Andrew Colley
October 2, 2018

Social license and the digital economy

Civic Nation

Social license and the digital economy

Danny Gilligan: Getting the privacy-innovation balance right is critical for data policy

Government policy makers must make a stronger and more direct argument to win the social license needed to create a successful data-based economy, according to Danny Gilligan, the chief executive of venture capital group Reinventure.

Mr Gilligan told delegates at InnovationAus.com’s Civic Nation 2018 forum that the failure to earn broad social license was one a major failings of federal government’s initial wave of innovation policy, which carried an unfortunate implied message that it would benefit only entrepreneurs and startups, rather than highlighting benefits for the rest of the community.

“The beautiful thing about data is you can actually impact on immunisation, childhood obesity, domestic violence, youth suicide — these are issues that you can address tomorrow leveraging private sector data and public sector data in collaboration which is a fundamental principle,” he said.

Mr Gilligan framed a larger argument advocating for a stronger role for data in informing government policy decisions, particularly social reform. He said that “data is the single biggest lever for micro-economic and social reform available in the next two decades”.

Policy improvements could include greater efficiency and productivity gains and would be applicable for every portfolio at a state and federal level, he said.

Coinciding with those gains, Mr Gilligan said that various state jurisdictions around the world were attempting to negotiate a delicate but “unconscious” trade-off between privacy and digital innovation. Contextualising that, Mr Gilligan said his comments referred to privacy around information security, digital trust issues, consent and transparency, and that innovation was the value that could be created from data.

At the extreme ends of those efforts were China and Europe, Mr Gilligan argued. In China, he said, innovation was the clear winner with the balance resulting in a FinTech boom giving the country a credit infrastructure and banking system that previously didn’t exist.

In contrast, he said that Europe’s GDPR legislation had been a disaster for data-driven innovation.

“On the other end of the spectrum we’ve got Europe, which has privacy gone mad. I say that because the ideology might have been interesting, but the implementation was terrible,” Mr Gilligan said.

“As a result, they’ve traded-off innovation in a very hard way and that will be visible and manifest for years to come,” he said.

“They’ve put themselves in position of structural competitive disadvantage on a global stage and effectively killed data-driven innovation in their local economies.”

“That’s as bad an outcome for citizens as China is through different means,” he said.

Australia, on the other hand he said, was among a handful of countries around the world that had got the balance about right.

However, it might be harder for Australian government authorities to earn that social license for data-driven innovation if, as Centre for Independent Studies executive director Tom Switzer fears, it becomes synonymous with “digital unemployment”.

Mr Switzer — who hails from a cohort of conservative thinkers that are broadly pro-innovation — said that an element of digitally disenfranchised were responsible for growing support for populist political insurgencies in Europe and the US, and he warned that the same was possible in Australia.

Mr Switzer said he derived his views from the theories of prominent early 20th century Austrian-born economist Joseph Schumpeter, who contemplated that capitalism was in a continuous cycle of what he called “creative destruction”.

Schumpeter theorised that capitalism constantly regenerates its base economic structures from within, destroying the outgoing ones in the process.

While digital innovation would bring major productivity improvements, he argued, there would be some employment casualties along the way.

Drawing on the example of driverless vehicles, he said that substitution of truck drivers by technology could lead to the creation of a class of discontents.

“There will surely be a lot of irate people who equate digital innovation with unemployment,” Mr Switzer said.

Mr Switzer pointed to a long list of right-wing populist leaders around the world who have gained prominence in recent years as evidence of the growing disaffection with the brave new world of innovation. He argued that those leaders represented a pre-digital and increasingly less relevant segment of “digitally ditched” workers.

“The losers of this creative destruction of digital technology could roil Australian politics in a way that they roiled American politics,” Mr Switzer said.

In making those comments, Mr Switzer was pointing to the upset ascendancy of Donald Trump to the Whitehouse on the shoulders of rust belt voters who, he said, rail against economic transformation and identity politics in equal measure.

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