J^nÂ£S

THE AUSTRALIAN LABOR PARTY

C

_-~y SCIENCE AND TECHNOLOGY POLICY 19 83

I N T R O D U C T I O N

The A.L.P. Science and Technology Policy offers some radical

alternatives to existing policies for the 1980s.  If we fail

to promote radical change in industry then Australia's economic

base will contract rapidly, our skill levels (already trailing

behind) will deteriorate further and we can expect a long

term decline in living standards,  further unemployment and a

social chasm between rich and poor.

* The technological base of Australian industry has barely

changed since the 1950s while our industrial contemporaries

(Japan, Singapore, Sweden) have undergone a .revolution.

* Australia must make a transition towards newly developing

high-technology 'sunrise'  industries, as wealth generators

and to compensate for the long term decline in employment

in our traditional 1  sunset1  industries.

* Much of the new technology (electronics, computers, bioÂ­

technology) is extremely parsimonious in its use of raw

materials and energy.

* We need to rethink the concept of 1  comparative advantage1

and recognise that the most significant factor in the new

technologies is not the abundance of metals or cheap power

but the levels of skill available.

Between 1955 and 1982 the nations with the greatest increases

in per capita GNP (Switzerland, Sweden,  Denmark,

Netherlands,  Japan, Singapore) lack natural resources but have

put heavy emphasis on the development of skills,  while

nations depending on mineral wealth have declined in

ranking order (U.S., Canada, New Zealand, Australia, U.K.).

More than 60% of the export earnings of Japan, France,

Sweden and Italy are directly attributable to intellectual

skills (research, design, invention, product innovation)

and less than 5% of Australia's. Their skill-based earnings

will grow. Ours will contract.

Australia's low investment, overall, in Research and

Development is caused by the dismal failure of industry to

carry out basic research or to support public institutions

financially. Multi-nationals receive their R & D from head

office and have no incentive to contribute here. GovernÂ­

ment funding has not.increased since the Whitlam years.

France is aiming at doubling its total investment (government

+ industry) in R & D for the period 1981-88, while Canada .

will also double its figure in the period 1979-85. We'

should aim at a 100% increase over five years, working on

the basis that industry should contribute virtually all

the increase and that incentives should be devised in

collaboration with industry.

The expansion of the Welfare State will be increasingly

dependent on the" capacity of the Australian economy to

generate more wealth. High technology industries offer

the best prospects for this.

The new technologies are high risk areas.  We cannot

promise success in any of them. We can, however,  guarantee

economic regression if we fail to take up their challenge.

4.

ÃÂÃÂ 1  OR ÃÂ  ÃÂ  AREAS FOK NEW (  1  SUNK I  SIÂ· '  )  INDUSTRIES FOR THE 1  980s

The Col lowing areas, in our present: state oÂ£ knowledge,  seem

likely to have the best prospects of success and can be discussed

with some confidence.  The list should not be regarded as exhaustive

Some areas not on the list may well emerge unexpectedly,  as has

often been the case in the past. All should be considerable

wealth generators. Â·

1. BIOTECHNOLOGY Australia has a very strong skill base in

agricultural science, animal and plant genetics, microbiology

and biochemistry.  Biotechnology has good prospects of being

the greatest industrial growth area of the 1980s, even more

important than microelectronics was in the 1970s. With

appropriate stimuli Australia could emerge as one of the

world leaders in this field, provided that we act quickly.

It is suggested that funding be made available for investment

(and equity participation)  in biotechnology enterprises

through the new Australian Industries Development Bank,  and

through the investment powers to be given to the

Industrial Research and Development Incentives Board.

Independent advice from a number of sources (e.g. Prof Bruce

Holloway, Dr Jim Peacock, FRS,  Dr Malcolm Simons, Dr John

Hobbs) suggests that the funding should be spread among a

number of projects (say with a first year share of $500,000

each, on average):

1st Year $ 5 million

2nd Year $10 million

3nd Year $15 million

$30 million

Government assistance would be desirable in marketing analysis and

in overseas promotion.

The most promising areas for development are:

Pesticides

Weedicides (CSIRO has a C4 weedicide,  with enormous potential)

Immunogenetics (sera have been developed to ensure that lambs

are born in pairs - vital to replenish flocks after drought)

Diagnostic sera .

Monoclonal antibodies (techniques for highly specific

self-medication, comparable to the use of insulin,by

diabetics)

Salt resistant plants

Plants requiring little water

Nitrogen-fixing plants

Conversion of wastes into animal feed

Ã¢ÂÂ   Ã¢ÂÂ

2. PERSONAL COMPUTERS It seems likely that by the year 1990

most Australian homes will have a personal computer. Although

unit costs will be low, this is an area we cannot stay out of,

given the volume of anticipated demand for minis and micros. .

3. COMPUTER SOFTWARE This is far more labour-intensive than *  4

making computer hardware and there is an enormous demand,

both actual and potential, throughout the Pacific Basin.

We have a major advantage because most software is written

in Latin characters, either in English or computer language

(e.g. FORTRAN) and Japan is not a major exporter.

4. CUSTOM-MADE COMPUTER CHIPS The work of CSIRO's Craig Mudge

in Adelaide, with VLSI chips, and Prof Graham Rigby of the

University of NSW, with LSI chips, should be encouraged.

SC ÃÂÃÂÃÂÃÂ¤ I  EiC INSTRUMENTATION '[.'his is a multi-billion dollar

industry throughout the world and Australia has a good

reputation in this area. Many great opportunities have been

lost in the past for expanding this area.  Sir Alan Walsh's

atomic absorption spectrophotometer is used throughout the

world. In 1981-82 we imported $360 million of scientific

instruments and exported only $86.6 million. The 1  InterScan'

aircraft guidance system is a significant exception to this.

The fruits of Australian-led research are being developed in

partnership wi th an American company with a guarantee of 507=

Australian production. The 'Starlab' project can put us in,the

forefront of super-sophisticated scientific instrumentation

for decades e.g. the photon counter.

MEDICALÂ· TECHNOLOGIES We have made some spectacular advances

here - e.g. the bionic ear and pacemakers (where we already

have 207o of the world market)  .  In some areas, e.g. cell

sorters, we have fallen behind, to the extent of three orders

of magnitude (i.e. 10 x .1.0 x 10 = 1000) :  this undercuts the

quality of: our medical research.  .

LASERS We import few lasers (less than 0.17> of our capital

equipment bill in 1981-82) because we have a pre-laser

industrial base. A comparatively small investment would enable

Australia to generate its own laser developments.

COMMUNICATION TECHNOLOGY,  We are moving towards a

wi red-society where many services will be provided by

'dedicated1  on-1ino services, using Laser stimulated optical

fibre. This is an area for urgent development.  .

9. INDUSTRIAL CERAMICS CSIRO has developed a ceramic which

has superior performance standards to metals under intense

heat and stress e.g. car and aircraft engines,  cutting

tools, grinders,  artificial hips.  The ceramic is called

PSZ (partially stabilised zirconia),  derived from zirconia *

sands,  and will.be a major world commodity by the 1990s.

10. SOLAR TECHNOLOGY Prof Dick Collins of Sydney University

has produced vacuum tube solar heat collectors (with a

selective surface of stainless steel + carbon on the inner

tube), generating temperatures of up to 300Â° C - i.e. .

enough for low grade industrial heat. This has been funded

by Saudi Arabia ($5 million) and Neville Wran ($1.8 million).

The tubes are fabricated in Japan because we lack the

technical capacity to make them in high volume.  Solar

energy (silicon) cells developed at the University of

New South Wales at a cost of some hundreds of thousands of

dollars have an output 50% higher than the cells used by NASA.

11. SHAPE MEMORY ALLOYS Some alloys e.g. Nitinol (nickel +

titanium) are intensely sensitive to minor variations in

heat and can be used in a variety of very sophisticated

applications e.g. microsurgery,  space equipment,  artificial

.  hearts,  dental prosthetics. Australia is rich in these metals

12. FUSION In the long term this is the best alternative to

nuclear fission as an energy source on a large scale.  Some

work is being done on it in Sydney and Canberra at low cost.

It is worth providing more research funds.

7 .

Ã¢ÂÂ¢ - Ã¢ÂÂ  ' i  Â·

ÃÂ .

13. ROBOTS This is a toushy subject particularly as robots

are likely to decimate employment in some.areas of

manufacturing - but it is an area with great potential,

especially in doing dirty,  exhausting and dangerous work.

There may be some export potential in this.  We must

consider the implications of this one.

14. INTERMEDIATE TECHNOL( GY PROJECTS Many of the Lucas Aerospace

Shop Stewards Corporate Plan ideas are available for anyone

who wants to make use of them. They are labour intensive and

do not depend on high, levels of skill to make.  All fulfil

major human needs e.g. the Hobcart for disabled children,

'telechiric1  (hands at a distance) devices to enable workersÃ¢ÂÂ¢  .  i to use and develop personal skills in controlling sensitive

and dangerous processes, low cost heat pumps, equipment for

the Third World. .

15. HYDROGEN GENERATION AND STORAGE A number of techniques are

being developed - both through electrolysis and biological

means - to use sunlight to extract hydrogen from water at a

cost low enough to be competitive with fossil fuels.

16. BIOMASS This has good potential as a fuel extender and

could be a significant employer in North Queensland.

9.

Australian's gross domestic expenditure on Research

and Development (GERD) is spread across many Departments -

primarily Science and Technology (38%), followed by Defence (13%),

Treasury (9% - mostly ABS),  Education (8% - in universities),  National

Development and Energy (7%), Primary Industry (7%) and Health (4%).

The proportion attributed to Education is underÂ­

stated because it does not include research work carried out as

part of the general research objectives of university departments.Â·

The imputed value of this was $160 r^in 1981 while university research

carried out under the Special Research Grants (paid to the States)

amounted to $84 m.

The largest sum in the DST vote in 1982 - 83 goes to

CSIRO, $249.4 m, which is 55% of the Department's budget ($453.4m).

The notes which follow deal with:

* The ARGC Scheme

*. The IRDI Scheme _ _  '  .

* Venture capital

FUNDING RESEARCH AND DEVELOPMENT

10.

The ARGC Scheme was established in 1966 to "stimulate

high quality research in the natural and social sciences and the

humanities" in non-government institutions,  largely in

universities. (CSIRO, CSL, weapons research,  and other GovernÂ­

ment bodies are excluded.  So is medicine).

This scheme funds Australia's basic research which is

the necessary pre-condition to developing concepts which may then

lead to projects with considerable economic potential. It is,

of course, a high risk area. Often the economic significance of

projects is not recognised when the basic research is carried out.

(Crick and Watson worked on the molecular structure of DNA in

1952-53 on a similar grant, in the UK, winning a Nobel Prize in Medicine

in 1962. Crick has said that they had no idea of the economic

potential of their discovery, which is the basis of biotechnology",

until 1966) .

AUSTRALIAN RESEARCH GRANTS COMMITTEE (A R G C ) SCHEME

The work of Dick Collins in producing high efficiency

vacuum tube solar collectors, Graham Rigby's design of large scale

integrated circuits and investigation of 'shape memory alloys'

at Wollongong University are notable examples of recent ARGC

grants.  Ã¢ÂÂ

Funds are provided for a calendar year and projects

may be extended over a period of years. (About 70% of each

year's funding is for continuing projects).

1 1.

Year Amount Spent Number of Grants . Average Grant

1973 $5,757 m 894 $6440

1974 $6,602 m 957 $6898

1975 $8,630 m 112 2 $7692

1976 $7,091 m 1065 $6658

1982 $17,980 m 1347 $13348

1983 $19,250 m n/a n/a .

There is a growing need for ARGC funding but the

Fraser Government has not even kept up with inflation in

recent years.  There was a dollar increase of only 7% from 1982

to 1983, an effective fall of 3%.

ÃÂ¨ -  -

The A.R.G. Committee reported in 1982 that there was a further

increase in the number of good quality projects which had to be

rejected,  from 296 to 372.

Taking inflation into account there should be an effective

increase of 10% per annum for the next three years.

POLICY DECISION:

The ARGC Scheme will be increased by 10% more than the inflation

rate for the first three years of a Labor Government .

12 .

INDUSTRIAL RESEARCH AND DEVELOPMENT INCENTIVES (IRDI) SCHEME

Commencement Grants (1982-83) $11,300,000

Project Grants (1982-83) $32,800,000

Public Interest (1982-83).... $ 4,975,000

$49,075,000

In 1981-82, $49,180,000 was appropriated for IRDI, but only

$24,196,000 was actually spent (49%).

Research into computer software is excluded from the IRDI Scheme

except where it is related to mining and construction.

Currently, IRDI grants are regarded as taxable income,  which is

a major disincentive for profitable enterprises making applications

ALP Policy provides that:

.  (B.19) all types of computer software should be

eligible under IRDI;

.  (B.20) IRDI grants shall be tax free.

The IRDI scheme should be extended to provide for an investment

fund so that the IRDI Board could take out equity participation

(or 1 Ã¢ÂÂ   'ans or debentures) in high technology companies. This

would i :  Â·  a rotating fundÂ· which would need to be '  topped up1  in

the first few years but which would aim at being self-sustaining.

POLICY DECISION:

The Industrial Research and Development Incentives Act will be

amended to give the Board (AIRDIB) power to invest" by equity

participation,  or debentures, or by making loans.

VENTURE CAPITAL,

Governments can assist in providing venture capital (or long

term loans) for new high-technology enterprises in a variety

of ways:

1. The Australian Industries Development Bank (formerly

the AIDC - see the Industry Policy).  .

2. The new Industry Reconstruction Finance Corporation

(see Industry Policy) .  Ã¢ÂÂ

3. Through an investment fund administered by the

Industrial Research and Development Incentives

Board (see Policy D .28) .  .

4. Through the newly established national research,

development and innovation division within the

Department of Science and Technology (see Policy

B.18) .

The direct provision of capital is only one aspect of what can

be done by Government to develop high technology enterprises.

Government can perform a vital, catalytic role in commissioning

outside advisors to provide expert project analysis and assistance

in development and marketing strategies.  The revival of

Australia's feature film industry in the period 1970-75 by the

Australian Film Development Corporation (later the Australian

Film Commission) is a useful illustration of how comparatively

small sums of public money can be used in a non-bureaucratic

way.  The AFDC began in 1970 with an investment fund of $lm.

(equal to $3m. in 1982 dollars). The Corporation.essentially

backed talent rather than projects:  nevertheless the projects

were subject to stringent and imaginative outside evaluation.

An AFDC investment would often attract large investment by

banks, insurance companies and other corporate lenders who

were prepared to invest on the basis that the Corporation

had made an evaluation of the project and its promoters and

they relied on the Corporation's judgment rather than underÂ­

taking an independent evaluation of their own. An. AFDC .

investment of $100,000 frequently led to a total of $400,000

being invested, either, in cash or by the use of facilities and

talent contributions (i.e. where performers deferred payment .

for services until after the project was turned into profit) .

State Governments are likely providers of venture finance for

high.technology in the 1980's (as they were for films in the

1970 '  s) .  .

However, the major contributor to expenditure in Research and

Development must be by industry itself, which has a poor record

in Australia. This is largely because most high technology firms

in Australia are foreign owned and they conduct their research

at head office. In Australia industry now contributes barely

60 cents to R & D for every dollar invested by Government. (In

Sweden for every Kroner contributed by Government, industry

invests 8 Kroner. In the U.S. industry and Government both

contribute about 48% in R & D. In Japan industry invests more

than Government).

ALP Policy provides that the national research, development and

innovation division of the Department of Science and Technology

will: .

14 .

(B.lS.f) work with existing industries, and through

15.

industry based committees to encourage them to

make an adequate contribution to R & D - either

within their own enterprise or by contributing to

.  a common fund (with the benefit of tax incentives

and priority access to innovations).  .

.  It must be conceded that many governments have a

poor." track record in providing assistance in high

technology innovation.  Rather than handling this

challenge bureaucratically, a Labor Government

will try a variety of approaches including the

setting up of consortia with trades unions and

private enterprise to provide capital, facilities

and expertise (including university and CSIRO

personnel) as appropriate (see Policy D .27). .

POLICY DECISION:

A Labor Government will provide venture capital for high technology

enterprises.

16.

ELECTION PRIORITIES:

1. The 'Sunrise' Industries

Labor will provide venture finance through the Australian

Industries Development Bank,  the Industry Finance Reconstruction

Corporation and from the Australian Industrial Research and

Development Incentives Board's investment fund for the setting up

of 16 priority 1  *  3  4  sunrise1  industries as set out above. Labor will

also work with industry, unions and investors to set up consortia

to run these industries,  and provide technical and marketing

expertise.

2. Industrial Research and Development Incentives Scheme

The IRDI scheme will be amended to give the board power to invest

by way of equity participation where appropriate.  IRDI grants

will no longer be taxed in the hands of recipients.

3. Australian Research Grants Committee Scheme

The ARGC scheme will be increased by 10% more than the inflation

rate each year for the first three years of a Labor Government.

4. Increasing Industry's Contribution to R & D

Labor will increase Australia's total investment in R & D by

100% over a 5 year period on the basis that industry itself will,

contribute virtually all the increase and that appropriate

economic incentives should be worked out in collaboration with

.industry.

17.

5. Antarctica

Expend!tire on scientific research in Antarctica will be increased

by 300% over a three year period.

Appropriate aircraft landing facilities will be provided at one

or more of Australia's Antarctic bases to enable Australia to

upgrade the levels of our operations.  Ã¢ÂÂ

6. Radio-astronomy .

Labor will restore Australia's former pre-eminence in radioÂ­

astronomy by:

(a) honouring the Fraser Government's commitment to fund

.  CSIRO's 'Australia Telescope'. ($25m over 5 years to

1988) .  '

(b) providing moneys through direct grant and through the

AIDE, IRFC and AIRDIB for 'Starlab', the orbital teleÂ­

scope, for which Australia will provide the scientific

instrumentation package.  ($25m to 1990.)

7. Australia Prize *  8

This will be an annual award for scientific achievement promoting

human w Ifare, to be of the same value as the Nobel Prizes, open

to nominaj.ons from all nations,  and awarded by the Australian

Academy of Science. Its primary aim is to secure recognition of

Australia's role as a leading scientific nation.

8. Raising levels of community understanding in science policy

Labor will use a variety of means to raise the level of community

understanding in technical and social matters related to science

r r' '

policy and the use of new technology, to strengthen the role of

parliament,  the community and the democratic process. (Details

are set out in the Science and Technology Platform and the

Introductory Paper.) .

18.

BARRY 0. JONES  Shadow Minister for Science  and Technology

