The Australian Financial Review, 24 September 2017
By Vicki Thomson
Last week a front page headline of The Australian Financial Review shouted the warning “Nation losing innovation race”. It was a blunt message from Australia’s hand-picked and highly respected chief innovation guru Bill Ferris that Australia is lagging behind Singapore, South Korea, China and other trade competitors in the “innovation race”.
That we have abandoned such a pivotal race to secure the future of every Australian family should have had that Financial Review front page attract considerable follow-up media, backed in by vocal political and public utterances of concern.
That it didn’t is as much a problem for Australia as the headline itself.
Because it is a race, and being a winner in this fiercely fought global competition is vital to our nation’s economic future. For Australia to have faltered at the starter’s gun, and to now be lethargically trailing other competitor nations, is an also-ran position that our fragile economy cannot afford.
Less than two years ago our Prime Minister made securing an innovative nation, ready for the new knowledge economy that is coming our way like it or not, his policy foundation in the National Science and Innovation Agenda.
But, as it turns out, we were not innovative. We were not ready. Poorly explained to the community and as equally poorly funded, the word “innovation” has now been banished from the political lexicon. That crucial policy is no more – deemed a turn-off by voters who saw it as a threat to existing jobs rather than an opportunity to ensure we had the knowledge and skills to keep jobs or secure new ones.
So where does that leave Australia? Unprepared, offside and still tying our laces to the sound of the starter’s gun.
Lack of government support
Disappointingly, the article did not mention that our competitors’ success in the innovation race has, in every instance, been a strong, and strongly government-supported, university sector – something Australia no longer has. Instead, our universities face a future with less than 50 per cent of their funding from government and with legislation hanging over their heads that includes the largest cuts to the sector in 20 years.
The innovation ecosystem of all successful innovative nations has universities at its core. It is universities that educate those pivotal young and innovative people, and their mentors. It is universities that deliver the research that both uncovers and delivers innovation. The Group of Eight universities spend some $6 billion each year on research (including $2 billion on medical research alone), but only $1.7 billion of that total is directly funded by government.
In contrast, our competitor countries supported and nurtured their universities even through the ravages of the global financial crisis (GFC).
Singapore, identified by Forbes magazine as one of the economies hardest hit by the GFC, has long recognised that its prosperity lies in innovation. It has invested substantially in science and technology plans since 1991, with successive budgets of $S13.5 billion (for the 2010 plan), $S16 billion (2015 plan) and – most recently – $S19 billion (2020 plan).
South Korea (4.25 per cent) and Israel (4.23 per cent) now lead the world in terms of gross domestic expenditure on R&D (GERD) as a percentage of GDP. Since 2006 Germany has invested an extra €4.6 billion in top end research – this during a decade which included the GFC. From 2019, it will double down on this investment with €3.5 billion more in funding.
Near bottom of OECD
By comparison, Australia has remained near the bottom of the OECD in terms of public expenditure on universities as a proportion of GDP, and we currently have a government seemingly intent on gutting the very institutions that provide the workforce and the research needed to underpin the next economic wave of reform – the new economy that we cannot hide from, but which current policy settings will ensure we fail in.
The government’s $2.8 billion in proposed cuts to universities is nearly triple the size of its investment in the National Science and Innovation Agenda. This will also effectively condemn Australia to exclusion from the global top 20 of universities – a weakness identified by Bill Ferris’ innovation report card.
Heavily reliant on full-fee paying international students to help fund our teaching research, Australia’s universities have also embarked on serious cost-cutting. In one Group of Eight university along, 600 jobs have gone, increases in energy efficiency has saved millions and a plethora of systems and management methods have been changed – with a conservative estimate of almost $40 million in savings per year – savings that are re-invested back into university operations.
We have always been keen entrants in the innovation race, but we are shuffling along without a government cheer squad or adequate team funding and we have our hands tied behind our backs. That is no way to win. The question has to be: does anyone actually care in Canberra?
Vicki Thomson is chief executive of the Group of Eight universities.