STEM) Education (http://acola.org. au/wp/project-2/) focuses on strategies, policies and programs used to enhance STEM at all levels of education and in the education/work interface. The interdisciplinary report examines solutions to the STEM skills shortage in comparable countries to determine which, if any, could be usefully applied in Australia to overcome similar shortages here.

The importance of STEM The international push to enhance STEM is part of a broader objective to lift educational qualifications and increase the number of people capable in research, commercial innovation and responding to technological change. Countries regard the STEM disciplines as essential for global economic positioning and social creativity. Nations with leading and dynamic economies tend to be those with the strongest performing education and/or research science systems. Countries rarely have a shortage of STEM graduates. Periodically in Australia there is a lack of STEM graduates in disciplines such as engineering and computing. Currently there are challenges facing our research and development and innovation sectors, and there are some labour market shortages in STEM occupations, principally engineering.

Features of strong STEM countries There are five distinguishing characteristics of countries strong in STEM: 1. School teachers are held in high esteem, are well paid and are rewarded for performance and professional development. 2. Unlike in Australia, STEM teachers are expected to be fully qualified in their discipline and to teach solely in that field. 3. The most successful countries have instituted active curriculum programs that make science and mathematics more engaging and practical.

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4. Many of the successful countries have implemented innovative policies to lift STEM participation among formerly excluded groups, such as low-achieving and Indigenous students. 5. There are national STEM policy frameworks that support centrally driven and funded programs; world-class university courses; the recruitment of foreign science talent; and partnerships that link STEM activities in schools, vocational and higher education with industry, business and the professions. Frequently, there are agencies that have been specifically created to advance the national STEM agenda.

How does Australia rate? The 2009 study by the Program for International Student Assessment ranked Australia as equal 7th of all nations in science and equal 13th in mathematics. The 2012 study ranked Australia 16th in science and 19th in mathematics. The percentage of year 12 students enrolled in higher level STEM in Australia has been declining for decades. From 1992 to 2010 the proportion of year 12 students in biology fell from 35 to 24 per cent, and in physics from 21 to 14 per cent. There was a lesser decline in mathematics, from 77 per cent to 72 per cent, but most students were enrolled in elementary mathematics subjects. Only 10 per cent participated in advanced mathematics at year 12 level. A growing proportion of high-achieving year 12 students, particularly girls, participate in no mathematics program at all. Australia does not have enough mathematics and science teachers. There are shortages, especially in rural and remote communities. However, a larger problem is teaching ‘out of field’, such as in mathematics, where teachers take classes for which they have little, or even no, university training. Australia is relatively strong in participation in the sciences at tertiary level, but weak in mathematics and engineering. Twenty-six per cent of PhDs awarded in 2008 were in science, with 14 per cent – a low figure by international standards – in engineering. But any growth in science and engineering has been among international students: the number of domestic students starting a PhD in Australia in science and engineering in 2010 was below the 2004 level. This was in sharp contrast with the rapid growth of STEM doctorates in many other countries. Despite a plethora of government policies and reviews focused on education, science and innovation and the relatively recent emergence of the STEM agenda, Australia still needs to lift its performance in the foundation skills of literacy (reading and writing skills) and numeracy (arithmetic skills); in the enabling sciences (physics and chemistry); in general scientific literacy; and in mathematics.

International attitudes Of 22 commissioned studies of educational policies and practices in relation to STEM around the world, most found that science and technology are valued by the public in the countries concerned and by parents of school students. There is a strong influence of families, and public attitudes, on STEM participation. The negative correlation between student attitudes to STEM learning and country index of development highlights the challenge of engaging students with science-related subjects and STEM futures in Australia. That is, students in developing countries are more likely to say that they like school science better than most other subjects than those in developed countries.

Appendix 2

60 50

Percentage

40 30 20 10 0

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Year Biology Chemistry Physics Psychology Geology Other Sciences

Year 12 science participation as a percentage of the year 12 cohort in Australian schools, 1976 to 2007. (Source: Ainley J, Kos J, Nicholas M (2008) Participation in Science, Mathematics and Technology in Australian Education. Research Monograph no. 63, ACER, Melbourne)

Conclusion It is in Australia’s interests to inspire more students to learn STEM and to enter STEMbased careers, and to have more high-achieving students study science, mathematics and engineering. Many countries have a more stringent approach to curriculum offerings than Australia, for example requiring the study of mathematics to year 11. In order to encourage Australian students to consider choosing STEM subjects and associated career choices: 1. Mathematics and science experiences before the early middle years of schooling need to be positive and engaging. 2. Students should be made aware of the range of people and activities comprising STEM work in society. 3. Mathematics should possibly be made compulsory for everyone to the end of year 11 or even year 12. 4. Effective partnerships need to be fostered between civil and business organisations and education institutions that support innovation in school mathematics and science. 5. Australia would benefit from national coordination of approaches to improving participation in STEM.

Expert Working Group Members Professor Simon Marginson FASSA (Chair) Professor Russell Tytler (Deputy) Professor Stephen Gaukroger FAHA Mr David Hind FTSE Professor Nalini Joshi FAA Professor Geoff Prince Professor Sue Richardson FASSA

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Appendix 3. Smart Engagement with Asia: Leveraging Language, Research and Culture

Introduction The rise of the countries of Asia requires vision and action in Australia. In future, the Asia-Pacific region will present us with major challenges and opportunities economically, socially and culturally. Our geography opens opportunities for business and research, but what we make of them will be determined by Australia’s strategy and commitment to our future in the region. In a timely reminder of the barriers that remain to cultural understanding and economic exchange, the report by the Australian Council of Learned Academies (ACOLA), SAF03 Smart Engagement with Asia: Leveraging Language, Research and Culture (http:// acola.org.au/wp/project-3/) provides new insights into the complexities of our relationships in the region, and lays out a blueprint for the bridges Australia can build to improve connections between people, businesses and institutions. The report draws on the authors’ expertise in social science, cultural studies and education, and an interdisciplinary panel of scientists, engineers and social scientists. The depth of Australia’s linguistic and intercultural competence will be a determining factor in the future success of developments in innovation, science and technology, research capacity, international mobility, trade relations and economic competitiveness.

Interactions with a growing Asia The rise of Asia is dominated by the influence of the giant regional powers of China and India. China is now Australia’s largest trading partner, taking almost a quarter of Australia’s total exports and imports in 2013. Australian businesses need to be ready to make the most of the economic opportunities the rise of Asia presents. However, only 9 per cent of Australian businesses operate in Asia, with 12 per cent having business experience in Asia, and around 65 per cent having no intention of doing business there in the near future. International education is one of Australia’s largest export industries, contributing $16.3 billion to the economy in 2013–14. In 2013 there were 410 925 international students studying in Australia, with China contributing 29 per cent, India 8.8 per cent, South Korea 4.9 per cent, and Vietnam, Malaysia, Thailand, Indonesia and Nepal in the top 10. Much of Australia’s relationship with the diverse countries of Asia has been filtered through this rapidly growing international education industry, as well as other businesses such as tourism. In the next few decades, these areas will continue to be of enormous importance to Australia’s economic development, but we need to progress from opportunism to smart engagement. Smart engagement with Asia involves more than pursuing short-term economic benefit, and works towards nurturing wide-ranging, long-term, mutually beneficial relations. It

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Appendix 3

promotes active interactions between Australians and Asians; it involves businesses, community groups and others; it recognises that building sustained relationships requires long-term investment and commitment; it embraces mutuality and collaboration as key principles; and it builds on the resources and connections already represented by Asian communities in Australia and Australian communities in Asia.

Learning the language Eighty-one per cent of Australians speak only in English at home, and interest in foreign languages remains low. Just 13 per cent of Australian year 12 students study a language other than English. Multilingual people have an advantage in increasingly international companies and organisations. In addition, foreign language learning has a significant positive effect on knowledge and perception of another country. Knowledge of Asian languages is also critical for deep, mutual and long-term engagement with Asia. Therefore, continued support, incentives and fresh approaches for learning languages and intercultural skills are essential at school, university and the workplace if Australia’s Asia capabilities are to grow. Meanwhile, the capacity to speak more than one language is widespread in the Asian region with many Asians learning English. It is spoken by nearly 800 million people in Asia, but the level of proficiency varies across countries. Commentators have put it this way: while not knowing English is a disadvantage, knowing only English is a disadvantage too.

Collaboration in research The ambition of our Asian neighbours is reflected in their strategies to grow their economies through innovation. Science and research are central to their national plans. Asia is the most dynamic region in the world for research investment and output: the Asia-Pacific region had the most rapid rise in share of global publications in the past 15 years. China is now the third largest producer of research articles, on course to overtake the top-ranked United States before the end of the decade. The humanities, arts and social sciences do not seem to be a major focus of national policies in the region. Many Asian countries are focused instead on science and technology. Nevertheless, research publications in the arts and humanities are the fastest growing across the region (albeit from a low base) as these societies become more developed. Research collaboration between countries in the region has increased strongly in the past decade. International research collaboration represents a significant mode of institutional and people-to-people connectivity between countries. When aligned with wider foreign policy goals, international research collaboration can contribute to coalition building, conflict resolution, and building trust and understanding between countries. Science diplomacy can advance our broader interests in the Asia-Pacific region. Furthermore, internationally co-authored publications in science, technology, engineering and mathematics achieve higher citation rates than average. However, while collaboration between Asian researchers has risen steeply, Australian researchers collaborate less with colleagues in Asia than in Western countries. The exception is collaboration with China, which has risen exponentially. Australia depends to a larger degree than other developed nations (including the United States and the United

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Kingdom) on the work of Chinese diaspora researchers in Australian research institutions for its research collaboration with China. Government support for collaboration with Asia has been lacking, and the strategic significance of international research collaboration receives little attention in Australian foreign policy.

Culture and community Historically, Australia’s cultural relationship with Asia has not been close because of major differences in history, politics and culture. Cultural diplomacy is an important tool to influence international attitudes and perceptions. However, Australian activity has not kept up with the rapid increase in cultural diplomacy activity in Asian countries over the past decade. Only long-term investment in cultural engagement may alleviate the profound sense of distance and barriers to close cultural relations. About 8 per cent of Australia’s population was born in Asia, a much higher percentage than the United States (4 per cent) or United Kingdom (2 per cent). Communities of people of Asian descent (Asian diasporas) have a role in establishing and facilitating trade, investment and commercial opportunities between Australia and their home countries, and in strengthening bilateral relationships through their informal networks. Asian diasporas also are a resource for linguistic skills, cultural knowledge and social networks, which can help connect Australia and various parts of Asia. Asian diasporas should be involved regularly as informal ambassadors focusing on entrepreneurship, innovation, philanthropy and volunteerism. These relationships exist informally but if Australia were to scale them up, all Australians would reap the benefits. Number of partnerships with Australian universities

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2003 2007

1000

2009 2012

800

2014

600 400 200 0 Canada

China

France

Germany

India

Indonesia

Japan

South Korea

UK

US

The top 10 countries for formal agreements between Australian and international universities (2014), which account for 62 per cent of total agreements. Five of the top 10 are in Asia: China, Japan, South Korea, India and Indonesia. (Source: Universities Australia (2014) International links of Australian Universities: Formal Agreements between Australian Universities and Overseas Higher Education Institutions. Universities Australia, Canberra, accessed 19 February 2015, from )

Appendix 3

Conclusion Australia will be left behind if it does not step up its transnational connectivity in the region. Smart engagement with Asia is a national necessity for Australia, and needs to be focused on the development of a range of sustained connections and relationships. Priority actions include: ●● ●●

●●

●●

encouraging greater interest and proficiency in Asian languages and cultures; investing strategically in science and cultural diplomacy through a national framework; using Asian communities in Australia and Australian communities in Asia to play a bridging role; and recognising and nurturing grassroot community initiatives as an essential complement to short-term missions and delegations.

Expert Working Group Members Professor Ien Ang FAHA (Chair) Professor Chennupati Jagadish FAA, FTSE (Deputy) Professor Kent Anderson Professor John Fitzgerald FAHA Professor Fazal Rizvi FASSA Professor Krishna Sen FAHA Professor Mark Wainwright AM, FTSE

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Appendix 4. The Role of Science, Research and Technology in Lifting Australian Productivity

Introduction Building the industries of the future through enhanced productivity will require increased investment in research and development, a commitment to innovation, better links between business and research, focused international collaboration, and the effective training and use of an innovation-capable workforce. The report by the Australian Council of Learned Academies (ACOLA), SAF04 The Role of Science, Research and Technology in Lifting Australian Productivity (http://acola. org.au/wp/project-4/) identifies opportunities for applying knowledge and skills in science and research across a range of industries and sectors to enhance innovation, creativity and productivity, and recommends business practices that will drive Australia’s prosperity. The report draws on the authors’ expertise in government, business, science, technology, economics and communication. The report finds that innovation – including research, science and technology – is the key to increasing productivity in the economy, by lowering the cost of production, improving the quality of goods and services or by introducing new products to the market.

Manufacturing in Australia Manufacturing is important to Australia’s economy. In 2014–15 it accounted for around 6 per cent of GDP ($104 billion), 11 per cent of employment, 25 per cent of business research and development and 34 per cent of merchandise exports. However, the sector faces many challenges. In recent decades, manufacturing’s contribution to GDP has fallen, while the contribution of the services sector has increased. The success of Australia’s future manufacturing industries will depend on technological innovation, a shift to advanced manufacturing, integration with services, international connectedness and enhanced participation in global value chains. Small and medium-sized enterprises are major employers and an important source of new products and services. Such enterprises account for nearly half of Australia’s private sector employment. Improvements in productivity will largely depend on the collective performance of many individual firms. Australian firms need to increase their research and development to position themselves in new, high-technology, niche industries. They should become better linked with global value chains, which provide the ability to share knowledge, processes and skills, and can initiate longer term collaborations. The sector offers good opportunities for those with STEM qualifications and a mix of technical and commercial know-how and problem-solving skills. Further advances in technology will require highly skilled workers in all parts of the development-to-market process, particularly within high-value-added manufacturing.

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Businesses find continual change to government assistance programs confusing. More stability is needed and unnecessary changes should be avoided. Difficulties in raising capital continue to be a major barrier to business growth. New measures are needed to assist start-ups, such as crowd funding, tax concessions for investors in start-up companies, and reform of the tax treatment of employee share options.

The benefits of collaboration Collaboration with researchers can provide businesses, particularly small and mediumsized enterprises, with opportunities to boost productivity. Australian businesses collaborate less than their international counterparts. Small and medium-sized enterprises are even less likely to collaborate than larger firms. Increasingly we are a net importer of technology and know-how and rely on foreign direct investment for technology more than most other OECD countries. There are systemic barriers to increasing collaboration. We can learn from successful measures used in other countries to promote collaboration. There are some examples of well-established policies and programs that are effective in helping to build and sustain business. International collaboration could help to address declining productivity and trade performance in key sectors, such as the food industry. Australia’s small and medium-sized enterprises find it difficult to participate in global supply chains, but there are considerable benefits when they do so. Large firms

90

SMEs

80 70 Per cent

60 50 40 30 20 10

Fin

lan Slo d ve nia Au str Hu ia ng ary Sw ed Be en lgi u Ge m rm an No y rw a De y n So mar uth k Ko re Po a rtu ga l J So a p a n uth Afr ica Fra Lu n c e x C z emb e c ou h R rg ep Sw u b l i c itz erl an d Un ite Spa d K in ing do Slo m v Ne akia the rla nd Est s on ia Isr ae l Po lan d Ire lan Ru d ssi It an Fe aly de rat ion T Ne urke y w Ze ala nd Br az il Ch ile Me xic Au o str ali a

0

Australian firms have low levels of international collaboration. Firms engaged in international collaboration by firm size, 2008–10, as a percentage of product and/or process innovative firms in each size category. (Source: OECD, based on Eurostat (CIS-2010) and national data sources, June 2013)

An innovative workforce Skilled labour is one of the key contributors to productivity gains through innovation. Requirements for an innovative workforce include skills in reading, writing and numeracy, information and communications technology, management and leadership; and academic, analytic and social skills. Effective workplace training is important in building an innovative, capable workforce, as well as having a positive correlation with business performance. It also has an important role to play in meeting the demand for skills and addressing skills shortages.

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Innovation needs to be valued and supported at every level with a risk-tolerant culture that allows diversity, flexibility and inclusivity. Businesses need to ensure that opportunities and incentives are provided for all staff to contribute ideas and that processes are in place through which ideas can be translated to outcomes. Encouraging the take-up of good management behaviour could be the single most costeffective way for governments to improve the performance of their economies. There is a need to improve management education and equip science and engineering graduates for innovation and leadership.

Productivity and economic growth Over recent decades, productivity growth has played a major role in the growth of the Australian economy. This was particularly the case during the mid-1990s, generally attributed to microeconomic reform and the uptake of information and communications technology. Recently there has been concern in Australia and other developed economies about the apparent slowdown in innovation and productivity growth. Australia has suffered a reduction in labour productivity in all sectors except construction. Public sector research and development expenditure by Australian government research agencies, the Australian Research Council and the universities has wide benefits and is an important source of gains in productivity. Moreover, private sector research, innovation and other intangibles benefit the community as well as business. Australia’s gross expenditure on research and development has been growing in recent years. Our research intensity (gross expenditure on research and development as a share of GDP) has also increased and is starting to approach the OECD average. Increasing the levels of research and development in the medium term to at least the OECD average should be a policy objective.

Conclusion Enhancing creativity and innovation to lift productivity in Australia will require: 1. adopting technological innovation to develop high-value products and services for a global market; 2. improving collaboration between businesses, and between business and publicly funded research; 3. increasing international collaboration; and 4. ensuring an innovative workforce that combines technical and non-technical disciplines, and enables good business management.

Expert Working Group Members Dr John Bell FTSE (Chair) Dr Bob Frater AO, FAA, FTSE (Deputy) Leslie Butterfield Professor Stuart Cunningham FAHA Professor Mark Dodgson FASSA Professor Kevin Fox FASSA Professor Tom Spurling AM, FTSE Professor Elizabeth Webster

Appendix 5. Technology and Australia’s Future: New Technologies and their Role in Australia’s Security, Cultural, Democratic, Social and Economic Systems

Introduction Technological change is a major driver of social change and the dominant source of economic growth. It encompasses the processes of invention and innovation, as well as the diffusion of technology. New technologies offer unprecedented opportunities for economic growth and community wellbeing. However, to capitalise on these opportunities Australians must be ready to adapt and learn. The report by the Australian Council of Learned Academies (ACOLA), SAF05 Technology and Australia’s Future: New Technologies and their Role in Australia’s Security, Cultural, Democratic, Social and Economic Systems (http://acola.org.au/wp/project-5/) examines how technology has changed in the past, how it will continue to change in the future, and implications for the impacts of new technologies on Australia. The report makes an interdisciplinary assessment of today’s technologies and emerging technologies, as well as how technology changes, the nature of its impacts, how it can be predicted and the types of interventions that help deal with the complexity and uncertainty inherent in technological change. The report draws on the authors’ expertise in engineering, information and communications technology, life sciences and history.

What is technology? The term ‘technology’ has a broad meaning. It includes processes, products, materials, structures, information and practices. The term can describe sectors, such as biotechnology, transport infrastructure, public health or mining technology. Technology can also refer to collective needs or uses such as information and communication or energy generation and storage. New technological products develop and are adapted from existing technologies, including the skills required to create and use them. For example, contemporary selfdriving cars build on past advances in transport technology that yielded horse-drawn carriages, bicycles, steam trains and engines – and the infrastructure, components and know-how to create, build, and support them. Technological change, comprising the invention, innovation and diffusion of technology, happens in many ways. There can be gradual or incremental changes, new combinations of existing technological components, or emergence of technologies that depend on advances in other technologies. Meaning, attitudes and cultural influences all play significant roles in how and why technology is created, implemented and adopted. Science and technology cannot be considered in isolation from values; many emerging technologies trigger debate about ethical, 147

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legal and social implications from invention to use. The introduction of new technology creates or affects social, cultural, economic and political processes. New technology is modified, adapted and changed as it interacts with people, cultures, governance and social structures.

The impacts of technology on Australia Technology has created and sustained our security, cultural, democratic, social and economic systems in many ways. Australia is part of an increasingly connected international system. Globalisation is an impact of technology, with further ramifications for security, culture, democracy, governance, society and the economy. ICT and transport technologies, in particular, facilitate globalisation, which critically affects Australia’s sociocultural setting, our economy, governance and security. Globalisation and technology have differentially affected Australians, producing costs and benefits to the nation. Some people have benefited and some have been disadvantaged, both domestically and internationally. The context in which technology is deployed affects its impacts. Technology and human nature are closely related: just as we change technology, using technology changes us. Technology changes the way we act, think, learn and socialise. The use of technologies helps shape national culture.

Australia’s technological future Despite being notoriously difficult, prediction of new technologies is useful. Prediction helps industry and users make decisions about adoption. It can spur action, and help planning, policy development and investment decisions. Prediction also can inspire technology development. The Global Technology Revolution 2020, a report released by the RAND Corporation, found that Australia has an excellent capacity to acquire a broad range of technologies. Governments can play a central role in encouraging experimentation and entrepreneurship. To allow new technologies to develop and diffuse, policies and regulations must support the growth of niche markets and entrepreneurs. The Australian workforce should be supported by policies that encourage an acceptance of uncertainty, an understanding that failure is inherent in technology change, and a culture of experimentation and adaptation. Adaptability and creativity are key skills in creating, assimilating and adopting new technology. Enhancing technological literacy, including fostering skills appropriate to engaging with technology in all levels of education, can enhance Australia’s ability to adopt and adapt new technologies. The difficulty of appropriating economic returns from early-stage technology research and development means that substantial ongoing government investment in research is warranted. Increased investment in high-quality scientific and technological research will lead to greater commercial and economic outcomes for Australia. Technology and economic policy are inextricably linked. When evaluating new technology, government should consider both the benefits and the risks. Blocking or delaying new technology due to overweighting the risks relative to the benefits can slow economic growth and affect standards of living.

Appendix 5

Short-term policies to deal with inequality in the workplace caused by technological change should not delay the adoption of new technology. Instead they should focus on facilitating worker transfers and re-skilling to enable those harmed by new technology to be protected and to adapt to the change. Technology evaluation is of central importance to technology adoption. The costs of a technology are complex to determine, context-dependent, variable, and contested. Governments can facilitate better technology evaluation by adopting international best practice and by minimising the role vested interests play in technology evaluation. Australian institutions will have to make increasingly thoughtful trade-offs between the benefits of a hyper-connected world and the associated risks of disruption, loss and harm. A multidisciplinary approach that brings together different perspectives to consider how people feel about, talk about, and use technology can contribute to technology prediction, and help determine adoption, use and impact. Providing information and facilitating deliberation can effectively increase public familiarity with technologies and allow better understanding of their broader impact. Australia’s future use of new technologies will continue to be informed by our national technological imaginary – the way we understand and perceive technology. Reinvigorating this imaginary through investment in tinkering skills, scientific education and inculcating an attitude of experimentation and global confidence can accelerate Australia’s technological future.

Conclusion Technology is complex and dynamic. Technologies and industries that have performed well in the past will not necessarily perform well in the future, at least without substantial adaptation and transformation. While it is possible for companies to adapt to external disruption, they cannot do so by sticking with what has worked so far. Adaptation involves innovation, change, and new technologies. What seems valuable now will not remain so in future. Australia’s growth and prosperity are likely to be enhanced by: 1. acknowledging that the world is changing, and embracing that change as a valuable business opportunity; 2. changing strategy away from focusing on what worked well in the past; and 3. creating and sustaining the capacity, skills, culture and the will to adopt, adapt, and develop our future source of prosperity and wellbeing.

Expert Working Group Members Professor Rob Evans FAA, FTSE (Co-Chair) Professor Bob Williamson FAA (Co-Chair) Dr Genevieve Bell Professor Rod Broadhurst Professor Gerard Goggin Professor Ron Johnston FTSE Dr Michael Keating FASSA Professor Stephen King FASSA Professor John O’Callaghan FTSE

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Appendix 6. Engineering Energy: Unconventional Gas Production

Introduction World demand for natural gas is expected to increase over the first half of the 21st century, primarily due to industry’s demand for electricity. Australia is already a major producer of conventional gas and coal seam gas. As technology and geological knowledge develop, it could be in a position to produce shale gas. The success of an Australian shale gas industry will require consideration of scientific, social, community, technological, environmental and economic issues and impacts. It will require human and financial capital and careful management of impacts on ecosystems and natural resources. It will also need informed and supportive communities, and transparent and effective regulations and codes of practice. Drawing on an interdisciplinary panel and the authors’ expertise in engineering, geology, petroleum, hydrology, physics, social science, public policy and economics, the report by the Australian Council of Learned Academies (ACOLA), SAF06 Engineering Energy: Unconventional Gas Production (http://acola.org.au/wp/project-6/) provides an impartial, dispassionate and evidence-based review of shale gas. It fills knowledge gaps, identifies and considers community concerns, and addresses opportunities and challenges that might arise. It saw no insurmountable technical barriers to producing shale gas.

Shale gas availability, technology, and economic feasibility Natural gas occurs in sedimentary basins. The geological setting and the manner in which the gas is trapped defines whether it is ‘conventional’ or ‘unconventional’. Most gas produced in Australia (and globally) to date has been conventional gas, but coal seam gas (CSG) is produced in large quantities in Queensland. Unconventional gas includes shale gas, tight gas, CSG and methane hydrates. Shale gas and shale oil occur typically at depths of 1000 to 2000 metres or deeper, in fine-grained, low-permeability sediments, such as shales and silty mudstones. In Australia there is significant potential for shale gas in parts of Western Australia, Queensland, South Australia and the Northern Territory. In remote regions, the shale gas industry may develop slowly due to limited access to water and the lack of road and gas pipeline infrastructure, but any infrastructure that is developed may assist other local industries. Because of its established infrastructure, shale gas in the Cooper Basin could be the first to be developed at a large scale. Some shale gas resources may occur in parts of south-east Queensland, western Victoria and south-western Western Australia. Undiscovered shale gas resources in Australia may be large compared to conventional gas, but as yet there are no identified economic shale gas reserves in Australia. More information and exploration and favourable economics are required to turn the prospective resource estimates into proven reserves.

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The shale gas ‘revolution’ in the United States has rejuvenated industry, as a result of new technology converting what was previously an uneconomic resource into a reserve of great commercial and national and international significance. Technologies such as horizontal drilling and hydraulic fracturing (fracking) are applied now in Australia. However, production costs to produce shale gas are likely to be significantly higher than those in North America, and the lack of infrastructure will further add to costs. Shale gas will not be cheap in Australia, but it could to be plentiful and it has the potential to be an economically important energy source. The extent to which Australia’s shale gas potential is realised will be highly dependent on the price of shale gas compared to the cost of other energy sources. In Australia, shale gas will require a price of the order of $6–9 a gigajoule to make its production and transport profitable. By comparison, the Australian east coast wholesale gas price (at the time of publication of the report in 2013) was about $6 a gigajoule.

Environmental and community impact of shale gas Increased use of shale (and other) gas in place of coal for Australian electricity generation could significantly decrease greenhouse gas emissions, provided emissions associated with shale gas production are minimised. Increased exploration and production of shale gas could adversely impact landscape, ecosystems (including vegetation, flora and fauna species and soils), surface water supplies and groundwater, and communities, and may result in habitat fragmentation and some environmental contamination. However, if best practice is followed, these problems can be avoided. Induced seismicity is unlikely to be a significant issue. Water will need to be managed, to minimise water extracted from the surface and groundwater resources. Additionally, there will be a need to minimise water with contaminants being discharged into streams and groundwater aquifers. While the economic and other opportunities generated by the development of shale gas reserves will be widely welcomed, there are likely to be concerns about potentially adverse impacts. Governments and industry must address these concerns while exploration is at an early stage, by engaging with affected and interested parties, building confidence in the science and technology, and demonstrating a preparedness to adopt and enforce strong regulatory and internal controls.

Regulations Given that shale gas developments are likely to cross state boundaries, it is necessary for state and federal governments to seek to harmonise regulations. A shale gas industry in Australia is not starting out with a blank sheet of paper as far as regulations are concerned. Overall, existing regulations for conventional gas production work well; however, the level of community opposition to some CSG developments suggests that there are issues to be addressed in the current approvals process. If the shale gas industry is to earn and retain the social licence to operate, it is a matter of some urgency to have a transparent, adaptive and effective regulatory system in place, backed by best practice monitoring, and credible and high-quality baseline surveys. Most if not all of the potential negative impacts could be minimised if these are in place. Robust and transparent regulation, underpinned by effective and credible monitoring, is key to public acceptability.

151

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Securing Australia’s Future

83 Norway

388 Canada 862

681

UK 20 France 180

187 Poland

Algeria 231

290 Libya

USA

Mexico

Pakistan 51 India 63

1275

China

226 Brazil

62 Paraguay 64 Chile

485

396 Australia

South Africa

Argentina

774

Bonaparte Basin

Beetaloo Basin

Georgina Basin

Canning Basin

Bowen Basin Carnarvon Basin

Amadeus Basin

Officer Basin

Maryborough Basin

Pedirka Basin Cooper Basin

Clarence-Moreton Basin Perth Basin Gunnedah Basin Sydney Basin

Great Artesian Basin Basin

Otway Basin

Play extent Gas pipeline

World (top) and Australian (bottom) shale gas resources. (Source: (top) IEA (2012) World Energy Outlook 2012, International Energy Agency, Paris; (bottom) Geoscience Australia (2012) Groundwater: Sedimentary Basins. Geoscience Australia, Canberra.)

Conclusion There are no profound gaps in technological knowledge relating to shale gas exploration and production. However, research requirements to ensure confidence among the regulators, community and industry include: 1. baseline data against which to measure change; 2. knowledge to be able to predict change before it happens; 3. using data and knowledge together to effectively deal with a minor impact before it has significant consequence; 4. making data used and knowledge gained transparent and readily available; and 5. transparent, adaptive and effective regulatory systems, backed by careful monitoring, to achieve social licence to operate.

Appendix 6

Expert Working Group Members Professor Peter Cook CBE, FTSE (Chair) Dr Vaughan Beck FTSE (Deputy Chair) Professor David Brereton Professor Robert Clark AO, FAA, FRSN Dr Brian Fisher AO, PSM, FASSA Professor Sandra Kentish Mr John Toomey FTSE Dr John Williams FTSE

153

Appendix 7. Australia’s Agricultural Future

Introduction Australia’s agricultural sector is at a crossroads – the future is bright but there are challenges. The value of Australia’s agricultural exports could double by 2050 in response to rising global population. Increasing affluence in Asia presents opportunities for growth. However, agriculture faces unprecedented pressures through climate change, funding and workforce issues. There is a critical role for science and innovation in Australian agriculture today, and these will be even more vital for our farming future. New technologies are particularly important to dryland crops, pasture-based production, and protection against the introduction of pests and diseases. Australia has a reputation for clean, green, safe, affordable, sustainable and ethical agricultural products; hence the sector must optimise production while maintaining its national and global reputation. Drawing on the authors’ interdisciplinary expertise in agriculture, biosecurity, economics, history and philosophy of science, bioethics, science policy, food studies, mathematics and statistics and history, the report by the Australian Council of Learned Academies (ACOLA), SAF07 Australia’s Agricultural Future (http://acola.org.au/wp/7australias-agricultural-future/) provides a vision of Australian agriculture’s future, and maps the pathway towards enhancing our outstanding reputation in agriculture, while producing more food in a sustainable way.

Australian agriculture’s advantage Agriculture accounts for ~2 per cent of Australia’s total gross domestic product (GDP). The gross value of agricultural production in 2013–14 was $53  billion, with $41  billion of exported agricultural commodities. Exports have tended to be unprocessed, and Australia is now a net importer of processed food. Australia is a major exporter of wheat, beef, cotton, wool, oilseeds, wine, lamb, sugar, barley and dairy products, driven by our comparative advantage in these commodities and by the trust in the products’ quality and safety. Australia’s reputation for ‘clean and green’ products will continue to be important for bulk commodities, as well as processed products. Such claims must be supported by evidence and accreditation. The expected overall growth in demand for food will translate into opportunities for bulk commodity exporters. However, increased global demand for food will bring increased global competition in our markets and Australia will be generally unable to compete on price internationally with processed products. Australia can develop niche markets for specialised, high-valued products for consumers who value safety, sustainable production, high quality and perceived health benefits over price. However, it is crucial to develop a better understanding of domestic and international consumers’ views on ‘clean and green’ attributes, including nutrition and

154

Appendix 7

environmental impacts, and the premiums they are willing to pay for such products. Sophisticated information systems and marketing strategies will be required to exploit this niche. Furthermore, Australian farmers face challenges dealing with highly variable rainfall and poor soils. Agriculture depends on healthy soil, water and biodiversity. Cropping and grazing use ~60 per cent (456 million hectares) of the Australian continent, and agriculture accounts for 50 to 70 per cent of all water consumed in Australia. Climate change and climate variability present significant long-term risks to agriculture that need to be managed. In summary, the major growth opportunities for Australian agriculture are in (1) raw bulk commodities and (2) high-value specialised products. The sector may also export the knowledge, experience, skills and technology to increase agricultural productivity in developing countries. To capitalise on these opportunities, policy makers need to ensure that: ●● ●● ●● ●●

demand growth is sustained in line with population and income drivers; there is access to markets, particularly international; agricultural protectionism is limited; and the diversity of consumer demands is reflected in market and regulatory processes.

Community concerns The bush has held a special place in the traditional Australian identity. Farming employed some 270 000 people in 2013–14 (excluding forestry and fishing), or 2.3 per cent of Australia’s workforce. However, this is just half of what it was in 2000. Nevertheless, labour shortages remain a problem in rural areas. The median age of Australian farmers is increasing at a faster rate than that of the general population, although Australia still has the second highest proportion of farmers under 35 years of age (14 per cent) compared with 29 other developed countries. Understanding the variations in Australia’s agricultural sector is essential for securing its future wellbeing. The sector contains a wide variety of farms, including tiny lifestyle farms, long-run family farms and large corporate farms. Family-owned farms account for 95 per cent of farms and 77 per cent of farmland. However, small family farm businesses may lack ability to adopt advanced technologies and adapt to environmental and market changes. Communities and consumers recently have expressed passionate views about production methods (for example, pesticide usage) and technological innovations (for example, genetic modification). These views have attracted considerable political attention, in part because they are connected deeply to our perception of national identity and because food is a fundamental part of life, the safety of which is considered paramount. Furthermore, community groups have concerns about the extent of foreign ownership and foreign labour in agriculture. Without more foreign investment in farms and agribusinesses, alternative models of farm financing need to be developed to meet the needs for farm businesses faced with fluctuating incomes and reduced capacity to borrow. Local superannuation funds and other Australian funders may need to be encouraged to invest in potentially risky farming enterprises.

155

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Securing Australia’s Future

Technology and opportunities to increase productivity By 2050, global agriculture will need to feed a world population of nine billion. Population growth and changing dietary preferences in Asia, particularly China, India and Indonesia, could result in export opportunities worth many hundreds of billions of dollars over the next few decades. A move to more profitable commodities and an increase in productivity of traditional commodities will require existing and new technologies, improvements in breeding made possible through advanced genomics, and improvements to management practices. Farmer-driven innovation has always been a feature of Australian agriculture, which has a long history of innovation, resilience, adaptability and growth in productivity. Partnerships between farmers, researchers, communities and others will foster innovation. But a

China

China

Africa

India

Rest of Asia

Africa Beef

ASEAN

2007

India 0

10

20 $US billion (2007)

30

Whea t

Rest of Asia

2050

2050 2007

ASEAN 40

0

India

China

China

Africa

Africa

3

6 $US billion (2007)

9

12

EU15 Dairy products

Rest of Asia

2050 2007

ASEAN 0

10

20 30 $US billion (2007)

40

Sheep meat

India

2050 2007

Rest of Asia 50

0

1

2 3 $US billion (2007)

4

5

Rest of Asia Africa China

Sugar 2050 2007

ASEAN 0

1

2 $US billion (2007)

3

ASEAN = Association of South-East Asian Nations 4

EU15 = European Union of 15 countries

Current and projected (2050) global demand for major Australian agricultural export commodities. (Source: Linehan V, Thorpe S, Andrews N, Kim Y, Beaini F (2012) Food Demand to 2050: Opportunities for Australian Agriculture. Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra)

49

Appendix 7

higher level of research and development investment is needed in areas including technology and practices, advances in genetics, and knowledge-driven systems. Farms of the future will be unrecognisable. Robots will harvest and prune, and drones will survey fences and check for problems in high-valued crops. Farmers will use real-time information to decide on levels of fertiliser and other inputs. Automation could see reduced demand for some labour while increasing the need for new skills; for example, engineers and computing experts will be needed to run machinery, which will place agriculture in competition with other sectors for these skills.

Conclusion Community perceptions of agriculture as a ‘sunset industry’ do not match the resilience shown by the sector or its bright future. Australia will have continuing comparative advantage in the export of bulk commodities and increasing opportunities to respond to the growth in demand for high-value products domestically and in Asia. Key findings for Australia’s agricultural future include: 1. Australia’s reputation for safe, clean and green food needs to be sustained and underpinned by internationally recognised standards and certification. 2. The agricultural sector will need to efficiently manage its soil and water resources, including the risks associated with climate change and climate variability, to meet increased demand. 3. The sector will need to attract capital and skilled labour in competition with other parts of the Australian economy. 4. A range of community concerns with food safety, product labelling, gene technology in plant and animal breeding, foreign investment and foreign workers and other issues call for informed and respectful conversations to ensure the Australian community is onside. 5. Accelerating the uptake of advanced technologies, communications and knowledge systems is critical for success, and ongoing investment in private and public research and development is vital.

Expert Working Group Members Dr Joanne Daly FTSE (Chair) Professor Kym Anderson AC FASSA Professor Rachel Ankeny Professor Graham Farquhar AO, FAA, FRS Professor Bronwyn Harch FTSE Professor John Rolfe Professor Richard Waterhouse FASSA, FAHA

157

Appendix 8. Delivering Sustainable Urban Mobility

Introduction Australia is one of the most urbanised countries in the world, with almost two-thirds of the population concentrated in five cities. The large number of cars and trucks in urban areas cause traffic congestion costing billions of dollars, harm human health, and add to greenhouse gas emissions. Throughout the 20th century there are examples in Australian cities of forward-thinking urban planning that were successful within the constraints and priorities of the time. However, from the late 20th century through to today, urban plans for Australian cities have increasingly not delivered urban mobility that is sustainable in the long-term. A business-as-usual approach will not work – a major rethink is required. The report by the Australian Council of Learned Academies (ACOLA), SAF08 Delivering Sustainable Urban Mobility (http://acola.org.au/wp/8-delivering-sustainable-urbanmobility/) brings together research on optimising mobility options in and between urban areas. This research was sourced from disciplines as varied as history, urban policy and design, technology commercialisation, health and medical science, and interdisciplinary research management. The report calls for a new approach to urban transport that prioritises people rather than one particular mode of transport, to ensure our future cities are productive, liveable and accessible.

Increasing pressure on Australian cities Only 3 per cent of the world’s population lived in urban centres 200 years ago. Today, half the world’s population lives in cities, and this is expected to increase to 75 per cent by 2050, when world population is projected to reach nine billion. In Australia, population is forecast to reach 37 million by 2050, with Melbourne and Sydney alone expected to exceed 14 million this century. Without proper infrastructure management, congestion costs in Australian capital cities are forecast to grow from $13.7 billion in 2011 to around $53.3 billion in 2031. Australians desire and deserve equitable, reliable and cost effective mobility choices – no matter whether they live in inner cities (where transport choices are greatest) or outer urban locations (where the practical mobility choice usually is only a car, even for short trips). Some aspects of transport systems in Australian cities are more than 100 years old. Several cities have grown to extend well beyond the reach of public transport. Adding roads is not necessarily the solution for the urban mobility challenges of today and tomorrow. Australian transport infrastructure spending has declined over the past 40 years. Australia’s current infrastructure shortfall in urban areas is estimated at $145 billion. The cost of addressing this deficit may exceed $350 billion by 2025, but if implemented well such investment in Australia’s mobility infrastructure is forecast to lead to a continuing annual economic benefit of $75 billion. 158

Appendix 8

There are also environmental pressures. As the Australian population increases, and is further concentrated in major cities with an increasing proportion of older people, the social inequities and economic consequences of fossil fuel dependence will intensify. Cities cover less than 2 per cent of the Earth’s surface, but use 78 per cent of world energy. Globally there are ~1.2 billion cars (a figure that is expected to double by 2030), but their use is inefficient with the average car parked 96 per cent of the time. In major Australian cities, about three-quarters of the journeys to work in 2011 were by car. Australian cities generally rate high on measures of liveability, but they have environmental footprints that are not sustainable. The expansive nature of Australia’s largest cities has consequences for water quality, air quality and ocean cleanliness. Transport is a major source (about a quarter, globally) of greenhouse gas emissions, with Australia one of the world’s highest emitters in this sector. As well as contributing to climate change, cities and their transport systems are affected by its impacts. A high proportion of the world’s cities with populations of one million or more are on the coast and hence vulnerable to sea-level rise. Cities act as amplifiers of global warming, creating urban heat islands. Many cities are introducing trees, open green spaces and other vegetation to reduce local temperatures. But cities have limited capacity to withstand the combined pressures of population expansion, climate change and outdated transport.

Sustainable urban design Transport plays an essential role in economic and social development, ensuring access to jobs, housing, goods and services, providing mobility, and opening up isolated regions. Access, mobility and how we shape our cities have a profound influence on perceptions of quality of life. Sustainable urban planning involves reducing or avoiding the need to travel by bringing workplaces closer to homes, increasing the number of homes in areas with the greatest number of jobs, and improving transport links between work and home. The approach of ‘smart growth’ or a ‘compact city’ reduces urban sprawl by focusing on walkable city centres, bicycle-friendly land use, and mixed-use neighbourhood development. Traditionally, the central business district and inner city have been the most important employment hubs. However, in recent years there has been growth in employment in health and education services in suburban locations, and an increased importance of the ‘forgotten middle suburbs’ as places for future employment growth. Furthermore, online retail and teleworking in Australia currently represent less than 10 per cent of the workforce, but this is forecast to grow rapidly. Digital technology and human behaviour are deeply interlinked, so increased telecommuting will change labour markets and retail models, and lead to a decentralised city design.

Transport technology Australia faces a fuel security risk. In 2013–14, Australia’s net import bill for crude oil and petroleum products was $30.7 billion, or 2 per cent of GDP. As a country heavily reliant on road transport, it is surprising that Australia has small and declining fuel stocks, holding no more than three weeks’ worth of oil and refined fuels onshore. Sustainable urban planning could address this risk by considering more environmentally friendly transport options, and improved energy efficiency of public and private

159

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Securing Australia’s Future

transport. Greater use of electric cars drawing on renewable energy grids, use of biofuels, gaseous fuels and synthetic fuels, and greater use of other energy technologies such as fuel cells, would reduce dependence on imported transport fuels, as well as lowering emissions. The provision of attractive public transport alternatives can discourage the habit, attitude and inertia of road use. The cost of moving freight by road is more than double the cost by rail, and the greenhouse gas emissions for road are more than triple those of rail. Despite this, over the past 40 years the share of rail freight compared to heavy vehicles has steadily declined in Australia. High-speed data transmission, digital sensors and data analytics (‘big data’) could better manage the flow of people, vehicles and goods through cities. Many cities already use technology to help manage traffic congestion, to police the streets and to allocate resources and services on the basis of real-time information. Technology and innovation will be key to meeting the challenge of urban congestion. But technology alone will not be enough. Meeting the challenges of urban transport and the urban built environment will require long-term, nimble policy development and sustained investment in innovative mobility infrastructure. Bamaga Nhulunbuy

Dar win

Coen

Katherine Kununurra

Cairns

Karumba

Broome Balgo

Townsville

Mount Isa

Port Hedland

Mackay Alice Springs

Longreach

Emerald Bundaberg

Warburton

Carnarvon

Thargomindah

Coober Pedy

Brisbane Brisbane Gold Coast

Geraldton Kalgoorlie Ceduna

Woomera Port Augusta

Narrabri

Broken Hill Dubbo

Perth Port Lincoln

Esperance

Bunbury

ARIA+ (2006) 1 km grid

Mount Gambier

Inner regional (> 0.20–2.40)

Very remote (> 10.53–15.00)

Horsham

Echuca

Port Macquarie Newcastle

Sydne y Canberr a Canberra Bega

Bairnsdale Melbourne Melbourne Yarram

Major cities (0–0.20)

Remote (> 5.92–10.53)

Griffith

Adelaide Adelaide

Albany

Outer regional (> 2.40–5.92)

Hervey Bay

Roma

N

0

250

500 Kilometres

1000

Launceston Strahan

Hobartt Hobar

People living in rural and remote parts of Australia face major accessibility challenges. (Data sources:

GISCA, The University of Adelaide, GeoScience Australia and Australian Bureau of Statistics)

Appendix 8

Conclusion Urban mobility planning in the 21st century must aim to ensure the accessibility needs of citizens and businesses are met at the lowest individual and collective environmental and social impacts and economic cost. Best practice planning for Australian cities will deliver new and economically sound responses to our citizens and businesses for sustainable living, working and playing. Delivering Sustainable Urban Mobility envisages a far-sighted urban planning approach – across all tiers of government – for a resilient, nationally competitive future. Areas requiring action include: 1. 2. 3. 4.

the development of compact, mixed-use cities that reduce travel requirements; a shift to low carbon transport options; improved vehicle occupancy rates and efficiency of freight transport; reduced vehicle emissions intensity, especially greenhouse gases and air pollutants; and 5. increased public transport and urban design to increase opportunities for active travel (including walking and cycling) to address Australia’s level of chronic disease and obesity.

Expert Working Group Members Dr Bruce Godfrey FTSE (Chair) Professor Bruce Armstrong AM FAA FRACP FAFPHM Professor Graeme Davison AO FAHA FASSA Professor Brendan Gleeson FASSA

161

Appendix 9. Translating Research for Economic and Social Benefit: Country Comparisons

Introduction Innovation in Australia is suffering from a lack of a national innovation strategy, shorttermism, inadequate scale and a fragmented approach. We need to urgently improve the application of publicly funded research, in order to generate economic and other benefits. The interdisciplinary report by the Australian Council of Learned Academies (ACOLA), SAF09 Translating Research for Economic and Social Benefit: Country Comparisons (http:// acola.org.au/wp/saf09/) analyses international approaches to encouraging and facilitating research translation, commercialisation and collaboration. The report draws on consultant reports and the authors’ expertise in government, science and innovation. The 14 nations studied were Finland, Denmark, Sweden, Germany, United Kingdom, Israel, United States, Canada, South Korea, Japan, Singapore, China, Brazil and Chile. There is a clear link between national policy on innovation and innovation performance. Nations that do better than Australia in innovation are characterised by rigorous policy setting and programs that encourage a culture of innovation and collaboration.

Learning from overseas One of the challenges for Australian public sector researchers is finding an industry partner with which to engage. We have relatively few firms that do research and development. Australian researchers are not well engaged with industry or with other parties. Australia’s higher education research spending is above the OECD average. Australian public sector expenditure on research and development is also strong. Public sector research is a major part of Australia’s research system. Accountability to the public makes it particularly important that we encourage and accelerate the translation of public sector research into economic and social benefits. Recognising the importance of the flow of knowledge to application, many countries have developed a range of mechanisms to bring together researchers and potential users. Governments have a vital role in adopting polices that can support and drive innovation, and to reflect emerging challenges and priorities. Governments must ensure public investment in science and research, and encourage and support innovation within the private sector. As well as funding research, the countries reviewed offer policies and programs to encourage and enhance the application of research. These include funding for start-ups, university-based incubators and technology parks, training for managers of intellectual property, and mentoring for university student and faculty entrepreneurs.

162

Appendix 9

Furthermore, such funding, policies and programs can provide assistance to researchers for collaboration, assistance to businesses, exchange and placement of researchers, technology transfer support and intellectual property support. The countries reviewed have each adopted a suite of measures to encourage the translation of public sector research to benefit the broader community.

Recipes for success Australia’s efforts to support the translation of public sector research have been minimal. In many cases, there has been inadequate reporting of program results and minimal evaluation of achievement. There are several overseas examples where stable, well-designed and well-funded measures have created jobs, increased business turnover and provided other benefits. Supporting small and medium-sized enterprises and start-ups that have high growth potential will help to increase the translation of Australian public sector research. Such enterprises with high growth potential are an important source of future jobs and economic growth and are the target for many of the overseas government measures reviewed. Start-ups help commercialise public sector research. Government support should be available to help start-ups, subject to the start-ups having essential prerequisites, such as intellectual property and business strategies, and researchers willing to continue the development process. Firms that undertake research and development are more likely to become involved in the translation of public sector research. Australia is overly reliant on indirect support for business research and development through the research and development tax incentive. The incentive could be adjusted to encourage collaboration with public sector researchers. 0.40

Direct government funding of BERD Indirect government support through R&D tax incentives

Percentage of GDP (%)

0.30

0.20

0.10

o

a

xic Me

ali

an

d

str Au

erl

l

an

itz Sw

Jap

ga

ica Af r

r tu Po

da na Ca

uth So

d

y

ina Ch

lan Fi n

m

an rm

do ing

Ge

il az Br

dK ite Un

en

e nc

re a

ed Sw

Fr a

Ko

es tat dS

ite Un

Ru

ssi

an

Fe

de

rat

ion

0.00

Direct government investment in business research and development (R&D) and tax incentives for R&D. (BERD: business expenditure on research and development) (Source: Adapted from OECD (2013) OECD Science, Technology and Industry Scoreboard 2013. OECD Publishing, Paris, France). DOI: )

163

164

Securing Australia’s Future

Shifting the balance of government support for business innovation to greater use of direct measures such as grants, loans and procurement contracts would allow a more focused and targeted approach to support research collaboration and translation. We need to reform research collaboration programs, such as Australian Research Council’s Linkage Program, by increasing funding and adopting the leading grant administration practices of the overseas programs reviewed. Measures that require a joint proposal from public sector researchers and external partners (often business) work well. Australia’s Cooperative Research Centres Programme is a good example of this approach. Programs that support the placement of students and new graduates within external organisations will help to transfer new creative and technical skills to business, government and not-for-profit sectors. Work-integrated learning placements can also help build relations between universities and external parties that can lead to future collaborations. The engagement of researchers from humanities, arts and social science disciplines has opportunities and challenges that are different from those of the science, technology, engineering and maths disciplines. For these reasons, some countries have adopted specific measures to encourage such engagement and collaboration. It is important to ensure that humanities, arts and social science researchers are not excluded from measures to encourage public sector researcher engagement with external parties. Legislative and administrative reforms to provide certainty and clarity in the legal framework and to encourage PRIs and universities to file for and commercialise their IP

Capacities to link with the external environment through bridging and intermediary organisations

Incentives for collaboration to induce business open innovation with firms

Collaborative IP tools and funds to coordinate and be able to execute knowledge and innovation activities

Mechanisms to facilitate the flow of knowledge and research data

Recognition of researcher participation in the commercialisation process

Supporting the emergence of entrepreneurial ideas from public research

Financing of public research-based spin-offs

Strategies for enhancing the transfer and commercialisation of public sector research. (PRI: public research institutions; IP: intellectual property) (Source: OECD (2013) Commercialising Public Research: New Trends and Strategies. OECD Publishing, Paris)

74

Appendix 9

Conclusion Australia would gain from a coherent national innovation strategy with an agency to manage it, and less reliance on indirect support for business such as through the research and development tax incentive. Most leading practice countries have well-resourced and coordinated innovation strategies, which guide the selection of policy and program options. Other important steps to lift research application and business-researcher collaboration include: 1. increasing assistance for collaborative research; 2. providing targeted incentives to universities to increase their engagement with external agencies; 3. employing commercial managers to help researchers engage with commercial partners from the early stages of projects; 4. implementing measures to support the financing of commercial outcomes from public sector research; and 5. commissioning independent reviews and evaluations of research translation measures to ensure that they are achieving their objectives.

Expert Working Group Members Dr John Bell FTSE (Chair) Professor Mark Dodgson FASSA Professor Les Field AM FAA Professor Paul Gough Professor Tom Spurling AM FTSE Professor Beth Webster

165

Appendix 10. Skills and Capabilities for Australian Enterprise Innovation

Introduction Australia needs an innovative, flexible and creative workforce with the skills and capabilities to enable the country to secure its future productivity. Technical and scientific capabilities are critical to innovation, but innovation also requires people who understand business, systems, culture and the way society uses and adopts new ideas. This project examines the way that Australia’s high-performing enterprises identify, manage, build and mix the capabilities to succeed. Drawing on extensive research and data, the report by the Australian Council of Learned Academies (ACOLA), SAF10 Skills and Capabilities for Australian Enterprise Innovation (http://acola.org.au/wp/saf10/) investigated the extent to which technical and non-technical skills underpin innovation, how they interact to meet innovation challenges, and the potential for industry, education and government to properly invest in the skills and capabilities that support enterprise innovation. This report builds on those summarised in Appendices 4, 5 and 9. Australia needs to improve the way it turns knowledge inputs into outputs to become a more efficient and successful innovator. The manner in which Australian enterprises use and manage skills and capabilities is a critical component of the broader strategy needed to enhance Australia’s innovation performance. This report represents the first in-depth investigation of how many of Australia’s bestknown innovative enterprises build and combine the technical and non-technical skills to drive the development of new products and services and to capture new markets and consumers. In the process, it explores potential mechanisms for achieving more efficient and effective innovation outcomes.

Australia’s innovation performance The 2015 Global Innovation Index reveals that Australia is a relatively inefficient innovator. Australia’s overall ranking for innovation inputs is a reasonable 10th. However, our overall ranking for innovation outputs is 24th. This means our innovation efficiency is low. The index shows that Australia has the relevant skills but lacks the capacity to manage and use these skills and other inputs for innovation. The most often stated challenge to innovation reported by innovative businesses is the lack of access to the additional funds required to develop and implement innovation. However, the Australian Bureau of Statistics’s Business Characteristics Survey reveals that a lack of access to skills was the most significant barrier to innovation among these businesses. The ACOLA project team commissioned Swinburne University of Technology to undertake a statistical analysis of the factors associated with innovation performance

166

Appendix 10

among Australian businesses. The analysis confirms that different types of skills are more important for different types of innovation. Science, technology, engineering and mathematics (STEM) skills are more strongly associated with innovation in products and processes, while business skills are associated with process, organisational and marketing innovation.

Innovation policy Innovation thinking in policy has evolved from ‘first generation’ (linear) approaches, to ‘second generation’ (systems) approaches, to third generation (ecological) approaches. Knowledge for innovation can come from a range of sources. Contemporary research and debate on the future of work, work skills and sources of innovation highlight the growing importance of higher-order integrative skills. Innovation, in third generation policy frameworks, requires people with sets of skills that integrate, and may go beyond, STEM. Organisations need teams that maximise diversity and creativity, supported by their connections to larger innovation ‘ecosystems’. Organisations do not need to have all of the skills and competencies to initiate and sustain innovation. Rather, they need to work cooperatively and in competition, developing and even sharing capabilities.

Lessons from innovative organisations The ACOLA report includes findings from interviews with 19 Australian organisations which are independently recognised as highly innovative. All of the organisations use people and teams with a mix of skills, and draw on external skills. They invest in finding and developing the right candidates. Attitude, cultural fit and emotional intelligence or ‘cleverness’ are important skills. Different skills are required at various stages in the innovation cycle, so skills mixing in individuals, in teams and across organisations is important for innovation. Innovative organisations value external ideas and viewpoints and cooperate with other organisations. Networks, partnerships and clusters help provide the skills needed for innovation. There is a transition from tackling technical challenges at the initial stages of innovation development to a strong focus on understanding the value of innovations from the customer perspective. The important consideration is how innovations in products, services and processes will add value that customers are willing to pay for. Many of the profiled organisations have a strong track record of ‘holism’ in their approaches to managing staff. This often includes developing employees’ attitudes and supporting activities beyond formal education, driven by the knowledge that technical skills are necessary but not sufficient for optimum contributions. These firms foster the development of individual, team and life skills.

Improve Australia’s focus on technical and non-technical skills mixing Governments cannot rely on traditional policy instruments to create innovation ecosystems. They must assume a broader role as facilitators, connectors and enablers of systemlevel collaborations. A government’s primary role should be to facilitate collaboration and

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cooperation; this will provide conditions and support to encourage enterprise and education, resulting in a mix and use of skills beyond organisational and sectoral boundaries. Highly innovative organisations overcome significant barriers to innovation through strengthening management and leadership capabilities. Many Australian business organisations do not have sufficient managerial talent required to meet critical innovation challenges. The consistent finding, with challenging implications for enterprise, education and government, is the potential to broaden yet complement the current policy focus on science and technology, enabling a more holistic approach to tackling Australia’s innovation challenges that teams humanities, arts and social sciences (HASS)-based skills with science, technology, engineering and mathematics (STEM)-based skills.

Conclusion Supporting Australia’s enterprise innovation will require steps that include: 1. more effectively transforming innovation inputs, such as investments in human capital and research, into knowledge and technology innovation outputs; 2. supporting and developing strong innovation ecosystems that enable access to a mix of skills; 3. employing and developing employees with broad knowledge bases and strong integrative skills (beyond a single discipline); 4. sophisticated recruitment and retention practices, internal training and development, and strong cultures and engagement; 5. strengthening management and leadership capabilities; 6. encouraging deeper collaboration across enterprise boundaries, including integrating Australian organisations into global value chains; and 7. investment in innovation ecosystems in specific industries and regions. 30 25 Per cent of businesses (%)

Innovation active business Non-innovation active business

20 15 10 5

wle Lac dge k o or t f acc ech ess nol to ogy kno

ds dar tan to s nce ere Adh

Skil ls the hor tag lab es w our it ma hin r ke t

or ta the ges w bus ithin ine ss l sh Skil

Un newcer ta goo in de ds o man r se d fo r vic r es Gov ern me nt o r c re g u l om atio plia ns n ce

o d u Co s t o c tio f d n / i m e ve l ple opm me ent nta or tion intr

Skil

l sh any or tage loca s in tion

0 La add ck of a itio cce nal ss t fun o ds

168

Barriers to innovation: innovative active versus non-innovation active businesses, 2013–14. (Source: Australian Bureau of Statistics (2016) Selected Characteristics of Australian Business, 2013–14, cat. no. 8167.0. Australian Bureau of Statistics, Canberra, )

Appendix 10

Expert Working Group Members Professor Stuart Cunningham AM FAHA (Chair) Professor Peter Gahan (Deputy Chair) Mr Ken Boal Professor Victor Callan FASSA Professor Tam Sridhar AO FAA FTSE Ms Christine Zeitz

169

Appendix 11. Australia’s Diaspora Advantage: Realising the Potential for Building Transnational Business Networks with Asia

Introduction Australia’s business and economics links with Asian countries have expanded rapidly in recent years. This has been strengthened by communities of people of Asian origin living in Australia, who use cultural, linguistic and other skills to build people-to-people links across diverse areas including science, culture, business and trade. However, many of the potential benefits of these connections are underused, underdeveloped or unknown. Focusing on the Chinese and Indian business communities in Australia, the report by the Australian Council of Learned Academies (ACOLA), SAF11 Australia’s Diaspora Advantage: Realising the Potential for Building Transnational Business Networks with Asia (http://acola.org.au/wp/saf11/) explored the extent, diversity and nature of Australia’s Asian business diasporas. It builds on the report summarised in Appendix 3 of this book, and draws on an interdisciplinary expert working group and the authors’ expertise in philosophy, educational strategy, public policy, global studies, and Chinese language, literature and history. As a dynamic economy in a rapidly developing region, Australia cannot overlook the importance of transnational business networks or the knowledge and skills held by Asian communities in Australia. In fact, Australia could lead the world in developing policies and programs that encourage more effective engagement of Asian business diasporas.

Diasporas in Australia Diversity Council Australia estimates that 17 per cent (4 million) of people living and working in Australia identify as being of Asian origin. Australia’s two largest Asian populations are the Chinese and Indian communities, estimated in 2016 to number at least 1.7 million people, of whom some 850 000 were born in China and India. By 2031, the number of people of Chinese and Indian descent living and working in Australia is expected to rise to 2.7 million. The report adopts the concept of diasporas – populations that are dispersed yet remain connected to transnational networks. Asian diasporas include new migrants, their Australian-born descendants, people of mixed parentage, and temporary residents here for work or study. The Chinese and Indian diasporas in Australia comprise a large proportion of educated, highly skilled and globally networked individuals. They are generally better educated than the rest of the Australian population: India-born Australians are almost three times as likely as other Australians to have a Bachelor degree or above, while those born in China are almost twice as likely. 170

Appendix 11

Their enthusiasm, entrepreneurial energy and preparedness to take risks is shown to form the drivers of their success. Their transnational networks are a major source of business opportunities, innovation and entrepreneurialism.

Business diasporas Business diasporas are those within the diaspora communities who are engaged in activities that involve trade, investment and commercial collaborations. Between 2006 and 2011, businesses owned by Australia’s China-born population rose 40 per cent, and for those born in India by 72 per cent, to a combined total of 45 500 businesses. Chinese and Indian business diasporas are mostly active in professional, scientific and technical, health, education, and information and communication technologies (ICT) fields. Business activities are bolstered by connections, high mobility and skill in circulating ideas and resources around the world. The idea of ‘diaspora advantage’ suggests how the linguistic skills, cultural knowledge and global networks constitute an advantage that benefits the members of the Asian diasporas personally and helps Australia extend its economic links with Asia, and promote a culture of innovation. Rather than a brain drain from the country of origin and brain gain for the country of residency, diasporas promote brain circulation as well as the circulation of people, and cultural and financial capital. However, much of the available data on business in Australia is based on migration and ethnicity, which does not fully take into account diasporas. Hence new ways of mapping the number and contribution of business diasporas who circulate between countries are needed to deepen our understanding of business diasporas.

Challenges In the past 15 years there have been positive shifts in public perceptions of Asia and Asians in Australia; this has contributed to a supportive climate for Asian business diasporas. Governments, business associations and industries appear committed to expanding economic links with Asia. However, opinions are mixed, and barriers still exist – including bureaucratic impediments, and the uncertainty in both Australia and Asia about the rules of business activities across borders. Of key concern is the under-representation of Australia’s Chinese and Indian business diasporas across government and in public office, on industry councils and business associations, in educational leadership, within peak bodies that promote Australia–Asia diplomacy, and in trade discussions and delegations. Diversity Council Australia identified only around 4 per cent of Australia’s top 200 publicly listed companies’ board directors are of Asian descent. This under-representation of Australia’s Asian diasporas occurs in an era that demands cultural understanding as well as technical knowledge and research. Recognising the complex differences and historical sensitivities of how knowledge is created and information shared in China and India is essential to better business, policy processes and decision making. Australia’s Asian business diasporas have a role in brokering this understanding, as well as helping Australian enterprises advance their Asia capability. The Chinese and Indian governments are deeply conscious of their global diasporas – they plan to increase the benefits they already gain from the knowledge and skills of the estimated 40 million overseas Chinese and 25 million overseas Indians. They are active in

171

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developing policies that aim to increase trade, investment and research collaboration. In contrast, the policies of advanced economies, such as United States, Canada, Germany, Ireland and Singapore, are mostly designed to attract skilled migrants and investors who have business networks in Asia for improved economic productivity. These nations’ policies do not adequately address the dynamic circulation, connectivity and valued flexible forms of belonging to business diasporas. Australia has the potential to lead the world in developing policies and programs that encourage more effective engagement of the Asian business diasporas in building transnational networks for trade, investment and innovation.

Conclusion Multiculturalism and diversity have provided Australia with a strong foundation that may now benefit from a new approach – a diaspora approach – to developing policies and programs. Underlining this is a long-term vision for Australia in Asia, and vice versa. This opportunity comes at an important time for Australia. China will soon pass the United States as the world’s largest economy; India is the world’s fastest growing economy and is likely to reach third-largest behind China and the United States by 2030. China has become Australia’s number one trading partner. Just over half of Australia’s two-way trade is conducted with countries of South, South-east and East Asia. Asian investment in Australia has also risen. To benefit from its diaspora advantage, Australian governments, businesses and organisations need to: ●●

●●

●●

●●

●●

move from previous notions of migration and multiculturalism towards diaspora as a more apt concept with which to make sense of the ways in which people of Asian origins living and working in Australia can participate in the social, cultural and economic life of both Australia and their country of family origin; develop mutually beneficial ways of using diaspora resources for research, cultural and business collaborations; ensure a supportive culture and greater representation and participation of Asian diasporas in the development of policies and programs that strengthen Australia’s economic, political and cultural relations with Asia; link diasporas to science, technology and research infrastructures, business communities and industry, and the cultural resources embedded within the broader Australian community; and consider Australia’s other Asian diasporas, especially with the Association of South East Asian Nations (ASEAN) – notably Indonesia, Vietnam and the Philippines – touted as the next emerging Asian economic powers.

Appendix 11

100 80 Percentage (%)

2001–2011 60

1981–2000 1961–1980 1941–1960

40

Before 1941 20 0

Born in China

Born in India

Born in New Zealand

Born in the United Kingdom

Year of arrival of those born in China and India to Australia from 1941 to 2011, compared with the major source countries of New Zealand and the United Kingdom. The number of permanent immigrants from China has doubled and from India tripled since 2001. (Source: Australian Bureau of

Statistics (2013) 2011 QuickStats Country of Birth: China. Australian Bureau of Statistics, Canberra; and Australian Bureau of Statistics (2013) 2011 QuickStats Country of Birth: India. Australian Bureau of Statistics, Canberra)

Expert Working Group Members Professor Kam Louie FAHA FHKAH (Co-Chair) Professor Fazal Rizvi FASSA (Co-Chair) Mr Kevin Hobgood-Brown Dr Marlene Kanga AM FTSE Professor Aibing Yu FAA FTSE

173

Index Aboriginal and Torres Strait Islander people 36, 105 Asian interaction with 38, 39 see also Indigenous Australians Academy of Social Sciences in Australia xviii, xxiii accessibility, rural population 160–1 ACIL Allen report 34, 134 active travel, need for 161 Adelaide 100, 106 advanced manufacturing 15, 16 advantage creation (chart) 135 affordability, energy sources 102 age level, STEM interest level and 90 age profile agricultural workers 116, 155 Australian workers 19–20 agribusiness 111 Agricultural Competiveness White Paper (2015) xv agricultural land, development of 98 agricultural science jobs, reductions in 115, 116 agriculture 20, 21 Asia and 29–30 Australian xxi, 12–14, 134 ‘clean green’ 98 future of 115, 122–4, 154–7 historical changes 117 improvements in 129 productivity increases 114 public perceptions of 117 research and 110, 111–14 tariff reforms 51 technology 97, 154, 156–7 air pollution reduction 99, 101 alternative energy sources 96, 110, 129 American Academy of Arts and Sciences xix Anderson, Kent 35 arts and humanities, Asia 141 ASEAN countries 123, 172 agriculture and 156 investment in 40 Asia Australia and 123, 170–3 Australian agriculture and 123, 154, 156 Australian business fear of 41 Australian economy and 23–46, 135 Australians living overseas and 43 dietary changes 30, 112 economy 8, 18 education sector and 134 export markets 19 174

links with xxi STEM education 92 urbanisation and 110 Asian Century White Paper 2012 40, 92 Asian descendants, Australians 42–3 Australians and 24, 123, 128, 142, 170–3 Asian languages 35–6 Australians and 123, 141, 143 collaboration 35–7 education in 93, 124 teaching decline 37 Asian markets 24, 41, 127 Asia-Pacific region xx Australia and 2, 27–8, 123–4, 127–8, 129, 140–3, 170 education and 125 attrition rate, female STEM teachers 84 audience receptivity 132 Australia agricultural sector 154–7 challenges and opportunities 121–9 comparative advantages 133–6 environmental sustainability options 95–120 innovation deficiency 60, 61–2, 166 international relationships 92–3 secure future plan 1–22 service industries 17–19 STEM subjects ratings 138 technological innovation 62–8, 147–9 Australian Academy of Science xviii, xxiii, 72, 84, 87 Australian Academy of Technological Sciences and Engineering (ATSE) xviii, xxiii–xxiv, 84, 87 Australian Academy of the Humanities xviii, xxiii Australian Bureau of Agricultural and Resource Economics (ABARES) 29 Australian Bureau of Statistics (ABS) 8, 60, 76, 166 multi-factor productivity study 48 qualifications study 73 Australian bush 116 Australian businesses, Asia and 40–1 Australian Census 2011 79 Australian Climate Roundtable 101 Australian Council of Learned Academies (ACOLA) ix, xiii–xv, xvii, xxii–xxiv, 12, 14, 17, 20, 23, 24, 26, 39, 43, 50, 51, 52, 58, 69, 80, 92, 94, 95, 102, 103, 105, 110, 120, 121, 126, 127, 131, 132, 133, 135, 140, 144, 147, 150, 154, 158, 162, 166, 167

Index

global business survey 5 Securing Australia’s Future reports xviii, xix, 22, 27–8, 45 technology reports 63, 64 Australian Council of Social Services 101 Australian economy, Asia and 23–46 Australian Government ACOLA and xvii future directions and 67–8 Australian Industry Group 41, 101 Australian Infrastructure Plan (2016) xv Australian locations, Bollywood films 39 Australian Population and Migration Research Centre 45 Australian Research Council ix, xiii, xviii, xix, xxiii, 50, 54, 146 Australians living overseas 43 Australian Stock Exchange 18 Australia’s Agricultural Future (SAF07) xxi, 22, 120, 154–7 Australia’s Diaspora Advantage: Realising the Potential for Building Transnational Business Networks with Asia (SAF01) xx– xxi, xxii, 22, 27–8, 30, 39, 45, 50, 69, 94, 95, 102, 133–6, 170–3 automation 64, 157 autonomous vehicles 64 baby formula, exports of 29 banking industry 18, 34, 60 Barber, Michael N xiii–xv, xix basic skills 61, 74 technological development and 66 Batterham, Robin xviii, xxii b-carotene 118 beef industry, Asia and 35 Belgium 77, 80 Bell, John 47, 56 Better life index 4 ‘big data’ 160 biodiversity impacts Australia and 133 failures of protective measures 99 shale gas extraction and 105 biofuels 119 biology 78, 138 Bissell, Richard xv–xvi, xix black coal-fired energy 104 Bollywood film industry 39 Boosting the Commercial Returns from Research (2015) xv Botanical Resources Australia (BRA) 114 Brazil 51, 55, 80, 162 Brisbane 59, 106 bulk commodities exports 28, 155 Bureau of Meteorology 21–2 Business Characteristics Survey (ABS) 8, 60, 76, 166

Business Council of Australia 101 business links, Asia and Australia 24, 41–2, 140, 170–3 business skills 61 Canada 19, 44, 51, 77, 80, 162, 172 Indigenous 80 STEM education 86 capability investment 12 carbon dioxide emissions 21, 64, 102 career information, STEM subjects 90, 91 car transport 126, 159 future of 97 limits to 109 central Australia 98 challenges and opportunities, Australia 121–9 Chief Scientist, Office of the ix, x, xiv, xv, xvii, xviii, xix, 68, 88 Chile 51, 55, 162 China 26, 28, 30, 31, 43, 51, 77, 80, 112, 156, 162, 172 Australian investment in 40 board directors from 42 export markets to 39, 40, 122 investment and 30, 40, 123 research collaboration and 31, 32, 141–2 rise of 140 STEM skills promotion 81, 92 tourism from 33 world trade and 27 Chinese language studies 36 Chinese migrants 93 Australian citizenship 43 businesses 41, 170 diaspora 44, 171 year of arrival 173 chip prototypes 68 chrysanthemum crop 114 Chubb, Ian ix–xi, xiii, xvii, xviii cities, liveability 106–8 ‘clean green’ Australia agriculture 154–5 Asia and 34 support for 29–30, 95–120, 128–9, 157 climate change 111, 125 agriculture and 155 Australia and 96, 99, 101 cities and 31 costs of 126 future projections 21–2 lack of report xvii urbanisation and 107 Climate Institute 101 coal industry 14, 104 reliance on 101–2 safety issues 118–19 coal seam gas (CSG) 104, 150 Cochlear 58

175

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Securing Australia’s Future

collaboration 19, 57 Asia 35–40 banking industry and 60 businesses 55 manufacturing 15 need for 54–5, 69 research 52, 110–14, 164 systems 167 workplace skills 56–62 commercialisation, public sector research 55, 164, 165 Committee for Economic Development of Australia 6, 133 commodity exports agriculture 12–14, 123 mining 14–15 Commonwealth Science Council xviii, 131, 132 Commonwealth Scientific and Industrial Research Organisation (CSIRO) 16, 21–2, 55, 87, 114 community concerns, agriculture 155, 157 compact cities 109, 126, 159, 161 company boards, women and 125 comparative economic advantage, Australia 25, 27–8, 95, 133–6 competitiveness, manufacturing 16 compulsory language studies 93 congestion, future cities 106, 107 connectivity, Asia-Pacific and Australia 26 conservation tillage 13 Convention on Biological Diversity 99 conventional gas supplies 104, 150 Cook, Peter 103 Cooper Basin 104, 150 Cooperative Research Centres Programme 54, 164 coordinating agency, STEM skills 71, 72, 88 corporate power, agriculture 117 Corruption Perception Index 4 costs oil imports 109–10 research translation 55 road transport 109 shale gas 105 Council for the Humanities, Arts and Social Sciences (CHASS) 57, 75 creativity skills 61 cross-sector collaborations 57, 75 cultural change 117, 123 cultural diplomacy, Asia and 23, 25, 38–40, 41, 42, 127, 142, 143 culturally responsive teaching 37, 86 Cunningham, Stuart 56 curriculum diversity 90 STEM participation 84, 137 customer orientation 16, 60

Daly, Joanne 110 data sources, shale gas industry 152 deaths per unit of energy 119 decarbonisation 96, 101–3 decentralisation 109, 120, 126 Delivering Sustainable Urban Mobility (SAF08) xvii, xxi, 10, 22, 109, 120, 158–61 Denmark 51, 80, 162 Department of Foreign Affairs and Trade (Cth) 26, 37 desalination plants 100 design skills 59, 60 diasporas, Asian 42–5 dietary changes agriculture and 112 Asia and 30 digital infrastructure 64, 127 di Lampedusa, Giuseppe Tomasi 6 direct funding, research and 54 Diversity Council Australia 93, 170, 171 drought 1990s–2000s 100 Earth system, future of 119 East Asia 26, 31, 81 trade relations with 27 ‘easy option’ subject choice 89 ecological approaches, innovation and 167 economic growth environmental sustainability and 100–1 impediments to 5–6 improvements in 127 productivity and 146 research and 52–4 technological innovation and 64 economic performance Australia 136 STEM skills and 80 technology and 63, 148 economic relations, Asia–Australia 140–1, 171 ecosystems 133, 167 education aims xx Asia and 30–1, 35, 170 Australian development 71–94, 133 Indigenous Australians’ disadvantage 85–6 provision of 4–5, 17, 18 spending 72 technological development and 65–6 workforce and 124–5 electric cars 110, 160 emotional distance poll 2015 26 employment Australian industry analysis 17 STEM skills 79 energy security 111, 120 energy sources alternatives 126, 129 deaths per unit of energy 119

Index

natural gas 103–6 energy storage 102 Energy Supply Association of Australia 101 engineering 138 participation rates 19, 78–9 skills 59 women in 125 Engineering Energy: Unconventional Gas Production (SAF06) xxi, 14, 22, 105, 120, 150–3 English language studies, Asia 36 entrepreneurial skills 61 environmental degradation agriculture and 114 Australia 100 environmental footprint cities 159 ‘clean green’ 96 shale gas production 151 environmental measures, Australia 21, 101, 133 environmental science, reductions in 115 environmental sustainability 10, 20–2, 28, 95–120 Asia 28 Australia 126, 128–9 ethical issues, education 124 Europe 31, 40, 43, 58, 117–18 carbon emissions 99 heritage 26 European Union 32, 146 evidence-based findings xiii, xvii–xviii excellence, support for 131 existing industries, favouritism toward 67 experimentation, entrepreneurship and 148 Expert Working Groups (EWGs) xiv, xxii SAF01 136 SAF02 139 SAF03 143 SAF04 146 SAF05 149 SAF06 153 SAF07 157 SAF08 161 SAF09 165 SAF10 169 SAF11 45, 173 export-earning industries 4, 112, 122 failure, uses of 66–7 family involvement, STEM subjects 91 family-owned farms 155 farming communities, future of 116–17 Federal Institute of Technology (Switzerland) 117 federal system 7–8 field robotics 111 Filipinos, Australian citizens 43 finance and insurance industry 18, 35, 135

Finkel, Alan 88, 121, 131–2 Finland 16, 19, 51, 77, 80, 162 skills indicators 81 STEM skills 81 fishing, productivity increases 114 Fitzgerald, John 24 Flinders Street station 9 food products, international competition and 34 food security 111 Asia and 29–30 foreign ownership, agriculture 155 forestry, productivity increases 114 fossil fuels 101–2, 159 replacement for 28 foundations for creating advantage (chart) 135 freight transport 109, 160 fuel cells 110 fuel efficiency 160 fuel security risk 126, 159 lack of 109–10 future Australia ix, 1–22, 121 investment 67–8 preparations for the 115–19 prosperity xx Securing Australia’s Future projects 129, 132 STEM education 92 technology 148 GameBoy Advance 59 gas resources 14 gender balance PISA scores 77 STEM subjects 79, 83–5 genetic engineering, distrust of 117 genetically modified crops 64, 117–18, 155 Germany 10, 44, 50, 51, 55, 77, 80, 162, 172 global demand, Australian agriculture 14, 156 Global Innovation Index 2015 4, 60, 166 globalisation 7, 127 Australian solutions xx, 111 energy sources 103 shale gas industry 152 technological development and 65, 147–8 global markets, Cochlear 58 Global Technology Revolution 2020, The 64, 148 global value chains 144 Gluckman, Peter xiii Gold Coast 33, 39 Golden Rice 117–18 golden welcome scheme (UK) 82 gold rush (nineteenth century) 9 governments Australian 10 educational responsibilities 77 entrepreneurship and 67

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Securing Australia’s Future

grants 164 inadequacy of 6 language studies and 37 manufacturing support 145 research and 52–3, 56 system collaboration and 167 technological investment 148 government spending, need for 47 graduates (STEM), lack of 137 grazing industry 155 greenhouse gas emissions Australia 20, 21, 22, 97, 99, 101, 107, 118, 151 cities and 159 transport and 109 Green Revolution 117 gross domestic product (GDP) agricultural products 154 education 77 industry sectors 50 manufacturing and 15, 144 service industries 18 groundwater, shale gas extraction and 105 habitat fragmentation 105 health care industry 18 hearing restoration implants 58 Henry Tax Review 12 higher education, Australia xxii, 10, 18, 162–5 high-skilled operations 16 high-tech nodes 109, 126 Hindi studies 36 hobby farms 111 holism, innovation and 167, 168 Holper, Paul xv, xvi Hong Kong 27, 37, 81 horse transport, pollution 108 Human Development Index (UN) 4, 133 humanities education in 124 manufacturing 15 research 164 technical staff and 59 technology and 57, 65 humanities arts and social sciences (HASS) skills xiv, xvii, xx, xxiv, 7, 20, 47, 54, 92, 121 STEM skills and 75, 168 hydraulic fracturing (fracking) 151 hydroelectric energy 101, 102, 119 ideas diffusion 49 immigration 8, 135, 142 incentives 49 research and development 164, 165 India 26, 28, 30, 31, 58, 112, 156, 172 collaborative research with 142 film industry 39 rise of 140

tourism from 33 world trade and 27 Indian migrants Australian citizens and 26, 43 board directors 42 businesses and 41, 170, 171 diaspora 44, 171 year of arrival 173 Indian student crisis 2009 39 Indigenous Australians disadvantage 135 land rights and shale gas industry 105 STEM education and 85–6, 138 workplace opportunities 125 Indonesia 2, 28, 31, 37, 43, 112, 123, 140, 156, 172 Australians and 26, 40, 43 collaborative research with 142 Indonesian language studies 36, 93 Industrial Revolution 118 industry analysis, Australian employment 17 industry development, investment in 50–1 industry innovation, ratings xv, 133–4 industry partners 162 industry policy 1, 127 infectious diseases 111 information technology skills 7, 68, 74 infrastructure 2, 4, 11, 12, 127 coal seam gas industry and 150, 151 inadequacy 6 nineteenth-century expansion 9 transport 158 innovation xxii, 62, 124–5 agriculture 14, 112, 113, 156 Asia and 31, 171 Australia and 4, 60–2, 133 barriers to 168 definitions xviii education 72 future directions 69 infrastructure 8 manufacturing 15 mining industry 15 need for 8 productivity increases and 47–69 prosperity and 144–6 public policy 10, 16 skills investment and 59 STEM subjects and 128, 139 technological 120, 122, 123, 149 workforce and 19–20, 73–6 innovation agenda 2015 67 innovation clusters 109, 126, 129 innovation strategy 3, 56, 166–9 lack of 162, 165 OECD (2010) 51 Institute of Public Administration Australia 6, 133

Index

institutional learning, Indigenous Australians and 86 institutional reforms, need for 47 intellectual property 10 intercultural skills, need for 23, 37 interdisciplinary research xvii, xviii, xix, xx– xxii, xxiii, 120, 122, 126, 127, 131 Cochlear 58 environmental studies 97 technological change 147 interdisciplinary skills 71, 72, 74–5 international attitudes, STEM subjects 138–9 International Baccalaureate 93 International Council on Science 119 international relationships, Australia and 7, 92–3, 145, 146 international students 30–1, 125, 133, 140 internships 76 interpersonal skills 75 inventions, history of 63 investment 7–8 increase in 136 industry development 50–1 research and development 111 Investor Group on Climate Change 101 Ireland 44, 172 irrigated agriculture 100 Islamic financial services 18, 34 Israel 19, 51, 55, 80, 162 Italian studies 36 Japan 26, 27, 28, 30, 37, 43, 51, 55, 58, 77, 80, 93, 162 collaborative research with 142 Indigenous art and 39 investment policy 40 Japanese language 36 Jetpack Joyride 59 Jetstar 41 Johnson, Lesley 82 Joshi, Nalini 83 ‘joy of invention’ 63 knowledge economy 52, 61, 125–6 Korea 28, 30, 58, 77, 80, 81 labour market, Asian born 42 labour productivity 49, 146 labour shortages, rural 155 land availability, agriculture 34 land security, Australia 28 language education 93, 124, 127 tourism and 33 leadership 11, 134, 136 legal system 2, 127 Leighton Group 41 Leopard, The (di Lampedusa) 6 lifestyle farms 111

linear approaches, innovation 167 Linfox Logistics 41 linguistic barriers, Asia-Pacific region and 25, 35–7 Linkage Program 54 liquid natural gas (LNG) exports 30 literacy skills 5, 74, 138 livable cities, Australia 106, 159 Livability survey 4 living standards improvements in 12, 127 nineteenth-century 9 productivity and 48, 49 Lo Bianco, Joseph 35 low-skills occupations 16 Lowy Institute poll 2015 26 McCarthy, John 108 McPhee, Peter xiii Macquarie University 58 Malaysia 31, 43, 140 management inadequacy 6 innovation and 168 skills 61, 74, 76 Mandarin studies 36, 45 manufacturing sector Australian performance 15–17, 134, 144–5 future of 122 industry reform 51 role of 2, 3 markets 49 agriculture 14 Asia 24, 28–35 governments and 134 mass manufacturing 16 Masters, Geoff 85 mathematics 78 Australian students and 78–9, 128 compulsory subject 72, 89, 139 decline in 72, 77–8, 138 promotion of 81 Maximum Residue Limits 98 mechanical harvesting 114 medical knowledge, increase in 58 medium-sized enterprises 163 megacities, Asia 31 Melbourne 39, 100, 106 railways 9 traffic congestion 107 mentoring programs, STEM teachers 84 methane hydrates 150 microeconomic reform 7, 134, 146 middle classes, Asia 27, 28, 40 ‘middle performer’, Australia as 8 middle suburbs 159 Migrant Intake into Australia (Productivity Commission) xiv

179

180

Securing Australia’s Future

migrants Asian 170 business investment by 41 languages of 36 migration policies, advanced counties 172 mining industry Asia and 30 Australia 14–15, 122, 134 China and 35 minority groups, opportunities 8 misunderstandings, Asia-Pacific and Australia 26–7 monolingual speakers, Australians 93, 141 Monsanto 117 Muir, Ian 60 multiculturalism, Asian diaspora and 172 multidisciplinary approach, technological change 149 multi-factor productivity (ABS scale) 48, 49 multilingualism, Australia and 93 multinational research 24 Murray–Darling Basin 100 nanotechnology 68 National Academies of Sciences, Engineering and Medicine (US) x, xix, xxiii, 74 National Asian Languages and Studies in Australian Schools Taskforce 37 national identity, agriculture and 155 National Innovation and Science Agenda (2015) xv national level coordination, STEM education 87–8 National Livestock Identification System 98 national policy, innovation 162 National Research Council (US) x National Research Infrastructure Roadmap 2016 68 Native Title lands 105 natural assets, Australia 98–9 natural gas 101, 103–6, 119, 150 Nepal 31, 140 Netherlands 77, 80 New Colombo Plan (Cth) 37 New South Wales 58, 98, 103 female STEM participation rate 84 New Zealand 26, 80 Australian investment in 40, 123 migrants from 173 Newspoll survey 2013 93 niche markets 112, 148, 154 Nintendo DS 59 non-innovative businesses 168 non-school qualifications 73–4 non-technical skills, Cochlear 58 North America 31, 43, 105, 151 Northern Territory 104, 150

Norway 19, 80, 82 nuclear safety issues 118–19 numeracy skills 5, 138 nursing 78 Office of Technology Assessment (US) 66 oil imports 109–10, 119 older employees 20 Omari, Arshad 89 online services 109 Organisation for Economic Co-operation and Development (OECD) countries 8, 12, 19, 64 air pollution and 99 Australian rates compared with 78 education spending 72, 162–5 innovation strategy 2010 51 knowledge basis 52 research and development 128, 146 scientific literacy 77–8 standards 47, 50 organisations, innovation and 167–8 out-of-field teachers 82, 83, 138 outside-classroom learning experiences, STEM 86 overseas students, STEM skills training 80–2 Pacific area, Australian economy and 23–46, 123 Page, Scott xiii–xiv participation rates (Australia), science 137–8, 139 partnerships, STEM education and 86–7 patents 9, 117 Pathways to Impact 54 pay incentives, STEM teachers 82 peak hour traffic 107 performance, Australia 3, 4, 122 personal identity, STEM subjects and 90 Perth 100, 106 pesticides 114, 155 PhD programs industry-based 76 STEM subjects 79, 138 planning, cities and 106 platform licences 59 PlayStation 59 politics, environmental performance and 100 pollution research 31, 108 population components, Australia 27 population growth agriculture and 112 Australia 9 cities 158 pressures 111 postgraduate research, reduction of 115 powertrains 110

Index

PricewaterhouseCoopers report 30, 40, 41, 80 primary commodities exports, Asia 28 Primary Connections 87 primary teachers, STEM skills 82–3, 84 Prime Minister’s Science Engineering and Innovation Council (PMSEIC) xviii–xix priority setting 11 problem-solving skills 66, 76 STEM subjects 91–2 processed food imports 113, 154 procurement contracts 164 production costs, fracking 151 productivity agricultural 13, 111, 156–7 future of 144 growth (Australia) xx, 114, 128 innovation and 47–69 STEM education and 137 Productivity Commission xiv product specialisation, agriculture 112 professional development Indigenous education 86 STEM subjects 90–1 Professional Scientists Australia 73 Program for International Student Assessment (PISA) survey 77, 81, 138 project steering committee, ACOLA xiii–xiv, xxii Promising Practices for Strengthening the Region STEM Workforce Development Ecosystem 74 prosperity, Australian xxi, 144 Psychology of the Inventor, The (Rossman) 63 public policy, development of 10 public sector research 50, 162–4 Australia 52–5 innovation and 16 productivity and 146 public transport, cities and 158, 160, 161 pyrethrum production 114 qualifications study 73, 137 quality, definition of 131 quality of living 4 Queensland 33, 98, 104, 150 racism perceptions Asia-Pacific region 26 Indian film industry and 39 Rahman, AR 39 rail freight 160 railways, Melbourne 9 rainfall Australian trends 21–2, 98–100 variability 155 RAND Corporation 64, 148

rankings environmental sustainability 21 STEM subjects (Australia) 138 recycled drinking water 118 regulations Australia 133, 136 industrial safety 119 shale gas industry 151–2 remedial programs, mathematics 88 renewable energy sources 101, 102, 103 report card, Australian STEM skills 77–82 research and development Asia and 31–2 commercialisation of 55 farmers and 113 future directions 68 increases 128 innovative 96 manufacturing and 144 multinational 127, 129 productivity and 47, 48, 49–50 support for 162–5 workforce 19 research applications 51–6, 163 research articles Asian countries 141 China 31 research collaboration Asia and 141–2 China and 32 India and 39 Research Councils (UK) 54 research intensity, definition 146 research partnerships 55, 125 research translation xxi–xxii, 48, 55–6 resilience, problem solving and 66 re-skilling 149 returns to scale 49 Review of Australia’s Research Training System xxii riches, Australia’s history of 9 Rio Earth Summit 1992 99 risk Asian business opportunities and 34–5 innovation and 146 Rizvi, Fazal 45 RMIT University International 41 road transport, inefficiencies 110 Roberts, Chris 58 role models, STEM subjects 90, 91 Role of Science, Research and Technology in Lifting Australia’s Productivity, The (SAF04) xxi, 22, 47, 58, 69, 94, 144–6 Rossman, Joseph 63 Rowling, JK 66–7 Royal Society (UK) 115 rural populations, transport accessibility 160

181

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Securing Australia’s Future

SAF01 (Australia’s Comparative Advantage) xiv, 22, 27–8, 30, 50, 69, 95, 102, 133–6 SAF02 (STEM: Country Comparisons: International Comparisons of Science, Technology, Engineering and Mathematics (STEM) Education) xi, xv, 20, 22, 71, 72, 80, 92, 94, 137–9 SAF03 (Smart Engagement with Asia: Leveraging Language, Research and Culture) xv, 24, 25, 35, 43, 45, 94, 140–3 SAF04 (Role of Science, Research and Technology in Lifting Australia’s Productivity, The) xv, 22, 58, 69, 94, 144–6 SAF05 (Technology and Australia’s Future: New Technologies and their Role in Australia’s Security, Cultural, Democratic, Social and Economic Systems) 62, 64, 147–9 SAF06 (Engineering Energy: Unconventional Gas Production) xv, 14, 22, 103, 105, 120, 150–3 SAF07 (Australia’s Agricultural Future) xv, 22, 110, 120, 154–7 SAF08 (Delivering Sustainable Urban Mobility) xv, xvii, 10, 22, 109, 120, 158–61 SAF09 (Translating Research for Economic and Social Benefit: Country Comparisons) xv, 51, 55, 56, 162–5 SAF10 (Skills and Capabilities for Australian Enterprise Innovation) 56, 59, 60, 62, 73, 94, 121, 166–9 SAF11 (Australia’s Diaspora Advantage: Realising the Potential for Building Transnational Business Networks with Asia) 43, 45, 94, 170 scholarships, Indigenous education and 86 school subject choice, Victoria 88 science, Australian participation rates 78–9, 89, 124, 138, 139 Science by Doing 87 Science in Australia Gender Equity (SAGE) program 83, 84–5 Science, Technology, Engineering and Mathematics in the National Interest: A Strategic Approach xv see also Securing Australia’s Future projects science/maths teaching 89, 124 scientific literacy 74, 77, 80, 115 Scientists and Mathematicians in Schools 87 sea-level rise cities and 159 Pacific nations and 32 secondary education, STEM training 78, 89 sector opportunities 12–19 sector performance ratings 134 Securing Australia’s Future projects x, xiii–xv, xvii–xx, xxii, 12, 17, 23, 26, 69, 92, 95, 120, 121, 122, 126–9, 131–2

see also Australian Council of Learned Academies (ACOLA); SAF01; SAF02; SAF03; SAF04; SAF05; SAF06; SAF07; SAF08; SAF09; SAF10; SAF11 sedimentary basins, natural gas 150 self-driving cars 147 senior management, Asian cultural literacy and 42 services industries 134 future of 122 performance 17–19 role of 2, 3 threats to 19 shale gas energy 14, 97, 102, 119, 150–2 economics of 103–4, 105 policies (2014) xv Shanghai region, STEM skills 81 shortages, STEM teachers 82–3 Singapore 10, 27, 28, 37, 43, 44, 50, 51, 55, 77, 80, 81, 162 single-language barrier 35–6 skilled workforce 128 agricultural 157 reductions in 115 shortages 69, 76, 124, 145 Skills and Capabilities for Australian Enterprise Innovation (SAF10) xxii, 56, 59, 60, 62, 69, 73, 94, 121, 166–9 skills development 56, 59, 65, 134 small and medium-sized enterprises (SMEs) 53, 144 small family farms 116, 117 Smart Engagement with Asia: Leveraging Language, Research and Culture (SAF03) xxi, 24, 25–8, 35, 45, 94, 140–3 ‘smarter country’ policy 23–46 smart farming 113–14 smart growth cities 159, 161 social inertia 110 social rankings, comparative 4 Australian advantage 133 Social Science Research Council of Australia xxiii social sciences environmental science and 97, 100 future directions and 119 socioeconomic background, STEM education and 88 ‘soft skills’ 61, 125 soils 155 solar (rooftop) power 119 solar research 103 South Asia 26 South Australia 102, 104, 150 South-east Asia 26, 35 South Korea 31, 51, 140, 162 collaborative research with 142

Index

investment policy 40 specialised agricultural products 154, 155 spending, investment versus 69 Standing Council on Tertiary Education Skills and Employment 74 start-up companies 55, 163 Steering Committee, Securing Australia’s Future Program xxii STEM: Country Comparisons: International Comparisons of Science, Technology, Engineering and Mathematics (STEM) Education (SAF02) xi, xxi, 20, 22, 71, 72, 80, 92, 94, 137–9 STEM (science, technology, engineering and mathematics) skills xi, xiv, xvii, xx, xxiv, 2, 7, 19, 20, 47, 56, 61, 71, 74, 76, 94, 121, 124 age level and 90 Asian countries and 93 Australian report card 77–82 decline in 4–5, 77–80, 138 encouragement of 128, 139 HASS skills and 168 importance of 137 Indigenous people and 85–6, 125 innovation and 167 national characteristics 73 national promotion of 80 participation rates 78–9 qualifications (manufacturing) and 144 teaching improvement in 82–3 tracking 89 strengths, Australia 1–22 student participation, STEM skills 72, 77 student placements 54 students, Chinese 45 suburban workplaces 109 sunlight bottling 64 superannuation industry 18 super-economies, Asian 27 sustainability 16 cities 159 collaborative research and 110–14 goals (Australia) 126 growth targets 120 Sweden 19, 50, 51, 55, 80, 162 Swinburne University of Technology 60–1, 166 Switzerland 10, 77, 80, 81 Sydney 39, 44, 106 systems approaches 167 Taiwan 30, 80, 81 Tapsell, Ross 92 targeted funding, female STEM teachers 84 taxation system, Australia 2, 3, 12, 127, 133, 136 research and development 54, 163

teachers professional development 82 qualifications 73 status 71, 73, 128, 137, 138 team-building skills 75, 125 technical skills 61, 76, 166–9 technical staff, humanities staff and 59 technological change 63, 147–9 agricultural productivity and 114 resistance to 117 technological education 65, 124, 148 technological evaluation 149 technological harmonisation 28 technological innovation 62–8, 146 technological lock-in 102 technology advances 16 definition 63 importation of 145 Technology and Australia’s Future: New Technologies and their Role in Australia’s Security, Cultural, Democratic, Social and Economic Systems (SAF05) xxi, 62, 64, 69, 147–9 Technology as Experience (McCarthy and Wright) 108 technology-based industries, humanities skills and 57 technology capacity, Australia 64–5 technology reports, ACOLA 64 technology research and development 128 need for 48, 49 technology transfer offices 55 ‘technology winners’ 68 telecommuting 159 tertiary education, innovative skills 76 tertiary participation rates, STEM subjects 78–80, 84 Thailand 31, 43, 140 thirty-minute city 108 3D printing 62, 64 tight gas 150 Torok, Simon xv, xvi tourism 20, 21 tourism industry 33–4, 39 trading partners 27 Asia 34, 172 China 140 traditional agricultural markets 113 traditional manufacturing 16 Translating Research for Economic and Social Benefit: Country Comparisons (SAF09) xxi, 51, 52, 55, 56, 69, 162–5 transnational businesses 170, 171 transport infrastructure 148, 158, 159–60 future cities 106, 107, 108, 109–10 travel options, cities 108

183

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Securing Australia’s Future

Treasury Ten-Year Review (UK) 81 Tyler, Russell 71 unconventional gas production xxi, 104, 150–3 undergraduate studies, Asian culture 37 underrepresentation, Asian migrants 171 unemployment, STEM-skilled workers 73 United Kingdom 26, 40, 51, 80, 141–2, 162 investment in Australia 27 language deficiencies 37 migration from 173 research translation 54, 55 STEM primary teachers 83 trade relations with 27 United States of America (USA) 10, 16, 21, 26, 31, 40, 44, 50, 51, 58, 80, 93, 109, 141, 142, 162, 172 Indigenous people 80 investment in Australia 27 scientific awareness 91 shale gas production 151 universities Asia–Australia collaboration 143 mathematics incentives 89 US 93 university entry standards, decline 78 university research, economic benefits 52 unprocessed foods, traditional markets 113 urban design 96, 97, 108–9, 159 urbanisation, Australia 9, 106–8, 158 urban mobility xxi, 10 urban planning 120, 161 urban transport 96, 97, 158–61 improvements in 129 limits to 108 value-added industries 2, 16, 19, 22, 116, 120, 127 agricultural products 112–13, 123 values and beliefs STEM education and 90 technological change and 117–18

vehicle emissions 161 Victoria 98, 150 Vietnam 31, 43, 140, 172 Australian citizens from 43 Vietnamese studies 36 vitamin A deficiency 117, 118 Vocational Education and Training 31, 79 Western Australia 98, 104, 150 university entrance incentives 89 water extraction, shale gas industry 151 water resource management 100, 107, 155, 157 Watt Review of Research Policy and Funding Arrangements (2015) xv wealthy countries, STEM skills 82 Wells, HG ix Westpac 60 White Australia Policy 26 wind power 119 wine industry, Chinese markets 45 women opportunities 8 STEM teaching and 79, 83–5 workforce participation 20, 125 wool industry 12 workforce 5 future 115–16 inclusive 20 innovation 145–6 participation rates 8, 19–20 scientific knowledge and 96 work-integrated placements 164 workplace skills 2, 124–5, 127, 145, 166–9 collaboration and 56–62 innovation and 73–6 manufacturing 15 need for 48 workplaces, future of 108 world demand, natural gas 105 Wright, Peter 108 Yeap, Jason 40