Paul Wallbank – Brilliant Communications

Tag: government

  • Australia in the Asian Century – Chapter Six: Building capabilities

    Australia in the Asian Century – Chapter Six: Building capabilities

    This post is one of the series of articles on the Australia in the Asian Century report.

    Of all the chapters in the Australia in Asian Century discussion paper, Chapter Six has probably attracted the most opprobrium because of the fine words which haven’t been matched by government policy and action.

    Parts of this chapter have a strong “school marm” tone as it tries to mandate the composition of company boards or the locations of where students will study. Overall though, most of the objectives are either motherhood statements, impractical or at odds with the actions of both state and Federal governments.

    National objective 9. To build the capabilities of Australian students, Australia’s school system will be in the top five schooling systems in the world, delivering excellent outcomes for all students of all backgrounds, and systematically improving performance over time.

    • By 2025, Australia will be ranked as a top five country in the world for the performance of our students in reading, science and mathematics literacy and for providing our children with a high?quality and high?equity education system.
    • By 2015, 90 per cent of young Australians aged 20 to 24 years will have a Year 12 or equivalent qualification, up from 86 per cent in 2010.
    While these objectives are worthy, there’s little discussion of exactly how this will be achieved beyond broad statements. Again it’s notable that these aspirations are being laid out at a time when funding is being cut and staff retrenched in both state and Federal government education departments.

    National objective 10. Every Australian student will have significant exposure to studies of Asia across the curriculum to increase their cultural knowledge and skills and enable them to be active in the region. All schools will engage with at least one school in Asia to support the teaching of a priority Asian language, including through increased use of the National Broadband Network.

    Says who? Who exactly is going to force a school to engage with at least one school in Asia? These are the sort of broad brush statements that detract from the report.

    These kind of statements are the “thought bubble” approach to policy that marks much of what passes for governance in Australia today and such poorly thought out programs end up at best wasting money. At worst, the unintended consequences of a ‘policy’ thought up on the back of beer mat end up causing more damage than good.

    Such a program could work well if properly thought out and integrated properly into the long term curriculum of the students but it would take proper leadership from state and Federal education ministers.

    National objective 12. All students will have access to at least one priority Asian language; these will be Chinese (Mandarin), Hindi, Indonesian and Japanese.

    This is good and fair, but is something that was supposed to have been put in place thirty years ago. Instead the proportions of students studying Asian languages has steadily dropped.

    As newspapers have reported there are barely a dozen Hindi language teachers in New South Wales, so the priority needs to be training teachers to deliver the courses.

    Such inconvenient logistical problems are an excellent example of those well meaning but poorly thought through “thought bubbles.”

    National objective 12. Australia will remain among the world’s best for research and teaching in universities, delivering excellent outcomes for a larger number of Australian students, attracting the best academics and students from around the world and strengthening links between Australia and the region.

    • By 2020, 20 per cent of undergraduate higher education enrolments will be people from low socioeconomic backgrounds, up from 17 per cent in 2011.
    • By 2025, 40 per cent of all 25 to 34?year?olds will hold a qualification at bachelor level or above, up from 35 per cent in 2011.
    • By 2025, 10 of Australia’s universities will be in the world’s top 100.
    • A larger number of Australian university students will be studying overseas and a greater proportion will be undertaking part of their degree in Asia.
    This objective really smacks of poorly thought out ideas on the run and illustrates starkly the differences between the well meaning objectives and the behaviour of governments.
    It’s almost impossible for ten of Australia’s universities to make it into the more reputable measure of top 100 universities when for the last three decades research and post graduate programs have been slowly strangled by falling government funding.
    Even if a Gillard government were to change that trend, it’s unlikely Australian universities could make up the lost ground in 13 years.
    Mandating that “a larger number of Australian university students will be studying overseas and a greater proportion will be undertaking part of their degree in Asia” is nice but who is going to force students to study overseas and specifically in Asia?
    More to the point, what are notoriously conservative Australian employers going to do with all these graduates of Asian universities?

    National objective 13. Australia will have vocational education and training systems that are among the world’s best, building capability in the region and supporting a highly skilled Australian workforce able to continuously develop its capabilities.

    • By 2020, more than three?quarters of working?age Australians will have an entry?level qualification (at Certificate III level or higher), up from just under half in 2009.
    • Australia’s vocational education and training institutions will have substantially expanded services in more nations in the region, building the productive capacity of the workforce of these nations and supporting Australian businesses and workers to have a greater presence in Asian markets.
    Given the week before the Gillard government cut apprenticeship funding and the NSW government announced it was further emasculating its state TAFE system a few days after the report was released, this objective can be treated purely empty words.

    Business capacity

    One of the reasons why Australia engaged so little with Asia over the last twenty five years is because the business community became focused inwards rather looking for opportunities in foreign markets. So the idea of getting more Asian experience into boardrooms is laudable but the solutions proposed impractical.

    National objective 14. Decision makers in Australian businesses, parliaments, national institutions (including the Australian Public Service and national cultural institutions) and advisory forums across the community will have deeper knowledge and expertise of countries in our region and have a greater capacity to integrate domestic and international issues.

    • One?third of board members of Australia’s top 200 publicly listed companies and Commonwealth bodies (including companies, authorities, agencies and commissions) will have deep experience in and knowledge of Asia.
    • One?third of the senior leadership of the Australian Public Service (APS 200) will have deep experience in and knowledge of Asia.
    This objective has drawn a lot of scorn from the business community and for good reason – how is a Federal government going to mandate that a third of the ASX200 will have “deep experience and knowledge of Asia”?
    While the aim of having a third of the senior public service possessing Asian experience is worthy, this is almost impossible given the deadline for this is thirteen years away, any bureaucrat hoping to have “deep experience and knowledge of Asia” would have had to have been working on it for the last five or ten years. If this program isn’t in place now, it isn’t going to happen.

    Society

    Probably the biggest strength of Australia as a nation is in its diverse and relatively tolerant society so this section of the report is notable for what it misses in opportunities.

    National objective 15. Australian communities and regions will benefit from structural changes in the economy and seize the new opportunities emerging in the Asian century.

    Another worthy aim and its notable that the region cited in the case study is Darwin, a city whose economy is being wildly distorted by the LNG boom which is driving up prices and labour costs. If anything Darwin is an example of Australia turning its back on opportunities and focusing on a quick, resources driven buck.

    National objective 16. By preserving and building on our social foundations, Australia will be a higher skill, higher wage economy with a fair, multicultural and cohesive society and a growing population, and all Australians will be able to benefit from, and participate in, Australia’s growing prosperity and engagement in Asia.

    Cant and motherhood statements as one would hope all government seek to build a fair and cohesive society on our social foundations. It’s interesting that much of the poorly thought out, short term tactics by publicity hungry politicians probably does more to damage Australia’s institutions than other factors.

    Overall this chapter deserves to have drawn the most criticism with its motherhood statements and wholly unachievable aims.

    Most disappointingly, it skates over Australia’s diverse workforce and provides no ideas on how to harness the talents of the country’s ethnic groups in building ties and improving the nation’s skills.

    Image of the Harbin Snow and Ice Festival from EmmaJG on Flickr

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  • Australia in the Asian Century – Chapter Two: The future of Asia

    Australia in the Asian Century – Chapter Two: The future of Asia

    This post is one of the series of articles on the Australia in the Asian Century report. An initial overview of the report is at Australian Hubris in the Asian Century.

    “Asia’s economic resurgence is set to continue” is the bold statement at the beginning of Chapter Two of the Australia in the Asian Century report and with that the chapter immediately falls back to warm motherhood statements;

    Average living standards are set to improve dramatically and transform the way people live and work. Asia’s economies are projected to expand at a strong rate. The region’s expansion and development will change the contours of Asia and the globe—opening up exciting new opportunities, while also posing some challenges.

    All of this is true, however the report struggles to identify exactly what those challenges and opportunities are as Asia develops and where Australians fit into the region’s evolving economy.

    Demographics will matter, but they are not destiny

    The constant mantra through the report is “demographics will matter, but they are not destiny.” Yet, despite the headline, Chapter Two illustrates that so far it has been destiny.

    Graph 2.6 of the report shows how Japan’s, and now South Korea’s, productivity has tailed off as the population has aged. This is to be expected when economic expansion has been based on labour intensive manufacturing, as China’s is today.

    Frustratingly, the report acknowledges this with the following paragraph;

    But the fruits of adopting new technology and adapting it will become harder to harvest. A point will come, though it’s still some way off, where the growth of labour productivity in developing Asian economies will slow—opportunities for gains from importing foreign technology and for shifting workers from agriculture to industry will diminish.

    “Some point in the future” doesn’t wash when the rest of the chapter shows off various ‘firm’ numbers estimating ‘base’, ‘low’ and ‘high’ growth rates. If you can quantify those growth assumptions, then it should be fairly trivial to estimate the turning point where aging populations start to affect China.

    Luckily others have done this work, the Australian Macrobusiness site suggests that turning point could be as early as 2015. In which case, unlike Japan and South Korea, China will have got old before it got rich.

    If this true, then IMF’s projected growth rates will miss their targets – particularly the ‘low growth’ scenario which is almost identical to their ‘base scenario’.

    Rise of the middle class

    Much of the emphasis in this view of Asia’s development is on the rise of the middle class and the report features a case study of Hitesh, a middle class stockbroker in Ahmedabad.

    While there’s no doubt Hitesh and his family’s income and standard of living are rising, the idea that several hundred million Indian and Chinese will jump to European or North American income levels before 2025 is improbable.

    Most stockbrokers in New York, London or Sydney earn between 30 and 300 times Hitesh’s $5,000 a year and in 2010, average Chinese income was a tenth of the US.

    Even if the Indian and Chinese middle classes did manage a tenfold growth in income over the next decade, the assumption they would adopt the debt driven high consumption patterns of the US or Australia isn’t a given as we see in how the Japanese middle classes haven’t aped the spending behaviour of their profligate Western friends.

    The credit and banking points in this chapter illustrate the hubris mentioned in my original overview of Australia in the Asian Century.

    And with financial systems in advanced economies unwinding the high debt levels built up before the Global Financial Crisis, financial institutions in stronger economic positions, such as those in Australia and elsewhere in the Asian region, will have opportunities to expand into new markets.

    Given the dire records of Australian banks in expanding overseas along with the “stronger economic position” being due more to government guarantees during the GFC and the desperate political desire to prop up Australia’s property market at all costs, it’s difficult to see exactly what Australian institutions have to offer Asian savers except to further underwrite the never ending down under housing bubble.

    Chapter two of the Australia in the Asian Century report finishes with an overview of the current geopolitical situation which is notable more for what has been left out. This is again probably due to Canberra public service politics and the report suffers for it.

    One major region left out is Central Asia and Russia – outstanding given the report’s view  that a resource poor Asia (that Japanese assumption again) will need Australia to fuel its energy and resources needs – which ignores the construction of pipelines and railways to China and India.

    Also missed are the projects to upgrade China’s railway and road links to Europe and Central Asia. These in themselves may trigger major geopolitical changes over the next few years, as we’re seeing today in Tibet and Xinjiang after railways were built to Kashgar to Lhasa. Yet none of this is considered.

    Not the ‘Stans should feel aggrieved, like the rest of the report the emphasis is on China and India with scant mention of other Asian countries.

    For Australia, much of the hope in the report seems to be in providing raw materials for Asia’s industrialising and urbanising societies along with being a holiday destination and education provider. This is all lazy 1980s thinking which projects Australia’s Japanese experience of thirty years ago onto China and India today.

    The predictions of Asia’s future in the Australia in the Asian Century report are largely are a continuation of the status quo. If this report had been written in 1960, it may have picked the rise of Japan over the following twenty years but the main focus would have been on Burma as Asia’s richest independent country.

    Exacerbating the report’s weakness are the assumptions that development paths will follow the same course as Japan, Taiwan or South Korea in the late 20th Century.

    Development wasn’t a smooth path in all three of those countries and each had their own unique political and economic upheavals in that time, the failure to recognise that similar disruptions will happen in Asia’s emerging economies as they develop is probably the greatest weakness in the entire report.

    It’s very easy to draw straight lines on graphs based on ‘best case’ IMF projections but history is rarely linear. This is probably the greatest intellectual failing of the white paper.

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  • Australian Hubris in the Asian Century

    Australian Hubris in the Asian Century

    This post is one of the series of articles on the Australia in the Asian Century report.

    The release of the Australia in the Asian Century discussion paper today raises the question of where the country sees itself and where it is going. It lets us down on many levels.

    While there’s a lot more to discuss in the paper, which I’ll do over the next few days, there’s a few issues that come to mind on first reading.

    The reliance on mining

    A constant  in the discussion about Australia’s future is the continued mining boom. This was the underlying theme of Monday’s Mid-Year Economic Outlook and is also the case in the Asian Century paper. Here’s chart 4.4.2 from the document which shows the forecast makeup of Australia’s exports.

    Today mining exports are shown as being just over 50% of Australia’s trade with Asia and have mineral income growing to well over 60% of trade by 2025.

    What is frightening about this is the belief across Australia’s political and business leaders that the mining boom is here to stay and will continue to keep growing.

    Little risk analysis

    Also notable about the report is how little acknowledgement of risk there is in the document. Most of the risks are dismissed in six paragraphs in Chapter 4.4

    Geopolitical risk does get its own chapter, but even there most of the challenges are glossed over. Eventually most of the risks are dismissed with this line.

    None of these developments of themselves make major power conflict likely—in some important ways they will probably act as a constraint. All the major powers recognise how interdependent their economic interests are.

    This is reminiscent of the line used in the late 1980s – “no two countries with a McDonalds have ever gone to war against each other.” A glib nonsense which ceased to be true when NATO attacked Serbia in an effort to stop the massacres of the Yugoslavian disintegration.

    Trivialising the big risks

    Had anyone predicted in 1986 that within five years, there would be a bloody civil war in Yugoslavia, the Eastern Bloc collapse and the Russian Empire’s eagle replace the hammer and sickle on the Kremlin they would have been dismissed as fools.

    Yet that is exactly what happened.

    The risk of instability within the People’s Republic of China isn’t mentioned or even the effects of what a collapse of North Korea would mean to South Korea – another key Australian mineral market – both of which would have massive effects on Australia’s export markets over the next decade.

    While I’m certainly not forecasting the collapse of either the DPRK or the Communist Party of China in the near future, these are massive risks to any plan which purports to look at the next decade. Ignoring them or trivialising them does not help the paper’s credibility.

    Australian hubris

    Most notable in the white paper is the tone of Australian Exceptionalism through the commentary. In the Prime Minister’s speech she said “we are the nation that stared down the economic crisis.”

    Calling massive stimulus packages, reinflating the property market and guaranteeing bank liabilities is hardly ‘staring down’. Australia’s avoiding going to into recession after the 2008 crisis was due to the “go early, go hard” philosophy of pumping money into the economy which was learned by Australia’s bureaucrats in the 1990s recession.

    That policy worked to stave off recessions during the Asian currency crisis of 1998, the Long Term Credit Bank collapse and the post September 11 uncertainty. It worked on massive scale during the post-Lehmann Brothers collapse.

    Crediting Australia with some sort of miracle economy is hubris on a grand scale and hardly the basis for developing a sensible plan to guide us through the next decade.

    What is Australia’s competitive advantage?

    Essential to understanding where the nation can prosper from the rise of Asian economies is where our current strengths lie. Apart from empty phrases on “skilled workforces” and “new opportunities will emerge in manufacturing” there’s no explanation of exactly where Australia can profit from these.

    In fact most of the case studies refer to Australian companies outsourcing or Asian trading patterns that really don’t need any skilled or valued added contribution at all, a case in point is the story of ‘Hitesh’, one of India’s rising middle class.

    Hitesh, 31, is a stockbroker in a firm that he opened with his friend several years ago. He brings in an annual income of US$5,280, placing his family squarely in the middle of Ahmedabad’s middle class.

    Nowhere does the case study explain exactly what Australia can offer him – the air conditioners and cars certainly won’t be made or designed in Australia and his daughters’ educations in 2025 might well come through the internet from MIT or the London School of Economics instead of them flying to Melbourne to drive taxis and do barista courses in the hope of getting Australian permanent residency.

    In fact if anything, it’s difficult to see why an Asian company would choose to do business with an Australian stockbroker when they earn thirty to a hundred times more than Hitesh.

    1980s thinking

    Much of what is in the white paper is what we’ve heard before in the 1980s – back then it was Yuske in Nagoya who was going to buy our wine and come to the Gold Coast for holidays.

    There’s nothing in the projections we haven’t heard before, except today we’ve squandered two decades of opportunity by ramping up our property markets and building an unsustainable middle class welfare state.

    Sometime in the 1990s – possibly around the time of John Howard’s election – Australia turned inwards and insular. We had the opportunity  to position Australia as a credible mid-level power in the region but we chose instead to renovate our kitchens.

    That opportunity has been lost and repeating the mantras of the 1980s with the words ‘China’ and ‘Chinese’ substituted for ‘Japan’ and ‘Japanese’ won’t cut it.

    Australia in the Asian Century was an opportunity to show some vision and stake a claim on sharing some of the 21st Century’s riches. Instead the writers chose to give us platitudes underpinned by the certainties of a never ending economic boom.

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  • Building new technological Jerusalems

    Building new technological Jerusalems

    A Telegraph profile of Joanna Shields, the incoming Chief Executive of London’s Tech City Investment Organisation, is an interesting view of how we see economic development and the route to building the industrial centres of the future. Much of that view is distorted by the ideologies of our times.

    London’s Tech City is a brave project and somewhat reminiscent of future British Prime Minister Harold Wilson’s 1963 proclamation about the UK’s future lying in harnessing the “white heat of technology.” From Dictionary.com;

    “We are redefining and we are restating our socialism in terms of the scientific revolution…. The Britain that is going to be forged in the white heat of this revolution will be no place for restrictive practices or outdated methods on either side of industry.”

    Fifty years later a notable part of Wilson’s speech is the use of the word “socialism” – the very thought of a mainstream politician using the “s-word” today and being elected shortly afterwards is unthinkable.

    Today the ideology is somewhat different – much of Tech City’s objectives are around aping the models of Ireland and Silicon Valley – which in itself is accepting the failed beliefs of our times.

    Based around London’s “Silicon Roundabout” – a term reminding those of us of a certain age of a childhood TV series – the heart of the Tech City strategy lies the tax incentives used by the Irish to build the “Celtic Tiger” of the 1990s and government investment funds to create an entrepreneurial hub similar to Silicon Valley, something also done in Dublin with the Digital Hub.

    It’s hard not to think that copying these models is a flawed strategy – Silicon Valley is the result of four generations of technology investment by the United States military which is beyond the resources of the British government, and probably beyond today’s cash strapped US government, while the Celtic Tiger today lies wounded in the rubble of Ireland’s over leveraged economy.

    At the core of both Silicon Valley’s startup culture and Ireland’s corporate incentives are the ideologies of the 1980s which celebrates a hairy-chested Ayn Rand type individualism while at the same time perversely relying upon government spending. Ultimately failure is not an option as governments will step in to guarantee investment returns and management bonuses.

    Just up the M1 and M6 from London’s Silicon Roundabout are the remains of what were the Silicon Valleys of the eighteenth and nineteenth centuries.

    The manufacturing industries of the English Midlands or the woollen mills of Yorkshire revolutionised the global societies of their times. These were built by individuals and investors who knew they could be ruined by a poor investment and managers who retired to the parlour with a pistol if the enterprise they were trusted to run failed.

    Today’s investment attraction ideologies – tax discounts to big corporations and grants to entrepreneurs – are in a touching way not dissimilar to Harold Wilson’s 1960s belief in socialism.

    At the time of Wilson’s 1963 speech China and much of the communist world were showing that socialism, with its failed Five Year Plans and Great Leaps Forward of the 1950s, was not the answer for countries wanting to harness the “white heat of technology.”

    Similarly today’s Corporatist model of massive government support of ‘too big to fail’ corporations is just as much a failed ideology, like the socialists of the mid 1960s had their world views had been framed in the depression of the 193os, today’s leaders are blinded by their beliefs that were shaped by the freewheeling 1980s.

    Whether the next Silicon Valley will be in London, or somewhere like Nairobi or Tashkent, it probably won’t be born out of a centrally planned government initiative born out of the certainties of Margaret Thatcher or Ronald Reagan anymore than the 1960s technological revolution was born out of Karl Marx or Josef Engels.

    Silicon Valley itself was the happy unintended consequence of the Cold War and the Space Race, which we reap the benefits of today.

    Every ideology creates its own set of unintended consequences, those created by today’s beliefs will be just as surprising to us as punk rockers were to the aging Harold Wilson.

    Maybe Tech City will help Britain will do better at this attempt to regain its position as global economic powerhouse, but you can’t help thinking that economic salvation might come from some West Indian or Sikh kid working out of a storage unit in Warrington than a bunch of white middle class guys celebrating a government grant over a glass of Bolly in Shoreditch.

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  • Closed data doors

    Closed data doors

    “Sydney now joins global cities including London, New York and Hong Kong that also have public transport on Google Maps” boasted Gladys Berejiklian, New South Wales minister for transport, last week that Sydney’s complex and confusing public transport system will now appear Google’s mapping service.

    The minister neglected to mention the other 400 cities that already offer this service including Perth, Adelaide and Canberra in Australia. What’s more concerning is the attitude of public servants and governments towards access to what should be freely available data.

    It’s difficult to think of anything less innocuous than public transport timetables yet access to the data is carefully guarded by most Australian governments under the claim of ‘Crown Copyright’.

    Underlying the idea of Crown Copyright is all the information held by governments is the property of the state – or the monarch in Australia – rather than belonging to the people. This is a great example of governments and the law living in the 18th Century which gives a modern perspective of what the US founding fathers were thinking of when they wrote their constitution in 1787.

    This refusal to make data available is not the attitude of any single government, the Victorian government notoriously refused access to fire information during the tragic 2009 bushfires and Google are still negotiating to add Melbourne’s public transport information to the Maps service.

    ‘Open Data’ is a concept that many agencies pay lip service to, as do many politicians while they aren’t in government, but in practice information is a precious resource which should be hoarded and hidden.

    In the public service itself, information is power – your position and status with an agency is directly proportional to the knowledge you possess and the contacts you can hoard. This attitude spills over into the way services are delivered, or not as the case may be.

    For startup businesses, this hoarding of data hurts local industry – with transport timetables application developers have to negotiate on a case by case basis for data access meaning that only big companies with plenty of resources are able to get hold of the information.

    The tragedy is government are trying to encourage smaller developers and startups. New South Wales had its Mobile Concierge program but these well meaning initiatives fall down when agencies won’t open their data.

    It’s time to scrap the idea of Crown Copyright and the philosophy that all government data is the property of the public service, or the monarch of the day. Certainly there are plenty of areas where it isn’t in the public interest to release confidential information but bus timetables are not one of those areas and there are plenty of laws already in place to protect that sensitive data.

    Like many things in our political and legal sectors, thinking is stuck not in the 1980s but in the 1780s. Maybe it’s time to grab our politicians and their learned lawyer friends and drag them by their horse haired wigs into the 21st Century.

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