Australia’s new industry policy

The Labor Party has won office in Australia, and major changes are expected in the industry policy field. This preliminary analysis highlights the rationale for these changes, the key programs, and areas of opportunity for Cockatoo members in terms of getting involved in the realization of these initiatives. 

RATIONALE 

The Labor Party’s industry statement “An innovation future for Australian industry’ was released on 21 November three days before the Election. The statement was underpinned by the following observations: 
§          Under the Howard Government, public investment in tertiary education has fallen by 4 per cent at a time when the average OECD investment increased by 49 per cent – making Australia the only OECD country to reduce public investment over this period.
§          Global competition is driving Australia’s manufacturers up the value chain, towards increasingly complex integration of electronics and information technology, and into the manufacture of micro and nano scale particles, and their incorporation into consumer and industrial products.
§          Australia’s potential in ICT industries is being held back by our poor broadband performance – US Information Technology and Innovation Foundation ranked Australia’s broadband speed as 26th out of 30 OECD countries – behind Hungary and the Slovak Republic.  

The statement flagged: 
§          Review of the national innovation system, including the role of the R&D tax concession scheme. To include examination of scope for the R&D tax concession to encourage stronger international linkages.
§          Seed funding to support region-specific strategies, such as business clusters and networks, that aim to boost the innovative capacity of firms. (Recognition of clusters is particularly noteworthy).
§          Establishment of Industry Innovation Councils – partnerships across the value chain in key sectors.
§          Incorporation of innovation, industry, science & research within one Department (DEST-DITR merger?)  

NEW PROGRAMS

The centerpiece of Australia’s new industry policy is the $200 million Enterprise Connect network, to connect businesses to new ideas and new technologies. It comprises national network of Manufacturing Centres. 

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Other programs include:

Clean Business Australia ($240 million) – re-tooling for Climate Change grants program; Climate Ready support for R&D and early stage commercialisation of environmentally friendly products;
 

Green Building Fund ($90 million) to help Australian businesses implement energy efficiency measures via the retrofitting and retro-commissioning of commercial buildings – 50% towards cost of retrofitting existing commercial office buildings (max. of $200,000 per building).
 

$150 million Energy Innovation Fund and a $50 million geothermal initiative.
 

Creative Industries Innovation Centre ($17 million) – draw together a critical mass of arts practitioners, cultural entrepreneurs and researchers, with access to the technology and business support programs. To incubate a cluster of arts companies and creative businesses, house creative industries research programs, building collaboration between researchers and cultural entrepreneurs, and to create an energised, vibrant creative precinct.
 

Remote Enterprise Centre $10 million – to help SMEs in remote areas to grow and succeed – to connect them to other companies for mentoring, private investment and partnerships, and help to identify complementary businesses for new business opportunities. Access to technical experts, scientific advice, as well as helping to identify new markets, and providing advice on legal and regulatory issues. Link to Industry Capability Network.
 

Innovative Regions Centre (Geelong) – $20 million to provide hands-on support to SMEs, boost local economies and create new jobs in areas that are experiencing adjustment pressures.
 

$500 million Green Car Innovation Fund to develop and build fuel efficient vehicles to generate $2 billion in investment.
 

$10 million for a ‘Researchers in Business’ initiative.
 

Trades Training Centres – $2.5 billion investment over 10 years – for each of Australia’s secondary schools – also a computer on the desk of every student in Years 9 to 12.
 

Halving university (HECS) fees for maths and science students, and halving their repayments if they take up jobs in key fields, like teaching.

$4.7 billion to establish the National Broadband Network in partnership with the private sector. 

AREAS OF OPPORTUNITY

 It should be noted at the outset that a fair number of the above initiatives will be slow to take effect given the significant machinery of government changes involved, and the likely resistance from the Department of Finance.  The adding of flesh to the bones of these initiatives will also take time.  

The Broadband Network initiative is likely to be complicated by the Telstra challenge of Optus’ treatment by the Howard Government.  

Nevertheless, the main opportunities at this juncture appear to be: 
§          Energy Innovation Fund – of relevance to leading edge companies.
§          Creative Industries Innovation Centre – currently suggests one centre (cities might compete as per the NICTA as a precedent?). A national hub-spoke arrangement might be an alternative, with state governments sharing the cost).
§          Remote Enterprise Centre – need to await more information – but a model project based in a remote city or town might be possible.
§          Innovative Regions Centre (Geelong) – the model could be extended to other cities/regions facing significant structural adjustment in the future. Worth tracking the Geelong experience.
§          Green Car Innovation Fund – substantial scope for engineering & environmental organizations.
§          Trades Training Centres – scope to coordinate activities with skills agencies, manufacturing companies.
§          Innovation Councils – some members should consider themselves for nomination.  

Silo mentality exposes governments’ own rhetoric

 

Collaboration is increasingly international. Collaboration is fundamental to innovative solutions in a complex world. But government agencies toss the word around with gay abandon, and the continuing silo mentality exposes their own rhetoric.

Governments simply MUST spend time more understanding how collaboration can be nurtured. A healthy collaborative environment can be built, just like you can an investment environment.

These and related issues were explored a couple of years back by Donald Beaver, of Williams College, Massachusetts – Reflections on scientific collaboration (and its study): past, present and future, (Scientometrics, Vol. 52, No. 3).

Beaver says that collaboration offers many benefits – speed, power and efficiency of research; breadth and synergy of projects; reduced risk of ventures; and feedback, dissemination, and visibility of results.

His article reviews past research and seeks to understand present thinking about collaboration, and speculates about the future, focusing on technologies like email and the Internet. 

Beaver argues that scientific collaboration was a relatively rare event until World War I, after which it grew at a much more rapid rate. Two facts of interest were apparent early – a collaborative first paper meant above average productivity later, and elite scientific journals published disproportionately more collaborative papers than did less prestigious journals. They still do. Today over 90 percent of papers in some journals are collaborative. 

However his broader point is specially important - that as globalization and internationalization continue, emphasis on cooperation becomes an increasingly common counterpoint to the current emphasis on competition and individuality.

Globalization is leading to a greater geographical diversity of collaborators – whether they are individuals, laboratories, or institutes. Physical location is no longer a barrier to the free and easy exchange of information. And the advent of email had already begun to increase diversity in geographical locations. (I am in Canberra. Where are you?)

We believe it is critically important for governments to get a better grip on the factor conditions for collaboration. It is a key to good policymaking in many fields. It cannot be left to the private sector, where competition is God.

See http://www.newswise.com/articles/2002/5/SCICO.WMC.html?sc=wire

Innovation NZ style (BEST PRACTICE)

An advanced food pilot plant is under construction in NZ – $6.5 million cost – completion by February 2008 – at the Institute of Food Nutrition and Human Health on Massey University’s Palmerston North campus.

It will cater both for industrial needs and academic requirements. It will meet the NZ Food Safety Authority standards and be able to produce small scale product batches which meet export certification. 

The plant includes smaller laboratories to allow sensitive work in tandem with teaching classes, a complex of chillers and freezers, a food quality assessment laboratory, and a sensory suite for consumer trials. 

Post-harvest quality has a dedicated laboratory area including 5 specialised walk-in temperature and humidity-controlled rooms. Dedicated food engineering and dairy processing equipment will be housed in separate areas, and a research area is devoted to extrusion technology – first in NZ.

Email: c.s.brennan@massey.ac.nz

Our assessment

These plants are becoming commonplace in the EC and elsewhere. For example, there is a similar plant at Werribee (outside Melbourne) which is around 8 years old. However the Palmerston North plant has the potential to be more effective than the Werribee plant, and many others. There are 3 reasons:

• it provides a ‘lighthouse’ for increased focus on high value food product  for export markets, where NZ is already ahead of Australia.
• it can enhance NZ’s clean, green image, where it has a clear global position.
• it can help, by the research and market trialling of niche exotic products, leverage the mystique that NZ holds in distant global markets.

Getting more out of regional universities

A couple of years back we identified an OECD-sponsored research paper by Arbo and Benneworth on the role of universities in regional economic development.

The study is even more relevant today.

Within the long paragraphs and academic language, it raises very important issues about the universities – especially their roles as anchors of regional innovation systems, providers of lifelong learning opportunities, partners in regional governance, and promoters of sustainable development strategies.

A key section talks about the role of universities in driving the concept of industrial districts and regional-political ventures that circumventing the core metropolitan regions.

The study also notes the significance of network initiatives aimed at small and medium-sized companies and the establishment of technology and competence centres and marketing agencies. 

Arbo and Benneworth stress that universities can no longer sit apart from other local actors as an “ivory tower.” As knowledge and innovation become more important components of regional development, the role of universities become critical.

Go to “Understanding the Regional Contribution of Higher Educational Institutions: A Literature Review,”

Getting REAL on economic development

Earlier this year, Sandy K. Baruah, head of the Economic Development Administration in the USA wrote an article titled “The Five New Realities of Economic Development in the 21st Century”.

Sandy authored the article because he says he’s in the ‘what’s next’ business.

His five realities are: 

1. We are in a global economy, where competition comes from anyone (any corner of the globe) with a good education, a good idea and a good Internet connection (take note regional Australia).

2. The pace of change will accelerate – innovation is becoming multidisciplinary as different technologies converge, creating fields that didn’t even exist just a few decades ago. 

3. Components of competitiveness cannot be pursued separately. This means that separate silos in workforce, social and community, economic development etc. can no longer be tolerated. 

4. The private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest, growth will not occur, regardless of how much government spends.

5. The ability to innovate is the only sustainable competitive advantage of a nation, region or company.

Well, you can’t fault his logic, and our economic development adviser in the USA, David Dodd, speaks very highly of him.

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Seine-Normandie Logistics Cluster (BEST PRACTICE)

The Seine-Normandie Logistics Competitiveness Cluster (LSN) was established in 2005. It has 5,000 companies in Haute and Basse Normandie, employing 80,000 jobs.

The aims are to:
§          Identify innovative logistic projects.
§          Promote skills and improve performance of member logistics companies.
§          Provide economic monitoring.
§          Meet the employment/training needs of professionals in the sector.  

The emphasis of the cluster is on traceability and information systems. Its CALAS project deals with a laser triangulation prototype at the Normandy terminal, offering real-time tracking of thousands of containers in a port and improves customer service. 

Contact : Adeline GENAUD  (An attempt was made to establish a logistics cluster around Melbourne airport around 2001 – Editor). 

We are THE experts in international networking
- for more information, contact us at apd@orac.net.au or ring 61-2-62317261

Danish view on clusters

Hi Rod, I just checked into your new blog for the first time.

It was a very positive experience. In particular I found the front page extract from John Houghton’s report to be very insightful, capturing the essence of what a governmental cluster strategy must be capable of achieving to get the expected outcome – improving linkages and generating investments.  

Here in Denmark clusters draw a lot of attention these days, recognising that cluster can be nurtured in order to improve capabilities, knowledge-sharing, research, and faster and better innovations. This requires government and knowledge institutions joining forces with private enterprise to drive the agenda.

However, much too often there is no regional framework to make sure that policies are being coordinated across various administrative levels, rendering the cluster efforts isolated and random.  When sharing insights on clusters, it is crucial to recognise the specific policy situation.

For instance, the uptake on clusters in UK was very powerful when the Regional Development Agencies came into place 7-8 years ago. Previously there had been next to no coordination of regional development, so the RDAs filled a policy vacuum. In this situation, and with substantial funding, RDAs had great impact.  

This is a very different situation from Scandinavian countries, where regional industrial policy has existed for many years, and where the level of coordination and political involvement in regional industrial policy making is substantially greater. Here, any attempt to introduce cluster building successfully as an industrial policy approach must recognise the organisational and political structures already in place. It should be recognised that a high level of coordination between a substantial number of public bodies and agencies as well as a high level of focus on industrial policy at a political level means that new approaches and ideas cannot be expected to be implemented overnight, but tend to be implemented incrementally. 

The skeptics claim that clusters are merely networks.

The network approach, so distinctly the main approach in Denmark, has its focus on the sharing of knowledge and experiences between companies. It gives the companies the opportunity to learn from each other across different sectors and on very specific issues. 

However, compared with the cluster approach, the network approach has clear limitations. There is no value chain linkage between the participating companies – hence there tends to be little or no strategic business focus. Obviously, this limits the amount of commitment by companies and only creates limited synergy. 

Your blog is excellent in distilling key findings from many qualified sources. The country pages are as yet limited, random and possibly outdated. But maybe this will encourage people to file updates!

All the best, Bjarne Jensen – www.bjarneejensen.dk Secretariat for REG LAB www.reglab.dk

We are THE experts in international networking
- for more information, contact us at apd@orac.net.au or ring 61-2-62317261

Strategic networking is the key, says INSEAD

Managers today juggle more responsibilities than ever and for many of them networking becomes an afterthought.

Herminia Ibarra, Professor of Organisational Behaviour at INSEAD (north of Paris) says that’s a potentially fatal career mistake. “What you know is who you know,” she says and warns that managers who neglect to build their networks risk failing or remaining stuck in middle management.

“Other things being equal, what is going to give you an edge?  It’s the relationships that you have that allow you to augment what you know and allow you to take the ‘what you know’ and actually to translate it into practice, into something the organization can use. It makes all the difference.”

There are three types of networks important in business:

·          Operational networking – cultivating the relationships with people you need to accomplish your job. Most people master this skill or they wouldn’t be in management.  But some managers don’t reach out widely enough to build all the relationships they need.
·          Personal networking – an afterthought for many busy managers.  These networks allow you to meet a diverse group of like-minded professionals.
·          Strategic networking – the toughest but most essential if managers want to become business leaders.  Contact with peers and senior executives is vital. It allows the sharing of ideas about best practices in management, learn new approaches etc.

To see Ibarra’s article called ‘How Leaders Create and Use Networks’, go to www.hbr.org.

We are THE experts in international networking
- for more information, contact us at apd@orac.net.au or ring 61-2-62317261

Singapore is the Big Easy – NZ second!

As more nations recognize the importance of entrepreneurship, their governments are reforming rules and regulations to ease the business development process.

The latest edition of the World Bank’s Doing Business report shows that these trends are taking hold. The number of new business starts in Eastern Europe now surpasses the impressive numbers found in East Asia.

Meanwhile, many long-time laggards, like Egypt, Croatia, and Ghana, now appear on the lists as “top reformers” i.e. governments that have implemented major reforms in their business regulation systems.  

Overall, Singapore takes the top spot as the easiest place to do business. Rounding out the top 10 (in order)  are New Zealand, USA, Hong Kong, Denmark, UK, Canada, Ireland, Australia and Iceland.

View the findings of the World Bank’s 2008 Doing Business report at www.doingbusiness.org. 

Original source: NDOE

                                 We are THE experts in international networking
                       for more information, contact us at apd@orac.net.au or ring 61-2-62317261

Medimap (BEST PRACTICE)

The EU’s Interreg project, INNOFIRE has developed a database web tool.

It links partners/regions (10 regions in 8 countries) to facilitate networking and trans-regional cooperation in the medical technology sector in Europe.  

The portal shows an online “Technology Map” with company profiles and cooperation requests. It highlights individuals, companies, universities and R&D institutes, hospitals/clinics, networks/clusters, technology centres/incubators, regional/local development agencies etc. Cost of membership is 100 euros +.

                                        We are THE experts in international networking
                       for more information, contact us at apd@orac.net.au or ring 61-2-62317261