Professor Jim Piper, President of Science and Technology Australia; Ms Kylie Walker, Chief Executive Officer; Distinguished Guests.

Thank you for again inviting me to be part of this very important forum.

It is always a pleasure to speak to an audience drawn from the two parts of my portfolio, science and industry.

The connection between them is not an accidental one.

They are both fields of endeavour that expand – and realise – human aspiration.

Aspiration to understand the world of which we are a part, and aspiration to transform it for the betterment of all.

At its best, politics is an activity that seeks to ensure that those two things mesh properly.

It is an activity that should give people hope.

Hope that we can continue to be the sort of society that Australians have imagine themselves to be.

A society that is prosperous, egalitarian and technologically advanced.

We can’t be that if we abandon science and research.

And we won’t be that if we abandon the industries, especially in advanced manufacturing, that generate high-skill, high-wage jobs.

Mention of jobs touches on one of the great anxieties of contemporary politics.

In Australia and other industrial societies around the world, people have been bombarded by media reports about the disruptive effects of new technologies.

These reports cite academic studies that predict massive job losses from automation and digitalisation.

The figures are rubbery at best, as even some of the authors of the original studies have acknowledged.

But there is no doubt that the nature of work is changing.

Our global competitors understand this.

But they are not throwing up their hands in despair.

They are making choices about the kind of economy they want to have.

In particular, I am thinking of Germany.

They are choosing to lead and shape the fourth industrial revolution – or industry 4.0, as some call it – rather than become victims of it.

Germany has embraced the idea that an effective response cannot only involve government and business.

It must also involve organised labour, and science.

That is the only sensible and effective response to the challenges of automation and digitalisation.

I believe it is the response we should take here, too.

We do not have to reject change to keep people in jobs.

The choice has never been between the gutting of the workplace or the wholesale rejection of technological change.

The choices we have to make are about the kinds of industrial capabilities we want.

The choices are about the skills and knowledge base the nation needs.

And, the choices are about the kinds of manufacturing we should do.

Despite all the fashionable talk about the death of manufacturing, the sector remains crucially important.

According to the McKinsey Global Institute, every manufacturing job has a multiplier of 2.5.

Manufacturing is good for the economy.

80 per cent of private R&D and 40 per cent of productivity growth is in manufacturing.

It triggers productive investments, and helps prevent over-reliance on bad economic behaviours like real estate bubbles and commodities booms.

Manufacturing also underpins the legitimacy of the state, because the jobs it supports help to buttress democracy from extremist forces

But it takes work to retain a strong manufacturing sector.

To do so requires constant innovation to find a place for our industries in global value chains.

This is no small issue. It goes to the heart of why events such as today are crucial.

Innovation is not just about start-up hype or the latest iteration of a slick smart-phone

It is about creating and deploying knowledge

In Australia we look to both the state and to business to create knowledge.

We look to the state through universities and publicly funded research agencies, engaging both in basic research and application oriented research

And we look to business to invest in everything from prototypes through to large scale industrial application

I am here to tell you that Labor’s view is that the business community can do more, and needs to do more.

But we do not ask you to do it alone

We have world-class universities. World renowned industrial research agencies like the CSIRO and ANSTO

And a long running and successful Co-operative Research Centre program – although this is at risk

Bill Shorten has recently reiterated Labor’s view that Australia should aim to boost its national R&D effort to 3 per cent by 2030

Because standing still – or going backwards as Australia’s R&D effort has done in recent years – is not an option

I remind you that Australia’s investment in science, research and innovation programs was cut by a massive $3 billion in 2014. 

The National Innovation and Science
Agenda that Malcolm Turnbull announced in 2015 only restored $1 billion of that.

In shaping the national science, research and innovation system, only government can lead.

There have been numerous reviews of science, research and innovation programs since 2013.

But most of them still await a response from the Government.

The most important was the so-called Three Fs review of the R&D Tax Incentive.

The Incentive is the single-most important measure linking the tax and innovation systems.

The review was commissioned in December 2015 and reported in September 2016. It made six recommendations.

One of these, a premium rate for the tax offset to encourage collaboration with publicly funded research agencies and the employment of new STEM PhD graduates, has the potential to transform the entire innovation system for the better.

But whether this, or any of the recommendations is likely to be implemented, we do not yet know

We also await responses to:

  • a research infrastructure review.
  •  a review of reporting requirements of research block grants for universities; and
  • a preliminary issues paper prepared for a 2030 Strategic Plan for the Innovation, Science and Research System.

There have been so many reports and reviews, and so few responses.

What concerns me most is that in this time when strategic direction is lacking, there is a danger of getting the balance wrong

There is an increasingly clear preference for commercialisation – for research that turns a quick buck

We must not forget that if we neglect basic, curiosity-driven research, we shall also lose our capacity to do applied research effectively.

The risks can be seen in the Watt review of university research funding.

Like most of the sector, I hold fears that the Watt recommendations do get the balance wrong

Toning down measures of research excellence sends a dangerous message

It says that the quality of research matters less than commercial application.

At the heart of this attitude is the idea that universities represent an opportunity for privatising the gains of publicly funded research.

The Government’s latest attempt to cut university funding is blocked in the Senate.

But it is clear from media reports that the government is considering new ways to cut university funding, including cuts to the research support program, and the research training program

It could also choose to withdraw funding from the Australian Research Council and the NMHRC

These are not merely savings decisions.

The Government does not appear to understand that without new knowledge there cannot be commercialisation

It can be seen in the Government’s decision to force the Australian Research Council to conduct an impact and engagement assessment.

Clearly the ARC has done its best with a bad policy. They have been asked to do the impossible.

Yet it is far from clear that this assessment will be enlightening, let alone useful.

As the report of the pilot by the Australian Research Council reveals, the exercise is riddled with uncertainty about how it can measure impact, if at all.

But we do know that the process is likely to saddle universities with another layer of metrics, with accompanying compliance costs.

That has been the experience of the similar Research Excellence Framework in the UK.

The policy that is being imposed on the ARC will waste time and money.

It will be eminently rortable.

And, it could set up research funding for further funding cuts.

Many of the great discoveries of our age would not be eligible to be measured by such a system

Think of Einstein and the theory of relativity, or the scientists around this country who have worked on gravitational waves

Or think of the multi million dollar investment by the ARC over the past fifteen years into quantum computing

That investment may have a revolutionary impact on our society and our planet.

But, apart from media articles and citations, it would be completely unmeasurable by this exercise

Given all of this, it is clear what needs to change.

First, we need to consider ways of protecting university research funding – including block grants and project grants from the ARC – from budget-inspired raids

Why not lock-in research funding in legislation the same way we lock-in funding for teaching and learning funding?

Second, we need to look at whether the funding frameworks for research block grants have got the balance wrong.

By completely cutting out measures of research excellence, is the implementation of the Watt review doing more damage than it is worth?

Should we not have a rethink and see if there are ways of sensibly measuring research excellence.

And, we need to revitalise the mission-based compacts

After all, we require the ARC to conduct a measurement of research excellence.

Why not use this to help us allocate research funding?

Third, we need a solution for research funding

I would urge you to go away and seek a copy of the Clark Research Infrastructure Review.

One idea – to be found in chapter six of the review – is for an Australian National Research Infrastructure Fund

The review makes the point that, “Ad hoc funding through the budget cycle is not an efficient or satisfactory way to plan long term National Research Infrastructure investment”

The review panel recommended a funding model that provides security of funding for a decade, rather than the year on year budget cycle

This could be achieved in a number of ways, including restoring the Education Investment Fund, which the Government is seeking to abolish in order to pay down debt.

Such a fund should be invested through the Future Fund, seeking returns of 6 to 8 per cent rather than the bond rate as is now the case, in order to achieve the returns needed.

Labor will make announcements on these matters as the election approaches.

But the issues I have canvassed today are not the whole of our agenda

I have not spoken about plans for the future of the R&D tax incentive, because we waiting to know the Government’s intentions.

Nor I have I spoken about the chronic underinvestment in the CSIRO and National Research Facilities like supercomputing, the AAHL and the RV Investigator

And, I have not spoken about arbitrary rule changes forced on to the CRC program, which are strangling new CRCs at birth

The ban on public benefit research and the 10 year time limit must go.

Labor’s commitment to a national response to the challenges of the fourth industrial revolution is real.

We have already put forward plans for a national space agency, and an advanced manufacturing future fund

Come the next election, Labor will be vigorously advancing a compelling vision for Australia’s scientific and industrial future

Malcolm Turnbull came to office in an atmosphere of great promise and high expectations, so his collapse has been all the more disappointing

Mr Turnbull is now so focussed on his survival at the hands of his own party, which in turn has suffered such a loss of political authority, that the country is in the grip of policy paralysis.

The government lurches from crisis to crisis, while the national interest takes a back seat.

Public confidence in the political system has dropped so dramatically that many are openly looking to a general election to resolve the impasse.

I am here to say to you that whenever the election is held, Labor stands ready to take on the challenges of industry 4.0 and to rise to its opportunities.

The nation cannot afford to wait.

Thank you.

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