Archive for July, 2011

South Australia’s defence cluster

July 8, 2011

South Australia once ran the best cluster program in Australia. The main architects were Mick O’Neill (until recently Deputy CEO, SA Dept. of Trade & Economic Development) and Hugh Forde (an ex-Irishman). In this series Mick provides Cockatoo readers with an exclusive insight into its origins and performance.

 The sector had evolved over 40 years and had substantial critical mass partly due to the SA government’s role in attracting new companies and high profile projects.

However there was limited engagement with the existing local industry. Through the SA cluster program, a new entity – the Defence Teaming Centre – was formed to facilitate collaboration and address strategic issues such as workforce and capability promotion.

 The State government reluctantly provided funding to support the DTC and gave in-principle endorsement (responding to a forceful pitch from a high profile industry leader). The DTC was subsequently responsible for facilitating more than $100m of new projects and gave the industry a voice and a vehicle for engaging with State and Federal governments.

Nevertheless personalities and politics (small and large P) and burn out took their tolls and the Centre waxed and waned. It somehow survived, retaining a modest level of government funding but always at risk. The Centre and the sector were embraced by a new government in 2002 and a new, well-connected former Rear Admiral (Kevin Scarce, now the State Governor), saw the merits of the Centre as a vehicle for engaging with the industry. Funding was significantly enhanced and the Centre is now a very impressive operation. (

At this point it is useful to distinguish the cluster from the entity supporting the cluster – and this applies to all clusters. The defence sector/cluster is now recognised as one of the two most significant sectors driving SA’s economy alongside mining. It receives more than 30% of allAustralia’s defence contracts (in a state that is 7% of the national economy). While individual companies face significant challenges related to continuity of projects, the sector is growing strongly. Whether this can be traced to our cluster development initiative or to other forces and interventions can be debated. I believe it is both and that our cluster initiative contributed substantially to the evolution of the sector.

 The point is this – even if the DTC had fallen over previously or falls over tomorrow it is not a failed cluster and the ongoing sustainability of the entity is not a determinant of the health of the cluster (although it may be an indicator).

The process was initiated to “accelerate the growth of the cluster” which arguably it has done. Regardless we can conclude that state government funding and alignment with state government policy has been critical for both the entity and the cluster.

 Regards, Mick O’Neill 0416 079 089

Beware the bolting regions

July 8, 2011

The Grattan Institute (Melbourne) has just released a report recommending that governments should tilt funding towards fast-growing regions.

Titled “Investing in regions: Making a difference”, it argues that government funding should steer away from slow growing regions without sustainable economic foundations, towards ‘bolting’ regions where people and jobs want to go.

The report also recommends that governments should cut funds to those regional universities making a modest economic impact, and subsidise students to attend higher education facilities in capital cities.

It’s all reminiscent of Treasury economists in awe of Adam Smith’s doctrine of following the invisible hand of the market. I guess theGrattan Institutehas only been around a couple of years, and has to make its mark. But peddling these sorts of recommendations is downright dangerous.

 Bolting versus lagging regions

 The fault with the Grattan analysis is that governments are duty bound to help lagging regions to adjust to market shocks and minimise social dislocation and distress. Every developed nation offers subsidies to lure labour-intensive firms into such regions. Examples here are northernAdelaide, northernTasmaniaand more recently the Lower South East region of SA.

 As regards redirecting expenditure, how do you define a bolting or lagging region, and over what period? The report listsCairnsas a bolting region – WRONG because the tourism market has now collapsed and unemployment is high.

 The report also recommends that governments should forget about trying to attract investment into lagging regions on the basis that it’s a lost cause. KeyMurrayBasincities – Mildura, Shepparton,Tamworth, Orange-Bathurst, Albury-Wodonga, Wagga – that are now recovering from the drought are in that category!  


 The Grattan report argues that infrastructure investment may only have a limited impact on a regional economy – this is at odds with scores of surveys of investor surveys. The report nevertheless says that bolting regions should have priority for such expenditure – this would consign lagging regions to a permanent state of disadvantage.


 The report’s recommendation for a downscaling of regional universities is short-sighted. RegionalAustraliacritically depends on building its skills base and development capacity. Along with Cooperative Research Centres, regional universities could be powerful ‘poles of competitiveness’ (as inEurope). If only we all realised it.

The better solution

Regional development is a messy, imperfect process. The interplay of economic and social factors is complicated by the intersection of local, state and federal politics. The result is a myriad of plans, strategies and programs peddled by scores of agencies.

Regional stakeholders are mesmerised by all this complexity. What they want is recognition and respect, and the knowledge that governments (plural) are systematically building their local economy and institutions. They intuitively know this will help them cope with company closures, droughts, floods, cyclones and the like.

In this context, the regional development approach being pushed by the federal government will hopefully deliver this recognition. It puts the onus on regional stakeholders to focus on their competitive strengths, and to collaborate with state and local government, local businesses, universities etc. to develop sustainable growth paths. It also challenges regions to be persistent!

This is good. These principles should become a permanent feature of regional development policy because it also puts the onus on the federal government to provide decent feedback to RDA applicants. And it sends a message to federal and state agencies to pay attention to projects that:

  • Align with a region’s competitive strengths.
  • Are best practice.
  • Measure up in terms of cost-benefit analyses and business plans.

So I suggest that councils assemble their ideas within this simple framework. Meanwhile, you might read the Grattan Institute report because it might be supplying oxygen to federal and state treasuries looking for cost savings!!!!!

Stormwater grants (Australia)

July 8, 2011

The third and round of stormwater grants has been announced – $100 million is available, less $10.5 million for two projects in South Australia.

We rang the Department for details, and were delighted to hear that one of the two SA projects involves the innovative stormwater pipeline proposed by the Eastern Region Alliance (easternAdelaide). The ERA comprises seven collaborating councils, mostly also Cockatoo members. The federal commitment of $10m was made by then Environment Minister Penny Wong in the run-up to the last federal election. Despite being lobbied, the SA Government has not yet agreed to fund its share. The other SA project mentioned in dispatches is the Greater Goolwa feasibility study ($500k).

 There are two important aspects of this round:

  • In recognition of the recent flooding across Australia, stormwater harvesting and reuse projects that include a flood mitigation component will be eligible in this round.
  • The minimum amount of federal funding per project is reduced from $4m to $2m – thus providing for more projects to be funded. Note that the federal share is a maximum 50% of the total.

 Applications close on Wednesday 7 December 2011.

Commercialisation Australia Grants

July 8, 2011

Most of the R&D grants run by the Australian Government have been scrapped – the new approach is the R&D Tax Incentive involving tax credits.

What is left however is the Commercialisation Grants Program, a VERY GOOD and quite accessible program if you measure up. It is competitive, and offers funds to take products to market i.e. beyond the R&D stage. Applications can be made at any time.

The main elements are: 

  • Proof of concept – $50k to $250k to prove the commercial viability of new IP
  • Early stage commercialisation – $250k – $2 million to take a new product, process or idea to market.

Eligible expenditure includes labour, contracting, plant; prototyping and IP protection. Expenditure can be incurred for product development; testing and documentation; tooling-up for full scale production; market validation; and IP strategy execution.

The grant (which really a loan) needs to be matched 50:50 by the applicant. The grant is paid back once annualised sales of $100k are achieved – 5% of sales are remitted. Our guru can explain all of this. The program has been going about 18 months and 115 grants have been made to date – the success rate is rather good if you have a quality submission. Contact us on 0412 922559 for a chat.

Sell your community to the world

July 7, 2011

 A new website – – has been launched by Paquita Lamacraft inGermany. As well as classy photos, her website captures historical facts, inventions and things of interest in various cities. It already has readership from 62 countries. It’s a sort of “pictorial Bill Bryson” that urges you to jump on a plane.

 Paquita knows us backwards – she’s a western district gal, and has held senior economic/tourism positions in Camperdown, the Greater Green Triangle, Daylesford and Mackay. She later drafted the Film & Music Strategy forNew Orleansand the cultural planning outlines for Milton KeynesUK.  

 So I suggested she also feature towns and regions inAustralia,New Zealandor anywhere for that matter. The opportunity is real because of her skill sets, and it would provide a great way for cash-strapped councils to sell themselves to world travellers and investors.

If you’d like to be featured, please view her site, and ring us to discuss rates and time schedules.



Promises with timelines – best practice program administration

July 7, 2011

 While in Cooktown recently, I bumped into a character who was working at the Hope Vale community (just north) when Cyclone Larry ripped through in 2006. He said that among the helpers post-Larry was a government official who promised a refrigerated storeroom to enable regular supplies of fresh fruit and vegetables to the 750 residents.

 Well after 3-4 months of no word, the Hope Vale chap telephoned the number on the business card. No answer. A few weeks later, the same result. He tried a third time, but then gave up. He has now forgotten the department the official was from, and shrugs it off as another example of the tyranny of distance.  

 Unfulfilled promises and inordinate delays from government agencies are the norm in regionalAustralia. The problem arises from the over-selling of programs, compounded by administrative processes that are way too process-driven and slow.

 In my Brave New World, I’d close half the do-gooder federal programs, shift the savings into regional budgets, and move 10% ofCanberrabureaucrats into regional centres where they’d have Key Performance Indicators based around getting funding out promptly to the right areas. If the Cooktown region’s priorities are refrigerated storerooms, cyclone relief, teachers or harbour dredging, then that’s what they’d get – and within an agreed timeline. As I’ve said before, next time a Minister or Shadow Minister lobs in to discuss your needs, impress on them the need for  REAL DELIVERY.

Some day I will write a paper explaining exactly how this could work.


Cooktown – a different type of zoo

July 7, 2011

 With the strong dollar, inbound tourism intoCairnsis pretty grim. You have to feel sorry for the shopkeepers and restaurant owners.

 Anyway, I’d never been to Cooktown, and have a long-lost cousin there, so last month I did the 4 hour drive fromCairns. TheMulligan Highwaywas unsealed up until five years ago. Now it’s a beautiful drive with the majesticGreat Dividing Rangeon your right, and wildlife everywhere. Brahman cattle as big as houses, and I nearly cleaned up a herd of brumbies and a pair of plain turkeys (aka bustards).

 Cooktown’s population is only 2,000 and has retained its frontier character. There are some great Queenslander-type pubs with timber floors. On the first morning I wandered down the main street past the spot where Captain Cook repaired the Endeavour. At the main jetty, the ferry fromCairnswas just docking with a sprinkle of tourists. I got to talking to a veteran fisherman casting a line.

 ‘Get many crocs here?’ I asked innocently.

 ‘Put it this way, mate, don’t wash your bloody hands down there’ came the reply in typical FNQ understatement. ‘See that rock wall behind us? A couple of months back a croc went flying up there after a white-tailed rat!’ I later googled the said rat – it is a rodent native to northQueenslandand can weigh up to 2 kilograms!

 My new best friend then gave me a 10 minute overview of fish he’d caught with his two sons in their 20 foot runabout, and some jibes about the ‘grey shoe shufflers’ wandering off the ferry. Then he launched into a stinging critique of the crocodile conservation policy. I’d gotten the drift the previous night from a photo of a croc launching itself at a youth in a tinny. A priceless photo – see for yourself in the local pizza restaurant.

 The point of this article is that Cooktown is just the beginning ofCape York, a vastly different region waiting for jaded domestic and international tourists. The southern nodes of Mareeba and Cooktown give way to Coen,LockhartRiver, Weipa and the communities of Seisa, Barmaga andThursday Island. Travel north of Cooktown has its challenges – unsealed roads, expensive airfares (unless you book ahead), insufficient accommodation and variable food. Cape York Sustainable Futures (Cockatoo member) is addressing these issues.

 If you want conventional tourism, it’s best to stick to Port Douglas,Cairns, Noosa and the like. But if you want sweeping scenery, abundant wildlife, friendly people in a remote setting, then put this place on your Bucket List.


Blewett Review of Food Labelling misses the point!

July 5, 2011

Former Labor Minister Dr. Neal Blewett recently headed a Panel that reviewed Food Labelling Law and Policy – it tabled its report in January, and the Australian Government’s decisions on the report’s recommendations are expected in December 2011. The delay is due to Blewett’s report needing to go back the states, territories and NZ for their final input.

 The terms of reference noted that labeling needs to convey product attributes to a potential consumer and the need is mainly at the point of sale. However the report gave scant regard to this. The Cockatoo Network made representations to the Department of Health and Ageing (which provides the secretariat) when we saw that the draft report had not sufficiently covered the issue of ‘country of origin’ labelling i.e. the wording ‘made from local and imported products’ could in fact mean that 99% of the product is fromChina! Such a lack of precision also thwarts regional branding efforts.

 The Blewett Review’s lack of treatment of this key issue was not helped by the submission by the Department of Industry, Science and Research, which opted out of the discussion. While DISR ostensibly exists to facilitate the growth of food manufacturing, its submission said:

“It should also be noted that any attempt by the Government to introduce country of origin labelling measures for the sole purposes of encouraging consumers to substitute Australian products for imported products could conceivably be considered to be inconsistent with a range of international trade obligations.”

We will continue to pursue this matter.