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Chairman of the CSIRO discusses support for companies with innovative ideas and products

MATT ABRAHAM: It was the now Treasurer, former Employment Minister, John Dawkins, who coined the need for Australia to become the clever country. Bob Hawke picked it up and ran through the 1990 election campaign with it. The problem was that the need to become the clever country often conflicted with government cuts in the science budget and the dry economic drive to level the playing field. Now the Keating Cabinet is coming under growing pressure to tilt the field. Professor Adrienne Clarke is the new Chairman of the CSIRO and I caught up with her this morning, shortly before she chaired her first CSIRO board meeting, in Canberra, and begin by asking her about the vision she's painted of an economy that has to foster companies from start-up to megabucks. How do we do that on a level playing field?

ADRIENNE CLARKE: Well, of course, it's going to be extremely difficult - probably impossible - but I think the term level playing field deserves a few minutes. Really, it's a very imprecise term; it means different things to different people. And it seems very sad to me that at this time in our history of Australia, that we have to resort to such impreciseness to describe what really is fundamental to our future; and that really is competitiveness. And of course, the other thing is that there's no such thing as a level playing field - if you have to use the metaphor. Everyone, whatever field you're playing in - whether you're an academic or a footballer or a business person or a painter or a sculptor or a plumber - you're always trying to tilt the field to your own advantage. And of course, in the international field, or the other countries are trying to tilt the field to their own advantage.

MATT ABRAHAM: Yet there is this mentality, and it is really quite widespread both within this Government and, you could say, within the Opposition, that we have to strip away a lot of the advantages that Australian companies have traditionally had and want again, many of them.

ADRIENNE CLARKE: Well, again, it's a complex issue, but I think that we certainly have to get away from the old, very high protective tariff barriers under which industry really didn't develop. That's one thing. But the other thing is, we've got to look at how we're paying vis-a-vis the other countries. The other countries, of course, all have tariff barriers, quotas, exclusions to a certain extent. Even the United States that considers itself having the most open economy in the world, has literally thousands of tariff barriers and quotas and other devices which are non-tariff barriers to specifically exclude value-added products coming in from other countries. They're trying to preserve their value added base desperately at this time, too.

So I think we've got to be realistic about it and we've probably got to pick some areas. We've got to knock down the barriers that exist within our own country - and there are plenty of those - and then we've got to ensure that a particular field that we choose to play in really has got the environment in which new companies can emerge and survive. But at the moment, the way it's structured, is that - just suppose you had a great idea or you had a great new product which had, for example, a high labour proponent in it. Why would you choose to do it in Australia? Why, if it were an unskilled labour component, wouldn't you do it in Fiji, where you pay 40 cents now for labour, and then - because there's no tariff barriers between Fiji and Australia - bring it back into Australia as an import?

MATT ABRAHAM: At the moment, we seem to just abandon it .. if we don't seem to get into that role of exporting out the manufacturing, then re-importing it for export, if I could put it in that complex way.

ADRIENNE CLARKE: Well, I think we're just not there. When what we see, the facts in front of us are that we're not getting new companies up and running. What's happening is that our existing companies are looking at the facts and figures and they're choosing to relocate offshore their manufacturing facilities and then import for the Australian market; or, what's happening in a number of fields seems to be that they're abandoning manufacturing altogether and just becoming importers. Now, the companies still survive but, of course, the workers are without work in Australia.

MATT ABRAHAM: Have we become too tangled up in theory, in economic theory and, I suppose, manufacturing theory, rather than just good practical common sense?

ADRIENNE CLARKE: Well, you could say that. Well, certainly, to a certain extent. I'm a scientist - if I want to know how to do something, I go to the people who have done it successfully, and that's the way that I can learn fastest. If I were a country trying to get employment going, I'd look to the countries who have had growth in employment and growth in economics and I'd look at how they did it. And of course, you start looking at the target countries. Now, what they are doing is setting out, very deliberately, to capture their share of global wealth. For example, if you take Malaysia, Indonesia, they have major incentives for start-up companies and multinationals to locate in those countries - things like 10 to 25-year tax breaks. It doesn't really cost you a lot, because if you're a new company, the first few years you're going to be in negative cash flow anyway. So, things like that, that sort of tax break, help with getting your power at a reasonable, a very cheap rate, supply of an assured labour force with no difficulties, good transport systems. They will certainly tell you that you can have, and they will give you an assured share of the local market, so they'll protect the market for you until you're established. So, they have a pioneer status for new companies.

Now, that pioneer status, of course, is programmed so that it will slide down as the company gets established, but they can recognise that a new company can't get up in a totally competitive environment. But of course, the other thing in Australia that we don't realise is that people don't play fair. And for example, if you're a new company and you were trying to get part of the Australian market which was now being supplied from an overseas company; if that company saw our new one as a threat to its market, then it would engage in a bit of predatory dumping, knowing that the new company hasn't got the cash reserves to survive for two years of dumping - which is the time it would take, perhaps, to bring an anti-dumping case - and all the expense of bringing it. So the people are quite ruthless; they want to keep their markets.

So I think we've got to be realistic. I mean, the world doesn't play fair, and whereas I think we should play as fair as we possibly can, we've also got to recognise that we're a very small country.

MATT ABRAHAM: Now, where does the CSIRO fit into this picture?

ADRIENNE CLARKE: Well, the CSIRO really is about doing science and reducing science to practice in this country. Now, I guess, in the rural area, where we've been particularly good - we had a very strong history - and in the mining area, we can get the value for Australia very well because the pathways are established. But in some of the other areas, in some of the newer manufacturing areas, we haven't got a lot of well-established companies to deal with, and so we have to look at supporting the new companies. And it's pretty sad if we, on the one hand, put our support in the companies that really need the support to get them going, to give them a technological edge, if they can't get the venture capital and can't really get on their feet steadily, get knocked over before they're adult.

So, I think we've got a lot of thinking to do, about how do we get new companies that are viable in the long term that will create jobs and growth. And what CSIRO can do is bring really world-class technology to both our established companies and our struggling new companies.

MATT ABRAHAM: Does that mean that the CSIRO, increasingly, will become targeted to a market and to specific companies, rather than being immersed in some of the freer, more, well, touchy-feely sort of research which may not always yield or be seen to be yielding a dollar at the end of the day?

ADRIENNE CLARKE: I guess, touchy-feely, you mean our animals and plants - is that what you mean?

MATT ABRAHAM: Yes. The more theoretical research, if I can put it like that.

ADRIENNE CLARKE: Oh, no. No, I think what we would say is that within CSIRO we address a number of research areas. There are things like, as you say, touchy-feelies, but I'd describe more as our natural environment and our wildlife. And those are things we must put a major effort into because a lot of the problems and a lot of the resources are quite special to Australia. Nobody else in the world is going to do them for us. So, we certainly must maintain our effort there. In agriculture and mining, as I said, we've had a well-established presence and we've got a very well-established pathway of sending that new knowledge to the users, but in any package of research, in any field, we have to maintain a really world-class basic research activity, for several reasons. One is that if you're really good at doing the basic research, you understand where the knowledge really is, it becomes a lot easier to recognise new opportunities, to solve problems that are already existing because you're right on top of the technology. And the other reason is that we are a very small country and we only generate 2 per cent of the world's knowledge, so to even understand what the rest of the 98 per cent is, we've got to be very good at the underlying technology.

MATT ABRAHAM: Professor Clarke, you know that, obviously, Paul Keating is putting together his economic package, and it is in its final stages. This is an opportunity - what message have you got for him, as he's putting the final touches on that?

ADRIENNE CLARKE: Well, of course, it's a very tough job for him, but I certainly hope that into the economic package we won't consider only monetary policy and labour; that we think about innovation, because innovation will drive our future economy.

MATT ABRAHAM: And you're chairing your first CSIRO board meeting in Canberra, this morning. We wish you well.

ADRIENNE CLARKE: Thank you very much.