In 1999, Opposition Leader Kim Beazley gave an excellent budget-in-reply speech in which he attacked the Howard government for its lack of any sense of where the country was going. Australia, he said, needed investment in education, in research and development and in sensible industry policy.
Now, almost 30 years later, the Albanese government, through its Future Made in Australia program has at least had a go at tackling the industry policy bit. But for an even longer period, there has been so little active government involvement in science, technology and industry, that it’s difficult for any government to find a credible way forward.
Backing comparative advantage has served Australia well. Massive mining operations have generated exports, provided governments with tax revenues and given modernising economies in Asia access to relatively cheap raw materials and energy to turn into every conceivable manufactured good.
The result has been prosperity, and an economy that, for a developed country is unlike any other. Added to resources and agriculture, we have services exports in tourism and education and a booming construction sector.
But there is a downside. At just over 5% of gdp, the manufacturing base has reached a tipping point and will soon reach the point of no return. A lack of interest in science and technology has led to lost opportunities, declining skills and a falling rate of business research and development, as more and more products are imported.
Does this matter? This is a question that can’t really be answered unless we address another: what kind of country do we want to be? Are we satisfied with being essentially a consumerist society, or would we prefer to be a leading middle power with a distinctive presence in the arts, science, technology and innovation?
The second pathway is possible, but after many years of neglect, doing anything sensible about it makes it a difficult problem. Inaction will mean more of the same: jobs for tradies, baristas and healthcare workers but not much depth. Politics being what it is, if you don’t have much idea about the sort of economy you want, you will get a version of it, determined by whatever interests and bureaucratic pressures happen to be strongest at the time.
There is an even more fundamental issue, and that is that we are not used to thinking independently about our place in the world. What does this mean? It means we are conditioned to rely on others, particularly the United States, at a time when we cannot be sure our interests coincide. Doing something about this does not mean we have to go it alone, far from it. But it does mean considering our values – of creativity, inclusion and social equity – and developing activities that will strengthen our ambition and performance in intelligent ways.
So what to do? It would help if there were some acknowledgment from both parties that we have a problem. We can continue to ignore it, and see our country’s options begin steadily to contract. Our best people will continue to go overseas, because the jobs they want to do are not here. Industries that add value to Australian resources will continue to go offshore. There will be surprising shortfalls of goods (such as hospital saline) where we think – surely we could do that here? Industries that are well-established and efficient will reduce production in Australia because it is easier to switch to imports which, in turn, become progressively more expensive. We continue to be in denial about this. Perhaps if we intone the phrase ‘global supply chains’ often enough, we can ignore the costs of an economy that for too long has relied on the ingenuity of others to solve our problems for us.
So, what to do? The first step is to acknowledge that the manufacturing and related industries we still have, are doing a good job. To survive, as they have done for many years, in a society that largely ignores them, is a major achievement we should celebrate. We should listen to what they are telling us.
The next area to consider is the university sector. As any academic (as distinct from university administrators) will tell you, the last 20 years have been disastrous and have produced an overblown tertiary sector that no longer knows what it is doing. We don’t need more international students, we need better research, less-pressured and higher quality tuition, and more productive links with industry. We need a vocational sector that restores its connection with Australian business and skills. We need a high school system that works much better than our existing one. Too many kids are coming through with skills, particularly in maths and science, that are below par.
Another important focus is what governments buy. And they buy a lot of stuff – health goods, computer systems, defence materiel and associated services. We need to think hard about these activities and their relationship to national values on the one hand and domestic production and skills on the other. AUKUS has given us the worst of all worlds – relationships with two quite distant powers (the US and the UK) that are built around extremely expensive submarines that have little connection with the industrial base that was built up around the Collins Class program. Instead of learning how to be better purchasers and moving on, we have had an unedifying saga of excessive Prime Ministerial involvement, and a program that is so confused, it is almost impossible to know where it might be leading us.
Governments also effectively buy a lot of research – in labs, in universities and in the private sector. It is time to start thinking more coherently about where all this is heading. There is too much pointless competition when people should be working together. Collaboration, both nationally and internationally is key, so we should be supporting those who are doing the most important work, as long as they are taking others with them. Governments should desist from their constant restructuring of CSIRO. We need its expertise, and the more freely it can pursue creative ideas, particularly those with potential for industry, the better.
We should promote our values more firmly. Unlike China, which beyond its obsession with power, has little to offer, Australia has a good story to tell, if only we could get over our perennial cringe. We do not impose ourselves on countries we are trying to help. We do not set out to corrupt their elites. A little imagination goes a long way. Bring PNG into the national Rugby League competition? Go for it.
In order to defend and promote our values, market signals are not enough. Some degree of self-reliance is required. If we take ourselves seriously as an independent, middle power, that perception has implications for all that we do. You can’t turn science, technology and industry policy on and off. It takes time and patience to build networks, to change the culture, to enlarge the perspective.
It would be good if both major parties acknowledged that all is not well and that we need to do better. An economy that relies on resources exports for its income and population growth for its economic vitality is an economy that has run out of ideas.