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AFR Innovation Summit speech

Sydney

30 July 2018

I am delighted to join you for this year’s AFR Innovation Summit - “Australia 2030 – Prosperity through innovation – Making it happen!”

This Summit is a fantastic opportunity:

  • to consider the changes happening and the opportunities being created;
  • to look at how each element of Australian society can use innovation, technology and science to drive productivity and competitiveness; and
  • to consider Australia’s national ambition and culture; in an ever-increasingly digitised world.

As Bill Ferris - Chair of Innovation and Science Australia - pointed out:

“Rather than being fearful of the disruption and change that technology will eventually bring to all countries - Australians should see in these transformations the seeds of renewed growth that can sustain our enviable prosperity and quality of life”.

Part 1. Change and opportunities

Australia has been at the forefront of innovative thinking for decades.

We are a young, agile country whose geographical location and environmental challenges have fostered an entrepreneurial spirit, a “can-do” attitude and very often, a sense that we can probably do it better than the way convention would dictate!

We have led and participated in technological breakthroughs that have transformed everyday life.   

In the 1970s, Australia was the birthplace of the cochlear implant - an innovation that has enabled hundreds of thousands of people to hear - for the very first time.

In the 1980s, who remembers screaming - get my jeans out of the wash there’s $50 bucks in the pocket - only to be sadly disappointed as you held up the remnants of it - that the $50.00 was now worth nothing.

Gone are those days – why – because Australia created the plastic bank note - now used around the world - and - apart from saving our money when washed in the washing machine - brings many security features not available in the paper bank note.

The 1990’s –what a total game changer: The creation of Wi-Fi technology.

This was world changing technology, used today by more than one billion people and - of course - responsible for the now stock standard question asked by all millennials when they arrive anywhere - What is your WiFi password?

Jump to the mid 2000s - how proud are we - Australian researchers developed the world's first cervical cancer vaccines, Gardasil and Cervarix.

The list goes on – the black box flight recorder - the ultrasound scanner………

And more recently, with the support of the Government’s Biomedical Translation Fund, our researchers have revolutionised the treatment of kidney disease, and developed an artificial heart technology saving the lives of millions of people worldwide.

Why do we need to know about these achievements?

Because they give us a great sense of our nation’s attitude to change and innovation – we can do it!

And our track record should provide us with great confidence in our ability to continue to innovate.

And this takes us to what we mean when we talk about innovation.

Innovation is happening everywhere - across all sectors, right throughout supply chains - as it always has.

It’s about coming up with practical solutions that add value, whether it is new products, processes or services.

AND - the benefits are clear:

Businesses that innovate – are twice as likely to create jobs as those who don’t.

Innovative businesses are also significantly more likely to enjoy  productivity and profitability growth than those who don’t.

Over a third say innovation increased their revenue and improved customer service.

Around one fifth, reported gaining a competitive edge and reducing costs.

Innovation is also about embracing change and doing things differently to take advantage of new opportunities to improve our lives through what we make, what we do, and how we do it.

Innovation is a national economic priority, fundamental to our nation’s future prosperity.

Whether you are working on a mining site, running a small business or conducting ground‑breaking medical research, innovation is crucial to success.

This Government is backing your efforts to seize the opportunities and prosperity, innovation and technology make possible.

We welcomed ISA’s vision for Australia to be a top tier innovation nation by 2030.

This is a realistic goal: and we all have a role to play.

From businesses, to our researchers, government, our communities, individuals, and our education sector - each of us needs to ask ourselves - what our contribution can and will be.

As the Minister for Jobs and Innovation, my role is to ensure the Government provides the enabling environment for our businesses to embrace technologies that will help them grow, export and employ more workers.

The Government also needs to ensure our education and training systems, and workplaces, support all Australians to continue to develop and update their skills throughout their lives.

That is the most strategic and effective role we can have - government as an enabler. 

It allows all of you - to get on and do - what you do best:

  1. innovate

  2. build and grow our businesses

  3. create more and better paying jobs; and

  4. take up the opportunities that collaboration, global connections and new technologies offer.

Part 2 - Policy Settings – Government as an Enabler

As a government we are delivering the right economic and policy settings.

Australia continues to set records in uninterrupted economic growth and the Government is committed to delivering on policies to ensure this growth continues.

The Prime Minister’s decision in December 2017 to unite the Jobs and Innovation portfolios under one Minister, reflects this Government’s recognition that innovative businesses are the key to increasing our nation’s productivity and the creation of more and better-paying jobs for Australians.

Since 2013, in an increasingly digital economy, over 1 million jobs have been created.

The budget bottom line is in its strongest position since 2007.

We will bring the budget back to balance in 2019-20.

The opportunities for our nation are immense: new technologies are transforming Australian industries, the workforce and communities – they are changing how we bank, shop, work, socialise.

New industries are being created and businesses – of all sizes – are creating new products and services, both, for Australians and for the increasingly accessible global economy.

R&D Tax Incentive

The Government recognises the role that research and development has here.

Not only because of the products it creates - but because companies that undertake more R&D create more and better paying jobs.

As part of the 2018-19 Budget, we have made important changes to the R&D tax incentive.

At the heart of those changes is providing more targeted support for innovative Australian businesses - whilst ensuring that taxpayer investment in R&D is affordable. 

The 2016 Three F’s review, and the ISA 2030 Plan, found under the previous system much of the support being provided to companies through the R&D Tax Incentive was funding business-as-usual activities.

The revised incentive’s central purpose is to get businesses doing more real and additional R&D – that will lead to new products services, processes and jobs.

The scheme continues to provide strong support for small businesses with turnover less than $20 million a year.

Of the 10,000 companies who fall below this threshold, only a handful will be impacted by the introduction of the $4 million cap.

We are also exempting clinical trials from the cap on cash refunds, underlying the Government’s commitment to supporting the development of life changing drugs and devices.

To support large scale R&D investment and encourage greater additionality, we will introduce a new R&D premium which will increase with the intensity of R&D expenditure.

Encouraging greater intensity will mean greater benefits for the community from companies that are more R&D intensive.

The government has released the draft legislation for consultation and I am looking forward to working with our business community to ensure the implementation of these changes result in what the AFR has aptly described as “R&Do”.

As this audience knows, the Government’s R&D spend is broader than the R&D tax incentive.

It includes the NHMRC Research Grants, CSIRO and the Australian Research Council National Competitive Grants Program.

In addition, government is encouraging R&D and innovation in business through the Cooperative Research Centres, the Entrepreneurs Program and the Industry Growth Centres.

The outcomes of these investments materialise when business invests in R&D that is above and beyond business as usual activities and that creates spillovers for the rest of the economy.

This year’s additional investments to strengthen Australia’s innovation system were informed by the latest evidence, including the ISA 2030 Report, of which this Government supported 27 out of 30 recommendations and noted the remaining three.

The Government has made a substantial long term commitment to Australia’s science, research, innovation and higher education systems in our 2018-2019 budget.

In particular, we have invested $1.9 billion to support and improve our world-class national research infrastructure, which is essential to sophisticated R&D, and used for everything from advanced manufacturing through to creating lifesaving drugs.

Just as power, water and roads infrastructure enable us to go about our everyday lives, digital equipment and systems infrastructure are now core to our everyday lives.

We have invested a further $140 million to upgrade Australia’s two Tier 1 high performance computing facilities.

This massive large scale data processing and visualisation capability puts Australia squarely in the game of Big Data.

Upgraded supercomputer facilities will ensure development of new applications with extraordinary reach, enabling new science and innovation in medical science, mining, urban planning, nanotechnology and radio astronomy.

We have invested $500 million in a Genomics Health Futures Mission that will save and transform the lives of more than 200,000 Australians and help find cures for currently untreatable diseases.

And another $500 million in the Great Barrier Reef including $100 million to harness the best science to support Reef resilience and the 64,000 jobs that rely on its prosperity.

And we are enabling the creation and fostering of new industries.

We created the Australian Space Agency to triple the size of Australia’s space industry to $10 to $12 billion per year by 2030.

This will make the space industry a large contributor to the growth and diversification of the Australian economy and provide up to 20,000 new high skilled jobs whilst creating an important capability for the nation.

It will give Australian businesses - in every state and territory - the ability to participate in international space missions and projects.

And alongside the space industry investment, we are investing more than $260 million into satellite-positioning technology: 

Technology that is critical to sectors that rely on spatial data and high accuracy positioning.

These enhanced capabilities will enable unimaginable innovation:  Be it virtual fencing for farms, better management of livestock over vast distances, improved control of autonomous mining activities, precise data for environmental rehabilitation, improved safety for aircraft flying into regional and remote aerodromes.

And, they will help businesses to innovate, lift confidence in investment in these technologies, improve productivity, open up markets, and create new jobs.

Like NSW business Agriwebb who has developed software which enables farmers to implement best practice livestock management from their phones or computers in real time.

Farmers can track livestock movement using sensors and real time maps.

This would not be possible without the accurate positioning infrastructure provided through Geoscience Australia.

This Government is also enabling the commercial realisation of our biggest competitive advantages.

This includes radio astronomy.

In the mid-west of WA, in one of the world’s best radio quiet zones, is an international collaboration of unprecedented scale.

This is home to world-class radio telescopes, which are precursors to the Square Kilometre Array radio telescope – set to become the largest telescope in the world.

On signing of the Square Kilometre Array Convention later this year – we will cement Australia’s position as a global leader in astronomy.

The raw data generated in Australia alone will equate to 5 times the estimated global internet traffic in 2015

The SKA will stimulate the development of world class computing and ICT skills in Australia – skills that, as we all know, are key drivers of industry and the economy as a whole.

This is an extraordinary initiative.

Part 3: The Growth Centres

And through our Industry Growth Centres initiative – we are investing in sectors we know have competitive strength and opportunities to go global.

This Growth Centres initiative is industry led – why - because industry is best placed to drive innovation, productivity and competitiveness.

The government has tasked the 6 Growth Centers to focus on:

  • increasing collaboration and commercialisation
  • improving international opportunities and market access
  • enhancing management and workforce skills; and
  • identifying opportunities for regulatory reform.

Earlier this year, I visited Astor Industries, an automotive manufacturer in Western Sydney - a member of the Advanced Manufacturing Growth Centre.

Astor has diversified and is now making spectacle frames from recycled plastic, having adapted its traditional automotive assembly operation to mass produce customised prescription eyewear for the global market.

Astor collaborated with Dresden Optics and leading researchers, including the University of New South Wales.

And Astor’s people are right there with them.

Their workers have embraced the opportunity to learn new skills and capabilities, to produce innovative new products, and be part of their company’s future growth.

The project has created new highly skilled jobs and Dresden forecast an increase in production by over ten-fold in five years - from 33,000 units now to over 400,000 units by 2022.

Quickstep Holdings - With assistance from the Advanced Manufacturing Growth Centre, they’ve developed and commercialised carbon fibre composite technology.

They’ve relocated their R&D functions from Germany to Geelong.

And they’ve worked with Deakin University researchers to refine the technology including hiring 11 PhD students in the process.

And now, Quickstep has proven its technology and as a result is a qualified supplier into the high-end European automotive market.

This is expected to create 30 high-skilled jobs and generate export revenue of $25 million.

These are examples of the Government’s investment enabling the private sector - to take the next step in growth - to ensure innovation generates positive change for the Australian economy and workers.

The Growth Centres are also playing a key role in the Government’s SME Export Hub initiative, targeted at SMEs in regional Australia.

We recognise that our regional businesses often face additional market-participation challenges.

The SME Export Hubs Initiative addresses barriers to participation in global supply chains, develop export strategies, building on identified local strengths, and enhance workforce skills through training and seminars.

The Government is also investing at the early stage of innovative business.

We recognise the critical role innovative startups play across the economy in creating high-value jobs, contributing to increased productivity and bringing new products and services to market.

The Government’s $1.1 billion National Innovation and Science Agenda established a number of measures in support of these new enterprises.

From the $23 million Incubator Support Initiative to develop market capability and connect them with top quality research, business advice and talent – through to new tax incentives and a crowd-sourced equity funding regime, the Government’s initiatives are seeking to develop Australia’s innovation ecosystem.

Our approach to enabling innovation seeks to be inclusive of the many different types of entities operating in our economy, the various stages of development and, the range of objectives they seek to achieve.

We are also seeking to ensure we have the talent necessary to take our businesses where they need to go.

On 1 July, we launched the Global Talent Scheme pilot.

The Scheme gives startups and established businesses access to the specialised and emerging skillsets that Australia needs to compete globally.

Part 4. What is our vision for our Nation?

Whether it’s aiding in bone regeneration, helping to harness the wisdom of the universe, or creating spectacle frames: the Government’s investments are enablers: of new knowledge, new and better products and services, new markets, new skills and more jobs.

This is prosperity through innovation.

The challenge for our nation is to embrace the economic opportunities, while also recognising, that technological changes are being applied to people.

And this brings with it the need for ethics, inclusion and regulation.

The proliferation of data, AI and automation has led to understandable fears about loss of control at the individual level.

Businesses have had their social licenses to operate challenged.

To help find the right balance, we need to identify what our vision as a nation is - where do we draw the line - between regulation and innovative entrepreneurship and economic freedom? 

The Australian Government is finalising a strategy that will provide an overarching guide to the formulation, development and implementation of policy in an increasingly digital world.

At the heart of this strategy is a vision that will see Australia as a top tier innovation economy that uses technology to enhance our quality of life, support and generate more and better paying Australian jobs, and grow our economy.

The Government has consulted widely in the formulation of this strategy.

As Minister, I have led a number of roundtables participated in by many of you here in the room today.

Fundamental to the success of our vision is clearly outlining the role and responsibility we each have.

If we envisage a nation with an inclusive economy that allows participation across industry, demographics and regions, it is critical that we all pull our weight.

If businesses want a secure, reliable and skilled workforce, they need to work with us to invest in education, training and development to create potential employees who are work-ready.

And the more involvement you have, the more successful our nation will be.

The education sector’s future success will depend on its flexibility and agility in providing the courses and training our economy needs to remain globally competitive.  From micro credentials to skills training - your involvement is critical to developing a highly skilled workforce.

And of course, as Government, we are working to create the appropriate regulatory framework for the unprecedented developments in AI, automation and data mining, collection and usage.

The technological changes we are witnessing - and often driving – present many opportunities.

The challenge - is the fear that often accompanies these changes.

Advances in automation and AI in particular have led to concerns regarding job losses and privacy issues.

These developments mean that we - those of us in this room – have to ensure those concerns are properly addressed.

We need to act early to assist employees - and the future workforce - understand that change will, more often than not, mean a change to your job description, not unemployment.

Through re-skilling, up-skilling and life-long learning, our track record shows that when business, government and the education sector work together, we can get this right.

The decisions by Ford, Toyota and Holden to cease car manufacturing here in Australia were heralded as a potential employment disaster.

And it certainly would have been, had not appropriate action been taken.

Both Holden and Toyota report that over 80 per cent  of their workers have successfully transitioned - either gaining new jobs, studying or retiring.

And they continue to work with the remaining workers to transition them.

These closures won’t be the last challenge our industries face – but nor were they the first.

But history tells us that when we collaborate, the results are positive.

We are committed to ensuring all Australians are part of the journey. It is a big task but, we are well advanced, and given our record, I am confident we can.

So ladies and gentlemen, with targeted policies and investments, the Government in its role as an enabler, will work collaboratively with you to continue to adapt to new opportunities, compete globally, and keep Australians in well paid jobs.

We look to your ideas, expertise, capital and passion. And we need your advocacy to bring others along.

We need people like you to lead the way in questioning old assumptions about how business is done. 

To inspire the creation of new and better products and services. To value-add.  To collaborate. To get globally connected.

To test the bounds of curiosity and research.

And to invest in people and their talents.

Challenges remain – but I am extremely confident that by working together we can make Prosperity through Innovation happen.

ENDS