The Good Oil by Rod Brown*
Middle income earners are paying ridiculously high tax due to bracket creep, and there is scarcely a murmur from anyone. About time that Labor championed the cause for the chattering classes.
And now GST revenues are adding to the tax revenue base in a big way. I recently asked a friendly Commonwealth Treasury official how much the States were actually getting from the GST bucket. He said ‘A lot. So much that they never mention it, and they continue to complain!’
He then kindly pointed me to the official Mid Year Economic and Fiscal Outlook. Treasury figures show that this year, the States will be $1.9 billion better off than had GST not been operating. And by 2007–08, the States will be benefiting by an extra $3.2 billion annually. For the record, the big winner this year is Queensland ($760m), followed by Victoria ($286m) and WA ($249m). By 2007, Queensland will still be the big winner ($907m extra) followed by NSW ($681m) and Victoria ($609m).
Worth noting next time you’re negotiating with the State Government.
Ireland – new focus on commercialising research
Dr Roy Green, National University of Ireland, Galway (ex Adelaide and Newcastle) was home for Christmas, and a Melbourne radio station interviewed him. Roy is an active supporter of our cluster network, and a leading industry analyst. Excerpts of his interview are as follows.
“In the 1980s, Ireland was essentially a basket case in Europe – 17% unemployment, 20% inflation, national debt higher than annual GDP. It was really in a serious predicament. It therefore developed a social partnership involving government, unions and business, and a framework in which new economic policies and an emphasis on education and research could take effect.
It opened itself to the international economy, looked for international investment – any investment, anything that would create jobs. This led to large companies setting up to manufacture with cheap labour, low corporate taxes, for the EC market, especially in computer hardware, pharmaceuticals and the like.
By the mid 1990s, Ireland was the world’s biggest software exporter, and also exporting PCs. But it was becoming evident that Ireland was not a technology maker, it was a technology taker. Thus in the mid 1990s economic policy became more discriminating. Within the context of the social partnership, some very far sighted civil servants, with leaders of business and unions, formulated policies that targeted areas of global growth that were not simply dependent on duplication of American software for the EC market or the production of PCs.
There is a high degree of government intervention in Ireland in the context of making firms competitive in global markets. While there is a healthy respect for the market environment in which Ireland operates, they’re not going to leave their industry policy to chance.
The Irish government set up the most significant review of industrial policy since the Telesis and Culliton reports of the late 1980s/early 1990s, which established such very effective institutions as Enterprise Ireland, that has developed supply chains and industry clusters and identified areas of growth for Irish industry.
The new review, released in 2004, concluded that Ireland had not done so well in developing its own R&D and innovative capacity. It is suggesting very large increases in funding on top of previous funding in basic and applied research (this level of investment is huge for a small economy).
However, a weakness in the Irish economy (and in Australia) is the lack of the ability of institutions to translate successful research into commercial products and processes.
Again, the Irish government is not leaving this to the market. It is intending to bring the universities together to cooperate. It doesn’t necessarily have the critical mass of big research intensive universities in the US like MIT and Princeton, so it’s bringing the universities together via a pooled approach to technology transfer and commercialisation of research. It sees this as the key to competitiveness over the next ten years.”
For more information visit www.nuigalway.ie/management/roy_green.html
Current models of globalisation not working
Another member of our network, Dr Bob Brown (former CSIRO division chief) now tracks technology and development issues for the MuNet network. His recent editorial, especially the last paragraph, is worthy of your quiet contemplation as you drive home tonight. Summary follows.
“Notwithstanding all the technological developments, human skills and human frailties remain at the heart of all industry. Human ingenuity conceives and refines products and processes. Human needs, desires and persuasion skills establish the market for the goods produced. Political, social and economic constructs determine if the manufacturing enterprise, or parts of it, will be profitable and sustainable.
In the 1970s there was considerable emphasis on robotics, automation and flexible manufacturing systems, leading to a proposed utopia of the “lights out factory”. Since then attention has concentrated on just in time manufacture and, in the last decade, attention has focused on LEAN manufacture – the minimalist approach to all elements of production and management.
These and other management methodologies are all fine, but the bottom line is to pay attention to what we are manufacturing and why. We are in danger of going into the ridiculous situation of making products obsolete almost as soon as they are marketed and releasing products that are obscene in their size, performance and cost – recognising that a large part of the world’s population lives in subsistence conditions.
I have a vision that globalisation will lead to closer cooperation between industrialists, researchers, decision makers and the community for the benefit of the world’s population. Current models of globalisation and the instruments of global control, the World Bank, IMF and so forth, seem incapable of reshaping “Market Forces” to achieve this vision. In fact, internationally and within most nations there is a growing disparity between rich and poor.
I don’t have any simple solutions, apart from a need for people to go back to basics and consider human values and aspirations. People often seem to expend huge amounts of energy – their own and non-renewable resources of the planet – on trivial and pointless activities. It is here that manufacturers and researchers can surely provide some rational advice and guidance for a more sensible resolution of the problems facing the world.
Weapon manufacture is unlikely to bring rational development; armies are not going to bring peace; irrational or fundamental religious beliefs will divide people into bitter enemies. You might silence opposition by punching an opponent in the face, but this is unlikely to convince him/her of the correctness of your case.”
Water Fund – $3.2 billion
In case you’ve not caught up with it, there is $1.6 billion of Federal funding available in the recently announced Water Fund. This amount MUST be matched from other sources, principally the States.
There is a huge opportunity for Local Governments to work together to make applications. My company has reached agreement with environmental and regional development experts to develop and promote submissions. The costs are minimal – we work on a management fee base once we have won the submission on your behalf. You win, and we win. Please contact us ASAP.
* Rod Brown’s Canberra based consultancy group, Australian Project Developments Pty Ltd, specialises in industry/regional development and government liaison. For further information telephone (02) 6231 7261 or email apd@orac.net.au
