R.F.X. CONNOR MEMORIAL LECTURE

91982

POST INDUSTRIAL AUSTRALIA; THE STRAINS OF TRANSITION

by

BARRY O. JONES. MHR

SHADOW MINISTER FOR SCIENCE AND TECHNOLOGY

Common Room, Union Building

University of Wollongong

23 July, 1982.

UNIVERSITY OF WOLLONGONG HISTORY SOCIETY

THE FOURTH R.F.X. CONNOR MEMORIAL LECTURE

I am grateful to have been given the opportunity to deliver the

fourth annual lecture in memory of Reginald Francis Xavier Connor -

better known as Rex Connor. I am proud to follow Gough Whitlam,

Boh) Hawke and Tod Wheelright in fulfilling this task.

Unlike my distinguished predecessors,  I did not know Rex Connor.

I saw him in the Chamber and in the corridors during my odd visits

to Canberra,  he nodded to me two or three times,  shook hands once

and exchanged a few monosyllables. That was all. But he stood

out in any company and he was certainly unforgettable.

%s you are all aware, Rex Connor was a great son of Wollongong and

served this city as a municipal councillor from 1938 to 1944, as a

Member of the New South Wales Parliament from 1950 to 1963, and as

Member of the House of Representatives for Cunningham from 1963 until

his death in 1977. He was Minister for Minerals and Energy from

December 1972 to October 1975 and served as Acting Prime Minister

of Australia in October 1974 and April 1975.

He was a man of extraordinary vision and of intellectual subtlety,

a lover of poetry and music, and a student of Latin and Greek. His

interests included anthroposophy,  what he called 1  supersensible

cognition', Einstein's theory of relativity, phrenology, astronomy

and the occult.

Clyde Cameron,  not a man given to extravagant praise of his fellow

politicians, said ot" Rex Connor:

He was one of the greatest characters and the greatest

intellects to sit in this Parliament during the period

that I have been a member - indeed, not one of the

greatest intellects,  but the greatest intellect.

He was an expert on law..., .1 great economist...,

a very great Laborite and a very great parliamentatian.

He was a firm supporter of the University of Wollongong but his

life's work confirms that formal education in a tertiary

institution is not tie only way to acquire intellectual mastery,

as Curtin and Chiflev demonstrated in an earlier generation, and

Connor and Cameron demonstrated later on.

His words suggest the subtlety of his thinking:

"No men is complete who lacks a cosmogony, or who

does rot possess the knowledge that he is intermediate

in stature between the atom and the star. Man is in

fact the microcosm of the macrocosm, and is in a process

of spiritual evolution, of which the present world doubts

and fears are the outward symbols. I have the firm

belief that man is a moral being, and that he is in fact

emerg ng slowly but certainly from an age of darkness

where materialism and its mechanistic expressions are the

symptoms of a deep, but definitely not fatal, spiritual

crisis. Man, in fact, has yet to realise the significance

of the inscription on the portals of Eleusis:

'Man, know thyself."

and also his observation in the House of Representatives:

'Lite is an equation of hydrocarbons'.

3.

I noted with interest in reading the Connor press clippings in

the Parliamentary library that when he was restored to the front

bench as a Member of the Shadow Cabinet in January 1976 he was

made Shadow Minister of Science, a position which the press with

rare unanimity called "insignificant". After Clyde Cameron's

views on the Science portfolio were made clear in 1975 it has not

been an office - either the substance or the shadow - which has

been eagerly sought.

his ministry but the verdict of history will be overwhelmingly in

his favour. His ranking as a great Australian is far more

readily conceded now, five years after his death, than it was in

the five years before he died.

He was extraordinarily difficult to classify in terms of faction.

He defied simplistic description and it is a matter of continuing

interest that two able Shadow Ministers as diverse in their

policies - although similar in application to the job in hand -

as Paul Keating and Stewart West should both regard themselves

as disciples of Rex Connor. .  I

I take up the point that Gough Whitlam made in his speech in the

House of Representatives after Rex Connor died and which he repeated

in his inaugural Memorial Lecture:

Connor with unparalleled savagery throughout

He saw that WrUrngorq's prosperity and security lay in...

developing its great natural resource - coal; its great

human resource - a skilled and educated work force; and

4 .

its great natural feature - an excellent harbour...

He was an active and forceful promoter of secondary

and tertiary education.

I turn to the theme of my lecture 1  Post Industrial Australia: the

Strains of Transition1. In my judgment the major policy concerns

of Rex Connor are just as relevant as they were in the early and

sovereignty,  the right of the Australian government to intervene

coiopfiwoiy in the economy,  the revival of the primacy of the

mark upon the world.

However,  the cockpit where these themes have to be fought has

moved into the area of Science and Technology rather than Minerals

and Energy - to that extent my priorities are essentially

complementary to those of Rex Connor,  not identical.

I draw your attention to the phenomenal changes in per capita

Gross National Product which have occurred in the past three

decades in technologically advanced nations. Contrary to what

the conventional wisdom might assume, the nations with a strong

natural resource base have fallen in the national pecking order

while those nations without a strong resource base have risen.

In the period 1955-79, of resource rich countries the United

States fell from No. 1 in per capita GNP to No. 7, Canada from

No. 2 to No. 10, New Zealand from No. 3 to No. 15, Australia from

No. 5 to No. 11, and the United Kingdom from No. 11 to No. 15.

I mid-1970s: the right of Australia to assert its economic

process and a determination that Australia can make its

5.

The nations which have risen in the table have been those which

i

lack rich natural resources but which have made heavy investments

in education,  research and development.

Switzerland, with a population of 6.3 million and poor natural

resources other than scenery, has risen from No. 4 in 1955 to

No. 1 in 1979 in per capita GNP and remains there in 1982: it

is also first in the world in patents taken out each year - in

1Â°75 2486 patents were granted world-wide (admittedly,  many of

m e m  through multi-national corporations) for every million in

population, compared to 132 per million in Australia (a ratio

of 19:1 against us). Sweden,  with 8.3 million people and lacking

physical resources other than timber and some low grade iron ore,

has risen from No. 7 in 1955 to No. 2 in 1979, having created

selective high technology products which have penetrated world

markets and enjoy high prestige - Volvo, Saab, Scania, SKF,

L.M. Ericsson,  Electrolux,  Bofors, ASEA, Husqvana,  Hasselblad.

Sweden ranks second in the number of world-wide patents taken out

per million of population. Denmark, with 5.3 million,  has risen

from No. 14 in 1955 to No. 3 in 1979, and the Netherlands

(14 million) from No. 17 to No. 6.

Norway is a useful example of a small nation (4 million) which

has taken political initiatives in ensuring that the exploitation

of a valuable natural resource - in this case North Sea oil - has

remained in its own hands and to that end it has developed

technologies in which it is now regarded as a world leader, having

6.

moved into an area in which Norway had no previous experience

whatever. Norway has enhanced its national independence and

technological sovereignty,  rising in pecking order from No. 12

in 1955 to No. 6 in 1979.

The most spectacular growth in per capita GNP has been in Japan

and Singapore,  both notoriously deficient in natural resources.

Japan ranked as No. 50 in 1955 and as late as 1959 a majority of

its export income consisted of three items - footwear,  textiles

toys. Japan has based its economic growth on developing the

skills of its people,  anticipating trends in the international

market more perceptively than anywhere else,  and making more rapid

transitions to new industrial forms than anywhere else. By 1979

Japan ranked No. 12 and in 1982 it was No. 5.

Singapore's per capita income was too low in 1955 to be given any

ranking whatever among industrialised nations but by 1979 it

ranked as 21 and it is anticipated that by the end of 1983 it

will have passed New Zealand in per capita GNP.

Of course the paternalist tradition of Japan Inc. with its

capitalist adaptation of the feudal era and the one-party state

"Command ’economy"of Singapore with its rigid controls of trade

unions are not models that we should seek to emulate here, nor

could we.

But we are,  as Maximilian Walsh commented so perceptively,  the

"poor little rich country" which has come to accept so completely

that our only national assets are in the ground and under the sea

7 .

and hardly at all in our skulls. If you ask a typical

Australian what our greatest resources are he will say - 'Coal,

bauxite, iron or uranium1  but ask the same question of a Japanese

or a Swede and he will say: 'The skills of our people'.

Tasmania - like Ghana - illustrates all too clearly the dangers

of relying on an economic strategy based on natural resources

and resource enhancement to the virtual exclusion of all other

factors. Tasmania's Hydro Electricity Commission has been an

M i l a r d e n t  promotor of hyper-hydroindustrialization in which all other

goals have been subordinated to that of generating cheap electric

power in the hope that large industries which were heavy users

would be attracted there.

Tasmania generates more electricity per capita than any other place

on earth - with Labrador a close second. Neither could be regarded

as industrial El Dorados. Tasmania's electricity usage per capita

is twice that of the U.S.,  three and a half times that of West

Germany, four times that of Victoria, South Australia and

Queensland, and five times that of France.

Between 1947 and 1979 generating capacity increased 1032% while

Tasmania's employment in manufacturing fell from 20.5% of the

paid labour force to 16.1%. The whole Tasmanian economy has

been distorted to ensure that far more Federal funding goes to hydro

electric projects than to all other projects combined. As a

result, 60% of Tasmania's electricity sustains three huge companies,

Comalco, Electrolytic Zinc and Australian Paper Mills which between

them account for less than 2% of Tasmania's jobs.

8 .

All three commodities produced by hyper-hydroindustrialization

in Tasmania have dubious futures. There is already a world

glut in aluminium and prices will continue to fall. Although

Alcoa in Portland will be postponed, new smelters will come on

stream in Gladstone and New Zealand's South Island. However,

the way in which the Exocet missile ignited the aluminium on the

"  cruiser Sheffield will hardly be a boost for sales.

.  New synthetic aluminium substitutes are cheaper and lighter,

r:'  reguiring only a fraction of the electricity usage. Australia's

new X—18 strategic fighters use fibreglass instead of aluminium.

Zinc is at its lowest price for many years and the cost of

processing in Tasmania is far more than the selling price on

world markets, even ignoring freight considerations. Paper

faces a long term contraction as we move to the paperless office,

electronic mail, electronic banking, facsimile newspapers and

through the microfiche revolution. What was originally regarded

as a sure formula for success now looks like a recipe for disaster

I turn now to the concept of post industrialization as an

explanation of the challenges and opportunities Australia

1  currently faces.

The Industrial Revolution is generally considered to have begun

in Britain around 1780 when agriculture - for the first time in

human history - fell below 50% of the paid labour force and kept

on falling so that 200 years later only 3% of Britons were farmers

9 .

The fall in employment was accompanied by a vast increase in

production (that is, in absolute figures) and in productivity

(that, is, the relative measure of output per worker).

Industry - manufacturing and mining, as they define it in Britain -

became the largest employment sector before 1820, reaching a peak

(about 50% of the labour force) in 1951, and then began its long

fall, which is still continuing. Services reached the 50% mark

about 1958 and is still rising sharply. Britain, like the U.S.,

Canada, France,  West Germany, Japan, Sweden, and Australia is now

in a 1  post-industrial1  era where employment in manufacturing is in

long term contraction and it is very unlikely indeed that this

will change.

The most significant change in employment in all technologically

advanced nations has been in the growth of employment based on

1  Information1  - that is, the collecting, processing and disseminaÂ­

tion of data,  broadly defined. I don't just mean computer operators -

this sector includes teachers, librarians, public servants,

politicians,  clergy, and policemen on traffic duty.

The history of labour force trends since the Industrial Revolution

began two hundred years ago can be expressed in a single

proposition: the transition from employment in the production of

necessities (e.g. food), through consumer durables (e.g. cars),

towards the production of increasingly marginal (or discretionary)

services (e.g. information,  eating out, beauty care, leisure

activities, bureaucracy a_la Parkinson) reflecting a greater variety

of artificially stimulated demands, and a loss of self-sufficiency

due to 1  division of labour1  being taken to extremes.

trend

10.

I have made use of a four sector analysis of the labour force first

proposed at OECD in 1975. This is described at lengthÂ· in my book

Sleepers, Wake! : Technology and the Future of Work (Oxford

University Press, 1982).

The Primary Sector (Extractive) includes people engaged in growing

stuff or digging it up. The Secondary Sector (which joins

Manufacturing and Construction together as analogous activities)

covers those who are making things,Â· goods like cars or bottles of

Ã¢ÂÂ¢"45; l0||^^^^^|beer,  or fixtures like houses or bridges. The Tertiary Sector

('Tangible Economic Services') moves stuff - and people - around:

transport, retailing, storage, utilities. The Quaternary (or

'Information') Sector involves the provision of intangible

services, things that won't hurt if you drop them on your foot:

.  finding out about things and telling people about them. If you

work with symbols - words, sounds, images, numbers - and if your

tools of trade are pens, telephones, cameras, microphones,

typewriters, and computers, then you are in this sector, which

already employs more people in Australia than manufacturing, mining.

and agriculture combined, 30.8% in 1979.

In Australia employment in the Primary Sector has fallen steadily

from 33.3% of the labour force in 1891 to 7.7% in 1979. The

Secondary Sector has been astonishingly stable: 24.3% in 1891,

reaching a high point of 33.5% in 1961, falling to 28.8% in 1979.

Manufacturing - part of my Secondary Sector - stood at 20.59% in

1891, reached a plateau at 25.05% in 1947, and stayed there until

1965 when it reached a high point of 27.6%. It then began to fall

11.

long before the 1973-74 recession,  dropping to 21.9% in 1979.

This fall has occurred in all other 1  post industrial1  economies

and Australia's rate of fall is average.

The Tertiary Sector has always been an enormous employer,

largely for geographical reasons: the heavy national investment

in transport, the huge distances between cities and our increasing

car dependence. 29.0% of the paid labour force was in the

Tertiary Sector in 1891, 32.7% in 1979. ÃÂ"' ' Â· Â·

The Quaternary or Information Sector soared from 13.3% in 1891

to 30.8% in 1979 - b u t ,  as in the U.S., it has plateaued in the

1970s and may fall in the 1980;;.

Conventional economists,  politicians and bureaucrats (all of whom

are in it themselves) have been slow to recognise the significance

of the Information Sector and work out appropriate policies for it.

We are inclined to think that our own employment is anomalous and

that it is only what other people do that is statistically

significant. Information workers include M P 1s ,  party officials,

union officials,  research workers,  teachers,  lawyers, students,

librarians,  office workers,  public servants, economists,  journalists,

bank,  insurance and communication workers.

I calculated that at the recent National Conference of the A.L.P.

held at the Lakeside International Hotel in Canberra,  96 of 99

delegates were in the 1  Information1  sector and 38 of the 39 proxies -

12.

a total of 134 in 138, or 97%. It is true, of course, that many

of the trade union officials would have begun their careers in blue

collar work in manufacturing, mining or .construction but at the

time of my calculation they had certainly made the transition.

Even more significant is the overwhelmingly probability that their

sons and daughters will follow them into Information rather than

to the occupation sectors they began their working lives in.

In Sleepers, Wake I  I presented a fou.r Sector analysis of the

r|i^^^^||8ifc: labour force in the Victorian Federal Electorates of Kooyong,

Mallee and Lalor - each of them safe Liberal, National Party and

Labor Electorates respectively. These reveal interesting

divergencies in employment patterns.

I have prepared a four Sector .analysis for the Federal Electorate

of Rradfield, the safest Liberal Seat in Australia, based on

Lindfield, Gordon, St. Ives and Wahroonga,  and Rex Connor's old

seat of Cunningham, based on Wollongong and Port Kembla. .

The employment figures from the June 1981 Census will not be

available until November 1982 but the probable changes in the

trend lines can be estimated.

13.

BRADFIELD 1971 1976

Primary

Agriculture   Mining

Secondary

Manufacturing   Construction

1.2%

0.5%

0.7%

21.8%

16.3% 5.5%

0.7%

0.4%

0.3% 1 4 . 8 %

1 0 . 3 %

4 . 5 %

Tertiary 27.2% 20.3%

(tangible economic services -   transport, retailing, utilities etc) Quaternary 49.8% 6 4 . 9 %

(information based services -   education, clerical, administration   etc)

Labor participation rate:

Unem p l o y ed :

15-19 y.o. in labour force   as % of age cohort:

100.0%

38177 _ ,, O0/ 43676

100870 0 / ‘ 0 / Â°  106101

344 (0.3% of total p o p 1n)

2575 _ on i o/ 3312

8548 " ,1* ÃÂ¤03ÃÂª7

100.0%

41.2%

940 (0.9%)

32.1%

CUNNINGHAM

Primary   Agriculture   Mi ning

Secondary Manufacturing

Construction Tertiary

Quaternary

Labor participation r a t e :

Unemployed:

15-19 y.o. in labour force   as % of age cohort:

3.8% Ã¢ÂÂ   3.0%

0.3% - 0.6%

3.5%

53.5%

2.4%

47.3%

46.0% 41.8%

7.5%

23.0%

5.5%

23.8%

19.7% 25.9%

100.0% . 100.0%

49998 125621 39.8%  51793 127811

= 40.5%

1009 (.8%) 3785 (3.0%) 5996 _   12219  49.1% 6748

12832  = 52.6%

14.

In 1971 the number of people employed in manufacturing in New

South Wales accounted for 23.9% of the paid labour force and this

fell to 20.8% in 1976: I estimate that it will have fallen to

about 18.5% or lower in 1981.

Manufacturing in Cunningham stood at 46.0% of the paid labour

force in 1971, that is 92% above the state figure, and had fallen

Ã¢ÂÂ   to 41.8% in 1976: however, relative to the rest of New South Wales

these figures increased Cunningham1s- proportionate share of

manufacturing employment to exactly 100% above the state figure.

In both 1971 and 1976 Cunningham ranked first in the State in

manufacturing.

I.estimate that the 1981 figures will show that employment in

manufacturing has fallen to about 38% in Cunningham and that the

area will be 105% above the state figure.

Total employment in my redefined. Secondary sector - that is,

manufacturing and construction combined - has fallen from 53.5%

in 1971 to 47.3% in 1976, and will continue its fall to 43% in 1981.

My own seat of Lalor, in Melbourne's western suburbs, around

St. Albans,  Altona,  Deer Park and part of Sunshine, is also dominated

by heavy industry,  nearly all of it under foreign ownership:

petrochemicals, refining, plastics, explosives and heavy engineering.

Employment in the redefined Secondary sector has fallen steadily

from 53.9% in 1966, to 48.0% in 1971, to 46.2% in 1976 and to an

estimated 43% by 1981. The fa LI will continue. In Victoria

Lalor ranks second to.Gellibrand (Footscray, Williamstown,  part of

Sunshine) for employment in manufacturing. .

15.

By way of comparison,  Bradfield has the lowest number of people

in manufacturing of any urban electorates in New South Wales -

16.3% of the paid labour force; in 1971, when it was only 68% of

the average state figure, to 10.3% in 1976, when it fell to 49.5%

of the State average. Ã¢ÂÂ   '  '

Since the Census depends on self-description it may be fair to

draw the inference that many of the people in Bradfield enumerated

in manufacturing are white cellar and other managerial workers

employment in manufacturing will have fallen to 13.0% of the paid

Between 1971 and 1976 - with the presence of the University of

Wollongong 'Information1  based employment in Cunningham rose from

19.7% to 25.9%, a rise of 31%, fractionally higher than the rise

in Bradfield from 49.8% to 64.9%, a rise of 30%. Of course in

Bradfield1s case it is the high absolute number of Information

workers which stands out, 13,000 more than all the other workers

in the electorate combined.

Unemployment in Cunningham is increasingly difficult to monitor

precisely since the Commonwealth Employment Service is forbidden

to provide detailed figures, office by office, but is believed to

be of the order of 11-13% registered, with a significant number of

unregistered unemployment, perhaps another 5-8%. This is

unemployment of plague proportions which is contributing to a

massive breakdown in social cohesion.

In 1971 and 1976 the labour participation rate was roughly

equivalent in both Cunningham and Bradfield - using the test for

rather than process workers. I estimate that by 1981 Bradfield's

labour force.

16.

participation of being in work or. actively seeking it - but by

1981 there would be a considerable divergence in Bradfield's

favour.

.  The most striking discrepancy between Bradfield and Cunningham

on the 1971 and 1976 figures is in the proportion of young people

in the 15-19 year old age group who are in the labour force: in

1971 Bradfield had 30.1% of the 15-19 year old age cohort in the

.  labour force rising to 32.1% in 1976. Cunningham had 49.1% of

i '

that age cohort in the labour force in 1971, rising to 52.6%.in 1976.

:-,v University and CAE attendance in Bradfield is equivalent to 48.2%

of the 17-22 year old age cohort. Cunningham's figures are 20.3%

of that age group.

The latest ABS figures indicate that Australia has 61.5% of its

15-19 year olds in the labour force - in work or actively seeking it,

as I said earlier. This figure is far too high. It reflects the

English tradition that the working class was basically ineducable

and that all you could do with a working class boy was to put a

i  spade or a spanner in his hand and push him out the door as soon as

he passed his 15th birthday. Like Australia, Britain and New 2fealand

both have more than 60% of young, people in the labour force.

In Japan the comparable figure is 24%, in the U.S. 28%, in Canada

33% and in Sweden 34%. Have they got it all wrong? Or have we

got it wrong?

The fact that Australia, Britain and New Zealand are non-coping

economies despite their rich physical resources suggests that the

latter proposition is correct.

* Cunningham's high figure is a sign of weakness, not strength.

17.

Society has taken a long time to grasp that Australia is now

in a post industrial era and the traditional industrial working

class in Australia is now an endangered species. It is, in my

judgment, impossible that any amount of macroeconomic fine

tuning, so fashionable in the ,1960s and still part of our thinking

in the 1980s, will reverse that downward trend.

I  "  .  Â·

.  Australia's tragedy is that there is virtually no high technology

...  industry which is in Australian hands. We used to market our

:

Ã¢ÂÂ   ~ own pharmaceuticals, during the war we made aircraft, after the

war we built Australia's own car, and one of the first large

computers. Now we make none of these things. Australia has

become a nation of technological voyeurs,  we adopt and use high

technology which is designed, controlled and sold by foreign

owned interests. The Quisling-like policies of Malcolm Fraser

intensifies this process. We can speak of an American or a

Japanese motor manufacturing capacity in Australia; we cannot

1 speak of an Australian motor manufacturing industry. There is

none. The essential decisions about these industries are not

made in Canberra or Sydney but in Detroit, New York and Tokyo.

The Swedes have control of their own economy: we do not have

control of ours.

. 1 8 .

In the 1980s and 1990s the changing nature of Australia's

industrial base will raise major challenges which we may prove

unable to meet. Can a nation with only 15,000,000 people, a

mere 4 per cent of the English speaking world, and whose high

technology industries are overwhelmingly under foreign control,

make the transition away from the traditional manufacturing

~ ('sunset') industries which are now in long-term decline as

employers towards newly developing types of high-technology

('sunrise') industries which will be major wealth generators -

although not large employers? .

V Â· Â·  '  '  '  '  .  '

Australia is full of 1  sunset1  industries but we have conspicuously

failed to address ourselves to the problem of creating and

controlling 1  sunrise'  industries. In the U.S. 'sunset'  industries

such as motor manufacturing are diversifying into 1  sunrise'

activities as well. Ford in the U.S. don't just make cars, they

make space technology as well. Ford in Australia just make cars.

Exxon in the U.S. don't just sell petrol,  they are heavily into

information systems. In Australia .Esso/Mobil simply extract our

own oil and sell it back to us at a high profit, nothing else.

While recognising the need to protect employment in our 1  sunset'

industries, it does raise the problem of how the economy can be

both static and dynamic at the sc me time - and the choices we have

to make if we pursue the static model or the dynamic model.

The dynamic model should lead to real.economic growth and more

equitable distribution of wealth but Australia lacks the instruments

and perhaps the capacity - or the will - to bring it about.

19.

The likeliest, prospects for wealth generating 'sunrise1  industries

in Australia appear to. be:

Ã¢ÂÂ¢(i)

(ÃÂ )

(iii)

(iv)

(v)

(v i )

biotechnology '

scientific instrumentation

software writing for computer operations and possibly

a VSLI computer chip industry designing custom-made

products for specific markets .

solar energy cells,  collectors and other equipment

hydrogen generation and storage

development of shape-memory alloys,  increasingly

important in high precision engineering,  surgery and

space research.

Biotechnology (sometimes called 'genetic engineering1  - an unduly

narrow description) seems certain to be the lead technology of the

1980s. It involves the application of biological organisms,

systems or processes - for exEonple .splicing genes from 1  recombinant

DNA1  into plasmids from specific bacteria which are then able to

replicate to 'manufacture1  the desired substance. Biotechnology

has a vast potential,  e.g. leaching minerals from ores; turning

waste materials into animal food; finding new forms of usable

energy (biomass); making new plant strains capable of resisting

salt,  using less water and fixing nitrogen; low energy techniques

in industrial processes; producing new medical technologies (e.g.

making interferon for use in cancer treatment) or old therapeutic

substances in new ways (e.g. manufacturing human insulin,  instead

of extracting it from animals). Of all the 'sunrise'  industries)

biotechnology has the greatest potential for wealth creation and

20.

here Australia has great comparative advantages - a strong

agricultural bas e ,  expertise in plant and animal genetics,

microbiology,  biochemistry and medical research. .  But time is

running out for us. We could be world leaders if we act early.

Biotechnology in the U.S., after an exciting start with rapid

surges in share prices, now appears to be becalmed. This is

because the American industries have chosen to concentrate on

the area of the greatest potential profitability - human health.

...- However, this is also by far the greatest risk area and no company

is prepared to run the risk of facing multi-million dollar suits

in the courts if unanticipated side effects emerge. Australia is

v'ell placed to develop biotechnology industries which are

complementary to the human health field.

Australia has a great potential in software writing, especially

for the Pacific Basin. We have one great advantage over the

Japanese - that our language is written, like computer language

in Latin characters and information computer networks are not

compatible with Japanese ideographs.

4

The.1970s in the United States - a period of very rapid technological

change - were marked by a decline in the numbers of people employed

in jobs which were dependent on technology and the growth of jobs

.  in areas which were not dependent. Between 1970 and 1980 about

80% of new jobs in the U.S. were created in three areas - 1  eating

and drinking",  'health care1  (broadly defined, including child

care and services to the aged), and 1  services to business' (mostly

cleaning,  maintenance,  waste disposal, point-to-point delivery

services). These jobs have these elements in common - they are

largely female, part time, unskilled, non-unionised with low wage

j Ã¢ÂÂ  Ã¢ÂÂ  Ã¢ÂÂ  > . Â· Ã¢ÂÂ   r&tes and potentially very insecure. Many of them - especially in the 'eating out'  industry - are dependent on the maintenance

of the two income family which enables meal preparation to be

transferred from the domestic economy to the market economy.

If there is a reversion to the single income family as the norm

(as recent unemployment trends in the U.S. suggest) then we may

expect a rapid fall in employment in the quasi domestic areas.

This seems likely to happen here tod.

In m y Â·labour force analysis in Sleepers, Wake! I have proposed

a fifth (Quinary) economic sector to cover employment within the

home on domestic services, whether paid or not, and substituted

domestic services in the market economy: care of children and

the aged,  cleaning,  catering and accommodation. In a five

sector analysis the Quinary sector has the largest number of

people in the extended labour force.

.  .  21.  ’

22.

Australia - like other technologically advanced nations - is

passing through a major transition in employment: away from high

volume production (where increased outputs of cars, wheat,

electricity,  petrol may require fewer process workers,  not more)

towards employment in the delivery of small-volume individualised

personal services. Investigation of Telecom's Yellow Pages

demonstrates the proliferation of such services in recent years -

eating out,  craft supplies,  sun tan parlours, massage parlours,

hairdressing, beauty care, health services (including fringe

medicine), ethnic welfare, child care, home maintenance, 'Do-it-

yourself' work, hobbies, gambling, animal care, messenger delivery

services, contract cleaning, gardening services, swimming pool

accessories,  antiques, entertainment.

Proliferation of service employment is characteristic of urban

life and the growing diversity of activities which are open to

residents of a big city. As I have argued in Sleepers, Wake!

'  the greatest single factor in employment growth is not

increasing levels of demand per se. as the classical and neoÂ­

classical economists insist, but the complexity and diversity

of demand.

Before the Industrial Revolution service employment was small

because families tended to be self sufficient and - before the

days of division of labour - they had a diversity of skills:

they grew their own food, they repaired their own houses, they

cut their own hair,  they educated their own children, they

entertained themselves. Now in this Post-Industrial era we are

experts in narrow areas of employment - as bus drivers or data

23.

.  ÃÂ¹ .

processors - which are their selves totally dependent on the

activity of others and are not ends in ourselves. We employ

others to ca^ry out tasks that we have no time to do for

ourselves.

There is a major paradox that the increasing use of 1labour

saving devices' - vacuum cleaners, motor mowers,  washing machines -

has not been accompanied by any real increase in leisure or the

cultivation of a relaxed life style. The use of labour saving

devices have been accompanied by a sense of increasing pressure,

!  rapid movement and fragmentation of experience - witness the

loss of coherence in so many lives, with increasing emotional

dependence on alcohol, drugs and electronic stimulation,

accompanied by a growth in suicide,  marital -  breakdown, insanity,

and obesity. .

We have failed to grasp the significance of the phenomenon which

I pointed out in my 1  fifth law' (Ch. 6, p. 148) that the worst

i  .  unemployment exists in communities with a high degree of self

sufficiency (e.g. country towns) or which are economically overÂ­

specialised with a heavy emphasis on a narrow range of high

volume production (e.g. Wollongong,  Manchester, Detroit, Seattle).

However,  there is a major problem about the growth of service

employment - especially marginal service employment: the kind

of things that we could do for ourselves if we chose to (e.g.

shoe cleaning: such a highly visible feature of cities overseas) -

which depend on having discretionary income. If discretionary

income falls, these jobs go too.

24.

' ÃÂ . ÃÂÂ·

Unemployment has cultural and psychological significance which

is almost as important as the economic elements. There are

dangers in assuming that there is an X 1  figure which represents

an optimum employment level and that an economy has failed to the

extent that the number registered as employed falls short of 'X' by

some percentage points. Australia is in the paradoxical situation

of having simultaneously (1) the highest number of unemployed since

the Great Depression of the 1930s and (2) almost the highest labour

force participation rate in our history. They seem contradictory,

but both statements are correct. The explanation is that large

numbers of people (mostly male) who were traditionally in the work

force are now excluded from it, while an even larger number of

people (overwhelmingly female) who were traditionally not in the

labour force are now in it - many of them part time, most through

choice.

In Australia for decades we regarded 65 as the normal retirement

age for men and we still regard a 50 year stretch - 15 to 65 - as

the norm for working class men. At the other end of the working

life,  we seem to take it for granted that Australian kids drop out

of school at 15 and fall into work. In Japan the normal

retirement age for men is 55 years. This is not an innovation -

it dates from the 1920s at a time when expectation of life in

Japan was 55 years and 6 months. Now Japan has the highest life

expectancy of any nation - 79 for women,  75 for men - but they have

not significantly changed the retirement age, although some firms

have gone up to 57 years. At the age of 17, 88.1% of Japanese are

25.

still at school compared with only 31.7% of Australians. Far

more Japanese than Australians go into higher education. Fewer

women are at work. Japan is typically represented in the OECD

tables as having less than 2.0% unemployment. Australia's

registered unemployment figures are at 7.0% while hidden employment

probably takes the total figure up to 11.0% or 12.0%. The

Japanese are perceived to have licked unemployment while we are

perceived-as having failed. However, the major significance of

these figures is that they demonstrate the contrasting cultures

Ã¢ÂÂ   of the two nations. The Japanese would find it difficult to

understand what a 60 year old man or a 17 year old boy would be

doing in the labour force anyway. If we imposed the Japanese

labour"force criteria onto the Australian scene, our unemployment

rate would drop to about 2% and conversely, if we imposed Australian

criteria onto Japan, their figure could multiply five or six times.

Australia actually has a higher proportion of people of labour

force age in work than does Japan - the difference is that after

a 30 year period of 'full' or 'over full' employment, Australia's

high level of registered unemployment represents a sharp

discontinuity with the past whereas the Japanese situation

represents continuity with the past.

Attempts to push more and more people into the labour force at the

same time that we are attempting to introduce labour-displacing (and

labour-contemplating) technology into our production system are

misconceived. You cannot do both. We ought to accept that

technological change can give us flexible options to secure a better

i

'  i .

'  26.

working Life to suit individual needs - and we ought to ensure that

the poli :ical process brings this about. The A.L.P. is already

examining a national superannuation scheme: we should also look

at guaranteed minimum income, recurrent education,  greater

educational opportunities for working class youths,  flexible options

on early (or late?) retirement, recognise that the compulsory work

ethic now an anachronism, promote industrial democracy and a

consensus model for industrial relations.

Summary;

Let me conclude by summarising the points I have tried to make in

this lecture: .

1.. Nations basing their economic strategies on developing human

skills are achieving far higher growth rates than nations

depending on the exploitation of natural resources.

2. Changing patterns of demand in the world economy - e. g. falling

demand for aluminium and ether commodities dependant on the use

of huge amounts of cheap energy - will reduce Australia's

comparative natural advantages.

3. Australia has been passing through a Post-Industrial Revolution

since 1965-66, and. declining employment in manufacturing is

permanent,  irreversible,  and structural. Few nations can

sustain a strong manufacturing sector employing more than 20%

of the labour force.

4. Rising levels of employment depend on increased demands for a

diversity of services, many stimulated by education. Over-

spec...ali sat ion and economic dependence in particular regions on

a single employment base inhibits the development of service

27.

activity: areas dominated by manufacturing or farming will have

far worse unemployment than areas dominated by service

employment.

5. 1  Information1  must be recognised as an economic sector in its

own right,  already employing more people in Australia than

agriculture, mining and manufacturing combined.

6. Australia has far too many 15-19 year olds offering for work:

this reduces the skill range required for future development

and makes it harder to effect transition to new forms of work.

High youth participation rates (as in Britain,  Australia and

New Zealand) are signs of economic weakness,  not of strength.

7. Foreign control of high technology industries in Australia

(other than metals processing)  has effectively destroyed our

technological autonomy.

8. Few 1  sunrise1  industries are developing in Australia to offset

the long-term decline of foreign owned 1  sunset1  industries.

Sunrise industries with the best prospects for success are

biotechnology,  software writing and scientific instrumentation.

9. Although Australia can adopt selective policies on technology,

it will be difficult to adopt a model which is both dynamic

and static. Ultimately we will have to choose between the

dynamic and the static model.

10. Employment levels are culturally determined. We should reject

the idea that there is an 'X' figure that represents, optimum

employment and adopt a variety of strategies to find a mixture

of work, leisure and other forms of personal development

appropriate to our social needs.

