Yesterday Dee Cee put in a passionate plea for ideas that are truly new and go beyond the industrial age as we know it, especially in relation to the business of mitigating climate change.
I don’t know how he rates the idea that US scientists have come up with of coating glass panels with a vegetable dye to make solar panels. Cheap solar panels that are more reliable and capable of generating up to ten times more electricity.
They are heading for commercialisation, it seems, but if you have the same idea here forget it unless you have a pile of cash.
It turns out that scientists at the University of Queensland have been playing around with the same idea. True, they are a long way from commercialisation, but if they were there would be little to help them. Andrew Blakers, Director of Sustainable Energy Systems at ANU says that there is $500 million in a renewable energy fund over six years, but it doesn’t start until July 2009. Something about needing industry consultation.
Also the energy innovation fund of $150-million over four years has a half allocation for 2010-11 and for 2011-12. Presumably it doesn’t start until next year either.
You might reasonably suppose that there would be general innovation funds available. You’d be wrong. In May notices like this one began appearing on Government websites:
The Commercial Ready program, including the Renewable Energy Development Initiative, closed to new grants from 28 April 2008.
It seems that the program was cancelled 16 days before the Budget, but Departmental officers didn’t know and continued tom hold meetings with prospective grant applicants.
Business was rocked, especially those that had made a business out of consulting on the program. I did hear several radio stories at the time, universally critical. The venture capital industry was stuffed, they said, without some Government support. I heard one bloke whingeing that he couldn’t progress his idea now. Something trivial like an electric drive train for trucks.
Kim Carr, the responsible minister was quoted as saying they weren’t in the business of giving money to millionaires. Anyway this article gives his side of the story, much better than the ABC did, it must be said:
“The Government has commissioned a comprehensive review of the National Innovation System, chaired by Dr Terry Cutler, which will provide a green paper report by 31 July,” he said.
“The Government will be responding to the review with a White Paper by the end of the year. In the meantime, it is important to note that all existing commitments under the program will be met — worth about $200 million over four years.
“It is also important to remember that almost three quarters of the savings from Commercial Ready in 2008-09 had already been earmarked in the election policy Clean Energy Plan to tackle climate change to offset the Government’s new $240 million Clean Business Australia package.
“The Rudd Labor Government will also continue to support Australia’s innovative businesses through the R&D tax concessions, the tax offset, the COMET program, and a range of venture capital measures — as well as new initiatives such as Enterprise Connect (including researchers in business) and the Green Car Innovation Fund.”
Nevertheless you might wonder whether it would not have been wiser to continue funding while planning the new dispensation. You might also ponder the true cost of those me-too tax cuts.
Not everyone agrees. At the end of that article Ivan Kaye, Managing Director of Business Strategies International says the Government got it right. He likes the R&D tax concessions:
Kaye says the Government’s R&D tax concessions, providing a cash rebate to companies with assessed tax losses turning over less than $5 million a year, is a much simpler program.
“That’s a fantastic scheme and well used, and it’s not about picking winners,” he says.
“It’s about if someone spends the money and they are doing R&D, and it’s assessed as R&D, they will get their tax concession.”
He then goes on to say
he has no doubt the Government will make other grants available, but instead of them being a generic Commercial Ready scheme it will focus on areas where it believes Australia has a competitive advantage.
Which brings us back to picking winners, which personally I have no problem with.
Here’s a spiel from a biotech outfit giving their thoughts. They say it was particularly helpful in the biotechnology and medical devices area. They also quote Lindsay Tanner telling Robert Gottliebsen that axing ‘Howard’ Commercial Ready was his ‘favourite’ budget decision. Not good, Lindsay!
At the very least the Government has a bit of ground to make up with small business of the innovative kind.
Brian:
That’s typical - in the tradition of the efficient Pritchard steam engine for trucks and cars, the superb Victa AirTourer light aircraft, that triumph of Australian defence procurement [and marketing!!] - the MetalStorm weapons system, Sister Kenny’s treatment for poleomyelitis victims, etc., etc.,etc., etc., …. ad nauseum.
There was NO excuse whatsoever for ditching this program …. and the culprits must be sacked immediately before they do any more damage to the Australian economy, especially now, when we need every possible advantage we can grab so as to weather the SubPrime Depression.
Brian,
That’s typical….what he said^.
I agree, but that means Tanner and Kim Carr for starters.
Venture capital has long been a problem in Australia. As far as I can see the Commercial Ready program seemed to be filling a hole.
Do we really need government programs to directly subside programs - which means a lot of overhead to analyse and audit which research is worth funding which is both costly as well as slows things down? Why is it that the venture capital system so much healthier in the US without the government funding?
I have a son who is a Patent Attorney. He claims that the abandonment of the Commercial Ready program was a huge mistake and he has some figures to suggest he is correct.
Seems a very silly decision.
Chris (a different one), I don’t know but venture capital has always been a problem here and one of the roles of government is to intervene when there is market failure.
Sometimes these decisions are symbolic and no rational explanation can be found. I recall when Costello brought down his first budget he cancelled a government grant that was going to build a cold store at Cairns airport. Costello saved a measly $2-3 million. With the store we would have been exporting about $300 million worth of exotic fruits to Asia every year in prime condition.
Then they gave an agricultural research unit the chop. It was costing $10 million pa and had just discovered something that was going to save rural industry (wheat, I think from memory) $100 million per year.
The decision to give Radio Australia broadcasting out of Darwin the chop was symbolic. The $17m pa was small change in the budget. And so on and on.
Chris (a different one) - the biggest problem doesn’t seem to be just the raw research. It really is getting the product from R&D out to the market (in a commercial sense).
From dealing with researchers, industry and investors my take is that the Australian investment market is so focussed on real estate, resources and markets that this sort of thing is way down on the list of priorities. The usual response to suggestions that “this or that” product is worth investing in are usually met with a question of “will it give me a 20% return within 2-3 years?”. The lack of investment in this area has almost become a self-fulfilling proficy - “none of my friends/fellow investors have ever made money on it so I won’t bother” is another common response.
Venture capitalists in the USA (and a lessor extent Europe) are much more willing to take a risk for a longer-term return. As for government support - the Mining/Resources CRC’s and CSIRO have always relied on the industry to take things to a commercial sale.
Will people who make money out of mining invest in more mining or more innovation.
The problem is the people who have made money in Australia didn’t make it out of innovation.
The clever country is dead, buried, never to return. Australia has a bad case of the Dutch Disease. Non-resource exporters and import competing manufacturers are getting absolutely smashed by the Australian dollar at the moment. Many of these businesses will not survive our fabulous terms-of-trade boom that the economists cheer on daily. Once they’re gone, they won’t come back.
Believe me, I know.
In my experience, Australian business culture is far too conservative to take the kind of hair-raising risks that venture capital requires. Aussie investors will back something if it has a 10-year proven track-record overseas first - this is the level of “risk” they will stomach. Whereas in the states the venture capitalists operate on a triage system…they know that 50% of what they invest will be a dead loss, that the next 40% will be even, and they bank on getting a 20x return on the lucky last 10% to make the whole exercise worthwhile.
The Australian business community just doesn’t operate on those sort of figures.
That’s not to say that individual Australian companies and inventors aren’t incredibly innovative - there is a century of innovation to show that - but the Aussie backers are operating on too conservative a set of assumptions to take full advantage of this.
Steve H’s comment @ 7 rings rather true to me - unless we do things like scrap some of the many billions provided annually in incentives for real estate and stock market speculation, Australian investors will still tend towards the quick buck and the capital gain, or tried and true stuff like the resources sector. Which raises the questions of whether the sorts of R&D support talked about will really do the trick, or whether there is a deeper cultural/institutional problem in Australia underlyinh behind the continuing difficulties in getting research like this into the commercial stage.
Also, from a greenhouse point of view, the main thing is whether a good technology gets off the ground, rather than whether it does so in Australia. In terms of overall impact, it may even be better that it reaches its commercial stage somewhere like the USA or China (of course, it is more likely to disappear all together than make it from Australia to overseas, but the fact it ends up operating somewhere else before Australia isn’t itself a bad thing in terms of reducing greenhouse)
An irony is that export market development grants, which are still available, might end up making it easier for Australian technology to take off elsewhere than it is to do so here - which still boosts exports of course.
BTW, can anyone tell me why the RBA is hell bent on driving the economy into recession when all the demand growth and inflationary pressures are coming from the resources sector?
The orthodox monetary policy of “inflation targeting” simply isn’t working at the moment. Do you think the miners notice a 0.25% rate rise when the price of coal triples? Of course not. Do you think the price of petrol will fall because Australia’s central bank raises rates? Of course not. The RBA cannot fix inflation but raising rates, all it is achieving is crushing the rest of the economy and driving the $AUD higher.
I propose some economic heresy as a solution: TAX THE MINERS
That is, rather than hurt the entire economy with the blunt instrument of monetary policy, target the sector of the economy that is the source of the inflationary pressures. And when I say “tax the miners” I mean a percentage of the sale price per tonne, not a flat rate per tonne, so if commodity prices come off the mining companies can remain profitable.
Think of the benefits: Lower interest rates, lower Australian dollar, billions more for the government to squirrel away into sovereign wealth funds, redistribute to the needy, or invest in clean energy technologies, and in the case of coal, a carbon tax paid by the tonne.
Frankly, I’m completely fed up with having to pay the economic price of living in country that’s little more than a quarry. Why does an export-focussed, innovative, high-tech company have to endure high interest rates and a high currency simply because they happen to be located in a country that is undergoing a resources boom?
carbonsink, I’d agree with tax the miners, but then it’s important not to piss it up the wall by spending it directly on recurrent expenditure in the budget, however worthy the need. This is what we’ve mostly done in the past.
The way to go is like the Future Fund, and like national provident funds, which is one innovation of Costello’s I’d applaud. We can use these funds to invest overseas (the strong dollar helps) and use the interest/dividends to fund recurrent programs into the future.
The US government does support R&D and innovation very heavily. They do it in a number of ways. One of the prominent ones is through portfolio specific projects, The DOE, military, airforce, army, NASA, and agriculture for instance. I remember hearing of a US gov guy giving a seminar on this, and he said that when it came to deciding which projects to support they use a system of pier review which was very accurate.
maybe they use peer review.
Mercurius and Andrew have both made the point more elegantly than I can.
Unfortunately the combination of pressures and incentives are strongly skewed towards certain (albeit very limited) investment vehicles.
I guess one issue is turning that around but it seems that this would involve some very unpopular measures (such as changing taxing arrangements for investment). Another thing I do think we could also do better in terms of government support is repeat the “proudly made in the USA” marketing which has proven reasonably successful over there (at least in promoting high-quality products). We do have an “Australian Made” push going on but it is very weakly supported by local business and government (with a few notable exceptions).
As a regular watcher of the ABC “New Inventors” program I do find it very frustrating and have actually looked a supporting/investing in some of the products but cannot find any information! It was purely by chance that one of my own suppliers turned out to be producing one these inventions commercially and was able to give me the details…I for one would be prepared to risk some money on something other than property. The trick is convincing those who are prepared to hand millions to Macqaurie Group to instead invest in something with greater long-term potential than more shops at Sydney Airport
Carbon sink
The RBA policy and the high dollar is going to decimate manufacturing; but what do you do. Australia’s resources are currently going into expanding mining.
As I have heard said before, if you want to know what the goldrush looked like, look around.
This selective investment ignores the fact that we have a community of diverse interests. Not every one wants to be or can be a miner. Yet everybody wants and needs to have a productive life. We need broad based research, development, and investment in most areas of endeavour, with the glaring exception of clean coal and carbon sequestration. But guess where the money is going. Down the carbon drain hole.
Brian @ 13: That’s why I said:
Which would be the preferred option at the moment to keep a lid on inflation.
For all those who say its just a problem of commercialisation and Aussie investors not willing to take enough risk, that’s only small part of the story. Speaking as one who has developed innovative products from scratch and sold them all over the world, I can tell you the big problem at the moment is the doubling of the $AUD since 2002. It doesn’t matter how fantastically innovative, and commercial-ready the product is, Australian companies simply cannot compete overseas with the dollar at 96c.
End of story. End of clever country.
19 carbonsink
Sorry - I’m not trying to be combative, but if Australian industry can’t survive due to the dollar, then isn’t that just a big clue that that industry isn’t viable here?
I think it’s quite possible that the whole ‘clever country’ is a bit of a myth anyway.
International competition requires international perspective, and I can see precious little evidence of that. I actually think that most Australian don’t realise how expensive life is here. We’re starting to get a few clues in the price of land, but that’s nothing compared to our cost of built infrastructure.
Have you read ‘Guns Germs and Steel - Jared Diamond’? The basic meme is that Europe developed faster than the rest of the world because basic life there was harder - you had to be innovative to survive. I suspect that’s not the case here at the moment - you just have to dig or build; it doesn’t really matter what, or how well.
As others have already suggested - reducing the structural incentives to dig and build would be a good start to providing some diversity and balance to our output is a better idea (IMO) than providing props in the way of hand-outs.
Please do not use some solar technology as an example of missed opportunity. The solar flux is
1 kW/m2 (roughly) end of story. No amount of fiddling with concentration type PV systems will alter this fact. Neither will they have any effect on the annual capacity factor which is about 12% in most reasonable solar regimes. (Annual Capacity Factor is the percentage of time that a generation system will generate 100% of its rated power in one year. End of story. (OK you might find a place on the surface of the globe where it is higher but check out its location).
Huggy.
Hey HuggeyB,
Quite true with the flux issue, however what these guys are saying is that they can capture all of that 1kw and deliver it to the edge of the glass sheet. Now the perimeter of the glas times the thickness is a lot less are than the flat surface of the glass. Key point? A lot less silicon, and silicon is the expensive bit. Further more there are silicon stacks that convert more of the light spectrum and are able to achieve up to 55% (I believe). But these are very expensive. So with the silicon area saving this technique could well bring the 55% efficient panels to below the 12% panels. Lost opportunities aside this is great news if it is indeed possible. This would bring PV out of the dark and into the light.
The problem isn’t that industry isn’t viable, the problem is we can make more money digging the place up and exporting it. Because digging the place up is so profitable our exchange rate is high, because our exchange rate is high secondary industry is stuffed, I really can’t see much of it surviving this time.
The other interesting point to note is that through the 50,60,70,80 and 90’s our terms of trade got worse, we imported manufactures and exported raw material. In the 00’s our terms of trade is going the other way. The secondary industries are getting very very competitive, the would needs more and more raw products.
I think the clever country metric to use is not what we build here, but the number of ex-pats we export. I don’t see the brain drain as a negative.
On that basis the thing we have to question is our inability to train enough teachers, doctors and nurses to support our needs.
huggy bunny
And your point is? Solar power innovations is about increased efficiency and reduced cost per sq meter.
Hey, combative is my middle name
Speaking personally, we could survive a 96c dollar, we could survive a U.S. recession, we could survive high interest rates, but its bloody hard to survive all three at once! What really p*sses me off if two of those things (high interest rates and the 96c dollar) have been inflicted on us by the RBA, simply because our dirt has become so valuable.
I had to lay off core engineers last month. Those very talented engineers are now out of work through no fault of their own. Those skills are now lost to my company forever. When (and if!) this infernal commodities boom ends I will have to rehire and retrain, delaying my ability to take advantage of the lower dollar.
I am in no doubt my story is being repeated around the country. IMO its a tragedy for Australia, but apart from my “tax the miners” idea (which will never be adopted under today’s economic orthodoxy) I don’t see a way out. Australia is destined to be little more than a quarry for Asia.
I think a lot of it is about critical mass. A couple of years ago I interviewed someone who claimed to have invented a piece for wind turbines that would make them produce more power for minimal extra cost. Of course I don’t know if there was some flaw that he wasn’t talking about, but he was from a reputable Uni with plenty of credentials so its unlikely he was just making this up.
He said the problem was that we don’t build wind turbines in Australia. So all the big wind manufacturers were only interested in his research if they could build the thing in Denmark or Germany or somewhere, and were generally interested in doing the further research where it would be built as well. No Australian firm wanted to touch it because they didn’t have the experience building similar things so it was too far out of their field of experience.
I haven’t heard anything about the idea since, which is not the best sign.
Stephen L, I think that sort of thing happens quite a lot. They talk about needing industry clusters.
Mercurious at 10 talked about the one in 10 ideas that brought the big returns. This is the problem of small investors getting into the field. It takes more than a good idea that is meeting an important need to make a successful enterprise. As a direct share investor I invested in a few startup companies that looked really good. The chances of getting burnt are just too high. For starters you need to have heaps of dosh to invest so that you can spread your risk. The venture capital industry, let alone small guys like me, lack the grunt to do the job properly.
Then you need to be closer to the operation to satisfy yourself not only of the worth of the idea, but the quality and competence of the people involved.
ominod, carbonsink was right in referring to the Dutch disease. There is a related concept known as the resource curse.
You’ll note that numerous studies, including one by Jeffrey Sachs and Andrew Warner have verified the phenomenon.
Stiglitz sees the Dutch disease as a version of the resource curse and gives some hints on how to avoid it. Principally, it seems, we should invest the profits overseas, which is what carbonsink and I have suggested.
Except that because we haven’t nationalised our resources industry it has to be tax rather than profits.
I think we’ve got a further problem in that the $A is seen as a resources currency by currency traders. So they gain exposure to resources booms by buying our dollar. There’s not much we can do about that because tariffs and subsidies are out of fashion. But it’s not only manufacturing. Tourism and agricultural exporters are similarly caned.
Brian [3]
Tanner for Ambassador-extraordinary and Minister-plenipotentiary to Belorus and Carr to Transdnistr then.
We cannot afford another Joh-For-PM-style blunder from either of them; one idiotic attack on the Australian economy is quite enough. They had better pack their woollies - winters over there can get very bitter.
As Voltaire said ” The English hang an Admiral from time to time …. to encourage the others”.
Interesting article, and even more interesting commentary.
This is my area of study, as it would happen, but it’s all the same arguments reiterated, not that that’s anyone here’s fault, more like the fault of successive Australian Governments and the failings of our commercial systems. Whenever Australia is mentioned in the literature on innovation systems the same words tend to pop up, things like “Primary Industry Dependence”, “Strong Innovative Capability”, “Weak Commercialization Capability”, “Picking Winners”, and “Fad Following”. It also tends to be another area where our constitution lets us down, apparently Mr. Barton was clear enough about Industry Policy being a state responsibility, but R&D and Innovation is not covered at all, so nearly every jurisdiction at every level of government has a go at Innovation Policy, so the words “Scatter-gun approach” would also be fairly apt.
All of this is a recipe for the type of mixed results we get, for every good story we have, there is an equally weighted bad one. Unfortunately, there are no easy answers, so I don’t hold out much hope of a political solution to the problem as every review of the system will compare against other nations and suggest complete emulation (See Fad Following & Picking Winners) without really addressing the bottleneck problem (Weak commercialization, skills shortages, barriers to innovation). On the loss of any one Innovation program, who knows; the funding is all good and well and should be re-invested quickly, but most of these programs barely scratch the surface of what is needed anyway, 6 months without one will only hurt existing participants who depended on the funding, as Brian pointed out. I’ll be watching in anticipation, but I have a feeling that the status quo will be back, but here’s hoping.
PinkyOz.
Brian and all:
“Venture capital” in Australia? That’s a joke. All we have here are the world’s worst squibs and squanderers – too fraidy-cat to take the plunge in anything [other than property or blue-chip shares] that might take a few years to show a good return – but always eager to to thrust money into the hands of high-flying con-men and grandious ratbags.
As the old saying goes
So let’s stop fooling ourselves that we have any astute investors at all who will take risks on innovative concepts and on businesses that work outside the square. Let’s use a carrot-and-stick approach instead : 99% stick and 1% carrot …. with generous tax relief and non-financial advantages for banks, superannuation funds and the like that make long-term investments in – and take real risks with – innovation. Have too, savage tax penalties and very oppressive regulations for those financial bodies that stubbornly refuse to invest at least 3% in innovation.
Conscription of capital? Yes! Interfering in the “market[?]”? My oath!
Forcing well-established institutions to be irresponsible and gambling with their shareholders’ and clients’ money? Now hang on – isn’t that what happens every time these institutions chuck money at one manifestly doomed scheme after another? Somebody should compile an Encyclopaedia of Australian Corporate Failures – it would sell like hot-cakes. What I am suggesting would be a LOWER risk activity instead – and one much more likely to benefit all of us.
Given Australia’s very costly and painful experience with rorts, swindles, middle-class-fiddles and shonky deals which very worthwhile programs such as the Training Guarantee and the National Employment & Training Scheme were allowed to become …. either a revived Commercial Ready or a new Investment In Innovation Program would have to be very tightly policed …. with entrapment and covert surveillance as part of the armory as well as mandatory imprisonment [in the general prison population!] for minor infringements.
Tough? Unreasonable? Outrageous? Of course …. but “businessmen[?]” – through their laziness, their cowardice, their foolishness, their wilful ignorance, their lack of vision – have only themselves to blame if people like me are now starting to think about radical and alternative ways of funding innovation.
Brian @ 28: Yes the paragraph on Lack of diversification and enclave effects in particular rings true for modern Australia:
See, that’s the thing. You can’t force investors into innovation, when its vastly more lucrative to invest in resources. I don’t think we can make it more lucrative to invest in innovation, but I think we can use the tax system to make it less lucrative to invest in resources.
Honestly, I don’t want any government handouts, or investment incentives. What I need is a currency that isn’t tied to the price of coal and iron ore.
This is (now) off-topic, but there is a nice description of that solar concentrator technology and a link to a video that explains it quite nicely.
Still looks a way off though.
Brian - rather than picking winners for programs to sponsor, perhaps it would be better to give big tax breaks to people investing in startups?
steve H - I agree that the problem is not core research but bringing it to market.
I once worked for a venture capital funded company (US based), and from what I understand the VC only expect 2-3% of their “bets” to succeed. But they expect those to do so well, they will compensate for the other failures and still get a really good return.
I suspect that the way we pillory businessmen who have companies which fail hurts us. From what I’ve heard VC will prefer to pick people who have previously failed with startups rather than those who have no experience at all as at least the failed ones have some experience in getting companies off the ground, even if its what not to do.
Chris, the last point you make is an interesting one. I’ve heard that also.
carbonsink & Brian
sorry for missing the link to Dutch disease - I hadn’t heard the concept referred to it as that before.
Again - the big solutions would appear to be political suicide at first glance.
Shocking, awful news. Especially since the yanks will never try to sell it to us!!11!1!
carbonsink @19, onimod @20: the clever country was an aspiration that has never in fact been realised, wasn’t it? Why perpetuate the myth that it is an achieved status?
The dutch disease frame is more accurate, and is a re-articulation of Donald Horne’s lucky country that is less prone to misinterpretation.
charles @ 23: “think the clever country metric to use is not what we build here, but the number of ex-pats we export. I don’t see the brain drain as a negative.”
I am shocked. I really hope that you are in a tiny minority. This country’s establishment really needs to figure out how to make the best use of all the brainpower that it has, and how the properly facilitate the flow from local ideas to local products to local industries, to keep the place as sustainable and comfortable as possible. It is currently very far from that ideal, and the last thing we need is acceptance that Driving Out The Pointyheads might be a Good Thing.
Eventually, transport costs will get so high that the Tyranny of Distance will increase our isolation again, and if all we have become by that point is braindead earth grubbers and agricultural serfs for whichever masters are running our quarries and farms, we will indeed be shafted.
Would you also regard driving our best athletes overseas as a good indicator of our sporting prowess, by any chance?
This is one of the rare times that I have such a different view of the world than LP posters.
Why do we have to keep beating ourselves up about not being able to turn Aussie ideas into Aussie-made, global dominating commercial successes? Has anyone noticed that there are only 20 million of us?
Now ideas are one thing, but commercialising them requires access to technology, capital and markets. Is it any surprise that Europe, US and (increasingly) China, with their hundreds of millions of people can put those things together better than us?
Is it really any surprise that Microsoft started in California rather than Bendigo?
And (whereever the sun shines out of) that solar technologies will be commercialised in China rather than Australia?
Even if you have the best solar technology idea in the world, its actually ridiculous, to me, to think that you could commercialise it in Australia. We’ve only got 20m people to generate the capitalists, and even more telling, we’ve only got a tiny market of 20m people to practice selling it to.
A capitalist in many Chinese cities can use the resources and market power of 20m people without even leaving town. Try doing that in Australia.
Not that there shouldn’t be some sort of support for innovation in things we might have some sort of advantage in - vis agriculture and mining, where we are actually significant on the world market.
PinkyOz,
would you care to briefly dot-point what you think should be in place?
I agree it’s an interesting topic.
The issue for me is not so much the business of ideas but ideas themselves in Australia - there is great resistance to new and innovative ones.
This country is full of people who repeatedly press the button at pedestrian lights to make them change faster. I suspect these people run our innovation policies.
Priceless.
Jacques, I’ll see your priceless and raise you.. umm… some kind of price.
Truly Roger, an inspired image.
New Zealand beckons then?
LiveWire @ 39:
Why do we have to keep beating ourselves up about not being able to turn Aussie ideas into Aussie-made, global dominating commercial successes? Has anyone noticed that there are only 20 million of us?
Why do we have to keep putting ourselves down on the grounds that we are so few/so far from everyone else, and use this as an excuse for not developing, diversifying, home-growing and exporting?
I remain amazed at how deeply so many Aussies are still conditioned into believing this. This country has been independent for a few decades, now.
Now ideas are one thing, but commercialising them requires access to technology, capital and markets .
Which are a few emails and a bit of freight away, potentially.
Is it any surprise that Europe, US and (increasingly) China, with their hundreds of millions of people can put those things together better than us?
Yes, because most of those people are not involved in the innovation or financing, and Europe in particular is hardly a monolithic entity, with its 50-odd languages, legal systems and ethnic identities.
Is it really any surprise that Microsoft started in California rather than Bendigo?
1. Microsoft was actually founded in Albequerque, New Mexico.
2. Why compare California with Bendigo? California is not a city of 80,000, but a state twice the area of Victoria, with a population of 36 million. Comparing California with Oz as a whole, on the other hand, is quite reasonable.
3. New Mexico is half the size of Victoria, with a population half the size of Melbourne.
Even if you have the best solar technology idea in the world, its actually ridiculous, to me, to think that you could commercialise it in Australia.</I.
How defeatist.
We’ve only got 20m people to generate the capitalists, and even more telling, we’ve only got a tiny market of 20m people to practice selling it to.
So we can’t use foreign capital? We can’t obtain any dollars for investment from all these goodies that foreign-owned mining companies keep taking out of the ground? And we can’t export products overseas?
With that attitude, the Swedes (population less than 9 million) would never have been able to sell Volvos or IKEA in Sweden, let alone Oz!
Not that there shouldn’t be some sort of support for innovation in things we might have some sort of advantage in - vis agriculture and mining, where we are actually significant on the world market.
You are contradicting yourself regarding sunshine, where we also have a huge natural advantage.
Chris [34]:
Hmmm. Thought it was a little bit higher - but still, you’ve worked for them ….
Bingo!! This is why the Land of The Fair Go, The Clever Country can never never never become truly clever - nor become sustainably prosperous. This is one of the reasons why our best and brightest flee overseas.
We reward the timid and the lazy. We punish the daring and the vigorous. The Clever Country? Pig’s what?
Time for a revolutionary change in attitudes …. or does everyone prefer living in the world’s quarry, brothel, dumping-ground and talent factory? .
Livewire, let me have a go at you also.
One of my favourite examples is the surfwear conpany Billabong.
The product range consists of 2,200 product lines in Australia, over 1,300 lines in America, and over 1,200 lines in Europe. Their products are sold in more than 100 countries by its directly controlled operations in Australia, New Zealand, North America, Europe, Japan and Brazil and through licensed operations and distributors in other regions.
Their 1750 staff produce an after tax profit of $175 million, that’s $100k for every staff member. I have no direct knowledge, but I’m betting that they make almost nothing here. Their real expertise is in brand management.
We actually have a number of world class companies. Cochlear, CSL, Resmed and Ansell come readily to mind. We lack brands with instant world recognition, like Nokia, Volvo etc. but then Denmark doesn’t own much apart from Lego and they do OK. I don’t know whether we still do, but we used to make the wheels for Harley Davidsons, because we were the best. We sell aluminium boats to the US Navy, but the joke is that they can’t use them at home because of the Jones Act.
It’s just that it doesn’t all add up to a positive balance of payments and debt is a bit of a worry (Alan Kohler said!)
So we need to do more high value smart stuff.
For some years now I believe there is a pattern of companies going global at the outset, which obviates the problem of a small home market.
Anyway, like Roger I wish PinkyOz would tell us what needs to be done if this is his/her field of study.
From Huggy Bunny.
Ok let’s assume that the maximum practical terrestrial efficiency for PV is about 30%. This amounts to 300W/m2 that would be good and say 4m2 on every rooftop would be useful. Now there are about 8 million homes on the East Coast of OZ
So this 1200W - call it 1 kW after losses,(leaf fall, birdshit, diversity etc) will generate 8GW at peak (solar noon) and contribute about the same energy as a 1GW coal fired plant (remember that the Annual Capacity Factor of PV is about 12%. However, while the 8GW PV is being fed into the grid about 20% of the conventional generation on the East Coast will have to be shut down - only to have to come back on again as soon as the solar peak has passed. This is not a plausible operating scenario, in fact it is impossible.
The short story is that for stability and other reasons the PV contribution can never exceed 10% of the total grid energy - most experts put it at about 5%.(BTW the present Current controlled Inverter technology is already unstable in parts of the world).
Add storage at each home and you have an entirely different story - about 8 kWh would do; then Solar and wind and all other intermittent sources could become the dominant generation source. You are looking in entirely the wrong place if you think that improving the efficiency of solar modules is important.
Huggy
Hi all,
Sorry about the late reply, I’ve been a bit on the busy side. Now as for a dot point list of things that can be done, well it’s not quite as easy as that. Fortunately, we have addressed some of the issues around our innovation culture already, and if you were a government ready to spend a little bit of cash, that’s where I’d start.
So we start with the cultural & environmental issues. Lack of available capital, weak links between research orgs and Business orgs, little incentive in commercializing technology due to high risk factors, highly competitive (to the point of being almost adversarial) and risk adverse businesses and small centralized populations with shortages of key skills. As Brian and Andyc pointed out population is an easy comparatively to the rest, thanks to modern technology and export grants. The other problems are a little more systemic, fortunately governments are responding to these to an extent, but for my money I would probably invest in ..
Strengthening research/industry links through formal ties between organisations (traditionally what we do) as well as building up informal links such as technology expo’s and freely distributed information on new breakthroughs between researchers and business, we do this to a certain extent, but the key here is to get business and researchers talking about the ‘next big thing’, the flow of information improves idea generation and better chances of success in commercializing technology.
Support for researchers/inventors that come up with new products in either selling their idea to an Australian company, or in establishing a new business. Once again, government does this, but there is a lack of awareness about it as well as a bit of apprehension about the bureaucracy and what it might do to the product, that’s a bit more difficult to combat, but word of mouth is best here, getting a strong success rate will help a lot.
The last one is the hardest, and the one government tend to do badly. Getting business to take risks and talk to each other. Now at some point or another you would have heard about “clusters”, its the big thing in the research. Think about the way Silicone Valley developed, with a range of competitors in the IT market coming together in a single area, sharing information about new breakthroughs and ultimately becoming more prosperous along the way. This is were criticisms of Australian governments come to head, we spend considerable amounts of money and time setting up clusters, say like the Brisbane Technology Park, and don’t get the same results. We have successes as well, like the Tasmanian shipbuilding cluster, but overall our governments always get swept away in whatever the latest trend in innovation policy is, and tends to miss the point completely.
This is because business here ‘doesn’t play well with others’; we have a very harsh business environment built on a relatively small number of consumers, so cannibalizing another companies market share is par for the course. For there to be success in endeavours like this, you must address that problem in particular, which means that in some cases government is going to need a strong mediator role between companies both in formal (chairing meetings, bringing like-minded companies together, negotiations on technology sharing) and informal linkages (innovation ‘portals’, networking events), the sooner you get the links moving information around the better.
Once you deal with these problems, working out where the grants and incentives go becomes a bit easier and you can start to build a strategy for innovation policy, which should lead to more and better results.
That’s where I’d start at least, it’s a bit summarised (yeah this is long, but there’s heaps more that can be done), but this covers the big issue problems, if only governments were willing to put the effort in the right places we might get somewhere.
PinkyOz
Huggybunny, I think you are saying essentially about PV solar what Robert Merkel has been telling us for ages. (He’s headed north to catch a bit of sun, BTW.)
But to be honest the solar story was a hook to raise the more general problem of innovation. Anyway thanks for your input.
PinkyOz, thanks also. On clusters, I recall reading some stuff a few years ago by Peter Brain’s outfit which used to do an annual report on the regions for local government (possibly still do). I seem to recall him stressing the importance of a mix of related skills in an area and the need for networking.
I don’t think HuggyBunny’s position on solar is the same as Robert Merkel’s. I may not entirely agree with Robert, but his position has some basis, Huggy’s does not.
“However, while the 8GW PV is being fed into the grid about 20% of the conventional generation on the East Coast will have to be shut down - only to have to come back on again as soon as the solar peak has passed. This is not a plausible operating scenario, in fact it is impossible.”
I believe it takes 15 minutes for a gas fired power station to be fired up in response to an increase in demand or a decrease in supply from other sources. There is no reason whatsoever why a low capital, high fuel-cost source like gas can’t be turned on when the sun goes down. Robert argues its not the best way to do things, and he may be right, but that’s different from saying it can’t be done.
Widely spread solar also has the advantage of smoothing things out a bit as well - when its cloudy in Melbourne it may well be sunny in Brisbane.
Robert’s right about one thing though - solar on the roofs of large buildings makes more economic sense than smaller systems on individual houses. However, there is no reason why this technology couldn’t be put on every factory, town hall and warehouse roof in Australia if it ever gets to commercialisation.
That seems to make sense, fs. Robert is the practical one around here.
They say that anywhere 150k in from the east coast in Oz is prime real estate for concentrated solar. So a network that ran north-south and east-west should have considerable flexibility and coverage. I recall Monbiot saying a in 2006 that most energy planners saw renewables going up to 20% OK and he assumed that this could be stretched further with time.
Meanwhile it’s just been pointed out that the dollar has hit 98c as we speak. That’s 98 frikkin cents! I remember about 2000 when it was around 50 cents economists saying that it was a once in a lifetime chance of curing our balance of payments problem. Of course we blew it. I say again it’s not just the manufacturers, it’s killing the farmers and the suppliers of services, including tourism.
Of course, to be fair, it’s the trade weighted index that really counts, which I think has gone from the low 50s to the mid 70s. It’s got to be a big problem, though.
Thanks for the engagement, Brian et al, its nice to have a bit of thinking going on…
Firstly, apologies if the California/Bendigo thing was a bit lazy, I was hoping you’d take my point.
(My whole comment suffered a little from my child’s afternoon nap being a bit shorter than I had hoped.)
On to whether I was contradicting myself about solar, I hope not. My point (if poorly made) was that no matter how much sunshine we have, the other advantages (re population, capital and markets) outweigh our wonderful climate.
Its getting late so I wont try to cover every point - lest I make another lazy argument, but I did want to say I love it that Australia exports its surf culture overseas. I would hope you would agree, though, that boardshorts are a pretty different level of difficulty of commercialisation than solar panels and their ilk?
In particular, I’d expect that the amounts of government funding of such things are way smaller than what you seem to be asking for.
While I’d love it if we had endless resources to poor into such things, the reality is that we have to be very selective, and I would suggest there are more profitable investments of taxpayer funds than chasing an Aussie-made solar miracle.
Once we’ve done a few of them, there might be some money left to buy some cheap solar technology from the Chinese.
Not necessarily solar, but something. If we accept that our national debt is too high and the balance of payments should be nearer par, we’ve got to export more things, services or even ideas (remember Orbital, which made money out of selling intellectual property in the form of auto technology know-how and was never going to be able to manufacture an orbital engine and flog it off).
The only other alternative is to save and to buy businesses, or stakes in businesses overseas to repatriate the dividends. We’ve mentioned sovereign wealth funds. The other big one is super. I suspect we’d be better placed if PJK had been able to pull the levers for another term and super had gone to 15%.
Brian,
Good point, there is plenty of research on skill sets and the viability of clusters, but it’s a bit of a catch 22. Skilled Australian workers aren’t finding the positions they need here, and are taking up better positions overseas (Brain Drain) which in turn leads to weaker cluster activity, which slows the growth of the number of skilled positions on offer.
It’s an economy of scale problem, but we can look to India for possible solutions. If we can convince companies to set up shop and graduates to study particular fields, we could market employees in that field as moderately priced and High Quality, which could become a base for a stronger Industry sector and in turn better ability to capitalize on innovation, but it requires a certain investment of resources and time (Best-practice university courses taking high-attaining students, advertising campaigns) to get working, but it might be a worthwhile investment.
Some of the Smart State Initiatives focus in on that theme, mainly around biotechnology industries, but there is a missing link in education, considerably more funding would be required to encourage more and better candidates into those positions, not helped by a mixed jurisdiction problem (State based policy, but the graduates will be created by Federally controlled universities), and while there is some incentive/funding to improve courses, no federal government is going to give up extended funding to a single state, knowing that the other states will be in line to either criticize or ask where their share is.
I think I might be running a theme here, a lot of problems we have in innovation are our own doing, virtually all our corporate and government organizations are in a perpetual state of war over a scarce number of resources, leading to very guarded and adversarial relationships which the lit tells us is counter-productive in innovative capacity.
PinkyOz
There’s another aspect to this. I believe that all things being equal being Asian ethnically reduces your chance of getting a job. (I hope I’m wrong). Whereas we should be capitalising on the language skills and cultural understanding of that segment of our population.
Brian,
Hmmm… Not sure about that, starting to fall out of my research area. I guess it’s not unreasonable to think that that might be happening, due to language/cultural barriers and underlying levels of racism but I have a feeling that it might be a bit hard to measure and not well covered in the lit (Think about it, a management researcher going to a large organisation asking for access to recruitment records to check if management is screening on race, which is both morally objectionable and illegal).
As for value, well you could be right there, but the innovation gains probably start to become a bit more defined, Multi-lingual people with an understanding of local cultures in foreign countries would be prime targets for support in finding export markets for new products, and relaying new ideas back, but its a bit harder to tell. There is still a lot of researchers out there that are going down the narrowing (local) focus rather then a broad (global) focus in understanding innovation.
PinkyOz
Brian - I’m rather curious as to why you think this. I don’t think this is true for white collar jobs. Can’t really say for blue collar jobs. In most places in Australia I think racism against Asians is generally very subtle.
Chris, It’s a bit too long ago, but within the last year or two, to remember where I picked that up. Possibly it was on Radio National, an article in the Fin Review or BRW. As usual it was given as received knowledge and there was no opportunity to see what survey was done or the methodology on which it was based.
I was hoping that someone here might know more.
There was a further element that I recall. It was said that in employing Asians especially to work in Asian countries, their loyalty was not trusted. Companies seemed to feel more comfortable with having ‘ordinary’ Australians bumbling around, or not as the case may be.
If true, it’s a worry, but I simply don’t know.
PinkyOz, an alternative approach would be to survey job seekers. I think it would be difficult to screen out other factors, though, to ensure you were comparing like with like.
I don’t know the reasons behind it, but I have noticed an unusually high percentage of ex-pats from western countries at management levels in asian countries. I think in the past I’d assumed it was the remnants of colonialism. Or maybe its just that white people stick out more in asian countries so you notice them more.
Brian @ 53:
Brian that’s simply not going to happen when every day imports become cheaper, and Aussie exports become less competitive overseas.
Its the dollar stupid!
Oh BTW, has anyone noticed that the balance of payments, current account and trade deficits, have become a total non-issue in recent years? Does anyone remember Costello’s debt truck? Nope, didn’t think so.
Absolutely I do. Costello would say that he did his bit by solving the Beazley black hole. There were three things wrong with that story. It wasn’t black, it wasn’t a hole of any significance and it wasn’t Beazley’s. What’s more it made the debt funding of necessary infrastructure politically impossible for more than a decade.
But magically debt for consumption doesn’t seem to be a worry to some of the political class, and those for whom it is a worry aren’t talking about it.