Inquiry into Regional Development Funding

 

Minister for Infrastructure, Transport, Regional Development and Local Government, Anthony Albanese, has asked the House of Reps Standing Committee (of the identical title) to inquire into the Australian National Audit Office’s Performance Audit of the Regional Partnerships Program. Never-ending story.

 

The Committee’s terms of reference are to:

1. Advise on future funding of regional programs to invest in genuine and accountable community infrastructure projects;

2. Examine ways to minimize administrative costs and duplication for taxpayers;

3. Examine the former government’s practices and grants outlined in the ANAO report on Regional Partnerships;

4. Examine the former government’s practices and grants in the Regional Partnerships Program after the audit period of 2003-2006 with the aim of providing advice on future funding of regional programs.

 

The Cockatoo Network has a firm position on these matters. It is set out in an article ‘The Regional Partnerships Program – the Smoking Gun’ which is on our blog – otherwise google the title. Submissions due by mid July. Cockatoo will be making a submission – contact us if you’d like to piggy-back on ours. Our basic line is:

§          Ministers cannot help themselves – therefore best to get them out of the decision-making loop.

§          The RDA Committees (the former ACCs) should be merged with state boards where possible.

§          The feds SHOULD NOT EVEN THINK about strict regional boundaries for such bodies.

§          Regional coordinators (senior federal officials) should be placed in regions with a CHEQUE BOOK - to cut down the delays and cost of making submissions. Any rorters go to jail.

 

Cluster links to India and USA (BEST PRACTICE)

 

A key success factor in investment attraction is the ability of localities to connect their knowledge, competencies and people.

We are thus in talks with agencies in India and the USA to link networks and clusters across borders – to enhance the connectivity of companies and researchers, and strengthen competitive advantages of towns and regions.

The key problem being addressing is the ’hit and miss’ involved in innovation and commercial deals. This is why development agencies and companies spend a lot of time connecting people via meetings, conferences, newsletters, websites, investment missions etc.

For example, millions of IT executives and their staffs compete daily to win business and to position themselves in each others’ markets. They crave knowledge about who is letting contracts, and which local companies they should be getting close to. This is a costly and time-consuming activity, only a small percentage of firms are amenable to joint ventures at any given time, and trust is not generated overnight. Wouldn’t it be easier with an on-the-ground ally?

We are thus identifying networks that are serious and active about collaboration and two-way investment. The aim is to have a multi-country platform to connect the key agencies within particular industries. Initial focus is on aquaculture; auto parts; biofuels; biotech; dairy foods; electronics; environmental management; food manufacturing; healthcare; information technology; marine engineering; telecommunications; textiles.

 

Contact us at apd@orac.net.au for further details.

Singapore petrochemicals cluster (BEST PRACTICE)

 

Output of Singapore’s chemicals industry is now US$59.4 billion – 34% of Singapore’s manufacturing output.

Merrill Lynch says its petrochemicals segment hasn’t been affected by the oil price hike - on the contrary. Saudi Basic Industries Corp (SABIC) predicts Asian demand for petrochemicals would outstrip the combined demand of the US and Europe within two years. To understand, just consider the end products - plastic bags, packaging, textiles, car parts, electronics - and their relevance to Asia’s increasingly wealth.

Singapore has been actively building its petrochemicals capabilities since it opened SE Asia’s first petrochemicals complex in 1984. Today, there is even a dedicated island - Jurong Island - hosting 95 companies including heavyweights ExxonMobil Chemical and Shell. Companies benefit from industry integration – sourcing raw materials and selling products over the fence, and sharing common pipeline services and other utilities.

The latest boost is synthetic rubber supplier Lanxess AG’s decision to invest in a €400 million butyl rubber facility to meet demand from auto tyres.

Technology is a critical enabler, and Singapore is investing heavily in petrochemicals R&D to become a “first implementer” of technologies, as well as a technology creator. It has its sights set on new process routes and novel applications. Indeed, Singapore’s Agency for Science, Technology and Research fosters research talent e.g. the Institute of Chemical and Engineering Sciences, sited on Jurong Island, does research work in biocatalysis, catalyst screening & optimisation, bioprocess engineering, and protein engineering.

Go to http://www.sedb.com/edb/sg/en_uk/newsletters/2008/edb_english_sinews_may08.html

Tories Release Small Business Platform

 

Recent Labor Party losses in local elections have emboldened the UK Conservative Party, which has released several policy proposals.

 

One examines how Great Britain can reform and streamline current public support programs for small business.

 

According to the study, Britain is now home to 3,000 different business support programs run by 2,000 public bodies at an annual cost of £2.5. billion. The report recommends:

§ major streamlining of these efforts, and a commitment to rigorous evaluation of programs.

§  the creation of a single web-based Business Information Service.

§  new approaches to expanding small business finance resources.

§  a program modeled on the US’s Small Business Investment Research.

§  expansion of youth entrepreneurship education programs.

 

Go to Small Business and Government: The Richard Report

Collaborative Innovation in Government needed, says US study

 

Government agencies need to embrace new models of innovation, according to a new report sponsored by the IBM Center for the Business of Government. The study reviews new innovation models - dubbed ‘network-based collaborative innovation’ – as pioneered by leading firms such as Procter & Gamble, 3M etc.

 

This approach links organizations to outside networks to generate a broader, more diverse set of ideas and solutions. In the process, the speed of innovation is increased. Many thorny public policy issues – for example, environmental conservation and disaster response - could benefit from this model.

 

Government agencies are not well suited to this approach, thus placing a premium on openness and close collaboration. The report makes recommendations for the appropriate organizational culture and structures.

 

Go to Transforming Government through Collaborative Innovation, by Satish Nambisan.

UK Creative Industries (BEST PRACTICE)

 

 

Compared with other sectors, the business dimension of the creative industries is inadequately understood despite their growing significance in the UK economy. According to a recent NESTA study, these industries are highly innovative – the UK has no problem in starting creative businesses, but it struggles to grow them. They lack the necessary skills and commercial awareness. Stronger entrepreneurship education is crucial.

 

 

A KITE project is bringing together researchers to identify and evaluate sustainable business models in creative industries. Web:  http://www.ncl.ac.uk/kite/staff/profile/a.j.lane

 

Pharmaceuticals – how competitive is China and India?

 

New research sponsored by the Kauffman Foundation depicts the rise of China and India as emerging powers in pharmaceuticals R&D.

 

The study notes that leading big pharma firms, like Merck and Eli Lilly, now rely heavily on Indian and Chinese partners for high value R&D. But the study concludes that it’s too early to say if India and China will become major sources of new drugs. Local firms lack capital and distribution channels and are thus heavily reliant on partnerships with existing global market leaders. However both countries are making impressive strides.  

 

Go to The Globalization of Innovation: Pharmaceuticals, Can China and India Cure the Global Pharmaceuticals Market?, by Vivek Wadha. 

Anyone for investment tie-ups with Australia?

 

The Cockatoo Network, which I manage, is recognised globally for its efforts to build collaboration and alliances. Our main fields are industry development, investment attraction and innovation.

In our experience, the strongest success factor in investment attraction is the ability of localities to connect their knowledge, competencies, resources and people - both internally and externally.

With respect to the external dimension, we are in discussions with development agencies in India and the USA to link networks and clusters across different localities. We believe this will significantly enhance the connectivity of companies and research organisations, as well as the competitive advantages of the towns and regions concerned.

The particular problem we are addressing is the large element of ’hit and miss’ involved in innovation and commercial deals. This is intuitively understood by development agencies and companies, which is why they spend a lot of time connecting people via meetings, conferences, newsletters, websites, investment missions etc.

Take the example of the IT sector, where millions of executives and their staff worldwide compete daily to win business and to position themselves in each others’ markets. They crave knowledge about which agencies are letting contracts, who are the key decision-makers, and which local companies they should be getting close to. This is a costly and time-consuming activity because only a small percentage of firms are amenable to joint ventures or deals at a given time, and trust is not generated overnight. Wouldn’t life be easier if you had an agency on-the-ground to assist?

We are therefore in the process of identifying those networks that are serious and active about collaboration and two-way investment. The aim is to have a multi-country platform that identifies and connects the key agencies within particular industries. Our initial focus is on aquaculture, automotive parts, biofuels, biotech; dairy foods, electronics, environmental management; food manufacturing; healthcare; information technology; marine engineering; telecommunications; textiles.

 We will be travelling to India and the USA - and then progressively to Thailand, Europe and other nations to complete our feasibility study. We are looking for potential collaborators. If you have a common interest, we surely would like to hear from you!

Rod Brown, Cockatoo Network, Canberra phone 61-2-62317261 or apd@orac.net.au

Mao-tai diplomacy

 

Australia’s minerals export boom to China did not happen overnight. In 1986, our Ambassador to China convinced Canberra to organise a series of technical missions to advise the Chinese on the best technology for their ageing lead and zinc smelters, alumina refineries, steel mills etc.

 

My job was to be the government person on the non-ferrous mission, along with the mining engineers and metallurgists from CRA, Western Mining, BHP, CSIRO etc. Eight of us literally bounced into Beijing, and for the next 21 days (except Sundays) the mission members gave free advice to the management of sixty plants across the length and breadth of China.

 

We saw unimaginable amounts of machinery, concrete, ores and metals, all the while advising on what type of minerals processing technology could deliver better productivity. Much of the plant was old Russian or local stuff, so Team Australia was merrily recommending they purchase particular equipment from Sweden, USA, Canada, Japan and Italy. Strange, I thought.

 

After a week, we were knackered – lack of sleep, long train trips, cat-sized rats around our feet,  copious amounts of food and Mao-tai (like metho mixed with soy sauce). After two weeks, we were fading, and one mission member was even packed off home. After three weeks, we emerged at Guangzhou in a state worse than knackered.

 

We recuperated in Hong Kong, and finalised our mission report for subsequent translation and dispatch to the Chinese agencies. When I got back to Canberra, my big boss called me in for a de-brief. He was less than impressed when I said not to expect a spike in exports of Australian mining equipment to China. He stared at the far wall for an eternity, and then asked why I was even on the mission (the same thought had crossed my mind somewhere around Zhuzhou).

 

Those were the days when the big mining companies literally told our equipment suppliers to ‘get out of the way’, and they in return lobbied government for local content arrangements. The federal agencies were similarly aligned. Indeed, Australian equipment sales counted for nought with my hard-nosed mission members. No wonder they created enormous goodwill with our Chinese hosts.

 

While we never sold much mining technology to the Chinese, they began to make significant investments in Australia - the Portland smelter was one of the early investments. Then the massive sales of iron ore, gas, nickel, lead, zinc, copper began to take shape.  

 

Lessons? – You can’t beat mutual self interest. The Chinese are patient and gracious people. Our foreign service is seriously professional, but we failed to roll our mining equipment into the equation.

 

THIS ARTICLE APPEARS IN THE JUNE 2008 EDITION OF LOCAL GOVERNMENT FOCUS

Mystique and food branding

 

 

 

 

 

Regional branding is commonplace in the USA and Europe. French food retailers clearly identify the country or region of origin of fruit and vegetables. The Parma region in Italy has legal systems supporting its ham producers.

But it has never taken off in Australia – opponents argue:

·          The Australia brand must be the No.1 identifying feature.
·          Australia’s ‘clean, green’ status is the other selling point – but when it gets overlaid with State and regional  dimensions it confuses consumers.
·          The labelling requirements are too costly.
·          Australian food producers are either too small or too competitive.
·          Manufacturers and growers face definitional problems.
·          Legal action might ensue should the origins of products be inadvertently mislabelled.  

These arguments are mostly nonsense. But things are changing. The major dailies have run recent articles picking up on the views of Barbara Santich and Maggie Beer, and the SA Food for Future initiatives.

Regional branding has come into its own as a response to globalisation, the search for product differentiation and rising levels of consumer sophistication. Consumers increasingly want to make informed choices – the treatment of consumers as passive and undemanding is giving way to more enlightened approaches that include region of origin, variety, quality classification etc.

Significant opportunities are opening up on world markets due to our clean/green image, the post-Olympics interest, and the environmental problems surfacing in overseas markets. A new, younger generation of horticulturalists and niche food specialists are embracing these opportunities arising from changing consumer demand.

Mr. Michael Dimock, President, Sunflower Strategies (Santa Rosa, California) recently lectured to WA growers, and ABARE staff in Canberra. He said that people will prefer your product for one or more of the following reasons:

·          Like the idea of the land where you live, the way you farm etc.
·          See your region as wholesome, clean and healthy.
·          See you as distinctive - traditional or progressive or old-fashioned or cutting edge.
·          Had a good experience while visiting. He stresses that ‘place’ counts once they know your region/product.

The other ingredient is ‘mystique’, defined as ‘having the capacity to stir the heart, emotions or sentiments by bringing deeper meaning to an otherwise ordinary experience’.

Successful regional branding is the result of persistent building of loyalties around unique characteristics. It also depends on finding the mystique to present to the consumer. It is more  than just fashionable labelling. Mr. Dimock stressed that regional branding is not easy - it takes time, flexibility, cooperation, capital and belief by producers in their own values. 

This is an extract of ‘Food for Thought’ – a major report being released in July. It details action agendas for the development of food clusters in regional South Australia – the work was undertaken under the aegis of Playford City Council, with support from the Department of Transport & Regional Services. Some of our members are forming a consortium to drive regional branding further. If you have an interest, please contact me.