David Havyatt
July 1, 2015

In search of tech bipartisanship

In search of tech bipartisanship

Productivity increase: Building bipartisanship on innovation

Amid all the cries seeking bipartisan policy-making, it is easy to miss the unity ticket unfolding on ‘innovation’. Unfortunately, behind the public agreement there is little of substance, merely resorts to tautology and platitudes.

Let us start with the tautologies that lie at the heart of the discussion; that to lift economic performance we need to increase productivity, and that increasing productivity relies on innovation.

‘Productivity’ in its widest sense refers to the amount of output created by an amount of input. Increasing productivity then means increasing the amount of output achieved using the same amount of input.

Put simply, if we want to maintain GDP per capita in a population in which a declining proportion are of working age then we need to increase the amount of output of each person of working age. That is, we need to increase productivity.

Technically what has just been described is labour productivity. What economists normally talk about however, is total (or multi-) factor productivity. This is a measure of the productivity after allowing for any increase in the inputs (both labour and capital) that are employed.

This measure of productivity is a measure of the technology (machines and processes) employed. The only way to increase the measure is to change the technology. Finding new technology is simply called innovation.

So to adopt a policy of supporting innovation to drive economic growth isn’t a policy choice; within the confines of the measures of progress, there simply is no alternative. Hence it is unsurprising that there is bipartisanship on support for innovation.

The Bureau of Communications Research has just released its Digital Productivity Primer as an introduction to its project to capture data on the impact of digital innovation on productivity.

The primer explains productivity and notes the fact that after a productivity surge in the 1990s there has been a slump since. It is hopefully only accidental that the surge started to slow in 1998 – the year the Productivity Commission was founded. It is also worth noting that John Quiggin claims the surge is over-stated and “was the result of measurement error, most importantly the failure to take account of the increase in the pace and intensity of work that was apparent to everyone.”

The agreement between the Coalition and Labor extends beyond merely the tautological statement that to grow the economy we need to support innovation.

Both parties support new tax and capital raising arrangements for start-ups, but that is as far as policy goes in creating a viable capital eco-system.

Both support greater collaboration between industry and our research institutions, but neither has any strategy other than to starve the research institutes of other funding.

Both state that we need more students and graduates with science, technology, engineering and mathematics (STEM) skills, but neither party has any significant program to achieve the goal.

The last of these is a good case study. The Chief Scientist, Ian Chubb, has led the charge on the issue of STEM skills, but he is far from alone.

The Australian Industry Group (AiG) joined the call in early 2013. They noted that STEM skills are essential for the future economic and social well‐being for the nation and that participation in STEM skills at secondary school and university are unacceptably low. AiG called for action saying, industry needs to become more engaged in the promotion of STEM skills at all levels of education and training; and that there is an urgent need to introduce a number of strategies across the various sectors to lift participation in STEM‐related activity.

The issue featured in the speech by Catherine Livingstone, in her capacity as the President of the Business Council of Australia, to the National Press Club in April. She observed that an estimated 75 per cent of the fastest growing occupations will require STEM-related skills and knowledge, and that the gap between the digital literacy of our young people and that of our competitor nations is increasing.

On the basis that the imperative for introducing these foundational skills into the primary and pre-primary curricula should be unassailable, Livingstone said we need urgently to embark on a ten year plan to close that gap.

While education authorities have been slow to act, Digital Careers (a program funded by the Department of Communications) is making a real impact. Digital Careers contributes to increasing the number and quality of ICT graduates in Australia while building a robust and sustainable ICT capability for the future digital economy. The program focuses on primary and secondary school students (school years 5-10), parents, teachers and school based career advisors.

Digital Careers is a government program, but it has the active support of a number of industry partners, including IBM, SAP and Google.

One aspect of their work has been support for teaching of the K-10 Digital Technologies syllabus, including teacher resources (a MOOC) to learn about how digital technology can be integrated into the classroom, explore example lesson plans, and g form a community designed to share resources and support.

The need to focus on the skills base of our workforce was highlighted in another of John Quiggin’s critiques of what he calls the zombie of productivity doctrine. He concludes:

Genuine long-term improvements in the productivity of the economy can be gained only through educating the workforce to take account of improvements in technology.

In the just released Australia’s Future Workforce report the Committee for the Economic Development of Australia’s Chief economist concluded:

To maintain and improve living standards in the face of technological change, Australia needs to adopt a broad-based education policy, ensure it can attract the best and the brightest, and enhance its innovation ecosystems to ensure it can operate on the technological frontier. In short, Australia needs a new social contract in education, innovation and attitude to the workforce to underpin its future prosperity.

It is time for our political parties to get beyond the platitudes into real action in their support for innovation; they have plenty of guidance.

But as programs like Digital Careers demonstrate industry also needs to stop calling for action and do something as well.

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