Coming Ready or Not

In the period 1982-89, there were 37 IT patents lodged in the US from Australia, 53 from Israel, 1 from Singapore, 24 from South Korea. In the period 1992-96 these numbers changed as follows: Australia 80, Israel 258, Singapore 82 and South Korea 1629.

In April and May of this year, Deloitte, Touche, Tohmatsu carried out a survey on behalf of the Australian Information Industry Association. They interrogated all leading suppliers of IT&T products and services as well as major users. Responses were received from organizations employing a total of one quarter of a million people, of whom 55,000 were IT&T specialists.

The survey predicts that next year’s demand for skilled workers will be an increase of 29,700, the next two years a further 58,000 and the next two years a further 81,800. The total predicted increase for the next five years is 50% greater than the total of all Australian university graduates for last year. When I say graduate here, I mean graduate in anything – arts, theology, veterinary science or even computing.

Let me make things worse! The Knowledge Economy is not only about IT as such, it concerns the value-adding activity of a well-educated populace. Soft skills in philosophy, literature and classics or hard skills in engineering, chemistry or molecular biology, and preferably these combined, will also determine our success in the Knowledge Economy. Accordingly, we cannot contemplate a huge swing of our resources to the IT area alone. Note my implicit assumption that the Knowledge Economy is chiefly about people. No matter how we try to analyze background issues, we will always return to that point.

There appear to be two ways in which a country can gain competitive advantage in the modern global knowledge economy. The first is through innovation and the second is by being a very fast follower. In both cases time is of the essence and remember the words of Royal Dutch Shell’s planner "the ability to learn faster than your competitors may be the only sustainable competitive advantage". For a multi-national, that means having access to skilled personnel wherever in the world they may be located. What makes a good site? One suspects a culture of invention, an excellent education system and a favourable tax and wage system. In Australia we have the first of these three. If one takes software technology as the benchmark, then the favoured locations are Israel, Ireland and India. In saying that I am relying on the research underpinning the document Going Global, which is a report prepared by the US Council on Competitiveness. That group is a non-partisan forum of 161 corporate chief executives, university president and labour leaders. One of the organisation’s co-chairs, William R Hambrecht, states:

"The competitive challenge for the future is likely to come not just from low-cost producers but from low-cost innovators. Because the innovator club is growing, the United States must look to the fundamentals to sustain a competitive environment: support for basic research creates the seed-corn for innovation, an assured talent pool and the legal, regulatory and accounting rules that can incent (or impede) industry investment in innovation".

The United States government is substantially increasing money for basic research, so is the UK, Sweden, Korea, Singapore. In Australia our research green paper is a zero-sum game in which it is proposed to transfer money away from basic research. Judging by this morning’s Australian, the main debate on the paper concerns protection of regional institutions like Charles Sturt or fledgling ones like the University of Western Sydney. There is a very real danger that, as a nation, we are simply afraid to contemplate the big picture.

Let me give you some more figures from the Going Global report. In what I must admit was their subjective rating of a country’s capacity for health care innovation, the Americans used three criteria: biomedical research base, entrepreneurial climate and public awareness and support. They produced the following ratings: Singapore 4.05, Japan 3.21, India 2.01 and Australia 2.00.

Remember that this is now a global economy where firms can move investment at will, chasing favourable environments for their research and development. Surely we must develop our policy in order to achieve the most effective outcomes and to set in place the most attractive infrastructure. Instead there is an obsession with equity across institutions, with the level playing field – or level minefield, as I think of it in my worst moments. Before I leave this point, let me put some dimensions on the problem. In the latest round of Australian Research Council Large grants (so-called), the University of Sydney won more than 22% above its nearest competitor, Melbourne, and 36% more than UNSW. Much more to the point, the entire Australian Technology Network, a vociferous lobby group comprising RMIT, UTS, QUT, Curtin and the University of South Australia, amassed a grand total less than Macquarie University, which, in turn, won less than a third of our total. In determining AVCC’s research funding policy, the University of Canberra, with no new grants this year, has an equal vote with me.

Believe it or not, I am a strong advocate of cooperation within the sector. We now have the AGSM as a joint venture with UNSW, the Australian Technology Park as a joint venture with UTS and UNSW, the Centre for the Mind as a joint venture with ANU and, announced recently, a new Centre for Gene Function Analysis with UNSW, Macquarie and Newcastle as our partners. The real challenge is to strike the correct balance between competition and cooperation, and, of course, lowest common denominator is no basis for the latter.

Let us turn to the most important part of infrastructure provision – training of personnel. Given that I have already noted that the needs of the Knowledge Economy are wider, let me first concentrate on the provision of IT specialists. This is a world wide problem and that, of course, is bad news for us in a global economy.

It is easier to define problems than to suggest solutions. Let’s try both – first the long part, the description of the problems!