Tech Leaders Forum
Tuesday, 18 February 2004
Sanctuary Resort, Gold Coast
[Check against delivery]
I acknowledge the traditional owners of the land on which we stand and their elders past and present.
Ladies and gentlemen.
Push Bikes to Packet Switching
In October 1962 – just over 50 years ago – a Western Union messenger boy held the fate of the world in his hands.
His job that day was to carry a message from the Soviet Embassy in Washington DC to the local Western Union office. From there it was sent by telegram to Moscow.
In that message was information that would end the Cuban Missile Crisis – 13 days when the world stood at the edge of Armageddon.
And it was delivered by a boy on a bicycle.
That was October 1962. In October 1969 ARPANET was created – the Advanced Research Projects Agency Network.
A packet switching network. The technical core of what we now call the Internet.
From push bikes to packet switching in seven years.
I love this story because it reminds us how fast things can change. The same thing is happening today.
Content on the Internet doubles every 18 months.
10 years ago Facebook was born. 10 years ago the iPhone didn’t exist.
Last year almost a billion smart phones were sold worldwide.
73 percent of Australians aged 15 – 65 have a smart phone. One of the highest penetrations in the world. And that’s expected to jump to over 93 percent by 2018.
This must make this one of the most exciting industries to work in, and to chronicle.
It’s all still pretty new for me. I have been in this job now for four months. Before that I was the Minister for Home Affairs, and before that the Minister for Defence Materiel. So I was more focused on things like organised crime and submarines.
That’s now changed. I have spent the last few months in a new environment, talking to a lot of people – including some of the people in this room.
That has given me a better understanding of not just how obviously exciting this part of our economy is – but just how important it is.
I understand better now than I did before, that what we do here will determine what our future looks like. How we work, how we live, our standard of living and the quality of the lives we live.
At Christmas I went over to the United States and I did for the first time what I am sure a lot of people in this room have done – I visited Silicon Valley.
It gave me a fascinating insight into what’s happening now and what might come next. Wearables. MOOCs. Driverless vehicles.
Apps that allow you to walk into a hotel and go straight to your room without having to queue up and check in. Or pay your restaurant bill using your phone – without having to hand over a credit card and then wait for it to come back.
Or – and this is the one I liked the most – going to the football and being able to order a beer or a meat pie with the press of a button, and have it delivered to your seat. With sauce!
I also met a few Australians, including one I will tell you about a little later.
Everywhere I went I asked people the same question: why is Silicon Valley here?
I got a few different answers. Some mentioned infrastructure. Some talked about the laws in the US, particularly copyright. Some mentioned the proximity to venture capital and the appetite for risk. But everyone – everyone – mentioned Stanford. It’s research park, applied learning, its entrepreneurial spirit and engagement with business.
That – everyone told me – was critical in spawning so much innovation and so many successful companies. From the little electronics company that William Hewlett and David Packard set up in a Palo Alto garage in 1939, to Google and Netflix and thousands of others.
It’s also the engine that continues to feed the Valley with the talented engineers it needs to sustain it.
Australia isn’t Silicon Valley. But there are a few lessons here for us.
We are living in a century where the sorts of things that made Silicon Valley so successful will be critical to the success of countries like ours.
That’s because it’s the countries that best adapt to digital disruption that will be the most innovative, most productive, the wealthiest and the most successful.
A lot of this work has to be done by the private sector. But government also has an important role to play.
We need to make sure we put the right laws in place to meet the needs of a digital economy. We need to put the right economic incentives in place. We need to help build the sorts of skills an economy like this needs and we need the right infrastructure to sustain and drive this.
On law reform, last week the Government released the Australian Law Reform Commission’s Report on Copyright and the Digital Economy. Its key recommendation is the introduction of a flexible fair use exemption.
The Law Reform Commission argues in its report that this reform “would make Australia a more attractive market for technology investment and innovation.”
Other countries have fair use laws, including the US. When I was in the US companies like Amazon, Yahoo and Google made a strong case for us to develop the same legal framework. They made the point to me that laws like this helped to facilitate the development of things like search engines and cloud computing.
George Brandis has said that he remains to be persuaded that we need fair use laws. I suspect Malcolm Turnbull might have a different view. He was in Silicon Valley at the same time I was there and last month he posted to his blog about his experience.
He said he got feedback from companies about the importance of law reform that removes obstacles to innovation. He mentioned employee share option reforms and crowd funding laws. But the same could just as easily apply to copyright laws. The same companies are asking for this as well.
So make sure your voice is heard. The debate is coming. It will happen in the Cabinet Room and in the Parliament and it is important that we make the right decisions.
Incentives for Start Ups
On economic incentives, the Government has foreshadowed changes to the way employee share options work for start ups.
I think there is a strong argument for reform here. The Government has continued the review being done by Treasury on this and I am looking forward to seeing their report.
On skills we’ve got a major challenge. There is nothing like a Stanford in Australia. There may never be. Of more concern though is we have got nothing like the STEM (Science, Technology, Engineering and Mathematics) graduates we need.
Carl Sagan made the point in 1990 that “we live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology”.
Unfortunately that is still true today. Perhaps more so. And we have to do something about it.
75 percent of the fastest growing occupations in Australia require STEM skills and knowledge. The number of students taking up STEM courses hasn’t kept up with demand. The number of students taking up IT degrees has actually dropped by about 36 percent. Uncapping university places has helped boost numbers in the last few years – but not much.
In the last 10 years there have been 100,000 new jobs created in the technology sector, but in the same time only 49,500 students have graduated with technology degrees.
Turning this around is a big task. Ian Chubb made some good points on this recently. The Australian Industry Group also wrote a good report on this last year.
Here are a few thoughts: We need to embed technology in the curriculum from primary school up. The delay in doing this is a concern. We need to change the way STEM subjects are taught, increase the digital literacy of our teachers and the way we provide career advice. We also need to get universities to take a more proactive role in encouraging students to take up STEM degrees, and get universities to collaborate more with business on research projects – what some call Stanford’s “secret sauce”.
Some of this is happening now but we have a long way to go.
Finally infrastructure. The NBN has dominated this debate. I don’t expect that to change.
I talked earlier about how quickly things can change. It is also true that we tend to over estimate the effect technology will have in the short term and under estimate the impact it will have over time. What’s sometimes called Amara’s Law.
It took a long time for ARPANET to become the Internet that we know today. But few then could have possibly imagined what it would become or the impact it would have on all of us.
The same I suspect is true of the NBN. If it is done right.
Four weeks into this job I made a speech at a CommsDay Conference in Sydney. One thing I said at that conference was wrong. I said that Labor had won the debate about the need for an NBN. That the Liberal Party accepted that it was a bit like Medicare. It was too popular to destroy. So they would keep it and just build a smaller version of it.
Since then the Strategic Review has been released and the Liberal Party has broken a number of important promises. They have broken their promise to provide everyone with access to at least 25 megabits per second by 2016. They have also broken their promise to roll out FTTN to about 9 million homes and businesses.
Instead they are now going to build a patchwork of different networks:
- 24 percent will get FTTP
- 31 percent will get FTTN
- 11 percent will get fibre to the basement
- 27 percent will access broadband via the HFC network, and
- 7 percent will access it via satellite or fixed wireless
That’s why I have said NBN is now effectively dead. It’s not a national network. At least not the sort people expected before the election.
With the benefit of hindsight I now realise what Tony Abbott and Malcolm Turnbull were doing in April last year when they made those promises. It was all about neutralizing the issue before the election.
A bit like Christopher Pyne’s promises on Gonski: make a promise to neutralize the issue before the election – and then break it afterwards. This is worse though because Christopher Pyne has since back flipped on his broken promise. Malcolm Turnbull hasn’t.
I got that wrong. But I got a lot of other things right in that speech.
I said I thought Malcolm Turnbull’s claim that the negotiations with Telstra would be quick, was optimistic. It has proven to be so. It is almost six months now and there is little sign of a new agreement.
I also said the cost of maintaining the old copper network could cost billions if most of the country received FTTN. Since then leaked advice from NBN Co to the Minister has revealed that this has could cost between five and nine billion dollars over the next decade.
I also said construction was too slow and we need to fix this. We need to speed up construction of the NBN. Unfortunately, instead of pushing NBN Co to speed up construction they have just pushed the targets they have to meet down.
In October last year Malcolm Turnbull said 450,000 premises would be passed by fibre by June this year. In December he dropped this figure to 357,000.
It is important to understand what is happening here. This is all about politics. NBN Co has failed to meet its construction targets in the past. Malcolm Turnbull is determined to make sure that this doesn’t happen on his watch, so he is lowering the bar so low that it is impossible not to jump over it.
To prove this point, NBN Co could slow down to two thirds of their current speed and still hit the target that has been set for them.
This will make for a good press release in July – “NBN smashes construction target” – but it doesn’t speed up construction. The same thing has happened with costs. Assumptions have been dialled up and before the next election we will be told how they have brought costs down. It is an old trick and it is important to see this for what it is. It’s all politics.
More importantly, we are now not getting the infrastructure we are going to need. Broadband is so important to creating jobs, building companies, increasing productivity and economic growth. That is why it is so disappointing the Liberal Party has taken this short sighted approach and is building a second rate network.
I mentioned earlier an Australian I met in the US. Her name is Tan Le. She came to Australia as a refugee from Vietnam at the age of 4.
She still remembers flying into Melbourne in the early 1980s and seeing big open spaces out the window of the plane. When the plane landed her mum told her that when they got off the plane they would be on very special ground and she should bend down and touch the ground.
The little four year old girl did what her mum told her to do. She bent down and touched the ground and looked up and said “Mum, it doesn’t feel very special”. Her mum looked back and said “Well, make it special with your mind”.
And she did. Tan Le was a refugee at 4. She was a university student at 16. Young Australian of the Year at the age of 21. A barrister by 22. She founded her first company when she was 26.
Today she is based in San Francisco. She is the co-founder of Emotiv, a neuro-engineering company. They make devices that read brain signals and interpret facial expressions. You where the device on your head.
It has the potential to transform things like gaming. More incredibly though, the device enables quadriplegics to move their own wheelchair – using their brain. It will change the lives of people all around the world.
Tan’s story tells us a lot about us. Who we are and some of the challenges I have talked about today.
We are a very special country, where incredible things, like Tan’s story, can happen. But we are also a small part of an increasingly competitive world. And if we are going to be successful in this increasingly competitive environment, we have got a lot to do.
We need the right infrastructure, the right laws, the right economic incentives, and we need to grow and keep more talented people like Tan Le.
And that’s just the start.
MEDIA CONTACT: RYAN HAMILTON 02 9790 2466