Australia has a rare opportunity to capture a disproportionately large proportion of emerging data economy, according to Reinventure Group co-founder and managing director Danny Gilligan. But the effort is going to take a top-down, nationally coordinated policy effort to build competitive and exportable regulatory frameworks for data.
Mr Gilligan holds deeply the belief that data is the single biggest lever for delivering microeconomic and social reform in the next two decades and should be made a material part of policy development and trade considerations at all levels of thinking across both government and the private sector.
The potential size of the global data economy is difficult to quantify. There is an ageing McKinsey report that suggests that $3 trillion to $5 trillion in annual value could arise from the use of open data in applications across a variety of sectors.
Regardless of how it is quantified, Mr Gilligan says the data economy will be as substantial as the financial services sector in the next couple of decades.
The trick now is to get the foundational infrastructure in place now that draws a reasonable balance of privacy and the specific data ownership rights of consumers on the one hand, and innovation and the ability to apply algorithmic considerations to data on the other.
Mr Gilligan will soon release a policy whitepaper – The Global Economy and Australia’s Role Within It – saying Australia is better placed than most economies to harness the data economy, and that data policy, while fragmented, is already quite sophisticated.
There is an emerging set of data economy infrastructure that has emerged. Things like the plans for the Consumer Data Right, the creation of a consumer data standards body, and the work done on a national digital ID has grown out of different parts of government.
The priority now should be on the creation of national policy to better coordinate the different parts of the data economy.
“The global data economy is emerging and nascent, but will grow rapidly. Individual markets are at different stages of development, with different settings and natural advantages to gain in this new environment,” the paper says.
“The market that orients policy settings most effectively – striving for maximum levels of microeconomic and social reform through data, whilst promoting globally best practice standards for privacy, and most effectively coordinates its private and public sectors – will be the market that wins a disproportionate share of this significant new economy.”
Mr Gilligan, who is also co-founder and director at Data Republic, says finding the balance between the demands of privacy and innovation is key.
In his study of global markets, he points to China and Europe as the extreme examples of this two sided balancing act: China has enabled a free flow of data with few privacy restrictions and innovation and data has bloomed, where Europe puts its weight behind strong privacy protection, and innovation has waned as a result.
“If you want to see what the future looks like, you go to China,” Mr Gilligan said. “If you want to have a look at what not to do, you go to Europe.”
“It’s the simplest of things. The GDPR is perhaps the biggest single regulatory own-goal that has ever been implemented. It was originally designed to slow down the progress of the US tech giants.
“But the first companies in the world that were GDPR compliant were the US tech giants, and its local [European] industry is dying under the weight of compliance with that almost un-implementable regulatory regime.”
Despite the somewhat fractured and siloed nature of the broader regulatory regime, Australia has got the balance about right, he says, particular through the creation of mechanisms like the consumer data right,
What Australia does not have is centralised policy thinking and actions about what comes next.
“We’ve got a whole lot of different components that are fundamental parts of the data economy – digital identity, KYC liability transfer, open government data, consumer data rights – and these policies are all being formed independently of each other,” Mr Gilligan said.
The initiatives are largely good, but they have been grown out of different parts of government, meaning there are “six or seven different hands on the data steering wheel.”
Contrast that with Singapore, where they have a highly functional regulatory and industry development framework within a single government agency – the InfoComm Media Development Authority (IMDA).
As an agency, the IMDA is responsible for both the development of the data economy (through the Data Innovation Programme Office) and the privacy (through the Privacy Commissioner.)
This model effectively bundles what Mr Gilligan calls the ‘accelerator’ agency alongside the ‘brake’ agency – a model that has worked very well for Singapore.
It is something that should be given serious consideration in policy formulation at the national level in Australia, he says.
“[In Australia] we’ve got APRA as a model for developing and monitoring our financial services industry, yet we have nothing for data,” he told InnovationAus.com. “And I think that data [as a sector] is going to become as significant as financial services in the decades to come.”
“My big call to arms for this [issues] paper is to create a stimulus for people to put up their hand and say ‘we need to develop a national strategy for the data economy’.”
“The fact that we are sitting on some of the most progressive policy frameworks in the world” is a good starting point to get that coordinated national policy discussion started.
Danny Gilligan will deliver a keynote address at the Civic Nation 2018 event in Sydney on September 27, with a focus on how the data economy is a key to the delivery of social policy in Australia. You can reserve your seat at this policy event here.