‘Great projects come out of unlikely situations’ says RD practitioner

The Australian Government is currently seeking the views of regional stakeholders on what the new local infrastructure program should look like. A local government official in Victoria has weighed in.

 

“Cockatoo – all regions, but particularly the smaller sub-regions, should be included in the new Regional Development Australia arrangements, as they have less critical mass and capacity to self help! The critical lesson of regional development planning is diversity – no standard pre-determined fomulae but a merit based region-specific approach.

 

A great project may come out of an unlikely regional situation, regardless of size. The new system needs to encourage bottom-up community-driven projects – not top down advisor, politically-driven, safe meaningless projects that would happen anyway. The projects should:

§          Make a real regional difference where it really counts.

§          Generate regional multipliers and be exemplars.

§          Leverage local leaders’ trust and the local entrepreneurs’ knowledge.

§          Devolve decision-making authority and delegate to region-based officials. 

 

I could go on, but I think the message is clear and some of these sentiments were in your submission to the House of Reps enquiry.”

NZ shows the way re Pacific Island guestworkers

Australian PM Kevin Rudd is reportedly aiming to use the Pacific Island Forum in Niue in August to announce a trial plan to bring Pacific Islanders to Australia for seasonal work – to meet labour shortages in regions. The trial, to begin in 2009, will provide several thousand Pacific Islanders with special visas for 6-12 months. Accommodation, travel and housing will also be provided.

The National Farmers Federation supports the scheme, but the Construction Forestry Mining and Energy Union et al have warned about the ‘Mexicanisation’ of the labour market. The Rudd Government is reportedly to guarantee the same wages as those received by Australian workers.

The NZ Government has introduced a seasonal employment program using Pacific Islanders – 5000 guest workers enter NZ annually. A hurdle for most recruits is the cold weather.

One worker, Joel-Eddie Kalmatak, who left his wife in Vanuatu to work on a vineyard owned by Pernod Ricard, has struggled with the temperature, which plummeted to minus 6 degrees recently. Some mornings he wears two pairs of socks, two pairs of trousers, and he wraps plastic around his fingers before pulling on his gloves. He is counting the days until his return to Mele, on the island of Efate, in October. But he earns upwards of $NZ12.10 ($A9.50) an hour, 10 times as much as back in Mele. However, he pays $NZ125 for rent, and his employers make deductions from his pay for his return air-fare and other expenses.

Getting the islanders to New Zealand involves expense and considerable bureaucracy. The employer must pay half the travel costs, guarantee at least 240 hours of work, and take responsibility for pastoral care. (With thanks to Melbourne Age)

(Kevin Rudd did subsequently announce this initiative – and the Liberal Opposition is now arguing against the initiative which is dangerous given the volatility of regional electorates facing major labour shortages)

Politicians prefer ribbons to paint – so TRUE!

 

Congratulations on Cockatoo 27 and on the regional infrastructure submission.

 

On Cockatoo, I hope the ANZRSAI conference at the National Wine Centre in Adelaide from 30 November to 3 December can get a run in the next Cockatoo. Early bird registration closes on 3 October and paper abstracts are due about October 17. This conference will be held jointly with SISS (the ARC supported Centre for Spatially Inclusive Social Science) and I expect to see sessions on the impacts of minerals development on regions and others.

 

On infrastructure I would add three things for your consideration.

 

First, I find Commonwealth electorate boundaries to be useful as regional boundaries. Not universally but often. They have the advantage that the local member can help defuse local disputes. They have a disadvantage of drawing in ministers when the local member is a minister.

 

Second, I think capacity building is fundamental in regions. Consider cluster development, linkage grants, etc. It is there but it might have deserved a bit more.

 

Finally, there is a measurement problem in infrastructure discussions – we focus our measurement on the level of investment in new infrastructure, and leave out the biggest value items – the infrastructure that is already there. And we do not measure infrastructure in a way in which it can be comparable between regions and in which it can be aggregated to state and national levels. I would include roads, because like airports they bring development and prosperity.

 

I suggest a 4-part measurement system made up of:

1. Replacement cost of each existing item of infrastructure (easy because it’s in most insurance calculators). 2. Share of existing infrastructure which is at community standard (including technical/social expectations – converts directly to $ of replacement costs which are below standard and provides a view of backlog.

3. Annual expenditure on sustaining existing infrastructure (maintenance, upgrades, relocations etc.) which brings to light the causes of decline and makes painting more attractive relative to new construction.

4. Anticipated social and economic return on incremental investment in new infrastructure. In my experience the regions themselves are quite happy with this approach because it draws attention to the fact that the stock of infrastructure is important and funding of maintenance is far too low. It horrifies the states and the politicians because it removes the opportunity to cut a ribbon. As Chris Schacht (former federal minister) responded to me one day, politicians prefer ribbons to paint.

 

Regards, Tony O’Malley OAM, Outlook Management, South Australia – tony.omalley@adelaide.on.net

The Hot Goss on federal programs (as at August 2008)

 

Many programs on hold – numerous program reviews underway – fascinating under-currents emerging.  

 

Cutler Review of Innovation Programs – Dr. Cutler’s group and its secretariat are currently mulling over 700+ submissions. The Green Paper was expected end July, but the date has been put back. Issues that might get a run are smarter use of government procurement; and clustering and milieu themes.

O’Kane Review of Cooperative Research Centre Program – report released 5 August. Key recommendations are:

§          A focus on funding large end-user driven collaborative pre-competitive research.

§          Each CRC should be of high national benefit with significant spillovers.

§          A new program be established to assist industry and other end-user groups to undertake strategic analysis or innovation mapping projects and to establish collaborative ventures between end-users and researchers, including publicly funded research institutions. (THIS IS SIGNIFICANT)

§          Priority for new collaborations in areas with little history of collaborative activity or a low R&D base, particularly service industries and those sectors populated by SMEs. (ALSO SIGNICANT)

§          (Shadow Minister Eric Abetz put out a press release criticizing the Government for being 5 days late in releasing the report. You can do better than that, Eric!)

Green Review of TCF support – understood to be on-track. Cockatoo hopes that it will focus on 1. keeping the local industry tracking to higher value activities that complement the market position of low-cost competitors; 2. strengthening of global supply chains; 3. integration of design into quality apparel fashion goods; 4. increased local processing of natural fibres.

Creative Industries Innovation Centre ($16.2 million) – submissions have closed. RMIT/QUT consortium was seen as the front-runner due to its initial involvement in lobbying for such a centre. But the submission process has triggered much activity from other players, and some excellent concepts. Cockatoo trusts that a collaborative framework emerges that can accommodate as many cities as possible.

 

Clean Energy Innovation Centre ($20 million) – submissions have closed. This centre could be significant if it captures the latent opportunities. The industry is defined as solar; wind; geothermal; biofuels; fuel cells; hydro (latter is marginal). It must focus on the links between research, SMEs and the big corporates.

Innovative Regions Innovation Centre ($20 million) – HQ to be in Geelong (Deakin University), but to involve 4 other regions. The centre will provide expert advice re strengths & weaknesses, strategic business issues etc.; provide grants for company improvement; help to find latest research, technology & organisational knowledge; provide specialist facilities & advice to turn ideas into products; facilitate access to other companies offering mentoring, private investment, partnerships.

The selection criteria for the other 4 regions are (i) higher than average unemployment and (ii) experiencing adjustment pressures. Cockatoo figures that if you follow these criteria, the old chestnuts of northern Adelaide, Gippsland, northern Tasmania etc. will emerge. We trust that there is scope for this Centre to reach out to those regions willing to chase best practice outcomes. The launch is very soon (21 August?).

 

Regional Development Australia – the RDA Committees (the old ACCs) are currently providing comments on new admin arrangements and local infrastructure requirements. The new program will be valuable if it can be integrated with the big ticket agendas of Infrastructure Australia. The feedback we are getting is that the current 12 month funding hiatus is creating major expectations for a major program as from next July. These expectations are being further fed by the consultation process. Also, the rural regions see their issues as quite different from those of the metro regions. There is a concern that the roll-out of Infrastructure Australia and the Building Australia Fund ($20 billion) will mostly favour the cities.

 

House of Reps Enquiry on a new regional infrastructure program – submissions closed 14 July. Cockatoo made a submission pleading for Ministers to keep out of the process, and for the feds to stop its piecemeal approach. Watch this space. The outcomes of this enquiry will somehow merge with those of the RDA arrangements above.

 

‘Failed state crisis’ in remote Australia, says former Governor of WA

 

Lt. General Sanderson, former Governor of WA, has REALLY come out swinging in support of remote regions. In the Weekend Australia (July 26) he made the following points:

§          Remote Australia is a failed state, bereft of government that works, its permanent population giving way to mining companies and their “mercenary” fly-in, fly-out workforces.

§          The lack of governance, people, services, economic diversity and infrastructure throughout vast areas of the continent pose a serious problem for national security.

§          The “obvious inference” from the federal Government’s intervention in NT Aboriginal communities was that it too was directed at a failed state.

§          There is a link between several vulnerabilities – economic dependence on “harvesting expeditions” by multinational miners; social and welfare dependence as white settlers and services withdraw from remote Australia, encouraging an Aboriginal exodus from remote communities to regional towns; and the environmental and strategic risks of an abandoned outback.

§          A coherent societal structure throughout remote Australia, with networked infrastructure of settlements, roads, airstrips and communication systems, has to be an important plank of Australia’s defence system in the most vulnerable regions of the nation.

§          There is no coordinated national plan to look after the ecosystems of remote Australia, representing 85% of the land mass. Climate change increases the challenge.

§          Problems such as changed fire management regimes, over-grazed pastoral lands and feral animals constitute a burgeoning environmental hazard which, together with the dynamics of the human evacuation, is now taking on a self-fulfilling dimension of creating a true terra nullius.

§          Remote Australia needs more population (not the closure of Aboriginal communities), civilian infrastructure to allow a range of economic activity, and effective regional governance.

 

Brazil’s a natural?

The British think tank Demos has been engaged in a very interesting exercise (‘the Atlas of Ideas’) that examines the new “global geography of innovation.”

 

Its latest report assesses Brazil’s innovation system, and says it has a “natural knowledge economy” i.e. its competitive advantage is that it links knowledge and innovation with environmental and other natural assets. It argues that Brazil’s innovation trajectory is unique – bridging the chasm between environmental protection and industrial development. Future innovations need to build on this legacy, and overcome growing income inequality and pressures on Brazil’s rain forests and other natural assets.

(This is all uplifting – not having been there, is it valid analysis? – Editor).

Go to Brazil: The Natural Knowledge Economy

Bresle Valley + Glass Valley + Cosmetic Valley

 

The Glass Valley, previously called the “glass district from the Bresle Valley (LPS)” – 65 companies and more than 7 000 jobs – has recently signed a partnership agreement in Lille with the competitiveness cluster MAUD on materials for domestic usage.

 

This partnership is working on the application of the European Regulation REACH (dealing with the registration, evaluation and Authorisation and Restriction of Chemical substances). The Glass Valley will also take part in the relevant R & D programs, and has signed a partnership deal with Cosmetic Valley.

 

Contact Jean-Marie ROUILLIER (The point of interest is that PLACE figures prominently in French industry policy. Bresle Valley is in the north – not far from Dieppe and the Somme Valley – Editor)

USA has competitive advantage in collaboration (or does it?)

 

A new study analyzes 40 years of data from R&D Magazine, which has annually ranked its top 100 innovations.

 

Conclusions:

 

§                      the role of Federal investments in supporting innovations has grown rapidly.

§                      collaboration is more important. In the 1970s, 80% of innovations came from large corporations acting

                alone. Today, roughly 2/3 results from inter-organizational partnerships and collaborations.

§                     US firms and government agencies are quite effective in building partnerships, and this collaborative    

                mindset is a competitive advantage for the US.

 

Go to “Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1976-2006,” Source: NDOE.

 

(A European-based Cockatoo member has disagreed with the above findings. He says that while such data might hint that the US has a competitive advantage in collaboration, there are a host of factors working the other way. He points to the strong and enduring competitive ethos in America, its relative international insularity, and its unwillingness to embrace multilateral solutions. )  

 

ICT business networks – getting people connected

 

 

Dear Cockatoo – I have now completed my PhD and I think that it could be interesting for your newsletter and blog.

The aim of my research was to contribute to the understanding of how ICT can facilitate knowledge sharing and innovation in regional areas.

 

My primary goal was to understand the value that ICT-based business networks can provide in regional areas. In pursuing this it was important to see the issues through the eyes of  the business owners, and to incorporate the views of others in the regions.

 

My focus has been Australia, not just because that is where I live but, as an isolated continent, Australia has much to gain from strong locally-based regions with global access to ideas and stimulation. Because Australia provides a good example of the issues, I hope that the conclusions of this research will be useful to people in other countries.

 

The main contributions to knowledge from my research were:

 

- new insights on the business practices of regional SMEs and the concepts of Community of Enterprise (CoE) and  Virtual Community of Enterprise (VCoE) to capture the special nature of business networks in those regions and the focus of their knowledge sharing. This concept extends the (Virtual Community of Practice (VCoP) concept on which it is based, but distinguishes the focus of online knowledge-sharing in the two contexts, resulting in greater conceptual clarity. The VCoE concept is particularly relevant to business networks in multi-industry contexts.

 

- new perspectives on how value can be derived from knowledge-sharing in SME-based networks in regions. It showed that social capital is an essential pre-requisite for accessing the value of intellectual capital. This has significant implications for the ways that CoEs and VCoEs are developed and managed. It underlines the significance of face to face interaction. The findings strongly reinforced the importance of trust (both institutional and knowledge-based) which is a central dimension of social capital.

 

- the key elements that need to be addressed when establishing and maintaining VCoEs e.g. the mix of applications and the management of the networks and their online activities. 

 

Prior understanding of a region’s cultural context is essential for developing online initiatives in order to stimulate value through knowledge sharing. The participating SME owners were reluctant to share specific business knowledge and were particularly averse to doing so online – thus many value opportunities are lost both for SMEs and their regions. This research highlighted the reasons behind that reluctance.

 

Regards, Cecily Mason, Lecturer, School of Management & Marketing, Deakin University, Geelong Vic.Cecily.Mason@deakin.edu.au

 

(This is VERY timely – and we agree wholeheartedly about the need for trust and F2F agendas.
We too are interested in knowing what works best in getting connectivity. e.g. dinner functions, network advisers, personality matching, mentoring etc. – Editor)

 

Florida USA interest in incentives + clusters

 

 

Dear Cockatoo

 

 

I came across your July 2000 article, “Cluster-led economic development is not a fad,” while Googling for information about whether industry recruitment using tax incentives can help create a “synergy” of self-perpetuating business relocation, educational and training opportunities, and cultural enhancements in communities.

 

I am defining “synergy” as the dynamic created by businesses that received government incentives to relocate to specific communities when interacting with educational institutions, business owners, local economic development entities, governmental entities, and individuals. This dynamic includes expansion or promotion of Florida’s innovation economy.

 

 

Now that nearly 8 years have passed since you wrote your article, has this type of dynamic come about in the communities or cities that you cited?

 

Thank you, Joyce Pugh, Florida Legislature/Senate Commerce Committee, Tallahassee, FL  32399

 

Cockatoo’s reply

 

Incentives are fine as long as they address market failure (inability of small firms to capture scale and locational economies, managerial myopia etc.) and enhance inherent competitive advantage and have a sunset clause. The Singaporeans are a great example – they have carved out a competitive position against us in petrochemicals and bioindustries using investment incentives. Ireland is another in medical equipment and ICT.

 

 

You folk in Florida have done likewise in aged care, bioindustries and medical services etc. But how? Like the Gold Coast in Australia, sunshine and lifestyle advantages have led to massive population growth – and the ‘retirement haven’ aspect triggered hospitals and medical care. And some local champions were also triggering things.

 

 

We are currently spending a good deal of time to better understand the impact of local champions in getting outcomes that wouldn’t have otherwise occurred. I doubt if investment incentives have been that important on the Gold Coast or in Florida – we suspect the gradual layering of hard and soft infrastructure provided the main incentive.

 

 

Now is the time for clusters to devote attention to their local companies – investment aftercare and embeddness is the jargon. Otherwise they will become footloose - and China, India, Singapore and Malaysia beckon. There are lots of examples of the intelligent use of incentives featured on my blog – and somewhere there is a listing of the key factors determining industrial investment.