Good morning, and thank you for inviting me to speak to you on behalf of the Leader of the Opposition, Bill Shorten.

I want to put forward for your consideration three obstacles impeding the way the political system deals with science, research and innovation policy.

These are the increasing alienation of many people from mainstream politics; the effect of Budget cuts; and a narrow, counter-productive emphasis on commercialisation of research.

The great barrier to the development of successful innovation policy is the political alienation of a substantial portion of the population.

Many of our people are deeply anxious because they are economically insecure.

That is why the Prime Minister’s enthusiasm for disruption had limited appeal outside the gentrified inner suburbs.

Beyond those inner suburbs, his language is not inspiring. It is threatening.

As the shrivelling of the Government’s majority shows, many people do not share Mr Turnbull’s belief that this is the most exciting time to be an Australian.

To be effective, innovation policy also needs the support of people in the outer suburbs, regional cities, and rural areas.

These are the areas where support for outsider politicians, like One Nation is strongest.

This is not to say that the majority of Australians are a lumpenproletariat of anti-intellectual Luddites.

Rather, it is to recognise the effect of growing disparities of wealth and the impact of the lowest full-time employment participation rate in generations.

It is to recognise that there has been no effective wage growth for years, as the workforce in the so-called old economy in the outer suburbs and regions becomes increasingly dependent on casual hiring.

Above all, it is to acknowledge a reality identified by the IMF: for the first time since the Industrial Revolution, technological change is the cause of inequality. It is destroying more jobs than it creates.

The consequence is that this deepening inequality will retard growth.

In countries like ours, that is the root cause of a decline in the perceived legitimacy of the agendas pushed by political elites.

In some democracies with which we compare ourselves, alienation is even more strongly entrenched.

For example, the billionaire Donald Trump is a great exponent of outsider politics.

It is astonishing that despite his bizarre and frequently offensive conduct in the presidential campaign, polls indicate he could still attract 40 per cent of the vote.

What is worse, up to 100 million Americans will not even bother to vote.

It is a huge problem for any democratic political system when we can’t talk to large sections of the population.

So, although I am grateful that the Prime Minister has rescued the word “innovation”, which had been all but banned under his predecessor, I believe that the focus of innovation policy under this Government is misconceived.

Innovation programs should not be directed chiefly to start-up businesses run by hipsters spruiking the latest mobile phone app.

A successful innovation system requires a suite of measures that also address the plight of older businesses that actually generate jobs.

Innovation is not something that happens online or on your phone. It happens in the factory and the office, the universities and the labs.

Public support for innovation is not for making millionaires, it’s for making new and better jobs for working people.

That was the approach we took in Government, but many of the programs we created have been axed or defunded under the Abbott-Turnbull governments.

That brings me to the state of the federal Budget.

It is not possible to foster innovation without substantial investment in science and research.

But when the Prime Minister announced NISA, his Government’s National Science and Innovation Agenda, in December, the investment was very modest.

NISA restored just over $1 billion of more than $3 billion that the Abbott Government cut from science, research and innovation programs.

That’s where the matter stands. The budget brought down before the election includes cuts from the two previous budgets that were blocked in the Senate.

You will also be aware of the impact of the cuts on CSIRO.

CSIRO’s funding was cut by $115 million, triggering the biggest job losses in its history.

The agency remains in crisis, and the crisis is not only about resources.

It is also about the direction followed by management, taking its cue from the Government.

Under two prime ministers and three science ministers, this Government has expressed a consistent preference for research that turns a quick dollar.

This emphasis on commercialisation arose from the effects of the Abbott Budget cuts, and has been consolidated under the Turnbull Government’s emphasis on start-ups and disruption.

But insisting on research that can quickly be commercialised is not conducive to the outlook and practice of science.

A nation that ceases to engage in basic, curiosity-driven research, and in public-good research, will diminish its capacity to do applied research effectively.

Just this morning, Dr Joanna Batstone illustrated how IBM’s curiosity-driven lab experimentation led directly to application in laser technology.

A national innovation system must operate at two levels.

It needs to commit sufficient resources to basic research, and to forge connections between researchers and industry.

Integrating those two approaches is what we sought to do in government.

And it was the aim of the commitments to increased funding – for university research, for the publicly funded research agencies, and for STEM education in schools – that we took to the election under Bill Shorten.

We understood that there could be no quick fixes, but we were committed to repairing the damage that was being done.

That commitment would be retained by a future Shorten Labor Government.

I don’t suggest there has been no positive policy work under the present Government.

In particular, I am encouraged by proposals for reform of the Research & Development Tax Incentive, in the review conducted by the chair of Innovation Australia, Mr Bill Ferris, the Chief Scientist, Dr Alan Finkel, and the Treasury Secretary, Mr John Fraser.

The R&D Tax Incentive is the most important measure integrating the innovation and taxation systems.

The report’s proposals include a premium of up to 20 per cent to support collaboration with publicly funded research organisations, and a cap on the refundable element.

Labor would want to see detailed costings for the review’s proposals before accepting them, and careful analysis of their effect on existing R&D activity.

Nonetheless, I am broadly supportive of the approach to policy they express.

My hope is that there will be more strategic thinking of this kind, and a shift away from the obsession with tech start-ups alone.

If that shift does not happen, Australia will fall into the trap that Catherine Livingstone, when president of the Business Council, warned against.

We would be “deciding how to style the rooms without having built the house”.

Labor is committed to doing everything possible to prevent that happening.


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