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Address to the Advance Global Australian Summit

Sydney NSW

21 October 2016

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Today, I am honoured to be sharing this room with Australians of remarkable talent, vision and ambition. People who are advancing Australia on the world stage through business, technology, science, the arts and the community sector.

I am proud that my portfolio, Industry, Innovation and Science, supports events like this, where we get to honour our trailblazers.

And I am especially grateful to have a chance to address you on the theme of this year’s summit – Australia in the Age of Disruption.

The age of disruption is a global age. And it’s digital.

The world economy is more connected than ever before, and global competition is placing increasing demands on our producers of goods and services.

More and more, success in world markets depends on finding a niche in highly dispersed global value chains. And that means Australia needs exactly the sort of international connections Advance can offer.

Today’s wave of disruptive technologies are built on the internet, cloud computing, sensors, smartphones and the internet of things. We’re seeing totally new materials and manufacturing methods, like computer-aided design, 3D printing or robotics. Yesterday’s science fiction is today’s routine industrial equipment.

And these technologies are spreading fast as the costs keep dropping. Drones cost about $100,000 apiece back in 2007. Now? About $700 – and that’s for a pretty good one. You could buy one for your kid for Christmas.

As the costs of technologies fall the knock on effect is reduced transaction costs.

It also changes how and where we produce things, and presents opportunities for local firms to both disrupt and be disrupted.

But disruption itself has been with us since cavemen days. In prehistory times, the club manufacturers were displaced by agile tech startups making flint-tipped spears, offering a more efficient way to put the woolly mammoth steaks onto the barbeque.

Another example is the transition from horses and carts to cars. In Australia in 1870, Cobb & Co. coaches drove all across Victoria, New South Wales and Queensland – 6000 horses totalling 28,000 miles every day, at the lightning pace of six miles per hour, 10 kilometres an hour in digital money.

Our first proper petrol-driven car was made in Melbourne in 1897. In 1908, factories in Geelong, Adelaide and Brisbane were turning out the Model T Ford.

Now, the last of the Australian made Fords have rolled off the production line and we’re looking at a future of driverless cars built on the back of the digital revolution.

Changes to the mix of industries and sectors that make up the Australian economy mirror trends evident in advanced economies the world over’.

And that is that over the 20th century, agriculture was overtaken by manufacturing as a major job source. Similarly, manufacturing is being overtaken by professional, scientific and technical services, which are in an expansion phase.

But Australia has proven agile in adjusting to structural change in the past. Things are no different today, governments and indeed the departing automotive manufacturers are all investing in skilling workers and helping supply chain companies to adapt.

Nonetheless, it doesn’t take away community uncertainty.

The main reason we hear a lot of negativity about the age of disruption is fear about unemployment because of globalisation or technology.

Articles about how we’re going to lose hundreds of types of jobs to robots seem to appear every other week.

And this is in the papers, or indeed, on online news sites when the community is already reeling from the loss of manufacturing jobs to countries with cheap labour, and the offshoring of local office jobs.

Those trends make it a hard sell just now to ask ordinary folks to get excited about digital disruption or global markets.

So let me take a moment to engage seriously with people’s concerns.

My own background is in a traditional family business – hotels – so I can relate to people’s fears for their jobs and businesses.

There are always two sides to the coin – and the upside is very bright.

Part of the upside is job creation.

While job losses from technological disruption get front-page publicity job creation doesn’t. Job losses tend to happen in big, obvious lay-offs, but job creation is more spread across the system – and it doesn’t make for snappy headlines.

We’re doing our kids a disservice if we ignore the future job creations from technological disruption.  

Historical data from over more than 100 years shows that technological change has created new jobs as fast as they are destroyed – often faster.

The Committee for Economic Development of Australia reported that we lost 146,800 jobs from 2009 to 2014. That’s a big number. But we created 944,500 jobs over the same period. That’s more than six times as many.[1] 

And recently Minister Hunt noted that between 2006 and 2011, Australian start-ups added 1.44 million full time equivalent jobs to the economy.

Another upside from structural change in Australia has been the even distribution of benefits across the population. Over the past four decades income gains have been appreciable between top, middle and bottom income levels.

This has arisen by the creation of vastly more higher paying new jobs than displaced lower paying jobs along with a shift towards more highly skilled work, with employers readily absorbing the huge increase in people with tertiary qualifications.

Disruption is not always a simple case of machines replacing people.

For example, the US startup Rethink Robotics is designing affordable industrial robots that can be used and trained easily by lower-skilled workers.

The robot in question is called Baxter. If you’re worried about the future of the blue-collar workforce in Australia, Baxter may be your new best friend.

Putting such robots on the factory floor boosts productivity and can help keep jobs in Australia.

Right now, Baxter is being introduced to American manufacturers of all sizes, including small and medium sized players that had never previously considered automation as an alternative to offshoring. And just to show that Australians are playing up there on a world stage, Baxter is the creation of Adelaide born Rodney Brooks, an alumni of Flinders University. In fact Baxter played a part at the opening of the Flinders at Tonsley Centre at the Tonsley Innovation Precinct in Adelaide last year.

Exosuits, which are wearable machines designed to augment a user’s strength and ability, are an example of where traditional blue collar workers may be able to work hand in mechanical glove with machines. While Exosuits are predominantly used in the military emerging applications are relevant to the construction industry.[2]

I want to take this chance to give a plug for some other Australian businesses, new and old, who are making the age of disruption work for them.

Point Duty is a Tasmanian based software company that uses technology to help fight crime. It captures data from social media networks, peer to peer networks and the dark web, helping to fight violent extremism, child abuse and fraud.

The company is expanding to the US, and the exposure they get there – to expertise, to contacts, to funding opportunities, to new ideas – is going to flow back home in benefits for Australian industry.

Melbourne-based startup SPEE3D has patented a high-speed, low-cost digital manufacturing process based on 3D printing with metals. This is a first-to-market innovation, and it will let companies 3D print parts equal to those made by casting.

The opportunities aren’t just for new players. Digital sector growth need not be at the expense of established business.

Since I’ve been in this portfolio I have been reminding people that innovation works just as well in old industries and firms as it does in startups. Sometimes it’s better because it builds on existing critical mass.

When we talk about the hospitality industry, AirBnB almost always gets mentioned as the classic digital disruptor. And some would argue that it is proof digital startups cause traditional businesses like hotels to lose out.

But some Australian startups nurtured by Advance’s Elevate61 programme are turning the tables by helping traditional hospitality businesses to thrive in the age of disruption.

Gold Coast startup Notebook makes a cloud-based reservation system for holiday parks, hotels, resorts and serviced apartments. It saves time by combining property management and digital marketing functions in one platform.

The M4 Group developed technology to speed up the creation of feature-rich websites linked with social marketing, customer relationship management and email functions, to help time-poor small businesses do more sophisticated digital marketing.

Many other traditional business sectors are working to turn the age of disruption to their advantage.

The NRMA has a startup programme called Jumpstart. Telstra backs an accelerator programme called Muru-D.

The Commonwealth Bank hosts Innovation Lab incubators in Sydney, Hong Kong and London. And the Commonwealth Bank has joined my department, Telstra and the University of New South Wales in backing the commercialisation of the world’s first silicon quantum computing chip. But that’s a whole other story.

And I have to talk about Coopers Brewery in South Australia.

Coopers was established in Adelaide in 1862 and is the largest Australian-owned brewery. If you had to point to the most “traditional” Aussie business imaginable, Coopers would be a top choice.

Now, Steve Jobs famously said, “A lot of times, people don’t know what they want until you show it to them.” Well, Coopers may have been channelling Jobs when their Australian ingenuity brought the BeerDroid into the world.

This system uses Wi-Fi, precise temperature control and patented end-of-fermentation technology to home-brewed beers at the push of a button.

It has been described as the Nespresso machine of home brewing. Moreover it talks to a smartphone app that doubles as the brewer’s stock inventory and portal for ordering ingredients. Home brewers get notifications to their phones based on the sensor data telling them exactly when the beer is ready for kegging.

It doesn’t stop there, the home brewer can get tech support from Coopers to “debug” a bad brew, because online integration means that Coopers can log in to see what went wrong.

And if, when, Coopers launch the system in the United States, the app is a success there, it means a better return for Australia, since very little of our beer is currently exported. Coopers could very well create a new, high-tech, distinctly Australian global market.

So you see, established businesses can benefit by playing the disruption game. You don’t have to pick favourites.

In the government we support all Australian businesses that can compete to compete.

The government’s vision for Australia in an age of disruption is a thriving, digitally sophisticated economy, with a network of globally engaged, high-growth businesses of all sizes that have successfully integrated into global value chains.

Because when all our businesses thrive, there are more jobs for Aussies.

The government is focused on creating the best possible environment for this to happen.

We can make sure that the underlying settings in areas like business tax and finance, labour, infrastructure and skills, make it easier for business.

We’re committed to reducing the tax burden on industry through our Enterprise Tax Plan to reduce the company tax rate to 25 per cent over 10 years, because you can’t grow jobs in Australia if businesses operating in Australia can’t pay for workers.

We’ve also already reduced the red tape burden on businesses by billions of dollars since we came to office.

We help businesses commercialise good ideas through Accelerating Commercialisation under the Entrepreneurs’ Programme.

The National Innovation and Science Agenda, or NISA is building a culture of innovation that is creating jobs and globally competitive businesses. It’s a long term plan to achieve our vision and secure Australia’s future economic prosperity.

We’re investing in Big Science, like the Synchrotron and building the world’s first silicon quantum computing circuit.

We’ve amended the tax system to make it easier for high-growth, innovative startups to attract investment.

We’re boosting the participation of women in STEM.

Minister Hunt has spoken about the potential for the next waves of NISA focussing on Big Science infrastructure and encouraging private sector investment in innovation.

Future waves  will make it easier for business to get on with it, by reducing unnecessary regulation.

I’m already talking with my state and territory counterparts about harmonising regulation and approvals.

And Innovation and Science Australia will deliver a 2030 strategic plan for innovation, science and research.

But the government can only do so much. Ultimately it’s the vision and drive of private enterprise that has to generate prosperity. It’s you guys, not the suits on the Hill.

This brings me to somewhere where we could use your help. I mean all the people in this room, and listening or reading from overseas.

In our vision of the future economy, businesses collaborate with the research and government sectors, contributing to a globally focussed and vibrant culture of innovation and entrepreneurship.

Like you, we in the Government believe in the opportunities of the global economy for Australians.

We believe in the benefits of free trade. We have opened up new markets for Australia’s products and services through free trade agreements with Singapore, China, Japan and Korea, and we’re looking elsewhere.

Our Global Innovation Strategy reduces barriers to international collaboration to help Australian businesses gain from global knowledge networks.

But there’s a lot of panic in the air about globalisation and the other disruptions Australian industries are facing.

I’ve already warned about the danger of a drawbridge mentality in response to the age of disruption. Disengaging from world markets is one of the worst things we could do for jobs in this country.

But many want to do that. They fear that disruption is going to leave them and their kids behind. They feel this story is not about them; that it’s just about Silicon Valley millionaires.

No-one is better placed than the people in this room to dispel the myth for Australians. You are living proof that Aussies can be winners in the disruption game.

The challenge for us all, if we believe in a globally competitive and engaged Australia, is to bring the sceptics along with us.

The OECD has argued that in today’s globalised market, the success of many businesses, especially exporters, is going to depend on identifying and slotting into niches in complicated global value chains. And that’s a huge leap for a small business working by itself in a country that’s geographically isolated from big markets. That’s where collaboration with successful global businesses and leaders can make a difference.

We need to demonstrate and understand that we’re not in a fight between old and new, or between local and global; we’re in a fight between a future of national prosperity and a future of stagnation, and we are all on the same team.

Through your efforts and ours, we can make sure the age of disruption works for all of us.

[ENDS]

[1]  CEDA, Australia’s Future Workforce (June 2015), p. 195: http://adminpanel.ceda.com.au/FOLDERS/Service/Files/Documents/26792~Futureworkforce_June2015.pdf

[2] http://csq.org.au/csq/media/Common/Knowledge%20Centre/Knowledge%20Centre%20Publications/CSQ_Farsight_Report_2016_LR.pdf  p62