Australia dumbs down?

29 May 2015


  Australia is betting on plumbers and coffee-shop owners over scientists and researchers to drive the nation’s next wave of economic growth, writes Michael Heath in BloombergBusiness.



The country that brought you refrigerators, black-box flight recorders, bionic ears and Wi-Fi will cut its research budget by 7 percent over the next 12 months, and another 10% in the following three years. At the same time it’s offering tax cuts and write-offs in this year’s budget for small firms to buy equipment like espresso machines and lawnmowers as the centerpiece of a plan to build a “stronger and more prosperous Australia.”

The government is reducing spending in the face of budget shortfalls after a 30% drop in commodity prices in 12 months and an end to the country’s mining investment boom. Helping small businesses to pick up some of the slack has lifted consumer confidence to its highest in 16 months and boosted shares of retailers like Harvey Norman Holdings Ltd. and JB Hi-Fi Ltd.

“Having this reliance on the bottom end of the economy, like small businesses, is a short-term fix,” said Andrew Hughes, a lecturer at the College of Business and Economics at Australian National University. “Cutting back on research is insanity.”

Counting on Calculators

Every country in the Organisation for Economic Cooperation and Development bar Australia has a plan to grow its scientific enterprise to help transition into technology, innovation and development, Chief Scientist Ian Chubb said.

“For 20 years, we have presided over declining levels of participation in science and mathematics” while the country assured itself that students will be fine with calculators, Chubb wrote this month in an article on his website. “I think about the sort of jobs a child in school today might want to do in 10, 20, 50 years. And I wonder, which of those jobs will not require an understanding of science?”

Australian school students underperform in science and mathematics tests compared with every other high-income economy in Asia apart from New Zealand, according to a report issued this month by the 34-nation OECD.

“We’re already losing our power in the brains market because we’re up against China, India, Japan and South Korea who spend so much more on research and development,” Hughes said. “We need to think long-term.”

Global Innovation

Industry and Science Minister Ian Macfarlane in March said the country ranked 81st out of 143 in a global innovation efficiency measure, putting it “close to average in turning ideas to our advantage.” The government is spending about A$9 billion ($7 billion) a year on science in what is “a conservative financial environment,” he said.

Prime Minister Tony Abbott said Tuesday the government had nine new science and research priorities and would work with universities and industry to identify projects.

“We have finite resources and need to be strategic in how we invest,” he said in a statement.

Researcher Danielle Edwards turned down a A$385,000 research grant in Australia because she saw little prospect of further employment in her native country.

“Australia has become a world-leader already in many scientific fields due to tremendous talent,” said Edwards, 37, an evolutionary biologist in California. “It is losing that talent through a lack of investment. Many of my friends have either left science or the country.”

The government needs to reverse job cuts to its national science agency, the Commonwealth Scientific and Industrial Research Organisation, and provide better investment in science to help future productivity, she said.

Black Box, Wi-Fi

From the time James Harrison built the world’s first practical, commercial refrigerator in 1854, to the invention in the 1990s of Wi-Fi by John O’Sullivan’s radio-astronomy team at the CSIRO, Australia has a history of turning inventions into commercial successes.

Yet the nation now ranks in the bottom seven countries based on government spending on research and development as a proportion of gross domestic product, according to the latest OECD scoreboard.

Australia isn’t alone in trying to bolster lower-skilled careers as economies look to shore up manufacturing and fill an increasing number of service-oriented jobs. Both Singapore and South Korea have urged students to consider skipping university.

Singapore, though, committed to increasing its R&D spending 20 percent for 2011-2015 over the previous five years, while South Korea spent the second-highest proportion of gross domestic product on research among OECD countries in 2013, behind Israel.

Manufacturing Shutdown

Australia’s boost for baristas is partly a result of successive governments’ failure during the decade-long mining boom to prevent a hollowing out the manufacturing sector as the currency strengthened and investment flowed to the mines. General Motors Co., Ford Motor Co. and Toyota Motor Corp. plan to quit manufacturing in the country within two years, while Alcoa Inc. last year closed an aluminum smelter and two mills.

Belinda Robinson, chief executive of Universities Australia, said the research cuts announced this month by Treasurer Joe Hockey in the budget will make matters worse.

“Against the backdrop of low commodity prices and the downturn in traditional industries, a prudent approach to stimulating economic renewal is to invest in, not cut, wealth-generating activities like higher education, research and innovation,” she said.

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