The report suggests that Australia’s carbon reduction programs should be linked to international schemes. However, it also wants the impact of the carbon pricing scheme to be ameliorated for energy intensive businesses. The Clean Energy Technology Investment Program is strongly supported by the report.
Other recommendations include investigating the creation of a sovereign wealth fund (a recommendation the government has already said it will not support) and the adoption of a conformity marking scheme similar to the CE Marking system used in the European Union (EU).
CE Marking was introduced in 1993 and is a compulsory requirement for all products sold in the EU. It guarantees that the manufacturer complies with appropriate EU regulations and compliances. Although not a quality mark, the CE Marking has become a form of quality assurance branding and signals that products are made to acceptable standards.
Such a scheme would appear to have merit, particularly if it could be developed in conjunction with New Zealand as a Trans-Tasman initiative within our free-trade agreement. By benchmarking such a CE Marking process against EU standards it would provide a potentially useful mechanism for enhancing the overall quality and reputation of Australia’s manufactured products.
Mid-level reform
At the meso-level, the Taskforce recommends establishing a small number of “Smarter Australia Precincts” and a larger number of smaller scale “innovation hubs”. The idea of industry clusters and innovation precincts has been around since the 1980s. It lies at the heart of government strategies around the world in which science parks and technology precincts are co-located near to universities and provided with technology incubators. Sadly, the success of many of these initiatives has been much less than was hoped for by the governments who fostered them.
What is important in clusters is often the presence of major “focal” firms that serve as key actors within production systems. In car manufacturing, these are companies such as Ford, General Motors or Toyota. In an ideal world these focal firms will be exporting their products and fostering international best practice ideas and innovation amongst their network of suppliers and related and supporting industries.
Currently, Australia has a globally competitive minerals and energy sector that has fostered some highly innovative clusters in areas such as iron ore or liquid natural gas (LNG) production. What is needed is for a similar industry cluster to be formed around manufacturing industries. However, too much of Australia’s major manufacturing base has been created for a primarily domestic market. While this worked during the days of high tariff barriers, it is not sustainable in the future.
The role of the university sector
The role of Australia’s university and publicly funded research agencies gets special mention. The report recommends that a committee be established to review how universities and other organisations (such as the Australian Research Council, CSIRO and Cooperative Research Centres) facilitate applied innovation and technology transfer. The creation of a “digital nervous system” for Australia’s national innovation system is recommended. A key part of this are measures to foster formal and on-going dialogue between industry and the research and education sector.
What lies behind these recommendations is a fundamental plank of the concept of a National Innovation System (NIS). This concept emerged in the 1980s, with research undertaken into the economic growth of Japan. An important element in the NIS is the role played by publicly funded research institutions such as universities. Government investment in these institutions is meant to provide dividends in the form of technology transfer that will help to boost the innovation and global competitiveness of the national industries.
Although this role for universities sounds reasonable in theory, it is fraught with practical problems. These are associated with getting technology transfer and commercialisation out of universities. For example, the reward and recognition systems that apply to academics favour peer reviewed publication not applied industry engagement. Universities are also not structured as commercial R&D centres and often cannot respond in the time-frames demanded by industry. They are also not financially or organisationally set-up to take on commercial risk.
Australia’s universities are currently tasked to provide high-quality education and the pursuit of fundamental research. Resources are stretched and any significant engagement into applied R&D and commercial project work will require significant funding. Such funding will require more contribution from both government and industry.
The importance of design
One of the more interesting but important recommendations in the report is the call for the recognition of the role of design. This correctly identifies the key role that design plays in innovation and competitive manufacturing. A longer term goal is to see design thinking become an integral part of Australia’s manufacturing industries and to include design as part of future leadership programs.
Without doubt, design plays a key role in the development of competitive products. It includes not only product design, but the associated graphic and related design including interior and architectural design. Australia’s designers are amongst some of the best in the world. However, there is a lack of appreciation of design amongst many managers. There is a need for better integration of design education with engineering and business management courses within our universities.
Building a globally competitive manufacturing sector
The Taskforce report is ambitious, although it is broadly consistent with the findings of the US Council on Competitiveness and Deloitte Global Manufacturing Competitiveness Index study.
The Prime Minister will now be under scrutiny over whether she accepts or rejects its recommendations. There are some big ideas in the report that Julia Gillard or any future Prime Minister could and probably should draw upon to reshape the future of Australia industry. The question is: will she?
Tim Mazzarol is a Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia. This article first appeared at The Conversation.
