We haven’t seen it since the Industrial Revolution; however once again, although technological capacity increases have led to increased productivity, they have not necessarily resulted in the average income and employment.
We cannot ignore that the nature of manufacturing is changing thanks to the development of 3-D printing and robotics. The challenge is to make use of these advantages in ways that, instead of shrinking wealth and jobs, they generate them.
In addition, as Glenn Stevens (governor of the Reserve Bank) has warned repeatedly, focus needs to be placed on accelerating growth in the non-mining sectors.
Two reminders of this have come up recently in the steep fall in the iron ore price, and the introduction of the Global Innovation Index. This demonstrates that although there has been improvement, Australia continues to lag behind OECD countries when it comes to providing an innovative environment.
Both of these examples are significant signs towards the future of Australia’s economic framework.
In order to secure an economic future for this country, we need to find ways to ensure that other sectors, beside mining, are able to flourish, particularly the manufacturing sector.
Accounting for nearly a quarter of all business expenditure on research and development, manufacturing in Australia employs almost a million people. This sector is both the fourth largest contributor to our gross domestic product and the fourth largest employer in the country.
Manufacturing industries contribute triple the the industry value added by fishing, forestry and agriculture combined.
Australia’s economic circumstances are ignored in the debate around whether the country needs a manufacturing industry. Australia will continue to be at the mercy of fluctuating commodity prices without its own strong manufacturing sector. The answer is to build an economic base that is as diverse as possible, and focus on innovation.
An innovation agenda is a crucial inclusion in the economic framework of any 21st-century government. In order to boost innovation in Australia, there are a range of measures that need to be taken, including considering the possibilities of crowd-funding and entrepreneur’s visa, as well as sectoral approaches.
It is important to clarify that a national innovation agenda does not mean awarding subsidies to companies with no consideration for their performance; it means providing companies with a strong incentive that will motivate them to become more competitive and innovative. This will give Australian companies a competitive advantage worldwide as international governments bring in policies that are designed to attract new investment while building new capabilities and maintaining vital industries.
In addition to this, there is recognition worldwide that developing capabilities in technology, mathematics, engineering and science is key to growth; yet, despite this, the Australian government is proposing to shift the cost of degrees in these subjects to the the students instead of increasing their public investment in STEM as other countries are doing.
Although Australia is ranked 17th in the Global Innovation Index, out of the 143 economics measured, we are ranked at 73 for the percentage of the population who are engineering and science graduates.