INDUSTRY AND COMMERCE

AUSTRALIA -V/// ^ÃÂªÃÂ¤ ÃÂÃÂÃÂÃÂ'

for release: EMBARGO 9.30 AM 23 JULY 1979 ‘ NO.: IC

SPEECH BY MR PHILLIP LYNCH, MINISTER FOR INDUSTRY  AND COMMERCE,TO THE W.D. SCOTT CONFERENCE ON.PROSPECTS IN  TECHNOLOGY CHANGE - SYDNEY - MONDAY 23 JULY 1979

'Industry and Commerce Tomorrow - New Directions

and New Emphasis’

Mr Chairman, I am glad to be here today to speak at this conference -

and to see so many senior members of the business community attending.

The issues which will be discussed are among the most significant

before us as a nation. The conference theme relates to technological

change - but it is important to recognise that change is taking

place in areas other than technology.

In the last 10 years new international forces have emerged and changed

the economic picture for the developed countries. The world’s

developing economies,  particularly in the Asian region,have introduced

new factors into the equation of comparative advantage. '  Nations such

as Australia have increasingly accepted the need to devote more of

their resources to the areas in which they can most successfully

compete internationally.

At the same time, the world economic structure has changed.  The

traditional trade cycles, and the fiscal and monetary techniques

which formerly influenced them, have been pushed into the background by

newly emerging forces. The OPEC oil cartel has acquired a capacity to

dominate the world scene. National economic plans and strategies can

be negated overnight. Projected national and international growth

rates can be slashed or even reversed. Â· . Â· .

.. ./2

The vulnerability of the world economy has seldom been more forcefully

demonstrated. We have also seen the effectiveness of Governments

.  reduced by inflexible public expectations.  The willingness of the

public to accept budgetary stringency in most developed countries

has lagged behind the economic need.'  Most nations have fallen victim

to severe inflationary problems. A resolute Government and responsible

policies have so far minimised this problem in Australia.

However,  we have been plagued by recent increases in the level of '

industrial disputation. While the picture has improved since the

excesses of the early 70s it is impossible to accept the proposition

that current levels of economic loss from strikes are inevitable or

acceptable. The national interest - Australia's reputation in other

countries, the wellbeing of other unionists - has been disregarded by

some unions in favour of a frenzied struggle to grab as much as

possible. Militant trade unions have become the new monopolists of

the 1970s - adopting selfish philosophies and tactics reminiscent of

the less reputable industrialists of the turn of the century. There

are those who tell us that we have to expect this - that any sign of

prosperity necessarily brings the return of selfish militancy by

powerful groups as surely as spring brings migratory birds.

We are in the midst of an economic recovery - the signs are all

around us

Â© real economic growth for the 12 months to March was 5.6 per cent

Â© manufacturing investment increased markedly in the year to March

Â© manufactured exports for the 10 months to April were 31

per cent above the previous year

Â© international competitiveness is at its highest level in many

years

3,

a

Â© housing approvals, commencements and loans are running at

high levels

Â® private capital inflow in 1978/79 was at its highest level

in seven years

Â© farm income in the nine months to March was almost double

that of a year earlier

Â© total civilian employment increased over 45 000 between July

.and May '

Â© the minerals sector is experiencing good prices

Â© and business confidence has improved.

The Government has no intention of allowing, the recovery to be

subverted by the adverse impact of industrial disputes. We intend to

pursue firm policies to ensure that industrial order is preserved -

within the framework of the present system of conciliation and

arbitration. This will remain a matter for priority attention by

the Government - and we expect the support of industry and the

.  business community. " Ã¢ÂÂ

I have referred to powerful forces which have developed in Australia

ana overseas w m c n  w m  arrect our future economic aeveiopmenc.

These include economic political and social factors.

There is one further factor which will profoundly influence our

future - new technology. "  We have become accustomed to the high and

accelerating rate of development of technology over a number of years

Each major breakthrough develops from a laboratory oddity to a

commercial reality more quickly than the last. Whilst a few years

ago managers could afford some delay in recognising opportunities,

Ã¢ÂÂ¢. *  / 4

4.

that luxury no longer exists. Increasingly both business and Ã¢ÂÂ

Government are obliged to devote their attentions to monitoring

their environment, observing extensions of the frontiers of t

technological feasibility as well as searching for early indications

of economic social and political trends. In a world characterised

by rapid change, there can be no substitute for attentiveness. Slow ,

response means lost opportunities. Ã¢ÂÂ

The demands on executives have increased markedly. New managerial .  Â·  '

techniques, new methods and new -equipment have become essential :

features of today's competitive business environment. Increasingly 1

managers must accept responsibility for selecting items such as I

computers and for hiring staff specialists from abstruse technical j

disciplines. Business success cannot be achieved without complex

analyses involving a multitude of specialised fields. It is impracticable '

for the top management group to maintain personal familiarity with all I

these technical areas - but they must have access to them and a j

basic grounding in the concepts. |

'Â· Ã¢ÂÂ   '  j-

The solution of this dilemma lies in training executives for .their '

tasks ,

' .  I

Â© in organising the firm to suit the job to be done

e in achieving a management orientation which seeks to conduct i

the orchestra rather than be a soloist

e but maintaining the recognition that the final decision

belongs at the top.

Given the difficulty of the task, is it any wonder that management

education has become a growth business? For Australian industry, it

is possible -to identify several broad areas in which opportunities

are likely to arise-but the need will always exist for that sense of

timing which has traditionally been a mark of the successful manager.

... /5

5.

Let me make a few comments on the characteristics of some potential growth

areas in industry. In general $  economic realities dictate that the

search should be concentrated on those activities where we have

natural advantages and where the need for Government support is

minimised. Examples are resource-based activities, and energy and

skill-intensive industries which can utilise our national resources

of minerals coal and a highly skilled workforce. The current rapid

growth of the aluminium industry is an outstanding instance of the

philosophy of combining a number of natural advantages with

appropriate timing to produce a major opportunity for investment.

Not all of our opportunities will be on the scale of aluminium

industry projects. In fact,  one of theÃ¢ÂÂ important areas for future

growth is likely to be those activities where major economies of

scale do not apply

Â© where a large home market may not be a requirement for lower

costs

Â© and where special Australian skills in low-volume operations

are an asset in competing with our rivals from more populous .

countries.

Australia's future will be closely aligned with emerging technologies.

As a high labour cost country, and one with high public expectations

for rising incomes and increasing leisure, our industry must achieve

the highest possible levels of productivity if it is to be competitive.

We can only achieve these productivity gains through employing the

newest and best technology. Â·

Our future will also often involve specialisation - making our small

population and small-scale orientation an advantage'instead of a

disadvantage. Specialisation is only a viable approach for those

at the forefront of technology in their field. .

i:

... / 6

6.

If Australia is to maintain its place among the technologically

advanced nations it must adopt a policy of both importing and

exporting technology. There are areas where we cannot compete in

developing the equipment. Yet we cannot be competitive if we do not

utilise it. In such cases we must import. An obvious example is

large main-frame computers. Another is industrial robots.

But we have also demonstrated the ability to develop in Australia

specialised high technology products for export. The InterScan

microwave landing system illustrates this point. Many other instances

could be cited

Â© an electronic heart pacemaker developed by a small Australian

company is already achieving substantial overseas sales, and

represents just one aspect of a successful export industry

producing specialised electronic medical equipment.

Â© the atomic absorption spectrometer is a fine example of an -

Australian invention which led to the development of a new

scientific instrument industry exporting 75 per cent of

its output.

Not all such innovations involve an enormous research team, backed

by a huge organisation. However, they are products which a less

technologically oriented country would be unlikely to develop.

They illustrate an area where we can expect to be highly competitive

- requiring a highly developed national technical base but not

always a multimillion-doliar involvement by a large organisation in

a country which is populous as well as advanced. Their success stems

from the quality of technical input rather than the quantity. In

short,  they arise from one of Australia's most significant national

assets - our well developed technological infrastructure.

./7 -

7.

Our universities and our industry have the capacity to develop

skilled specialists capable of competing with the best of their

overseas counterparts. I have been encouraged to note from the

survey results just reported to this conference that Australian

managers accept the basic elements of what I have said. Many

expect to increase their imports of technology. Many expect

increasingly to export it. The great majority believe that new

technology will absorb an increasing proportion of their companies6

funds, and that private investment in research and development must

increase significantly. :

This recognition must be transformed into action as a matter of

urgency. There has been a disturbing trend in recent years for

Australian industry to reduce its research and development effort.

Private enterprise expenditure o n .research and development fell by

almost 20 per cent between 1973-74 and 1976-77 in money terms.

Research and development manpower fell by 40 per cent in the same

period. This is an annual loss of 5200 man years. Information

available to my Department indicates that this decline continued

through 1977-78. .

The problem I have described is not confined to Australia. OECD

Ministers reported in June 1978 that the phenomenon is world-wide,

reflecting a tendency for companies to concentrate on short-term

problems in these difficult times.

I am sure that I do not need to point out the dangers of such a

short-sighted policy, particularly for Australia. We are in the

midst of a period of opportunity, having the chance to take a new

direction in pursuit of renewed growth and prosperity. This chance

should not be missed. .  .  .

.  .. /8

Technological development must be a central element in our national

strategy if we are to realise our full potential in the coming years.

Yet the figures I,have just quoted suggest that we are in danger

of sacrificing this prospect. Australia cannot afford such a Ã¢ÂÂ

sacrifice. The Commonwealth Government has taken significant steps

to facilitate the introduction and development of technology. The

investment allowance has provided substantial.benefits to those

pursuing productivity improvement and cost reduction in production

facilities. And our industrial research and development grants have

assisted the development of technology within Australia. We regard

these incentives as an important part of bur industry policy.

Nevertheless the major responsibility for making investment decisions

and financing them must lie with individual companies. The Government

supports the concept of private enterprise - and it is heartening to

see from the results of the survey which have just been related that

company managers-accept the need for increased private investment in

technology. "

It must be recognised that the capacity of industry to invest in new

technology is affected by prevailing economic conditions. For this

reason the restoration of historic levels of corporate profitability

is a priority aim of the Government’s economic policy. We intend to

press on with economic policies which will enhance the capacity of

the private sector to finance higher levels of research and development

activity-on an on-going basis.

Our future prosperity requires economic growth

- especially growth in exports :

- exports which are competitive in world markets. .

Growth can bring a sustained high rate of creation of permanent jobs -

jobs for Australia’s school leavers and unemployed of all ages. Our

success will be. determined by our competitiveness.

'  8.  _  ,

.. .79

9.

We must avoid the pitfall of passing up productivity increases in the

hope of saving jobs. Such a strategy'would be likely to lead to

more jobs being lost. .  Any failure to achieve higher productivity in

Australia would simply yield an advantage to our overseas competitors.

Our competitive position would deteriorate

Â© we would be unable to achieve the growth in manufactured

exports which we need

Â® Â·  foreign investors would find Australia, less attractive

than other countries -

Â® and our rate of economic growth would decrease

We live in a competitive world. Others will be sure to capitalise

on our mistake if we fail to adopt modern production methods.  New

jobs will be created in other countries instead of in Australia.

And existing jobs will disappear as we lose our present markets to

those who achieve the productivity gains which we forego.

A majority o,f companies in the survey just reported to us have said

that new technology has not reduced their employment and they do not

expect that it will in the future. This has been the usual pattern

ever since the industrial revolution - although it does not necessarily

apply during periods of recession and adjustment such as we have just

experienced.

For Australia new technology should not be a problem to be overcome

but a source of advantage.  It can enable us to compete in additional

areas with countries which lack our infrastructure and our educated

population. Technology itself is a potential export. It is one of

the keys to economic growth,  part of the solution to unemployment,

the means to reconcile rising public expectations with intensifying

international competition.

.../10

10.

I do not propose that we blindly accept technological change without A

thought to its costs,  whether economic or social. The Government has

established the Myers Committee of Inquiry into technological change

in Australia to recommend action to maximise its benefits and minimise

any adverse consequences. This demonstrates further the Government’s

recognition of the importance of technological progress for future

national well being.

I am very pleased to see from the W.D, Scott survey that our

businessmen also recognise this and I wish them every success in

implementing their convictions.Â·

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