INTRODUCTION

THANK YOU. .

THE TITLE OF MY PAPER IS GOVERNMENT SUPPORT FOR SCIENCE

AND TECHNOLOGY, ITS ROLE IN STRUCTURAL ADJUSTMENT. THE PAPER

WILL CONCENTRATE ON THE MANUFACTURING SECTOR.

WHEN PREPARING THE PAPER, I WAS REMINDED OF A NUMBER OF

FORECASTS BY EMINENT PEOPLE OF THEIR DAY, WHICH IF PROVEN

CORRECT, WOULD HAVE CHANGED THE COURSE OF MANUFACTURING. '

IN THE LAST YEARS OF THE 19TH CENTURY THE GREAT PHYSICIST

LORD KELVIN MADE THREE PREDICTIONS OR TECHNOLOGICAL

FORECASTS. .

FIRST, HE SAID, X-RAYS WILL PROVE A HOAX, SECONDLY THAT

AIRCRAFT FLIGHT IS IMPOSSIBLE AND THIRDLY, THAT RADIO HAS .

NO FUTURE. ‘ .

ANOTHER GREAT PHYSICIST LORD RUTHERFORD CLAIMED THAT ANYONE

WHO EXPECTS SOURCES OF POWER FROM THE TRANSFORMATION OF

ATOMS 'I S  TALKING MOONSHINE'. '

HE SAID THAT JUST A FEW YEARS BEFORE THE FIRST NUCLEAR POWER

STATION STARTED OPERATING. Â·

SO I HAVE GREAT SYMPATHY FOR THE POOR OLD INVESTOR WHO PUTS

HIS MONEY UP FRONT IN THE HOPE THAT A TECHNOLOGICAL ADVANCE

WILL PROVE TO BE ECONOMICALLY SUCCESSFUL.

RISK TAKING LIES AT THE CENTRE OF THE RELATIONSHIP BETWEEN

SCIENCE AND TECHNOLOGY AND INDUSTRIAL DEVELOPMENT.

STRUCTURAL CHANGE Ã¢ÂÂ

IN 1980 THE OECD PUBLISHED A REPORT ENTITLED "TECHNICAL

CHANGE AND ECONOMIC POLICY. " .

THE REPORT FOUND THERE IS A KIND OF VICIOUS CIRCLE IN OUR

ECONOMIC SYSTEM. '

THE SLOW-DOWN IN INNOVATION CAUSED BY THE SLOW-DOWN OF

ECONOM.IC GROWTH CAN RESULT IN FAILURE TO GENERATE NEW

SOURCES OF GROWTH. .

THE REPORT ALSO NOTED THAT BY DEFINITION THE PROCESS OF

TECHNOLOGICAL CHANGE IS DISRUPTIVE. .

BUT, AS HAS BEEN POINTED OUT (SCHUMPETER) IT IS ALSO CREATIVE

DESTRUCTION. ' . .

A STUDY OF THE REAL GROWTH SECTORS IN THE 1950'S AND 6 0 'S

IN THE MANUFACTURING SECTOR REVEALS THAT INDUSTRIAL SUCCESS

IS CLOSELY TIED TO TECHNOLOGICAL ADVANCES. .

THE GROWTH SECTORS INCLUDED ELECTRONIC GOODS SUCH AS

TRANSISTOR RADIO, TELEVISION AND COMMUNICATION EQUIPMENT,

CONSUMER DURABLES SUCH AS MOTOR CARS AND SYNTHETIC MATERIALS

SUCH AS PVC AND PLASTICS.

SCIENCE AND TECHNOLOGY HAS THERFORE BEEN A MAJOR CAUSE OF

STRUCTURAL CHANGE.

AND POLICIES MUST BE FRAMED WITH AN UNDERSTANDING OF THE

FACTORS WHICH UNDERPIN TECHNOLOGICAL INNOVATION AND WITH

AN AWARENESS OF THE NEEDS OF INDUSTRY. :

WORK AT THE OECD AND ELSEW'HERE HAS IDENTIFIED THREE FACTORS

WHICH, WHEN BROUGHT TOGETHER, PROVIDE THE INGREDIENTS FOR

SUCCESSFUL INNOVATION.

THESE FACTORS AR E:- ' "

-  THE PRESENCE OF A SCIENTIFIC AND TECHNOLOGICAL

CAPABILITY

-  THE EXISTENCE OF AN ACTUAL OR POTENTIAL DEMAND

. AND,

-  THE A B I L I T Y  TO TRANSFER TECHNOLOGICAL CAPABILITY

INTO GOODS AND SERVICES.

GOVERNMENTS HAVE A LIM IT ED  BUT SIGNIFICANT ROLE IN ENSURING

THAT THESE FACTORS COME TOGETHER IN THE REQUIRED FASHION.

IN . GENERAL, GOVERNMENTS 'WHICH WISH TO PROMOTE STRUCTURAL

ADJUSTMENT BY STIMULATING INNOVATION, SHOULD CONCENTRATE

THEIR EFFORTS IN TWO DIRECTIONS.

FIRST, THEY SHOULD AIM TO BRING ABOUT AN ECONOMIC CLIMATE

IN WHICH INDUSTRY AND INNOVATION IS LIK ELY TO FLOURISH.

SECONDLY, GOVERNMENTS HAVE A RESPONSIBILITY TO ENSURE THAT

THE SCIENTIFIC AND TECHNOLOGICAL INFRASTRUCTURE PROVIDES

THE FA C IL IT IE S  AND INFORMATION REQUIRED BY INNOVATORS.

SCIENCE AND TECHNOLOGY POLICY IS DIRECTLY CONCERNED WITH .

THE SECOND DIRECTION.

THE NORMAL WORKINGS OF THE MARKET ECONOMY AND THE PROFIT

MOTIVE WILL BRING ABOUT SOME INVESTMENT IN RESEARCH AND

DEVELOPMENT.

HOWEVER, IT IS UNLIKELY THAT THIS INCENTIVE ALONE IS

SUFFICIENT IN TERMS OF THE NATIONAL INTEREST.

AREAS IN V/HICH MARKETS ARE UNLIKELY TO REFLECT AND .

ANTICIPATE FUTURE ECONOMIC AND SOCIAL NEEDS INCLUDE THE

SUPPORT OF LONG-TERM INDUSTRIAL RESEARCH AND DEVELOPMENT

AND THE OPERATIONS OF SMALL AND MEDIUM-SIZED COMPANIES.

CHANGE IN AUSTRALIAN MANUFACTURING.INDUSTRY

IN THE LAST 30 YEARS, TECHNOLOGICAL CHANGE HAS BEEN MORE .

RAPID THAN IN ANY OTHER PERIOD OF HISTORY. AUSTRALIAN

INDUSTRY SHARED THIS EXPERIENCE.

HOWEVER, IN RECENT YEARS, THE ENVIRONMENT FOR MANUFACTURING

INDUSTRY CHANGED DRAMATICALLY: THE 1970'S WERE

CHARACTERISED BY THE ENERGY CRISIS, A RAPID GROWTH IN IMPORTS

AND SUBSTANTIALLY HIGHER WAGE COSTS. ''

AS IN OTHER INDUSTRIALISED COUNTRIES, SUCH STRUCTURAL .

PRESSURES WERE AGGRAVATED BY DEPRESSED DEMAND AND

CONTINUING INFLATION.

AN IMPROVEMENT IN WORLD-WIDE ECONOMIC CONDITIONS WILL DO

MUCH TO RESTORE HEALTH TO THE MANUFACTURING SECTOR.

BUT PARTICULAR REMEDIES WILL NEED TO BE FOUND TO OVERCOME

DIFFICULTIES FACING AUSTRALIAN INDUSTRY.

THE GOVERNMENT IS COMMITTED TO THE DEVELOPMENT OF A

MANUFACTURING SECTOR WHICH IS INNOVATIVE, EFFICIENT, .

INTERNATIONALLY COMPETITIVE AND REQUIRES A MINIMUM LEVEL

OF COMMUNITY SUPPORT. .

THE (1977) WHITE PAPER ON MANUFACTURING INDUSTRY OUTLINES

THESE GOALS.

THE DEVELOPMENT OF AN INDUSTRY STRUCTURE ALONG THESE LINES

IS ONE OF THE OBJECTIVES OF OUR SCIENCE AND TECHNOLOGY

POLICIES.

THE GOVERNMENT'S SCIENCE AND TECHNOLOGY POLICIES RECOGNISES

THE IMPORTANCE -OF THE MARKET MECHANISM AS A MEANS OF

EFFICIENTLY ALLOCATING RESOURCES

HOWEVER, GOVERNMENT A C T IV IT Y  CAN SUPPLEMENT MARKET FORCES

WHERE IT IS IN THE COMMUNITY INTEREST.

EXAMPLES OF GOVERNMENT INVOLVEMENT INCLUDE THE UNDERTAKING

OF STRATEGIC RESEARCH INTO INDUSTRY PROBLEMS BY CSIRO'S

DIVISION OF MANUFACTURING TECHNOLOGY, AND THE PROJECT AND

COMMENCEMENT GRANT PROVISIONS OF THE IR & D INCENTIVES

SCHEME.

THE RECENT HIGHLY SUCCESSFUL SYMPOSIUM ON THE COMMERCIAL

OPPORTUNITIES OF GENETIC ENGINEERING IN AUSTRALIA IS ANOTHER

EXAMPLE. .- Â· Ã¢ÂÂ   Â·

IF I MAY PUT IN A "PLUG", A COPY OF THE PROCEEDINGS WILL BE

AVAILABLE SHORTLY IN AUSTRALIAN GOVERNMENT PUBLISHING

SERVICE STORES. *  1

THESE IN IT IA TI V E S  AND OTHERS ENCOURAGE DESIRABLE STRUCTURAL

ADJUSTMENT

PROCESSES IN MANUFACTURING INDUSTRY,

TARIFFS ' . Â·

OF COURSE THERE ARE OTHER TYPES OF SUPPORT, BUT IN THIS CASE

I WILL CONCENTRATE ON SCIENCE AND TECHNOLOGY PROGRAMS.

BUT BEFORE I DO I WOULD LIKE TO COMMENT ABOUT TARIFF

SUPPORT FOR AUSTRALIAN MANUFACTURING INDUSTRY.

I SUPPORT THE ARGUMENT FOR THE GRADUAL REDUCTION IN TARIFFS.

HOWEVER A PRE-CONDITION OF REDUCING PROTECTION IS THAT TIME

AND INCENTIVES MUST BE GIVEN TO INDUSTRY TO INSTALL NEW

TECHNOLOGY.

THE INTRODUCTION OF PRODUCTS AND PROCESSES BASED ON NEW

TECHNOLOGY WILL LOWER COSTS, CREATE JOB SKILLS AND BUILD AND

STRENGTHEN OUR MANUFACTURING INDUSTRIES. '

THE CONTRIBUTION OF SCIENCE AND TECHNOLOGY POLICY PROGRAMS

TO PROMOTING STRUCTURAL ADJUSTMENT IN MANUFACTURING INDUSTRY,

WILL ONLY BE EFFECTIVE IF THEY ARE CLOSELY INTEGRATED WITH

ECONOMIC AND INDUSTRY POLICY.

THE PRIME MINISTER OUTLINED THE ROLE OF THE GOVERNMENT IN

THE ECONOMY WHEN HE- TABLED THE REPORT OF THE REVIEW OF

COMMONWEALTH FUNCTIONS' IN PARLIAMENT.

AS A RESULT, A NUMBER OF THE PRODUCTIVITY AND '

TECHNOLOGY-ORIENTED 'PROGRAMS OF MY DEPARTMENT WERE REVIEWED

THE REVIEW COMMITTEE CHAIRED BY MR. RAYMOND KIRBY ASSESSED

THE APPROPRIATENESS OF COMMONWEALTH INVOLVEMENT IN INDUSTRY

PRODUCTIVITY DEVELOPMENT, AND IN PROGRAMS AIMED AT

IMPROVING THE INNOVATION PROCESS AND ASSISTING INVENTORS.

IT RECOMMENDED GUIDELINES FOR FUTURE COMMONWEALTH

INVOLVEMENT IN PROGRAMS OFFERING DIRECT AND SELECTIVE

ASSISTANCE TO INDUSTRY. Â·" .

THE COMMITTEE BELIEVED THAT THE GOVERNMENT SHOULD INTERVENE

IN TWO GENERAL SITUATIONS. . ' ,

THE FIRST IS WHERE GOVERNMENT SUPPORT FOR PARTICULAR

AC TIVI TIES  WOULD:- .

-  GENERATE COMMUNITY BENEFITS OR

-  PROVIDE ASSISTANCE TO OVERCOME MARKET

IMPERFECTIONS; OR

-  PROVIDE POSITIVE ENCOURAGEMENT FOR STRUCTURAL

' ADJUSTMENT.

THE SECOND GROUND FOR INTERVENTION IS WHERE MARKET FORCES

WILL NOT ACHIEVE SPECIFIC GOVERNMENT POLICY OBJECTIVES.

THE COMMITTEE ADDED THE PROVISO THAT IN ALL CASES PUBLIC

BENEFITS HAD TO SIGNIFICANTLY EXCEED PUBLIC COSTS.

IT RECOMMENDED THE ADOPTION OF A NUMBER OF GUIDELINES FOR .

FUTURE COMMONWEALTH INVOLVEMENT-. ' '

THE MOST SIGNIFICANT A R E :-  '

(1) PROGRAMS SHOULD BE DESIGNED TO IMPROVE THE

OPERATION OF THE MARKET AND SHOULD HAVE THE

; POTENTIAL TO PROVIDE SIGNIFICANT PUBLIC BENEFITS.

(2) PROGRAM OBJECTIVES SHOULD BE COMPATIBLE WITH THE

GOVERNMENT'S OTHER POLICIES;

(3) WHERE APPROPRIATE, STATE GOVERNMENTS, INDUSTRY

. AND EMPLOYEE ORGANISATIONS SHOULD BE CONSULTED

. DURING THE PROGRAM DESIGN PROCESS; . Ã¢ÂÂ

' (4) ESTIMATED PUBLIC BENEFITS FROM, AND COSTS OF

' PROGRAMS SHOULD BE CLEARLY DEFINED BEFORE A

PROGRAM STARTS;

( 5 )  . THE USER-PAYS PRINCIPLE SHOULD APPLY WHEREVER '

. APPROPRIATE; AND .

(6) PROGRAMS SHOULD BE DELIVERED THROUGH APPROPRIATE

MULTIPLIER AGENCIES. FOR EXAMPLE, THE TECHNOLOGY

TRANSFER COUNCIL, PRODUCTIVITY PROMOTION COUNCIL

OF AUSTRALIA, INDUSTRIAL DESIGN COUNCIL OF

AUSTRALIA, INDUSTRY ASSOCIATIONS AND SOME TERTIARY

EDUCATION INSTITUTIONS.

THE GOVERMENT HAS ACCEPTED THE KIRBY COMMITTEE'S

RECOMMENDATIONS. .

THIS IS A FIRM BASIS FOR IMPLEMENTING OUR SCIENCE AND

TECHNOLOGY POLICIES. .

IT BRINGS US MUCH CLOSER TO WHAT I BELIEVE IS THE PRIME GOAL

OF MY MINISTRY -  THE EFFECTIVE INTEGRATION OF SCIENCE AND

TECHNOLOGY WITH ECONOMIC AND SOCIAL POLICY.

I AC REVIEW OF THE I R & D INCENTIVES ACT

THE GOVERNMENT HAS TAKEN ANOTHER.STEP TOWARDS THIS GOAL.

THE INDUSTRIAL RESEARCH AND DEVELOPMENT INCENTIVES (IR & D l)

SCHEME WAS REFERRED ALONG WITH OTHER FORMS OF BUDGETARY

ASSISTANCE TO THE INDUSTRIES ASSISTANCE COMMISSION FOR REVIEW

THE IR & Dl SCHEME, THROUGH ITS SUPPORT FOR THE RESEARCH

AND DEVELOPMENT A C T IV I T IE S  OF INDUSTRY, IS A MAJOR ELEMENT

IN GOVERNMENT SCIENCE AND TECHNOLOGY POLICY. '

THE I AC HAS BEEN ASKED TO DETERMINE WHETHER "THE INDUSTRIAL

RESEARCH AND DEVELOPMENT INCENTIVES SCHEME IS MAKING A

SUFFICIENTLY EFFECTIVE CONTRIBUTION TO THE ACHIEVEMENT OF

. THE GOVERNMENT'S INDUSTRY POLICY OBJECTIVES."

THE IAC EXAMINATION PLACES A MAJOR ELEMENT OF TECHNOLOGY

POLICY FIRMLY WITHIN AN INDUSTRY CONTEXT.

ATTITUDE OF AUSTRALIAN INDUSTRY TO TECHNOLOGY

THERE ARE A COUPLE OF PARTICULAR ISSUES IN SCIENCE AND

TECHNOLOGY POLICY WHICH ARE OF PARTICULAR CONCERN TO ME.

THE FIRST IS THE ATTITUDE OF AUSTRALIAN INDUSTRY TO RESEARCH

AND TECHNOLOGY. . . .

THE LOW LEVEL OF I R&D PERFORMED BY AUSTRALIAN INDUSTRY IS

A SUBJECT OF WHICH YOU WILL ALL BE AWARE. .

IT COULD BE ARGUED THAT THE LOW LEVEL IN ITSELF IS NOT A

CRITICAL PROBLEM IF FIRMS MANAGE TO GET ACCESS TO DEVELOPED

TECHNOLOGY FROM OVERSEAS.

HOWEVER, THERE IS EVIDENCE TO SUGGEST THE FIRMS SUCCESSFULLY.

IMPORTING TECHNOLOGY ARE ALSO THE ONES WITH A SIGNIFICANT

IN-HOUSE IR&D CAPA BI LIT Y.

THERE ARE MANY INSTANCES IN WHICH AUSTRALIAN FIRMS HAVE BEEN

AT THE FOREFRONT OF TECHNOLOGICAL DEVELOPMENT.

HOWEVER, I AM STILL LEFT WITH THE IMPRESSION THAT TECHNOLOGY

IS UNDERVALUED BY MUCH OF AUSTRALIAN INDUSTRY -  TO OUR .

NATIONAL DETRIMENT. . .

THERE MAY BE A NUMBER OF REASONS FOR THIS -  THE ISOLATION

OF AUSTRALIAN INDUSTRY FROM OVERSEAS MARKETS, MANAGEMENT

ATTITUDES OR A LACK OF RISK CAPITAL. .

HOWEVER, WHATEVER THE CAUSE, INDUSTRY MUST MAKE ITSELF MORE

AWARE OF THE POTENTIAL BENEFITS OF GREATER PRODUCT AND

PROCESS INNOVATION AND THEN ACT QUICKLY TO REVERSE THIS

SITUATION. ./

THE SECOND MATTER RELATES TO THE ALLOCATION OF THOSE

RESOURCES AVAILABLE FOR GOVERNMENT SUPPORT OF SCIENCE AND

TECHNOLOGY.

PRESENT CIRCUMSTANCES DICTATE THAT THE GOVERNMENT'S ECONOMIC

POLICY IS BASED ON MAXIMUM RESTRAINT IN EXPENDITURE.

RESOURCES AVAILABLE TO GOVERNMENT ACTIVITY. IN ALL AREAS, .

IRRESPECTIVE OF PRIORITY, ARE SEVERELY LIM IT ED .

IN THESE CIRCUMSTANCES THE MATTER OF VALUE FOR MONEY FOR

EXISTING PROGRAMS BECOMES EVEN MORE CRI TICAL.

THIS RAISES THE PROBLEM OF SELECTING THOSE AREAS WHICH WILL

BE OF GREATER VALUE.

THE ISSUES INVOLVED IN GOVERNMENTS "PICKING- WINNERS" HAVE

BEEN EXTENSIVELY CANVASSED.

HOWEVER, IT MAY BE DESIRABLE TO ADOPT A MORE SELECTIVE

APPROACH TO THE SUPPORT OF TECHNOLOGICAL DEVELOPMENT.’

I HAVE RAISED THE QUESTION OF A MORE SELECTIVE APPROACH IN

OUR POLICIES FOR TECHNOLOGY SUPPORT IN RECENT MONTHS.

I BELEIVE THIS SHOULD BE FURTHER EXAMINED. 'Ã¢ÂÂ

I AM PLEASED TO SEE THAT THE MATTER HAS RECEIVED THE

PARTICULAR ATTENTION OF MANY OF OUR INDUSTRY LEADERS AND I

HAVE RECEIVED A NUMBER OF VALUABLE SUGGESTIONS THE DIRECTION

POLICY SHOULD TAKE. .

THESE WILL ALSO PLAY THEIR PART IN FORMING A GOVERNMENT

APPROACH. ..

CONCLUSION .

GEORGE BERNARD SHAW ONCE' SAID:

"SCIENCE IS ALWAYS WRONG -  IT NEVER SOLVES A PROBLEM

WITHOUT CREATING TEN MORE."

I HAVE ALWAYS BELIEVED THAT THE SEEDS OF OPPORTUNITY LIE

IN PROBLEMS. . .

AND THOSE SEEDS SHOULD BE BROUGHT TO FRUITION BY SCIENCE AND

TECHNOLOGY AND INDUSTRY WORKING TOGETHER FOR THE BENEFIT OF

ALL AUSTRALIANS.

THANK YOU.

