PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
F'ORUM ON BUSINESS AND UNIVERSITY CO-OPERATION
SYDNEY 2 OCTOBER 1936
I am pleased to have the opportunity to share with you some
thoughts on ways of achieving greater co-operation between
business and our tertiary institutions. After all, progress
in this area is crucial to the revitalisation of the
Australiani economy and ultimately, to the achievement of our
common gjoal of a prosperous, fairer soci'ety.
Two years ago I encouraged the Business Council of Australia
and the Australian Vice-Chancellors' Committee to meet and
discuscs ! pays of achieving closer co-operation in areas of
mutual irterest. Even at that time it was clear that
co-operation between industry and universities would have to
be an inoortant element of Australia's industrial
revi tali* cation.
Now, faced as we are by severe economic difficulties created
by the slump in our terms of trade, that co-operation has
become essential. The progress your two organisations have
made therefore is a source of great encouragement. My
message tonight, however, is that your achievements to date
are but the first of many steps that need to be taken.
The report produced by your joint working party points to
the many existing links between business and the
universities. It also proposes ways in which those links
can be strengthened and extended.
Examples of what is already being done include
university-based consulting companies, liaison and advisory
units, and research and development centres that concentrate
on industrial applications, such as the Julius Kruttschnitt
Mineral Research Centre and the Warren Centre.
Business leaders serve on the governing bodies and
committees of the universities and contribute their
knowledge and experience to developing centres of learning
that are relevant to Australia's current and future needs.
I hope that this forum will identify more links, like these,
and also see a determination of both of your groups to
establish those links.
The challenge now facing Australia is widely understood. As
a nation we cannot go on indefinitely spending more than we
are earning and financing the difference by adding to our
external debt. Not-only is there now a wide appreciation of
these problcms, there is an emerging consensus that the
Government's response is the appropriate one.
The recent slump in our terms of trade, which have been
declining on average for decades, has served to highlight a
structural weakness in our economy: our heavy reliance on
primary industries and, until recently, uncompetitiveness in
the manufacturing and services sectors.
Growth in wcrld trade has been the engine for post-war
global economic development. The most successful economies
are those that have placed the greatest emphasis on
export-oriented industrial strategies.
Manufacturing and services have been the fastest growing
sectors of world trade, yet Australia's share of world trade
in manufacturos and services has been falling. However, the
conditions are now to hand to enable us to strengthen our
manufacturing and service industries so that they become
more successful on international markets and in competing
against imports.
The large and fundamental depreciation of the Australian
dollar has boosted our price competitiveness to levels
unseen since the 1960s. As I travel around the country it
is becoming clear to me that more and more businesses are
coming to appreciate the opportunties that are opening up as
a consequence of this change.
The Government is determined to ensure that this vastly
improved price competitiveness is maintained. This year's
Budget and our policy of further wage restraint are vital
elements in our strategy.
As a further element in our strategy for economic
adjustment, the Government recently convened a meeting
between business and unions on work and management
practices. The results of that meeting offer the prospect
of a widespread improvement in co-operation between
management and unions that will be invaluable in boosting
productivity and thus in maintaining our competitiveness in
the longer termi.
At the BCA annual general meeting two weeks ago I announced
a series of major initiatives designed to improve the
internal workings of our economy, including the easing of
export controls on a number of major mineral exports. I
also announceJ a~ wide ranging review of impediments to trade
competitiveness. These measures complement a range of
similar steps taken over the past three years to improve
Australia's flexibility and capacity to compete.
EP, 0fundamental element in maintaining our
. ti~ nss and converting it into export sales and
sutCLSSasainst imports is innovation, based on
a1jy1.. periormed research and development.
7-his does not mean that we will no longer need foreign
technology. on the contrary, the challenge is to obtain the
best foreignl technology and to combine it with the best
Australian technology to develop products that embody
excellence in design and quality products that can compete
successfully on tough international markets.
First, and most fundamentally, the Government has restored
the conditions for profitability. In addition, we have
taken a nualber of initiatives designed specifically to
improve the convironment for innovation. We have introduced
the 150 pe:: cent tax concession for research and
development, together with a complementary Grants for
Industry Rasearch and Development Scheme.
The Government has recently accepted the thrust oE the ASTEC
review of the CSIRO. The CSIRO will continue its role in
applications-oriented research but will give greater
emphasis to the effective transfer of the results to users.
Through financial market deregulation and the tax concession
for Management Investment Companies, the availability of
venture capital has been increased substantially.
Changes have been made to Government purchasing and offsets
arrangements, which give higher priority to technology and
to industrial development in Australia.
we have established the Australian Trade Comamission, which
is strengthening the support provided to exporting
companies, particularly new exporters and those with
high-technology products to offer.
Further initiatives will follow shortly, when the Government
receives AS-J. C's reports on the Defence Science and
Technology Organisation, and on research funding in higher
education. we are also awaiting the report of the Inglis
Committee on government purchasing.
Clearly, the Government already has done a great deal.
Substantial resources have been provided. Given the
constant need to restrain public sector expenditure, the
ball is now in the court of organisations such as yours to
make effective use of these resources.
In the recent review of Australian science and technology
policy by the OECD, the highest importance was placed on
education and training. The OECD Examiners observed that a
system of training programs which stimulated technical
training and retraining within individual enterprises would
be among the most important contributions of the education
and training system to national economic recovery.
They saw the condition of Australian primary and secondary
schools as critical for technological well-being. They
regarded the tertiary education system as the heart of
Australia's scientific and technological effort. They
encouraged closer relationships between industry and
education and urged greater mobility between the two. And
they emphasised that on-the-job training within individual
enterprises is of central importance to national
technological development.
I would like to take up some of these observations in
addressing, in turn, the public and private sector roles in
skills developnent for new technology and innovation.
Public investment in education is considerable and the
Government is determined to make the education system more
responsive to the needs of the economy and the society
generally. m~ uch has been done already. For example, there
are now 145,000 more young people under the age of 25 in all
forms of post-compulsory education than there were in 1983,
an increase of seventeen per cent.
But this is not enough in itself. For example, . our
retention rates in the final years of secondary education
are low by compar~ ison with other developed countries, as are
our retention rates in tertiary education.
Australia is now in the early stages of a fundamental
economic restructuring one that will span this and the
next decade and extend beyond the turn of the century. We
are a nation in ransition. We must reshape our attitudes
to work, to risk taking, to enterprise and to innovation.
in all their pursuits Australians must strive for excellence
so that they can meet and overcome the best competition in
the world.
But we will not be in the race unless our tertiary
institutions becone more sensitive and more responsive to
the needs of Australian industry. Graduates will need
training and analytic skills relevant to Australian industry
in transition if the nation is to succeed in revitalising
its manufacturing and service industries and if we are to
triumph in world markets.
I see the Vice Chancellors' Committee as having an enormous
responsibility in ensuring that graduates are given the
training and the skills needed by emerging export-oriented
manufacturing and service industries.
In particular, our output of science and engineering
graduates compares unfavourably, not only with other
developed countries, but increasingly with the newly
industrialising nations. We continue to meet our needs in
computer science, for example, largely by immigration.
It is not just a matter of quantity of allocating a
greater share of tertiary places to these disciplines -but
also one of quality. Curricula should be reviewed
periodically and systematically along the lines of the
current CTEC review of law and engineering to ensure
continuing relevance to market place needs.
At the same time, consideration might be given to how
universities arnd the other tertiary institutions can provide
students with entrepreneurial experience and skills. In
these endeavours our tertiary institutions clearly will
benefit from close interaction with/ the business community.
Employers have generally not been effective as a group in
expressing their needs and expectations of the education
system. In that regard I an, encouraged both by the
convening of. this forum and the recent series of extensive
discussions between representatives of the education sector
and employeiL groups.
Industry has indicated on a number of occasions that its
access to Government and its input to decision making in
education should be further expanded. I ap~ pleased to
announce that the Minister for Education, Susan Ryan, will
be contacting business organizations soon to propose the
establishvacent of an Industry Reference Group, with direct
access to the Minister. The Government looks forward to the
fullest p3,; Gible private sector co-operation in this and
other steps to enhance dialogue.
The Minister will be improving consultative arrangements
between thco education portfolio and industry, specifically
by setting uip an Industry Liaison Unit within the Department
of Educationi for day to day consultation.
In looking at industry's responsibility in the development
of technclogical skills, I want to emphasise that industry
cannot absolve itself of its own direct responsibilities for
education, training and retraining. Industry cannot expect
the education system to produce a finished product, totally
tailored to its needs. Indeed, it is essential that
educational institutions provide a strong basic training,
upon which particular skills can be superimposed.
I think vie all acknowledge that in some industries there
needs to be a substantial change in the attitude of
management towards the workforce and its skills. The
production workforce has a central role to play in improving
innovation and productivity. In Japan, for example, it is
estimated that more than sixty per cent of all innovations
come fro. the shop floor.
The skill and motivation of the workforce is an obvious and
key factor in business competitiveness. The workforce
should not be seen simply as an unavoidable cost to be
reduced wherever possible. The challenges ahead of us call
for the workforce to be regarded as a vital resource for
future success.
6
I am aware of several companies which have developed a
constructive relationship with the workforce, one which has
enabled real improvements to be made especially in work
practices and product design. But, unfortunately, there is
evidence that Australian management on the whole does not
interact well with the workforce and does not seek to
involve the workforce in product development, quality
control and related aspects of innovation and productivity
improvement. For example, the OECD Examiners observed that
technical co-cperation between workers and management, which
is common in countries such as the Federal Republic of
Germany, Scandinavia and Japan, is rare in Australia.
The recent BuIsiness Council paper on work practices
recognises resistance to the introduction of new technology
as a major source of restrictive practices and workplace
rigidities. out it also recognises the importance in this
respect of greater emphasis on training and on the
development and utilisation of skills and concedes that
management has not paid sufficient attention to these
matters. Deficiencies in knowledge and education can sometimes do
more to obstruct innovation and productivity improvements
than shortcomings in technology and lack of investment.
Turning specifically to the question of research and
development, Auntralia devotes about one per cent of its
gross domestic product to expenditure on R& D. This is a
very low figurc when compared with the leading OECD
countries. Not only large countries such as the US and
Japan but also countries with more comparable sized
economies, such as Sweden and Switzerland, currently devote
around three pc,-cent. Even so, these countries are
seriously questioning whether they are investing enough
public and private resources in research and development.
Japan, in particular, is moving to significantly increase
its basic research effort to support increased industrial
growth. In Australia'G case the level of public sector investment in
research and development is broadly comparable with that in
most OECD countries, but the private sector compares most
unfavourably. It is therefore hardly surprising that our
industrial products have lacked the competitive edge, to
mention one aspect that improved product quality and design
can provide.
Fortunately, there are encouraging signs that this situation
is changing. Hlowever, it remains the case that industry
investment in research and development is only a fraction of
that in the countries to which I just referred.
Public investment in research and development is substantial
and now exceeds one billion dollars a year. Some seven
hundred million dollars of this is spent in the higher
education sector, primarily in universities and increasingly
in the institutes of technology and some other colleges of
advanced education.
The Government also provides substantial support for basic
funding of the CSIRO, through funding of medical research
where real increases in Government effort have been
maintained over recent years in spite of difficult budgetary
circumstanceso and-through funding of other programs in the
industry arid science portfolios. In the medical research
field, Aus*.. ralia has a well-deserved international
reputation and a record of new product design which
unfortunately has not always been followed in any
significant way by local development of such products.
signficant opportunities remain for those who wish to take
advantage of them.
The excellence and world standing of much of the scientific
research conducted in Australian universities is not
questioned. This is particularly true when the best
researchers have the resources to build strong
multidiscipl-inary teams and have the infrastructure and
equipment necessary to sustain the effort.
A good example is the success of the Special Research
Centres Scheme, for which the Government has recently
extended suwport. Centres such as the Joint
Microelectronics Research Centre and the Adelaide Centre for
Gene Techno.-hgy have attracted industry funding and
stimulated greater university-industry research interaction.
To link these research functions to the commercial world,
all universities now have a commercial arm, usually a
separate comnpany, which acts as a broker between the
university's researchers and companies which can develop,
manufacture and market their ideas.
Let me take a few of the success stories. The " bionic ear"
was developed at Melbourne University and commercialised,
with the aid of Government public interest grants, by
Nucleus Ltd. The device provides hearing for people who are
profoundly fierve deaf. The current world market is
estimated at 220,000 units. But further technical
refinements could make it applicable to lesser degrees of
deafness, with substantially increased market prospects.
Sales are expected to be around $ 5.5 million in 1986, rising
to $ 50 milion by 1990.
At the University of Melbourne a blood test has been
developed for the detection of breast cancer, a major killer
of Australian women. The test developed by the Research
Centre for Cancer and Transplantation helps the early
diagnosis of breast cancer, and in tracking the course of
the diseas; e. It was recently licensed to Australian
Med-Research Industries and provided the basis for the
launch of a public company, Integrated medical Technologies.
Scientist6 at the ANU have invented a way of genetically
modifying yeast which is being developed with funds provided
by the Food Division of Burns Philp. The outcome of this
work is expected to be a range of significantly improved
biotechnology products that will let the company penetrate
increasingly competitive international markets.
The ANU is also finalising agreements with Forensic Science
Technology International and Melko Electronics manufacturing
in Victoria to develop new instrumentation and chemical
technology for forensic science use throughout the world.
The ANU's Fcrensic Science Research unit has been working
with police forensic-. science departments in Australia to
develop the device.
A number of other exciting developments could be mentioned,
like Murdoch University's bromide battery ( which has
attracted about $ 5 million in development funds) and
Queensland University's fermentation process for converting
sugar to alcohol. obviously, the research of our
universities does provide the basis for commercial
development by the private sector.
No doubt the potential exists for much more variation and
specialisation in and between our universities. Resources
need to be uscd flexibly so that each university develops a
more distinctive character and selectively concentrates its
research in key areas.
The Vice Chancellors are the key people in initiating such
major changes so that each university perceives its role and
manages its research activities.
Bringing together now the various strands of the thoughts I
have put to you, I believe that there is an emerging
awareness of the value of the substantial public investment
in higher education research and the role it can play in our
industrial competitiveness. To foster this awareness it is
essential that the universities more vigorously make their
research skills and activities known to industry and further
develop mechanisms which facilitate the flow of information
and skills to and from industry.
Interaction between universities and industry also can be
assisted by increasing the mobility of research and
development personnel in both directions. Institutional
barriers can limit this interchange and I hope that you all
will work to remove them.
Industry, has, of course, a major role of its own in
research and development. However, except in the largest
companies, there will continue to be considerable reliance
on the public research infrastructure for specific aspects
of research expertise. In that way research and development
capacity within the individual firms can be supplemented and
made much more effective.
This is recognised in some of the proposals and initiatives
set out in you., own report. The tax concession for research
and development is encouraging such interaction. Early
evidence suggests that companies are more frequently using
university staff as consultants and contracting research to
universities.
9
Increasingly, all companies will have to innovate in order
to survive. Greater innovation and competitiveness in
Australian industry will demand changed attitudes in
corporate managementd
These challencL's Will involve a longer term approach aimed
at gaining and improving market share, particularly
overseas. They will demand a reputation for promptness,
quality and reliability. Significant investment will be
necessary in research and development, production systems
and marketing.
The recent PA Consultants' technology surveys of management
attitudes in Australia underline the change that is
required. Ir. comparison with those in leading countries,
Australian boards and top management appear to lack strength
in both technological and marketing skills. The surveys
show limited awareness on the part of boards of the
importance oi technology, innovation and research and
development to their future competitive survival and
perceive resealrch and development as a reluctant tactical
necessity rathc , r than a key element of their business
strategy. The drive for 3tructural change in our economy involving
export orientation will succeed only if large companies make
these changes i~ n strategy and attitude and adopt the
necessary approaches to innovation and research. Those of
you here from the Business Council are in key positions to
effect this change.
Similarly, the. Vice Chancellors' Committee has the very
great respons4ibility I referred to earlier to ensure that
the allocation of tertiary places, the design of courses and
the specialisation in coursework and research between our
tertiary institutions, reflects the needs of Australia's
emerging manufacturing and service industries.
Let me closc by saying that I am convinced Australia has the
capacity to compete successfully in the increasingly complex
and difficult international trading environment.
But to do so requires a concerted effort from us all. We
must discard maany of the attitudes and practices of the past
and adopt new ones for the future.
The resulting teamwork will involve the closest possible
interaction between individual firms and universities. it
will require the personal commitment of each of you.
I wish you well in your forthcoming discussions and hope
that the current forum will be followed by others in due
course. My Government stands ready to join with you
constructively in the important task ahead.