Tim Watts on the digital economy

James Riley
Editorial Director

Tim Watts is one of the new faces in the Federal Parliament, having been elected to Nicola Roxon’s old seat of Gellibrand in the ‘Class of 2013.’ He is a bright, next-generation policy-thinker on Labor’s backbench, and will almost certainly be moved to the frontbench after the next election (regardless of who wins).

At 33, Mr Watts is young, smart and brings specific tech industry interest and experience into the parliament. Which is a good thing.

Tim Watts and co-author Clare O’Neil: opportunistic optimists

Before becoming an MP, he was most recently with Telstra in a senior executive role in regulatory affairs. He has also been a senior advisor in John Brumby’s office when he was the Victorian Premier and was a deputy chief of staff to Stephen Conroy.

The luxury of being on the backbench is the freedom to range widely in canvassing policy ideas for the future. Mr Watts recently teamed up with fellow Class of 2013 member Clare O’Neil (who was elected to Simon Crean’s old seat of Hotham) to write Two Futures, a book that takes a long-view of Australia’s policy future, and includes substantial sections on the opportunities and challenges of the digital economy.

Mr Watts is a law graduate who also has a Masters of Public Policy from Monash and a Master of Politics from the London School of Economics, while Ms O’Neil has an Art/Law degree with First Class Honours from Monash and a Masters from the Kennedy School at Harvard. These are not prototypical politicians in Australia.

Last year, Mr Watts put the book The Second Machine Age on a summer reading list for progressive MPs, which is said to have become an influential one within the caucus. It has been referenced by both the Leader of the Opposition Bill Shorten, and by the shadow treasurer Chris Bowen.

You don’t get any prizes in Australian politics for reading books (or even writing them), but there is an influential cohort of interested policy doers inside the Opposition who are preparing economy-wide digital strategy for its next shot at government.

Jason Clare, Ed Husic and Michelle Rowland have been outspoken on these digital issues, and Tim Watts and Clare O’Neil have joined their number (together with Jim Chalmers, the Class of 2013 economist MP from Brisbane who was previously the former Treasurer Wayne Swan’s chief of staff).

I spoke with Tim Watts last week about the transformative forces that are shaping our economy.

You looked at a number of themes in Two Futures – like what is going to drive economic growth, and how should we be responding to the digital revolution. So where did the thinking for that book take you?

Tim Watts: It’s a very wide ranging book. We deal with the six themes that we think are going to have the greatest impact on shaping Australia in the next 20 years. We look at what’s going on around us that will matter, not in a week’s time, not at the next election, but in 20 years’ time.

The topics we identified are; democracy, particularly the institutional decline of a lot of our democratic institutions; inequality particularly capital-driven inequality, albeit inequality in our economy; climate change as it just overarches everything, particularly in Australia; growth, one of the new sources of growth in Australia over that period; technology how the digital revolution is transforming our society, business and government; and finally Australia and the world, how our geo-strategic environment is being reshaped.

This is very broad terrain. I do a number of these interviews and people say “summarise the book,” and that’s a very long conversation. I’ll make one point, though. We’re quite confident that we’re on the right track with these themes when we see how much overlap there is between them. There’s a lot of interaction.

Technology in particular has a major impact on the themes of democracy, obviously the digital revolution chapter, but also inequality and growth in Australia and the world.

Inequality and growth are fascinating and important. There is a great Fast Company article that fleshes out some of the themes that Nick Hanauer highlighted about the shrinking middle class in the US. Are we seeing these same trends here? Are we creating well-paid, high-tech jobs fast enough?

Tim Watts: Neither Clare nor I are technological determinists. We don’t think that technological innovation will determine our course as a society. Technology is a tool, and the decisions that we make in response to those technologies, and the values we apply to those decisions, are what’s going to shape the outcome.

As Labor politicians, as progressive politicians, we look at some of the dynamics that technology change is unleashing in our labour markets, and there is cause for concern. We are ultimately optimists, however, and we absolutely welcome the change that’s occurring at the moment. But the pace of the change and the scale of the change means there’s going to be a significant dislocation in the market. It is important the government is alert to this, and is implementing policies needed to adapt to it.

These are huge questions … how do we begin to grapple with these issues? If you look at ‘jobs of the future’ and training people to higher skill levels, how do we make sure there are enough of these jobs? If we look at the disruption of a range of industries, we can’t simply hold back these global forces of consumer change…

Tim Watts: Clare and I are fundamentally opportunistic optimists. We don’t think that you would want to hold [those forces of change] back, but rather you want to shape its evolution so that it develops in a way that works for us.

We have identified a number of interventions that are probably going to be necessary in this space. One, we want to make sure that the most Australians possible can benefit from the growth in high-skill, high-wage jobs that utilise technology.

It’s really clear that the winners in this new economy are going to be people who are able to use computers, to use technology to innovate and problem-solve. And that requires a different skill set, a different set of literacies than we are currently teaching in our schools.

It was really pleasing to me that in his budget reply speech Bill Shorten was talking about teaching computational thinking in our primary schools. This is a big theme we talk about in the book. This is not about teaching kids how to code; it’s not an expectation that you’ll have ten-year-olds writing Python scripts.

It is about teaching kids from a very early age the fundamental literacies of how to solve problems with technology, how to use algorithms, and how to use the basket of skills that are associated with technology and with computers to innovate and to solve problems.

This is not ground-breaking stuff. The United Kingdom enacts this from the first year of primary school. Estonia mandates it throughout its education system. Barack Obama talks about this issue a lot. This is not on the bleeding edge, but is something we really need to start getting on with now.

So in building these skills, you’re saying the aim is to create as many of these ‘winners’ as possible.

Tim Watts: You need to share the benefits [of technology change] as much as possible. Obviously changing the primary school curriculum is not going to do anything for people who are already in the workforce. We talk a lot about the need to really strengthen our vocational education sector, and there’s going to be significant re-training need over the next twenty years.

At the moment we have an extraordinary number of students in our vocational and higher education system studying for jobs that just aren’t going to exist in ten or twenty years’ time. We need to get better at pulling people up about where they need to be investing in their human capital.

This is through awareness campaigns? Or just engaging with kids earlier and getting them [using technology] and getting them interested?

Tim Watts: A lot of this is the very unsexy work of dealing one-on-one with institutions, with careers’ councillors, with the people developing curriculums, and with the education providers. There’s no silver bullet to a lot of this work. It’s really investing in the knowledge and capability of the sector so that they can best guide the students.

In Australia we have a fairly vibrant start up community. We have demonstrated that we can build global-scale companies from here. Labor policy is quite interventionist in this regard – in terms of this $500m Smart Investment Fund. Is this the centrepiece, or is there more of that you’re looking at in terms of support for that sector?

Tim Watts: I will say getting the environment right for startups is a key part for ensuring the success of the tech sector in Australia. But it’s not everything. It’s easy to fetishize [the startup scene] because it’s so interesting and innovative and mind-blowing – but it’s not everything.

On a personal level, I am interested in what we can do to bring that startup culture across from the business sector into the government sector. So we talk a lot in the book about how do we use technology [in government] to allow us to do more with less, to respond to the fiscal pressures that government is currently facing.

In that respect, a lot of the policies are aligned around reconceptualising government-as-a-platform, allowing innovators external to government to get involved in shaping government service delivery and government decision making.

That’s pretty radical thinking for what I would think would be the orthodox Labor left way of doing things …

Tim Watts: It is and it isn’t. Barack Obama has done a lot of work rolling out Challenger platforms in the US. These are essentially open innovation platforms, where Government entities and Government departments identify a problem they are facing, put up a prize with a quantum [of dollars] relative to the size of the problem, and then innovators from outside government are invited to come up with whatever solution that they like in an open competition. And that’s had a lot of success. Drawing on the skills and expertise from people outside government, particularly in the technology sector is just crucial.

If you look at the open innovation models that technology change has made possible, models of co-production – such as those we see in the open source software community in in events like GovHack – it’s really clear that if you open the window to government, you can let an enormous creative energy.

Okay so you would be watching this Digital Transformation Office with some interest then … these are some of the issues that it has been asked to look at?

Tim Watts: And as far as it goes, it’s a really worthy initiative and I’m really excited by it. They are doing really interesting work. At the moment, from their public comments at least, a lot of their work is focused on the front-end of government service delivery, that interaction between citizens and government services.

I think we can do more on the back-end, in the innovations in the way that government actually does things, rather than just in the way that it interacts with user. There is innovation to be had fundamentally in the way it builds services from the ground up.

Do you know more? Contact James Riley via Email.

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