The Australian economy is at a “pivotal fork in the road” and the next three to five years will decide whether the nation is able to extract its share of the value from the tech-driven global restructure that is underway whether we’re ready or not.
The confluence of hyperscale compute power, super-fast connectivity, billions of mobile phone users and many billions of other sensor devices has created the opportunity of the century. But the opportunity is perishable, and the challenges for Australia are significant.
Mr Turner, who was speaking at a BlackBerry World Tour event in Sydney last week, said the goal of policymakers can no longer be about just making Australia’s existing industries more productive in the way that technology has been viewed by this country in the past. This should happen anyway.
The structural shifts in the technology and the economy are fundamental, he says. The focus must be on the creation of, and participation in whole new industries, and all the value extraction that comes with that.
Our government leaders cannot ignore these structural changes in the economy any more than they could have ignored the arrival of roads and the internal combustion engine in a past era.
Mr Turner says although Australia’s performance against international peers on multifactor productivity numbers has been poor – alarming even – there are green shoots in the home-grown technology industry and more reasons to be optimistic than the whole-of-economy averages suggest.
Specifically, he says, while structural change in the global economy is moving incredibly fast, the opportunity is still in its early stages if we act now.
Mr Turner is the former chief executive officer of the CSIRO’s Data61 and the current co-chair of AustCyber, the Australian Government-funded cybersecurity industry growth centre.
He says that research performed by economic consulting house AlphaBeta with Data61 found that in services industries, where you split the productivity numbers into separate groups for ‘ICT intensive’ and ‘Non-ICT intensive’ companies, “you actually do see productivity gains in the ICT intensive businesses.
“You have to drill down into the averages. They’re actually masking what’s going on in the Australian economy,” Mr Turner said.
“It’s just that in the Australian economy as a whole, [these ICT intensive businesses] represent such a small part of the economy right now that they’re not shifting the averages,” he said, just as they are in tech heavier economies like the US.
But this is the trend Australian policymakers must seize on, because these are the companies that will deliver the productivity benefit and prosperity benefits they are looking for. These numbers are also a better way to tell the story to the broader population of economic transition.
“The reality is, the notion of automation taking jobs and connected systems taking jobs and AI taking jobs [is not the whole story],” Mr Turner said.
“There will be job displacement, and it will change the tasks within the job description. But we need this automation to drive productivity improvements, and the productivity improvements are the underpinning of real wages growth, which is the underpinning of a more prosperous economy.”
But the shift in productivity numbers of ICT intensive companies versus non-ICT intensive companies is a sign of the structural economic shift that it underway.
Just as the value being created by the giant tech stocks of the S+P 500 are starting to accelerate away from older mainstream businesses, we are seeing the same trend in Australia – albeit on a dramatically smaller scale – as tech stocks start to finally appear on the ASX 200 in a meaningful way.
For a modest-sized economy like Australia’s, the way forward must be through a nationally coordinated push around AI and data-driven technology.
The government’s recently released AI roadmap is the rallying-point, identifying areas where Australia should be able to direct its scarce resources for maximum return. This includes areas like health, ageing and disability care, to natural resources and mining, to cybersecurity and agriculture.
The danger is that policymakers either misunderstand the urgency of the action that it required, or worse, if defeatists lapse into inaction because of a wrong-headed belief that the opportunity had been missed.
Pointing to the Data61-AlphaBeta research, Mr Turner said between now and 2028, precision healthcare represented a $30 billion to $50 billion opportunity, digital agriculture a $20 billion to $25 billion opportunity, a data-driven urban management opportunity of $5 billion to $10 billion, and a cyber-physical security opportunity of $10 billion to $15 billion.
“There is plenty of opportunity to innovate. This [new paradigm] is not done by any stretch,” he said.
“I am incredibly optimistic about the country. We’re at a pivotal fork in the road, and the next three to five years are critically important to making progress in creating new industries,” Mr Turner said.