Transforming our Economy from Innovation to Collaboration

Today Prime Minister Malcolm Turnbull and Christopher Pyne, Minister for Industry, Innovation and Science, will release an innovation statement.

Since the election of Prime Minister Turnbull, the word innovation has been bandied around without much serious discussion given to what the concept actually means. The former Advanced Manufacturing CRC (predecessor to the current Innovative Manufacturing CRC) has encapsulated this concept with the offer of a very useful definition; inter alia, ‘The creation, development, protection and commercialisation of know-how, new products and/or processes that pre-empt the market by the application of scientific and technological skills.’

The CRC has taken the view that this definition is important because it recognises that innovation is a formal process that can be carried out by an individual, a company or publicly funded research organisation, or any of these collaboratively, and that the driver of innovation has to start with how best Australia can create and manage intellectual property.

Earlier, in 1996 and inspired by its then Executive Director, Professor Trevor Cole, The Warren Centre for Advanced Engineering of The University of Sydney, brought focus to bear in Australia on the importance of innovation. The annual Warren Centre Innovation Lectures, which commenced in that year, have since played an important role in raising awareness of technology and innovation in Australian industry and in creating role models.

With another innovation statement to be issued soon by the Turnbull Government, Paul Hodgson, a LinkedIn commentator, reflected last week on the history of statements during his 24 year career in the innovation system, and what he’d like to see in the next statement. Paul dutifully listed some major national innovation reviews and statements that have occurred during this period. He pointed out that Section 1 “Science and Technology in Context”, in a little over five pages at the beginning of the “1993/94 Science and Technology Budget Statement”, captured our national challenges and opportunities with words and intent that are still very much relevant today, paraphrasing, “innovation is one of the keys to economic development … a weakness in the ability to exploit our R&D in many fields … a high priority to establishing Australia’s place in Asia … a clear sense of direction, planning and leadership are needed to achieve our goals … our most urgent task is to build an innovative culture in industry … above all, we need a cultural change – among business leaders, decision-makers, and the community generally – which recognises the major significance innovation has for building national competitiveness.”

Paul also referred to other ‘innovation’ reviews and statements as follows, all of which I remember too.

  • 1995 – “Innovate Australia”
  • 1996 – “Going for Growth”
  • 1997 – “Investing for Growth”
  • 2001 – “Backing Australia’s Ability – An Innovation Action Plan for the Future”
  • 2004 – ‘Building Our Future through Science and Innovation”
  • 2007 – “Global Integration: Changing Markets, New Opportunities”
  • 2008 – “Venturous Australia – Building Strength in Innovation”
  • 2009 – “Powering Ideas: An Innovation Agenda for the 21st Century”
  • 2013 – “A Plan for Australian Jobs”
  • 2014 – “Industry Innovation and Competitiveness Agenda”

Paul concluded by asking why our national innovation challenge still persists 22 years later?

Referring to other perspectives, for my part, I noted that in 2008, the Australian Innovation Research Centre at the University of Tasmania identified five key dimensions of a healthy innovation system to be strengthened by government action, i.e.

  • opportunity identification;
  • knowledge creation and distribution, including higher education and research;
  • business development and production capabilities;
  • financial risk management; and
  • knowledge and other technological infrastructure.

It is worth noting that the Howard Government Electronics Industry Action Agenda focused over the period 2003 to 2007 on at least two of these dimensions i.e. opportunity identification as well as business development and production capabilities. It was recognised that the ongoing outcomes of this industry-led program, and other like science/technology related agendas, could be strengthened by government policies and programs which focus on global integration, hence the evolution of the then Government’s ‘Global Opportunities’ program. Put simply, it was realised that our innovation system needed to be globally ‘market facing’ and marching to the tune of identified opportunities and challenges which can be realised by the application of Australia’s  hitherto untapped technological capabilities and abilities.

Back in July 2005, to further this aspiration, and as part of the above-mentioned Electronics Industry Action Agenda, the Australian and Taiwan ICT industries agreed to co-operate in the mutual development of their electronics and ICT sectors through the implementation of a program of engagement guided by a strategic framework agreement (ATSFA) as a logical consequence of an active program of activities developed between the key electronics industry associations representing both countries.

For the Taiwan side, the Institute for Information Industry (III) was assigned responsibility to communicate with the Taiwan Government and to participate in areas assigned. For the Australian side, it was decided that the Electronics Industry Action Agenda Strategic Leaders, would coordinate engagement from the Australian side and communicate with the Australian Government. The truly unique ATSFA addressed five key pillars of engagement (i.e. partnership and collaboration).

  1. Technology R&D
  2. High Value Added ICT Manufacturing
  3. Strategic Alliances
  4. Investment Collaboration
  5. Trade Facilitation

However, persevering for only a few years, the Australian side soon lost interest in this approach. Nevertheless , given the success of Taiwan’s industry development record over the 50 years, it has to be recognised that the five core pillars of engagement embodied into ATSFA all need to be addressed simultaneously by Australian industry and governments wishing to succeed in building new globally focused,’ value adding’ manufacturing enterprises over the long term.

Now, in the context of the Coalition Government’s current policy framework, the ‘growth centre’ model for advanced manufacturing has five key elements, as follows.

  1. Industry led – emphasis on engaged enterprises (not observers)
  2. Focus on engaging Australian companies with global supply chains and (therefore) markets
  3. Engagement and collaboration on projects and programmes
  4. Achieving all Growth Centre objectives by bridging the commercialisation “valley of death”
  5. Public: Private funding giving way to Private: Public funding over four years to enable sustainability

However, it is my view that this model can be improved by incorporating other tenets of the abovementioned ATSFA model, in particular, by seeking global strategic alliances, a higher focus on attracting international investment, and by strengthening capabilities in trade facilitation. In a functional sense, it is increasingly recognised that more work needs to be undertaken by industry, in association with Austrade, in actually exploring for and identifying technology gaps and opportunities in global markets.

On the subject of strategy, the Advanced Manufacturing CRC has also written about the practical aspects of strategy, reminding us that ‘a good strategy does more than urge us forward toward a goal or vision; it honestly acknowledges the challenges we face and provides an approach to overcoming them. Focus needs to be determined through a rigorous process of choice.’

It can argued that these latter considerations clearly need to be driven within a national strategic framework which could best be driven by the establishment of an ‘Economic Development Board’ comprising industry, business and government representatives. Unlike most other countries in the developed and developing world, Australian economic development is not strategically driven by a coordinating agency responsible to Executive Government. Moreover, none of the central government agencies or industry portfolio agencies (or the Productivity Commission for that matter) have this clearly defined role as a core mission.  By way of example, Singapore’s Economic Development Board (EDB) is a shining example of how national economic policies can be driven strategically to ensure that Singapore is truly an ‘agile’ economy.

In summary, it is arguable that a new innovation policy needs to focus strategically on building large scale, advanced manufacturing capability embodied by ‘new industry’ creation and capable of generating over the long term substantial levels of new revenue for Australia’s external revenue account.

In the absence of an overarching strategic framework, any innovation policy which just focuses on ‘start-ups’  risks committing Australian industry to no more than ‘cottage industry’ status incapable of collectively building the revenue flows necessary to sustain Australia’s standing of living. If we have learnt anything from Australia’s mineral industry, it has been the realisation that this industry grew by developing large mining enterprises capable of generating substantial revenue flows for the nation. Our mining industry has not been characterised by a raft of ‘small show operators’ struggling to remain viable.

I agree with another recent LinkedIn commentator Anthony Head, who suggested that we needed to move on from the language of ‘innovation’ and to embrace instead ‘collaboration’. I would further argue that Australians need to ‘collaborate to compete’ and conclude with the Coalition Government’s recent response to the Harper Review which, according to Treasurer Scott Morrison, “sets out a productivity and competition agenda that, combined with our efforts to create a better tax system, will boost innovation, open up new markets”, and which will, according to the Treasurer, “see Australia prosper in the years ahead”.

It will be interesting to see if whether or not today’s announcement with its four anticipated themes of talent and skills, culture and capital, collaboration (hooray!), and government as an exemplar, will serve to deliver on the Treasurer’s rhetoric!

 Note: For more commentary on innovation, readers are invited to  visit http://openforum.com.au/innovation-featured-forum

Proposed Wonnarua National Mining Park, NSW

Six panelists were invited to participate in the ‘Reuse of Mined Landscapes’ session of the Mine Rehab Conference 2015 held in Singleton on 26 March 2015, were asked to offer up a one minute vision of the future of the Hunter Mined Landscape.

The following outlines my ‘vision’:

Proposed Hunter Valley (Wonnarua) National Mining Park

– embracing the mining and mining purposes lands from the Port of Newcastle, through the Lower Hunter, Cessnock through to the Upper Hunter.

A regional, collaborative, multi-land use strategy which will provide for development within rehabilitated mined areas with the following uses,

  • native flora and fauna habitat conservation – all connected through existing and proposed corridors;
  • ‘soft adventure’ recreation (e.g. mountain bikes, horse riding,  water sports etc);
  • coal mining heritage (museum type) sites, geosites and geotrails;
  •  sites set aside for renewable energy generation (solar arrays, wind farms, biomass production) with associated light industrial sites for industry services and ‘value adding’ manufacturing;
  • innovative, food production and ‘value add’  manufacturing; and
  • engagement with indigenous Australians – the Wonnarua peoples of the Hunter Valley.

As one key outcome, delivering a major geotourism product of national and global significance, recognising that geotourism is ” tourism which focuses on geology and landscape as the basis for providing visitor engagement, learning and enjoyment’, and understanding that visitors can also enjoy the wonderful cuisine and wines of the Hunter Valley!

 

It should be noted that with tourism destinations in mind for both domestic and overseas visitors, China has established 72 national mining parks, Taiwan has developed the Jinguashi Gold Ecological Park located close to Taipei, and Italy hosts the Tuscan Mining Global Geopark 

Surely, the unique selling proposition for the development of the proposed ‘Wonnarua National Mining Park’ is that it could be the largest national mining park in the world – a fitting celebration of the significant role that mining has played for Australia’s development – first undertaken by Europeans with coal mining in Australia commencing near Nobbys Head in Newcastle in the 1790s, with the first coal shipment leaving Newcastle in 1799!

Angus M Robinson, Chair of the Geotourism Standing Committee, Geological Society of Australia

 

 

Solar Power Comes of Age

http://www.foreignaffairs.com/articles/143066/dickon-pinner-and-matt-rogers/solar-power-comes-of-age?cid=nlc-foreign_affairs_today-031815-solar_power_comes_of_age_5-031815&sp_mid=48254423&sp_rid=d2FkZGVsbHR3QG96ZW1haWwuY29tLmF1S0

Solar power has been declared a winner before, only to flounder. It’s easy to remain skeptical today, given that solar power accounts for less than one percent of the global energy supply. But it is also expanding faster than any other power source, with an average growth rate of 50 percent a year for the past six years. Annual installations of photovoltaic panels increased from a capacity of less than 0.3 gigawatts in 2000 to 45 gigawatts in 2014�enough to power more than 7.4 million American homes. This time really is different: solar power is ready to compete on its own terms.

The momentum behind solar power is a result of innovations in regulation, industry, technology, and financing. In a number of markets, it no longer needs public subsidies to compete on price with conventional power sources, such as coal, natural gas, and nuclear power. The International Energy Agency, which has historically taken a conservative approach to evaluating solar power’s prospects, has projected that by 2050, in the best-case scenario, solar energy could be the single biggest source of power, generating as much as 27 percent of electricity worldwide.


If that happens, the consequences will be profound. Electricity will reach places that have never known what it means to get light or heat on demand. The price of electricity could fall, and utilities will have to figure out how to adapt. But the environmental gains, in terms of lower emissions of particulates, sulphur, and greenhouse gases, would be profound. 


THE POWER OF POLICY


Four factors lie behind the rise of solar power. The first is regulatory support. Around the world, governments have enacted a range of pro-solar policies, including requirements that utilities generate a given fraction of their electricity from solar power, feed-in tariffs (a guaranteed price per kilowatt of solar power), and subsidies to manufacturers of solar panels and the households that buy them. Policymakers have supported solar power for a number of reasons, including a desire to reduce emissions, diversify their countries’ energy supplies, and create jobs. Perhaps most important, they recognized the long-term potential of solar power and wanted to foster a market for it. 


Germany, the country with among the most aggressive polices, added 35 gigawatts of solar-panel power in the last ten years, driving the majority of global demand for much of that time. In the United States, a set of mandates requiring utilities to produce a certain amount of electricity from renewable sources and a federal tax credit that allows taxpayers to write off 30 percent of the cost of installing solar power systems have helped the power source take off. From 2000 to 2013, solar-panel capacity in the country increased from 18 megawatts to more than 12,000 megawatts�enough to power almost two million homes. 


Not surprisingly, regulatory support has not always been economically efficient, but it has been effective in creating enough demand for a large solar-panel industry to take shape 
and learn how to compete. Even as the industry has endured painful shakeouts�>in the middle years of the last decade, in particular, dozens of solar-panel manufacturing companies went bankrupt�installations have continued to soar, and the industry has become much more competitive. Almost all solar installations in California, for example, took state subsidies in 2007. By the end of 2013, less than 40 percent did. Federal subsidies are still available, of course.


The second factor is industrialization, chiefly in China. Beginning around 2005, manufacturers there entered the solar-panel market to chase growing global demand, and they now account for nearly two-thirds of global production of solar panels. Chinese competition squeezed profit margins and drove many suppliers out of business, but it also led to improved production processes and new economies of scale, cutting costs substantially. 


The last decade has seen technological innovations in manufacturing, low interest rates, leaner supply chains, and improved economies of scale; the price of polysilicon, the raw material used to make solar panels, fell by 90 percent over this period. The net result is that the cost of solar panels has fallen by 
80 percent since 2005. Prices are still falling, by five to 12 percent in the first half of 2014, and there is room for them to fall further. So-called soft costs�>meaning the cost of everything but the equipment, such as permits, installation, and maintenance�account for almost two-thirds of the total price tag for U.S. residential solar systems. Soft costs are about one-third of the price tag in Germany, where, among other factors, national standards have simplified installation and streamlined the permitting process.


The third factor behind the rise of solar power is technological innovation. Slowly but steadily, solar panels have become more efficient. Efficiency rates have peaked at about 20 percent�meaning that a panel is able to generate two watts of electricity for every ten watts of sunlight hitting it�but that figure could grow as the industry experiments with a number of new techniques and materials. If it does, the savings could be significant: every percentage-point increase in efficiency can translate into a five percent cost reduction on the entire system. There is also room for greater efficiency after the electricity is generated, when power is lost as direct current (produced from the panels) is converted to alternating current (required for distribution by the electrical grid). 


The fourth and final factor involves financing. Setting up a solar system entails high up-front costs. It takes about $15,000 to $20,000 to install rooftop panels on a typical house, and even though the investment can pay off over time, many households and businesses are wary of spending so much cash 
at once. New financing models are addressing this problem. Under third-party ownership systems, homeowners sign contracts with companies that install and maintain the solar panels. In return, consumers pay either a set monthly rate or a fixed price per unit of power�paying no cash out of pocket but still getting lower electricity bills. In 2012 and 2013, more than two-thirds of the installations in California used this financing approach, one reason the state is leading the country when it comes to solar power. 


MORE FOR THE MONEY


Given these trends, it is not a stretch to assume that in many markets, the costs of solar power will continue to decline by eight to 12 percent a year. First Solar, an Arizona-based manufacturer, expects its solar-module production costs to fall from 63 cents per watt in 2014 to about 40 cents per watt in 2017. Utilities that rely on coal and natural gas�commodities whose prices are subject to market swings�could never be so confident of continuous year-on-year reductions. 


The development of technologies to store electricity�in particular, batteries�will also help solar power’s development. Without storage, solar power can be harnessed only when the sun is shining; with storage, it can be used when power costs are highest. The costs of battery storage have declined by about 70 percent over the last five years, and already, companies such as SolarCity are packaging solar panels with batteries. The price could fall by another 70 percent in the next decade as the technology and manufacturing methods improve, thanks in part to battery research conducted by consumer electronics companies such as Panasonic and electric-vehicle companies such as Tesla.


It’s not safe to bank on great leaps forward in efficiency and storage. But even without such advances, solar power is making inroads into major markets. In the United States, rooftop solar panels are already competitive in places with lots of sun and high power prices, such as Hawaii and parts of California. As the cost of solar power continues to fall over the next decade, it could make economic sense for consumers in a dozen U.S. states by 2020 and for specific customer segments�such as those with high electricity consumption and well-positioned rooftops�in more than 
25 states by 2030, even without government subsidies. In much of Australia and central and southern Europe, solar power is coming close to reaching an economic tipping point. And China, where many cities are so dirty that snow turns gray by the time it hits the ground, is pushing hard, with a goal of installing 70 gigawatts of solar power by 2017.


In the Middle East, solar power is competing against oil-fired electricity generation, which costs 12 cents per kilowatt-hour. In 2014, the Dubai Electricity and Water Authority agreed to purchase solar power at half that price. Solar power now accounts for less than 100 megawatts of capacity in sunny Saudi Arabia, chiefly because oil-
powered generation is so cheap, with providers paying only a little more than the cost of production per barrel (about $5). As oil-producing countries turn away from burning oil domestically in order to sell it for higher prices on the international markets, the case for solar power will get stronger. Heeding that logic, the Saudi government has unveiled plans for two gigawatts of solar power by 2015 and 41 gigawatts by 2032.


Japan is not as sunny, but it is also betting big on solar power, as it seeks alternatives to the nuclear plants it closed in the wake of the 2011 Fukushima disaster. It has established generous feed-in tariffs for solar power and other alternative sources. Japan installed more than eight gigawatts of solar power in 2014 and has set an overall goal of having renewables account for 20 percent of its power by 2030, about double the figure before the disaster. There is also room for more solar power in Asian countries, such as China and South Korea, that rely heavily on liquefied natural gas, the price of which is linked to oil and can therefore swing up and down.


In places that are not yet electrified, such as much of South Asia and Africa, solar power is usually cheaper and easier to access than conventional energy sources. In India, where about 100,000 villages lack access to electricity, solar power is already less expensive than the likely alternatives, such as coal or diesel (and often more reliable). Solar power also eliminates the need to wait for transmission lines to reach a town. India’s new prime minister, Narendra Modi, appears to see the benefits, announcing in January the ambitious goal of building 100 gigawatts of solar power by 2022, which could make India the largest solar power producer 
in the world. For villages that aren’t connected to the electrical grid, the combination of solar panels, efficient lighting, cell-phone plugs, and electric water pumps could improve the quality of hundreds of millions of lives.


THE COMING DISRUPTION


As the rates for solar power begin to match the rates for traditional energy sources in more and more markets, the capacity of solar power installed each year could increase from about 45 gigawatts today to more than 200 gigawatts by 2025. That would fundamentally disrupt the electric power sector. 


In Europe, the proliferation of solar panels, wind turbines, and other renewable sources is changing the composition of the electricity sector. The market share of renewables there rose from six percent of the total in 2006 to 12 percent by the end of 2013, and it has risen much more in some countries. That significant new supply, combined with low growth (or even shrinkage) in demand due to efficiency gains and slow economic growth, has helped push down the wholesale price of power. The price that consumers pay is still high, however, due to the cost of infrastructure plus various taxes. European consumers pay an average of roughly 26 cents per kilowatt-hour, compared with the 12 cents Americans pay.


High prices in Europe have made 
it easier for renewables to compete, 
as have requirements that utilities give priority to renewable power on 
the grid. But European utilities are suffering in part because of this growth in renewables. From a peak of $1.3 trillion in 2008 to the end of 2013, their market value declined by half. In 2014, Germany’s biggest utility, E.ON, announced a radical move: in order to focus on renewable power, it will spin off its nuclear and fossil fuel power plants into a separate company. Japan’s utilities, too, have found themselves unprepared for the solar surge, and are threatening to hold back on access to the grid.


Utilities in parts of the United States are beginning to face similar problems. Traditionally, U.S. utilities stayed profitable by capturing all new demand for electricity, but solar power is threatening that reliable revenue stream. In the first half of 2014, solar power accounted for a quarter of new capacity, and a house equipped with solar panels doesn’t buy as much power from the grid. The resulting drop in demand is shrinking the amount of new capital that utilities can invest, meaning that even if solar power continues to generate a relatively small fraction of electricity in the United States, it could have an outsized effect on the industry’s future. In a 2014 survey by the consulting company Accenture, 61 percent of utility executives said that they expected to see noticeable revenue losses as a result of the spread of distributed power sources, including solar power.


Solar power could shake up other sectors, too. In the housing industry, for example, the spread of rooftop solar panels could transform construction and design practices. In manufacturing, factories could relocate to areas with favorable conditions for low-cost solar power. In agriculture, hot countries that lack fresh water could harness solar power for desalinating and pumping water, enabling farmers to work previously infertile land. History suggests that when a commodity gets cheaper and cheaper, it gets used in new, unforeseen ways.


RISKS AND RESILIENCY


Amid all the optimism, it’s worth considering what might set back solar power. One possibility is that governments might dismantle or weaken their supportive policies. That could hurt, as it did when Spain cut subsidies in the wake of the financial crisis and when Germany lowered its feed-in tariffs. 
In both markets, the adoption of solar power slowed down, but the industry as a whole kept rolling. Indeed, the solar industry has proved resilient, coming back leaner and stronger from its painful shakeout a decade ago. 


The biggest risk in many markets is not that government support will go away but that long-standing regulatory issues will fester. In the United States, for example, utilities are concerned that solar consumers get a nearly free ride, since they rely on the grid on cloudy days and when the sun goes down yet no longer cover the grid’s fixed costs. And in some states, when consumers sell electricity back to the grid, they get paid the retail rate for it rather than the lower wholesale rate, a practice known as “net metering.”


In response, some utilities want to charge households with rooftop panels for access to the grid, imposing fees known as “demand,” or “capacity,” charges. That would change the economics of solar power substantially, depending on how high the fees went. Some utilities in the United States would like to recover the full fixed costs of distribution from solar customers and also end net metering. Regulators may not go that far, however. In 2013, for example, Arizona allowed its largest utility to impose a fixed charge on households with solar power, but the fee was much lower than what it wanted, and the state preserved net metering.


How and when the debate over recovering fixed costs is resolved in country after country will be one of the most important factors determining how fast solar power will scale up and how much of it will be centralized (in the form of large, faraway solar plants) and how much decentralized (on rooftops). Both sides could take their cues from the telecommunications industry. When the monopoly in that industry was broken up in the United States in the 1980s, new market entrants were guaranteed access to the existing infrastructure but had to pay reasonable fees that compensated existing providers for their services, while also leaving room for new competition. And it is worth remembering that an unprofitable utility sector benefits no one; a reliable grid is a national necessity. As SolarCity’s CEO, Lyndon Rive, told the Financial Times, “It is important that there is a grid.”


Compared with the regulatory dispute, other challenges look easy 
to deal with. One possible risk is the inevitability of higher interest rates (interest rates have nowhere to go but up), which would raise the costs of financing solar power. But there is strong demand among institutional investors for “yield cos”�publicly traded companies that package the cash flow from renewable energy. These low-risk investments should help moderate financing costs. Besides, higher interest rates would also affect other capital-intensive alternatives for generating power. 


Another risk is that lower-cost power sources, such as natural gas from shale deposits, could undercut the economics of solar power. In the short term, that may happen. In the long term, however, natural gas is more friend than foe to solar power. Natural gas tends to be a cheap and reliable source of flexible power that can complement solar-generated electricity by providing 24-hour backup. This reduces the costs of integrating solar power into the grid. Indeed, solar power is going strong in the place with the world’s lowest natural gas prices: North America. 


A third possible risk is that nuclear fusion or some other breakthrough will finally take hold. Perhaps, but that is a hypothetical. Better to bet on a proven technology that is seeing its sales booming and its costs falling. 


HERE COMES THE SUN


Coal, natural gas, and nuclear power, which today supply two-thirds or more of global power, are not about to disappear. But even at its currently low rates of market penetration, solar power has begun to shift the economics of electricity. This is the dawn of the solar age. 


If that sounds overly optimistic, consider another technology that went from curiosity to commonplace in a matter of decades: the automobile. When the first car hit the American street in the 1890s, skeptics sneered that the “horseless carriage” had no future. In 1900, there was only one car for every 10,000 Americans. In 1908, however, the Model T hit the market, making cars more affordable for many more people. By 1920, there were almost 900 cars per every 10,000 Americans. The global solar industry is at an analogous stage to where the auto industry was in 1920. Just as it was not yet the norm for Americans to have a car in 1920, it was becoming normal. And norms can change quickly. Between 1920 and 1930, the rate of car ownership shot up to 2,170 cars per every 10,000 Americans. The United States was now a car country. 


The next ten years could see something similar with solar power, but on a global scale. It would not be at all surprising, for example, if most new housing developments, particularly in the sunnier parts of Europe and the United States, came with solar power, or if most of those 100,000 Indian villages without power were 
lit up at night thanks to solar energy. Even without a great leap forward 
in efficiency and batteries, and even with halting and sometimes contradictory government policies, the momentum behind solar power has become unstoppable.

 

Australian Small Businesses and ‘Engines of Growth’ (22 March, 2015)

This weekend’s Chanticleer column in the AFR reported on a recent RBA organised conference in Sydney which, based on several presented research papers, seemed to conclude that the salvation to Australia’s post mining boom economy may well be found in a upsurge of activity within Australia’s 2 million strong small businesses. Chanticleer concluded that ‘small business is an ‘engine for growth’. Well other economies e.g. South Korea and Taiwan, which are characterised by the existence of millions of small businesses see ‘engines of growth’ in a different context – these are instead a focus on co-investment by government, business and industry on centres of new industry creation underpinned by emerging technologies. These ‘engines of growth’ actually create substantial levels of export revenues and new wealth for their respective nations.

It can be reasonably assumed that Australian economists seem wedded to the view that wealth is created ( and GDP growth measured) by simply increasing the level of activity within the domestic economy, particularly within the services sectors. By way of a simple analogy, no business creates a profit, despite an increase in internal business activity, unless that business creates added value by selling to external customers either products and/or valued added services.

To date, Australia has prospered by generating large levels of revenue from the sale of mineral resources to external custpmers. With these revenues now in decline, other areas of externally sourced revenues must be found, and we would argue that within that mix, ‘value added’ manufacturing must be included in a significant measure, even though it will take a good part of a generation to achieve the levels of revenues enjoyed by other competing developed and developing countries.

Just cranking up existing, internal service industry activity, is not an ‘engine of growth’ strategy, simply an exercise of ‘spinning wheels’!

Firing Up Those Engines of Growth

A meeting on 12th May 2015 with Advanced Manufacturing Industry Growth Chair- Andrew Stevens proved highly instructive from the viewpoint of my understanding that the Government’s Growth Centre strategy is not about ‘rearranging’ the desk chairs on the deck of the ‘ship of state’, but instead putting industry in the driver’s seat to charge up those ‘engines of growth’!

Of all the information that the Department of Industry and Science has made available to date, there is one key diagram that Andrew has pointed out to me that spells out the way in which Australia’s Innovation System is planned to work.
http://www.leisuresolutions.com.au/wp-content/uploads/2015/02/Industry-Growth-Centres-Overview.pdf

Simply put, it is now understood that the five (5) selected Industry Growth Centre engines will tap into nearly $1 billion of public funding from existing programmes to be made available to Australia’s key research science and research facilities for priorities determined with strong industry input and direction complemented by industry and business co-investment. The allocation of the previously announced $188.5 million dollars to the Industry Growth Centres per se will now fund the means of driving strategically a key part of Australia’s innovation system.

It is also understood the allocation of funding will be prioritised for each of the growth centres across the four areas of required outcomes that have been determined by the Government i.e.

* regulatory reform
* improved access to global supply chains and international markets
* improved engagement between research and business
* improved management and workforce skills

As Andrew explained, advanced (‘high value’ adding) manufacturing has essentially ‘horizontal industry’ dimensions impacting to various degrees on the industry growth centre ‘verticals’ other than just the Advanced Manufacturing Industry Growth Centre (AMIGC) itself – its drivers include digital (ICT) technologies and new and advanced materials which are themselves ‘horizontal’ in their nature of and ability to enabling and transforming existing industries, as well as creating new industries. Andrew’s extensive ICT industry background and experience will be of enormous benefit in understanding the total dimensions of the digital transformation that is now impacting on the global manufacturing sector, and that includes the various additive manufacturing technology platforms.

The Chair recognises that the Advanced Manufacturing IGC can also serve to ‘bridge the gap’ across the well known ‘valley of death’ in the new product development cycle.

The Chair is keen to attract into the AMIGC structure those manufacturing firms and organisations that are key to join as enthusiastic members, and to benefit from the co-investment and market access opportunities that will be created.

Andrew Stevens is an attentive member of this forum and has indicated to me a keen willingness to take on board any questions about this process and to seek input from our members about some key issues where industry input will be required and will help ‘make the difference’.

We are being welcomed aboard! It is surely incumbent on manufacturing firms, industry groups and other key stakeholders such as service providers to embrace this new strategic imperative as a distinct shift away from the essentially disaggregated ‘technology push’ ways of the past!

New Post

AEEMA Annual Report, 2006

HOR Inquiry – ‘After the Resources Boom’ – AEEMA Submission (August 2006)

Reflections On Effective Leadership

Values Driven Leadership

A Fresh Look at Ethics

ICT Lobbying: Consolidate or Wither on the Vine (Rust Report, 14 October 2011)

Joining the Dots – “Value Adding’ Our Mineral Resources (August, 2014)

 Great Ocean Road Koala Habitat Rescue (6th March, 2015)

Taiwan Forgotten in rush of successes on free trade agreements (The Australian, 13 March, 2015)

Germany’s Energy Revolution (14th March, 2015)

digital business insights_MeInc

Digital Manufacturing – The Future of Making Things (March 2015)

 

Blowing in the Wind – Illustrating How Governments Invent Red Tape

LinkedIn Post: 20 June, 2015

The announcement this week that a national wind farm commissioner has been proposed by government to address complaints about the operation of wind farms on the basis that an appointed commissioner will “hear complaints and refer them to relevant state authorities” is a classic demonstration of how governments can conceive and introduce ‘bad’ regulatory procedures. And all of this at a time that the Coalition Government has been advocating since its election about the need to remove duplicative State and Federal Government environmental regulations that impact on major infrastructure development.

Appointing a Commissioner is one thing, but has anyone thought through the implications of introducing a further regulatory procedure in the environmental assessment process? Will the Commissioner’s findings impact on a development application prior to a development determination or will it become a ‘show stopper’ after development consent is received or even after the construction of a wind farm is completed? Will the Commissioner’s findings be subject to judicial appeal? Will the Commissioner be empowered to require additional and scientific studies? Who knows, except we can be sure that the regulatory process for wind farm development will be extended in time, become more complicated, and inevitably incur additional projects costs, and add to investment uncertainty.

Now the precedent is on the table for proposed implementation, no doubt that the mining and CSG industries will now be wondering whether this new concept will be forced upon them when community groups start agitating on specific environmental issues which are predicated on challenging scientific studies in support of infrastructure development.

In October last year, the Australian Government announced that “as part of the Industry Innovation and Competitiveness Agenda, the Government will examine opportunities for greater acceptance of international standards and risk assessments.This is an important part of the Government’s plan to cut red tape and foster a lower cost, business friendly environment with less regulation”.

“The Government will adopt a new principle that if a system, service or product has been approved under a trusted international standard or risk assessment, then our regulators should not impose any additional requirements for approval in Australia, unless it can be demonstrated that there is a good reason to do so. This will remove regulatory duplication, reduce costs and delays for businesses and consumers, increase the supply of products into the Australian market and allow regulatory authorities to focus on higher priorities”, the Government stated.

In addition, it is also noted that earlier this year, the National Health and Medical Research Council (NHMRC) concluded that “there is currently no consistent evidence that wind farms cause adverse health effects in humans. Given the limitations of the existing evidence and continuing concerns expressed by some members of the community, NHMRC considers that further high quality research on the possible health effects of wind farms is required.”

In these circumstances, surely the sensible  approach would be to allow the NHMRC to undertake whatever additional research that they believe may be necessary, without government preemptively introducing into the existing regulatory regime (where ‘it has not been demonstrated that there is a good reason to do so’) new procedures; an unwise move which would seem to be totally inconsistent with the tenets of the Government’s Industry Innovation and Competitiveness Agenda. 

Note: In the 1980s, the author chaired a coal industry/government working group which reviewed and streamlined all regulations required for coal mine development in NSW, which resulted in a major reduction in the time required by mining companies to obtain a coal lease.

 

Making Australia Great: Inside Our Longest Boom (Australian Manufacturing Forum, 18 March 2015)

Viewers of the ABC documentary screened last night would have been reminded of the state of the Australian economy (and the Australian manufacturing industry) prior to the floating of the Australian dollar in 1983 i.e. characterised by a fixed exchange rate, centralised wage fixing and a well developed tariff regime which, as was alleged, ensured that tariffs were set to match product prices – just enough to keep competing imports at bay! Complicit in this cartel were governments of all political persuasions, the union movement and the captains of industry. Industry associations were established and prospered to make sure that this cosy arrangement was never challenged!

How things have since changed with the Australian economy being progressively thrown open to global competition, with most of the Australian manufacturing capability replaced with imports, predominantly from advanced manufacturing economies, and increasingly from the Greater China Region. Former PM Paul keating made the oft quoted comment that Singapore’s first elected premier Lee Kuan Yew had told him that if Australia hadn’t changed, we were rapidly on the pathway to become the ‘white trash of Australia’. Lee Kuan Yew was of course a supreme strategist, and unlike Australia, he had a grand plan for Singapore. Former PM John Howard made the astute comment that despite the reforming plans of Labor leaders such as tariff slasher Whitlam and Hawke/Keating, Australia had no strategic plan in place to manage the transition to an open economy, and hence the rapid decline intensity of our manufacturing capability.

The episode next week will no doubt make the point that the burgeoning prosperity that Australia has experienced since 1983 can be attributed to the mining boom that has ‘delivered the goods’ What the episode next week will not reveal is that in 2006 the then Howard Government commissioned a House of Representatives Standing Committee on Economics, Finance and Public Administration Inquiry into “The state of Australia’s manufactured export and import competing base now and beyond the resources boom” Unfortunately, the Government seemed not to like what the Report had recommended and after tabling in the House, it was consigned to the dustbins of history!

Nearly 10 years later with the resources boom well and truly behind us, Australia still has no strategic plan for the future, just the promise of a number of lightly funded ‘growth centres’.

Prior to 1983, the strategic plan was simple – maintain the closed economy, but in an open economy, it is a quite different dynamic – to compete effectively, we need to be as smart or smarter that the many economies with which we compete. And if Australia completely opens its doors to the world through a myriad of FTAs and the proposed Trans Pacific Partnership arrangements, without a carefully structured strategic approach supported by governments, business and industry, we risk being overwhelmed by the forces of international competition. 

Lee Kuan Yew may well have had some good advice for Australians some 30 years ago. Since then, Singapore’s Economic Development Board has made an art form of strategic planning and has continued to prosper.

There is no time like the present to ‘kickstart’ this essential strategic planning process, even if the idealogically driven economists and the current batch of ‘industry captains’ prefer to defer to the vagaries of market driven economics. 

Comments are most welcome!

 Geotourism Speaking Opportunities Abound (20 March, 2015)

The Geotourism Forum of Ecotourism Australia and the Geotourism Standing Committee of the Geological Society of Australia have arranged two opportunities this year to raise awareness of geotourism through Ecotourism Australia’s Global Eco Conference in Perth (17-19 November) and at the 2015 SEGRA event in Bathurst, NSW in October (20-22 October).

Global Eco conference organisers have issued a call for papers which can be viewed at http://www.globaleco.com.au/Publications/2015/callforpapers-flyer.pdf

Topic areas include global geotourism, geoparks and geotrails, as well as highlighting ecotourism (and geotourism developments) in Australia’s National Landscapes. The Call for Papers close on 30 March.

A call for papers will issue shortly for the 2015 SEGRA event where the concept of geotrails is being featured as a major theme. Geotrails provide an alternative and attractive approach to nurturing regional development by celebrating geotourism, geological and mining heritage (of which the Modern Mining Trail of Central-West NSW and the Hill End Historic site located just north of Bathurst are outstanding local examples). Given Bathurst’s location, the Australian National Landscape – the Greater Blue Mountains including the Jenolan Karst Conservation Reserve, is on the agenda to be discussed. Pre and post conference tours with a strong geotourism focus are also currently being planned.

Delegates at SEGRA include senior officials of state and local governments, particularly regional development authorities. Highlighting geotourism at SEGRA raises awareness amongst decision makers of the opportunities offered by geotourism in nurturing regional development and new employment creation.