Lagging Behind the Long White Cloud

 

Keynote Address

CommsDay Summit 2015

The Westin Hotel, Sydney

Tuesday, 21 April 2015

 

**Check Against Delivery**

 

Introduction

Saturday is Anzac Day.  A very special Anzac Day.  100 years since the Australian and New Zealand Army Corp landed at Z Beach.  What we now call Anzac Cove.

Normally when we think of Anzac Day we think of row boats hitting the beach.  The sheer cliffs.  The soldiers clamouring up the hills and carrying injured mates back down.

What is not well known though is on that first day amongst the thousands of Australians and New Zealanders who landed at Anzac Cove were signallers.  Their job was to lay copper wire between the beach and the soldiers up ahead.

One of those men was Cyril Bassett – a bank clerk.

On the 8th of August 1915 his job was to get the telephone line up to the front line and keep it working.  The lines were easily cut by shrapnel and stray bullets.  The best way to keep it working was to bury it.  But on this day there was no time for that.  Every time the line went dead he had to find where it had been cut and fix it.

For the next three days he ran up and down that line – under constant attack from snipers, machine guns and artillery.  The closest they got was one bullet that went through his collar and another that tore off his right hand pocket.

His bravery earned him the Victoria Cross.

Cyril Bassett was not an Australian.  But he was an Anzac.  He was a Kiwi.  The only New Zealander to win a Victoria Cross at Gallipoli. 

Years later he mournfully reflected on the decision to award him the Victoria Cross.  He said “all my mates ever got were wooden crosses”.

To give you an idea how dangerous this sort of work was – 3,800 Post Master General Employees volunteered to serve in World War One.  After the war only 2,400 came back to work. 

They weren’t professional soldiers. They were engineers and technicians. They were like a lot of people in this room.

100 years on things are very different.

But the work this sector does is no less important.

And that’s what I want to talk about today.

 

Jobs of the Future

When politicians talk about the future they usually talk about the rise of Asia or the ageing of our population.

There is a reason for that.

The rise of Asia creates enormous opportunities – just think of it, 3.2 billion middle class consumers on our door step by 2030. That means trade and jobs and wealth, if we get it right.

Conversely, the ageing of our population creates enormous challenges – it will increase the amount of money that governments have to find for health care and aged care, as well as the pension.  With fewer workers paying taxes to pay for it. 

There are 4.5 workers in Australia now for every person 65 and over.  By 2054-55 it is expected to be 2.7.

You can see then why politicians talk a lot about Asia and ageing.  Both are big and important.

But there is a third area which is critical to our future that often gets over looked.  That’s the digitisation of our society.  And if we don’t focus on this as much as we do on Asia or ageing we are making a big mistake.

Here’s the challenge.  

In 2013 Carl Frey and Michael Osborne from Oxford University published a report called “The Future of Employment:  How Susceptible are Jobs to Computerisation?”.

They looked at 702 different jobs in the US labour market and concluded that about half were at risk of disappearing over the next two decades.  Half.

If this is only half right we have a big challenge ahead of us.

Our economy is going to change massively.  And this sector is at the heart of it.

It will be the countries with the strongest digital economies in the years ahead that will be the most successful.

So how do we stack up?

We are a smart country.  We have created everything from WiFi to the black box. 

Our digital economy is growing twice as fast as the rest of our economy. 

If our digital economy was classified as an industry it would be bigger than our agriculture, transport or retail industries.

But there are a lot of areas where we are falling behind.

Two months ago Harvard Business Review ranked the digital capacity of different countries. Countries were ranked based on a number of different factors and placed in four different categories – Stand Out, Stall Out, Watch Out or Break Out.

Australia was described as “Stalling Out”.

New Zealand – the land of the long white cloud and Cyril Bassett – was described as a “Stand Out”.

A few weeks ago I went over to New Zealand to have a look for myself.  What I saw concerns me. 

Let me give you a few examples. 

 

Infrastructure

First, infrastructure.

At the same time as we are building the NBN, New Zealand is building its own network, the UFB – Ultra Fast Broadband.

Already about 50 per cent of the population has access to VDSL.  They built a fibre to the node network there at the end of the last decade.

Now they are building fibre to the premises for about 80 per cent of the population.

They are scheduled to complete their network in the same year that we are scheduled to complete ours – 2020.

The difference is most of New Zealand will end up with a fibre network.

Here in Australia we will end up with a mixture of fibre, copper and HFC.  About 3.6 million homes will end up with FTTN.

In other words about 30 per cent of Australians will end up at the end of this decade with what the Kiwis built at the end of last decade – and decided wasn’t good enough then.

The same technology Simon Hackett recently said “sucks” and, if he had a magic wand, said it’s the bit he would erase.  And that’s the guy Malcolm Turnbull appointed to the NBN Board in 2013 because of his experience and leadership in the telco industry.

Little wonder then that when the latest Akamai State of the Internet Report came out in January we were ranked 44th for average connection speeds – two spots behind New Zealand and 47th for broadband connectivity – 14 places behind our Kiwi cousins.

Little wonder Malcolm Turnbull started planting the seed yesterday about g.fast.

 

Crowd Funding

Here’s another area where we are off the pace – crowd funding.

I spoke about it at this conference this time last year – and said we support it.  We are still waiting for the Government to introduce legislation to make it happen.

The US did this three years ago.  New Zealand did it two years ago.  We are still treading water.

And while we are waiting for the government to introduce legislation, Australian companies like Equitise are setting up across the ditch – taking advantage of New Zealand’s laws. 

StartupAUS released a report today entitled Crossroads 2015.

It is scathing about the Government’s lack of action to help startups.

And it compares and contrasts what we are doing here to what’s happening overseas.

In China they have just announced the creation of an $8.

3 billion National Venture Capital Fund. South Korea is implementing a $4 billion Creative Economy Initiative to accelerate the growth of their startup sector.

And, again, in New Zealand they are focused on this as well. They have introduced Entrepreneur Visas and they are extending their network of startup incubators and innovation precincts and funding programs for startups.

 

Skills

What I worry about most is skills – or our lack of them. 

I am sure you have heard me talk about this before.  There is a reason I keep banging on about this – I think this is the biggest and most difficult challenge we face – and we are not doing anywhere near enough to address it.

Let me show you what I mean.  Here are some statistics I got from the Australian Computer Society last week.

In 2003, 9,093 people graduated with an ICT degree in Australia.  In 2013 that figure dropped to 3,446.

The number of ICT graduates we are producing has dropped by two thirds in ten years.

How do we compare to other countries?

A few months ago the Global Innovation Index ranked Australia 73 out of 143 countries for the proportion of science and engineering graduates in the population.

Only 16 per cent of Australian university students graduate with STEM degrees.  In South Korea it’s double that.  In China it’s 41 percent.  In Singapore it’s almost 50 per cent. 

New Zealand is also in front of us.

We have got the same problem in our schools – the number of students undertaking intermediate or advanced mathematics at high school has dropped 34 percent in the last 18 years. 

A decade ago only five countries out performed us in mathematics literacy in schools. We are now ranked 17th.

You can see the problem here.

Remember what I said earlier about jobs being destroyed by computerisation – up to 50 percent of the jobs we do today according to Frey and Osbourne from Oxford University.

Invariably the new jobs that will replace these jobs will require STEM skills.

Economist Tyler Cowen says in the future there will be two types of workersthose who are “good at working with intelligent machines and those who are replaced by them”.

75 per cent of the fastest growing jobs in Australia already require STEM skills.  This is only going to increase.

And the number of Australians graduating with these skills is going down not up.

That leaves us with three options – we can import skilled workers, we can send the work overseas, or we can change our education system to produce more people with the skills we need.

The third option is the only real long term option.

There is a symbiotic relationship between technological change and education. In the wake of the Industrial Revolution it was changes to education – the introduction of universal education – that helped to produce the workers needed for the different jobs being created, and spurred more innovation.

The digital revolution is exactly the same. Our education system needs to change to reflect changes happening now in our economy – and the changes that are going to take place in the decades ahead.

In the UK last year they introduced a new curriculum that includes coding lessons for children as young as five. Coding in kindergarten. In Finland it will start next year. Canada and Singapore are doing something similar in a number of primary schools. In the US they are trialling this in more than 30 school districts including Chicago and New York.

Why are they doing this?

Because in the world that these kids will grow up in and work in, coding and computational thinking will be just as important as being able to read and write.  And like learning a language, the earlier you start, the better you will be at it.

The Poms get it. Other countries get it. But here in Australia we are still talking about it. 

It was in the new national curriculum.  It’s been ready for about a year.  When I spoke at this conference this time last year Christopher Pyne had just announced a review of the proposed new curriculum.  Late last year that review was released.  Disappointingly it recommends that it is not necessary to teach this until Year 9.

This is a big issue.  If we do this now and get it right this will help tackle the long term challenges we have in building the workforce we need.

The work organisations like Code Club are already doing in our primary schools indicates how important this is – students who participate in Code Club subsequently perform better in maths, science, reading and languages.

Interestingly, it also indicates that the girls usually outperform the boys.

Malcolm Turnbull actually gets this, but unfortunately he is not the one we have to convince.  The person in charge is Christopher Pyne.  If you have got any tips on how to convince him we need to do this let me know.

New Zealand, by the way, has got the same problem we have.  The difference is they are trying to do something about it.

They are reviewing their digital technology curriculum right now.  Last year they opened their first official STEM high school – Linwood College in Christchurch.  They are also building three new ICT Graduate Schools. 

They are also trying to lure Australian scientists and researchers and entrepreneurs across the ditch.  I saw an article in The Australian last week where the New Zealand Minister for Science and Innovation Steven Joyce said New Zealand was “recruiting actively in Australia” off the back of recent cuts at the CSIRO and NICTA.

 

Collaboration

I also want to say something about the lack of collaboration between Australian universities and Australian businesses.

This is another area where we are badly underperforming. Believe it or not our rate of university and business collaboration is the lowest in the OECD. 

Only four percent of large Australian firms collaborate with universities and research institutions.  In New Zealand it is over 20 per cent.

The result is a lot of opportunity wasted. We are currently 81st in the world for converting innovation into the output business needs.

When people talk about Silicon Valley what’s the one thing they say made it and sustains it? Stanford University. It’s fundamental.

We don’t have anything like it. Perhaps we never will. But what we do need to do is bring universities and business closer together.

That’s why, for example, I have said that as part of the new Badgerys Creek Airport the Federal Government should master plan the whole site and allocate land for the University of Western Sydney and a business and research park around it.    

 

Conclusion

Bring all of these things I have spoken about today together and what it shows is we are not as competitive as we should be now and we are not taking the steps we need to get ready for the future.

Just one more example – the World Economic Forum put out a Global Competitive Index every year.  For the first time ever we have fallen out of the Top 20 most competitive countries.  And guess who has jumped in?  New Zealand.

Remember what I said earlier about computerisation of jobs.  It’s countries that are ready for this that will be the are the ones that will succeed.  The ones that don’t adapt won’t.

It’s why the Chief Scientist, Ian Chubb, has been screaming out for the last two years calling for the development of a National STEM strategy.  It is hard to disagree.  Believe it or not we are the only country in the OECD without a science or technology strategy.

I said at this conference last year that I am not interested in the old wars in this portfolio, and I am not interested in opposing things just for opposition’s sake. 

People are sick of politicians abusing each other.  They are sick of the name calling and the pettiness.  They want us to work together.  And that’s what I have tried to do over the last 12 months.  Sometimes it has been popular to do that.  Sometimes it hasn’t. 

But in this area that I have talked about today – fuelling the digital economy – not enough is being done.

We are still waiting for crowd funding.  We are still waiting for a digital curriculum, and we are still waiting for the NBN roll out to really ramp up.

We might have beaten the Kiwis in the cricket a few weeks ago.  But we are not beating them here.

They are beating us on broadband.  They are beating us on crowd funding.  They are beating us on STEM.  And now they are even trying to poach our best and brightest.

This weekend we will stand together and remember men like Cyril Bassett.

But the terrible truth is in this – we are lagging behind the people of the long white cloud.

 

ENDS

MEDIA CONTACT: RYAN HAMILTON 02 9790 2466