Archive for October, 2011

EC emphasis on regional specialisation

October 18, 2011

 There is a widely-shared consensus across Europe that mobilising innovation potential of all regions is the way forward.

 To this end, a recent European Commission study ‘Regional Policy for Smart Growth in Europe 2020’ (Directorate-General for Regional Policy) calls for a refocusing of regional policy. It makes four suggestions that make a lot of sense for all regions. (Our comments are in brackets).

 1. Develop smart specialisation strategies

 This calls for regions to concentrate on the most promising areas of competitive advantage based on clusters, cross-sectoral activities, innovative services, high value-added markets etc. The strategies should be subjected to international peer review. (Yes – sticking to the principles of competitive advantage you hold the high ground! International peer review also provides the objectivity sought by potential investors.)

 2. Redirect programs

 The EC study proposes that the substantial funds available under the EC regional cohesion policy be redirected to programs that conform with a smart specialisation approach. (This could theoretically improve the performance of regions i.e. program funds would go to those fields with the greatest economic potential).

 3. Interregional cooperation

 This recommendation is for better access to international research and innovation networks and for EC member states to run their own projects to this end. It calls for improved knowledge transfer and the use of the “Regions for Economic Change” and “RegioStars” initiatives. (This is most interesting e.g. there is interaction between Australian and EC academics, but it rarely extends into policy research. Wouldn’t it be marvelous if our academics got involved in international research that could underpin government policy!)

 4. Develop a “smart specialisation platform”

 The EC study recommends the marshalling of expertise from universities, research centres, regional authorities, businesses etc. to formulate and implement smart specialisation strategies by national and regional governments. (Regions in most nations are crying out for ways of aligning resources and program support to attract investors. Collaboration between federal, state and local governments to develop such pathways would really shake things up! Companies do it, why shouldn’t governments?)



Leveraging defence expenditure for wider outcomes

October 18, 2011

 We are currently identifying the scope to leverage defence expenditure for wider economic and commercial outcomes at the regional level. We put a request out to Cockatoo members for any insights and got some very interesting snippets.

 From Stu Rosenfeld: ‘As part of recentFortBragg inNorth Carolina is treated as a large economic hub, if not a cluster in the conventional sense.  The cluster impact is mostly based on meeting the needs of the large and mobile population residing there such as purchasing some local foods, landscaping, refuse collection, hospitality and recreation, transportation, retail, many other services.  But the larger military supply chain for the base, e.g., equipment, technologies, etc. is global.  The defense clusters we typically work with are defense contractors like the Technology Coast Manufacturers Network in northernFlorida.’

 From an ex-senior (very) official in Defence Department (Australia): ‘The trick to industry development would be working around a matrix of (a) niche areas of defence capability that will be in demand over the next 10-20 years, and (b) the fields in which our defence companies have some sort of competitive advantage. But my old department won’t share the information!’

This could be the kernel of a fascinating project. Does anyone know of anything similar in other countries?    

Collaboration – with the support of the tax system

October 18, 2011

In our experience, the best outcomes in regional and business development result from people clicking with other people. They find others with the same passion and view of the world – agendas develop from there.

 When these relationships develop across international borders, the results can be particularly rewarding. Accordingly, over the last decade, the Cockatoo Network has put lots of economic development professionals in face-to-face contact with their international counterparts.

However local councils and development agencies rarely fund their ED professionals to undertake such networking because of likely criticism about taxpayer-funded junkets. Similarly, a lot of federal and state programs specifically exclude expenditure on international foreign travel.

 Well we recently sought the advice of a nice lady at the Australian Tax Office. After describing the work we do in identifying leading edge industry innovation, we explained that we’d uncovered the Copenhagen Cleantech Cluster (see below) and that we’re looking for the ATO to allow our members to claim collaboration with that cluster as a personal income tax deduction.

 There was silence. So we further explained that most people find it difficult to separate work from leisure, and it’s no different while on holiday. In this case, a Cockatoo member might, while his/her spouse is shopping inCopenhagen) be comparing notes with local cleantech experts and inspecting wind turbines. Or a few days later our member might be in Saint-Paul (near Nice) getting a guided tour by a local council staffer of the artists’ colony, asking lots of questions, writing a report for the Creative Arts Committee back home. Our intrepid member might spend 30% of his/her trip on work-related activities and should thus be eligible to claim 30% of travel and accommodation expenses as a tax deduction.

To our delight, the Tax Department lady agreed subject to evidence that the work had been planned and the proper recording of the work undertaken.

 We would surmise that the tax systems in other countries are similarly geared to allowing such deductions. If they are, this might be a great way to trigger more cross-border collaboration!

Asylum Seeker Policy a house of straw! (Bogong is baaaack)

October 18, 2011

 Bogong, our resident political analyst, has returned from an extended stay in Japan, and is incensed at the politicisation of the asylum seeker issue.

 Poor confused Bogong! Walking around Parliament House there is so much heat-generated by the boat refugee question. Forgive the pun, but the tide is turning and the Left factions would love to desert the sinking ship of failed refugee policy. Thank God, because it’s a third order issue.

What are the bigger issues facing us? productivity and competitiveness; improving the tax system; improved health infrastructure; dealing with an ageing population; getting the balance right between coal and green energy; exacting a contribution on windfall profits by miners; finding a path to get alienated indigenous communities into the mainstream. And dare I say it – getting on with a national broadband network.

 On the economic management side, we have solid employment and most of us live comfortable lives challenged only by who will win the football finals or whether we can buy a decent chardonnay for under $20. So why the obsession with refugees and where do they rank in the big issues?

 Since there are 1.1 refugees for every 1000 Australians, Bogong doesn’t feel threatened by a stealth invasion. While we should do everything to stop them, we have had little success. Offshore processing has not worked. Towing the boats back into international waters has not worked.Naurudid not work. As forMalaysiawe will probably never know.

So are our efforts worth what we the taxpayers are shelling out? What we do know is that offshore processing is very, very expensive and we should be asking more about the cost and the opportunity cost. The Department of Immigration is saying offshore processing is about 10 times the cost of onshore processing and admits the last group of refugees fromNauru– most accepted by us eventually – cost over $1 million/refugee. This year, processing will cost close to $1 billion.

 But facts and cost benefit analysis is anathema to the government and opposition. Having determined that they will compete to beat it up and push every possible scare mongering button, they have gone to the third estate to have their prejudices vindicated.

Why? Well since this is an era of poll driven policy, the ignorance of many ordinary Australians is there to be manipulated. Not addressed in the sense of an education policy but ‘manipulated’ to encourage uncertainty and fear and to turn ignorance into a vote for the ‘toughest’ party. And the media’s attention is up for grabs.

 This house of straw is starting to fall down. Much of the media is conceding that boat refugees are not an Armageddon – although News Limited from its ‘moral high ground’ continues the campaign. The High Court caught the Government totally asleep! Trying to change legislation has brought out the worst in the PM and the Leader of the Opposition and the attempt at an unholy alliance alienated the Greens and Labor’s left factions which have both long supported an onshore solution.

 Does anyone remember Carmen Lawrence (WA Premer, Labor Party President, federal MP) who resigned from shadow cabinet in 2002 because her Labor colleagues adopted a “brutal and inhuman” asylum seeker policy? Now, instead of embracing onshore processing and community care as a humanitarian and cost-effective outcome, it is being forced on a reluctant Government. Let’s hope that there is now less need to scare the western suburbs electorates, and that we can move on to more important policy challenges.

 Cockatoo readers would be surprised at how many MPs from all sides would like that to happen.

South Australia’s clusters…what worked and why

October 18, 2011

SA once ran Australia’s best cluster program. The main architects were Mick O’Neill (now an executive with Adelaide City Council) and ex-Irishman Hugh Forde. This is the last article in the series by Mick – previous clusters featured were water, defence, spatial information and multimedia – refer our blog.

 Arts, Tourism and Sports all had a government department that initiated/sponsored the respective cluster initiatives, albeit engaging industry leaders to drive the project. The process again focused on strategic initiatives, engaging local industry and building collaboration. The department took up the role of supporting the initiatives and the cluster, so again it was inappropriate to establish a new entity. Projects had a life and the degree to which they contributed in the long term was debatable.

 But one anecdote is telling. Prior to the tourism cluster initiative the state and federal bodies were at loggerheads. The engagement of the federal body in the state process led to SA being more explicitly recognised in national promotion campaigns and it enhanced ongoing collaboration.

How do you put a value on something like this? Similarly, while it may seem amazing, both Arts and Tourism sectors acknowledged that there had been only limited cooperation between the sectors. Explicit initiatives were thus developed to address this. While not all as tangible, there were numerous examples of benefits that emerged from the respective processes. While there is no evidence of the ‘cluster’ today, the Arts and Tourism sectors definitely exist and many would say the cluster initiatives were valuable.

 Healthy Ageing and Environmental Industries are interesting. They were both ten years ahead of their time (another lesson) and received limited government support although participants were tremendously enthusiastic. Again a variety of strategic projects were established and in each case an entity was established on a shoestring budget. Inevitably the burnout law applied.

 The Environmental Industries initiative was funded by the Federal government under an emerging industries program. Ironically both sectors are flavour of the month today – with environmental industries now largely rebadged as Cleantech, while healthy ageing is a massive budget issue and substantial market opportunity.

 It’s probably OK to talk about failed clusters here too, although I am currently working with a network that emerged from the environmental industries process and has survived for the past 10 years. It’s in the energy efficiency/smart grid space – an area whose time has definitely come.

 In summary – adequate funding, usually state government, is critical as is the rationale and process involved in selecting the clusters (responding to government agendas is fraught). Nevertheless we need to be careful about using the term failed clusters. We need to distinguish the clusters as they exist in the real world from the groups that we’ve facilitated as well as the entities that have emerged out of these facilitated interventions. The fact that an entity might not survive or the groups no longer meet does not mean that the sector/cluster is not healthy or growing or that the initiative ‘failed’. Any number of cluster activities may have contributed to the growth of the cluster but have their own finite life for various reasons.

 Regards, Mick O’Neill 0416 079 089


RDA Fund underwhelms

October 18, 2011


The first round of the Australian Government’a $1 billion play in regional development got off to an inauspicious start last month, and there are lots of confused punters.

Why? Mainly because there were only 35 successful applicants out of 550 submissions – a very low success rate of 6.4%. Thankfully some of the winners were Cockatoo members.

The Department is pointing out that the success rate was actually higher because 249 applications didn’t meet all the criteria. That is splitting hairs.

The problem is that Minister Crean talked the program up way too far i.e. $150 million per round is not much across 55 regions. And an urban centre likeGeelongwith marginal seats should NOT have received two lots of $10 million. If you’re one of the 93.4% who missed out, DO NOT give up. Crean has stressed the importance of being persistent.

 Notwithstanding the above, the RDA Fund criteria are sound. Our view is that program funding needs to be doubled due to the underlying need for community infrastructure in the smaller councils/towns. They don’t have the revenue base, whereas cities likeGeelong,Bendigo, Gold Coast andNewcastle(who cornered over $40 million in the first round) have countless more funding options.

 The 55 RDA Committees must also prioritise the projects before they go to Canberra. They should be told to put a maximum of two projects forward in any six month period (i.e. total of 110 acrossAustralia) – with an ‘understanding’ that at least one would be funded. This would avoid the large number of submissions at present, and give the RDACs a reason for existence. We are currently lobbying certain MPs to this effect.

 The good news is that there are other well-resourced programs in other federal portfolios. 

Contributed by LG Focus – see October edition.