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43rd Chapman Oration for the Institute of Engineers, Melbourne: speech.

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Robert Menzies once said - ‘that prosperity was essential in the writing of policy but never in the writing and delivery of a speech’ but obviously for an oration - one which is named in honour of Brigadier Dr Wilfred Dinsey Chapman - it is absolutely essential. I don’t profess to understand your profession or what drives it, although I do have some inkling of the final outcome and how important you are to our society and indeed to our future.

Wilfred Chapman was a man from who apart from leading your division - the Victorian Division- in 1922 and assuming the Presidency of the Institution in 1944 was a man who was possessed of vision. It was mentioned earlier it was said of Chapman that an inspiring and effective engineer, indeed an outstanding engineer was one of vision. And when thinking about engineering and what it should mean to us and our society, you are by definition a group of men and women who are always looking for a way of overcoming human adversity, of improving the efficiency of everything that we do, of protecting us and making us secure and finding new and innovative ways of approaching age old problems. And Chapman amongst many other things was a man who had a vision, not only of a national rail gauge but also of an association that would take a leadership role in nurturing vocational education and training. And that -as a person who has the privilege to be the Minister for Education, Science and Training for the 21st Century - that at least, in my view, is perhaps the greatest legacy that he has left us. One of the observations that I make as a parent, a human being and, in a previous life, my wife would say when I had one, when I was practising medicine, is that it is often the things that are most important to us in our lives as human beings that we so often are tempted to take for granted, whether it is our families, our freedoms, our security, our citizenship, or in your case, the marvellous things that you have done to make this country what it is. And whilst much is said about scientists, I can assure that I am aware that much of the innovation and research and development, which is the application of science that occurs in this country, is done by people who are members of the Institution of Engineers of Australia. So can I reassure you that is understood.

The difference between management and leadership is vision. It was said of Chapman that he was man of vision. Management is about getting results. It is about moving your in-tray from one side of the desk to the other and making decisions in the process. That is not ever easy but the much more difficult task is leadership. And leadership should be informed by visions - vision being like the campfire around which we as a people should sit. Vision should warm us. It should cause us to reflect on who we are, how we relate to one another, those and their circumstances who made us who are and, most importantly, give us a sense of where we want to go and why we want to get there. Management is about getting results, but leadership is a question of why do we want certain outcomes. Why do we want certain things to happen. And the vision of education and science and training, which I am seeking to articulate on behalf of all of us as Australians, whatever our circumstances or politics, is informed by many things but principally the statements made by two statesmen, a world apart, almost sixty years ago.

In 1943, when Winston Churchill went to Harvard University in a world that is quite different from that in which we live, in a rather prescient address, he said "that the empires of the future would be empires of the mind". And then a year later here in Australia, the same year that Wilfred Chapman was the President of the Institution of Engineers of Australia, Sir Robert Menzies in October to the eighteen organisations that had come to Canberra to found the Liberal

Party of Australia, said in part that "that to every good citizen the State owes not only a chance in life but a self-respecting life". And those two men and what they said under quite different circumstances from those in which we live, are critically important to what we are trying to do in Government to lead education, science and innovation. And they are important because two years after Churchill was at Harvard, and when the war ended, the world was characterised by one hundred segmented markets. And here we are today, living in a world that is coalescing into three major trading blocks. This country has literally been built by you and your professional forebears, principally in agrarian, land and labour intensive industries, in mining and manufacturing, in agriculture and fishing and forestry. When I finished my schooling, in 1975, manufacturing was 17% of Australia gross domestic product. Last year it was less than 12%. The same year I did my VCE, agriculture was 3.6% of Australia’s GDP - it is now 2.8% and I recently noticed the latest (inaudible) trends in relation to Australian industry, and I notice that of the 20 slowest growing industries in this country, 7 were in manufacturing. But of the 10 fastest growing, it included finance, biotechnology, information communication technologies, telecommunications and tourism. And the problem, or the challenge, that we face as Australians, whether as engineers or indeed as part-time human beings, is that there are several million Australians, who question whether there is a place for them in 21st Century that they see ahead.

I am privileged, thanks in no small way to the efforts of Tony Staley, to be the member for the electorate of Bradfield, which is on Sydney’s upper north shore. My electorate is one of the most affluent and highly educated electorates in the country. Most of the people that I represent want Australia to be a republic, though I confess not to being one of them. Most of people I represent see Australia, and with a sense of frustration, feel that we are not yet a part of the world’s economic (inaudible) culturally as much as they would like us to be. Most of the people I represent readily understand and embrace the share market, although they have gone off it a bit recently. And when people write to me about information communication technologies, it is about complain about slow access. But in the outer suburbs of most of our large cities, in the some of the regions of this country, and in almost all of rural Australia, are several million Australians who feel a deep sense of economic, technological and education detachment from the kind of world in which they see us living. They feel at times they perceive that the relative affluence we enjoy has been built at their expense and that too many of us take for granted what they have done to give us what we have. One of my constituents sent me a book just before Christmas in 1997 entitled Revelation by a German physicist and philosopher, which is an interesting career combination. In fact David Murray recently said "what we" - the Commonwealth Bank - "are looking for out of law graduates, is people that have done philosophy." I said can you please go and tell prospective law students and then the philosophers will be very happy. But it is a heavy theological read about change - how we effect and manage change institutionally and individually. And he said "Progress leads to chaos if not anchored in tradition. Tradition becomes rigid if it does not prepare the way for progress. But a perverted traditionalism and a misguided progressivism, propel each other toward a deadly excess, hardly leaving any ground between them."

And therein lies our real challenge. How do we - how do you as professional people - people in industry, people who will drive our future - how do we bring those Australians who are questioning and are deeply troubled about whether what they have done to make Australia what it is, will be the basis upon which the 21st Century will be built? At the same time how do we bring perhaps some of the more enthusiastic progressivists if you like, to an understanding of what has been done for us and to respect the values and sacrifices of our past upon which the future must be built?

If you look at the last decade - in the year 2000 for example - of the OECD (inaudible) research and development intensive industries were 3½% of the OECD (inaudible). Ten years later in the year 2000 it was 6½%. By the year 2000 all government expenditure on research and development in this country was 0.7% of GDP and there are those who choose to criticise that and that was before the introduction of Backing Australia’s Ability at $2.9billion which we expect to leverage over six years another $6billion from the private sector. We were in the year 2000, in terms of public investment in research and development, 10% ahead of the OECD average, 19% ahead of Canada and 30% of the UK. And the business investment in R & D had improved in those two years from 1998 by 18% to 0.7% of GDP and of course, as I said, that was pre Backing Australia’s Ability.

What is important for us to understand is that our vision of education should be one in which we understand that education is about learning how to learn, that all of the facts that each of us learn goes out of date and those that don’t we forget. But it is a process that begins not long after we are born and should continue right throughout our lives, particularly in a country with collapsing age dependency ratios and as I said to the audience last night, for those of you with empty lives who have read the National Commission of Audit Report and the Retirement Incomes Modelling Taskforce Report and the Intergenerational Report released by the Treasurer recently, you will know that in the next forty years our age dependency ratios will decline from 5.3 to 1 to 2.6 to 1.

It is obvious, as a relatively small country, with 0.3% of world population, we are 1% of world trade, we are still 6% of APEC. If we are going to offer the next generation a standard of living in which they can have hopeful confidence and half the sense of satisfaction that we have left them something worthwhile, it will depend entirely on the empires of the mind - our ability to develop new ideas, to create new knowledge, to develop new technologies to apply to traditional commodities and industries as much as we use them to support new and emerging ones.

When I recently opened the Tweed Heads campus of the Southern Cross University, for example, I said to the seventy people who turned up in spite of the fact I was opening it, it was the centre for excellence in interactive video-teleconferencing and information communication technologies. I said them, a hundred years ago with Australian population was less than three million, if we had been opening a train station, there would have been two and a half thousand people there because they would know just how important rail infrastructure would be for our economic and

social development. The railway lines for this century are in our ability to think and to innovate. And one of the many things that we have just done, I announced in September, for example, the first national survey done by the NHMRC, the Australian Reseach Council and CSIRO of our ability, if you like, to commercialise our research. And what we found is we had 47 spin offs, we had 400 licences, $99million in revenue from licences and it doesn’t surprise me having now spent the best part of the year with my head buried in universities - possibly to the concern of the Prime Minister at times - the university which actually came out as the best value for money, in terms of research investment, was Southern Cross University. In terms of patents applied for and licences for research dollar invested. And that is not to speak ill of the University of Melbourne, which I have right in front of me - yes I have Allan Gilbert in front of me every day. And I will speak about that in a moment. But what is important also in what the government has sought to do is that we have refigured the Australian Research Council. We want it to be concentrating, not only in research it is traditionally funded, but in linkages to other institutions and organisations. We have also had Geoff Garratt recently tell the National Press Club that it is partnership or perish for CSIRO and I am particularly interested in looking at the relationship between CSIRO not only in industry, but also Australian universities and I am the Australian Institute of Marine Science, the Defence Science Technology Organisation and ANSTO. I think that there is enormous potential for closer collaboration.

At the end of the third week that I had the privilege to be in this portfolio, I made two decisions in relation to universities. I had closely examined the financial position of each one of the 38 publicly funded universities. I then attended a dinner with the executive of the Australian Vice Chancellor’s Committee and said to my then Chief of Staff, as we drove back to Parliament House late that evening, I said "I think we are going to have to do something for our future and it is going to be hard but we are going to have to reform Australian higher education".

But whilst John Kenneth Galbraith had said that given the choice of change or proving it is not necessary most people get working on the proof, I have found that with one or two exceptions the people in the higher education sector have been exceptionally constructive in taking this on.

There have been six papers produced that are held in the National Archives which specifically canvass the issue of a crisis in universities. In 1952, in 1965, 1970, 1980, 1994 and 2001. So those who argue that there is a crisis in Australian higher education are not setting a precedent.

The reason I say that there is not a crisis is firstly the sector had last year had $20.8billion in fixed assets available to it; $4.8billion in liquid assets; the net operating position was $464million which had improved from $361million the year before; the borrowings in the sector at $591million are 2.8% of asset value; total revenues have increased in the last six years by $2billion to $10.4billion. So when people want to talk about a crisis I have said to them have a look at what is happening in aboriginal literacy, where, for example, only 16 of 378 aboriginal kids outside Alice Springs can pass the basic Year 3 reading test, or, if you are not satisfied that that is an educational crisis, go and have a talk to the people at Jesuit Social Services here in Melbourne or Bill Crews of Exodus Foundation in Sydney and have a look at kids that have spent five years in the education system and cannot read a word. One child in fact saying "Oh, it’s the black stuff that you read". And for those who still want to talk about a crisis in a society where some Australians trying to feed their kids, their car loans and their mortgages, are working in industries that are undergoing significant reform and in some cases disappearing under along with their communities. Have a look a two generations of working age Australians living in a society talking about the email and internet and they can’t even turn on a computer. So I said to them, stop talking about a crisis and start talking about reality.

But if we want to face our future, it is not a question of what will happen in universities this year or next year. It is what sort of Australia will we live in twenty years from now and whilst the key political issues in my portfolio are in schools and training, the real policy issues that will deliver the future are in higher education and in science. The issues in Australian universities are very complex. I do not profess to be an expert but I have learned a lot. We need to seriously ask ourselves - Can we deliver an outstanding future for our children when we fund and administer 38 universities out of 22 different programs in my Department alone, we fund and administer them all in exactly the same way. So you have Kerry Cox at the University of Ballarat with a very high low socio-economic status student base. Compare that with Allan Gilbert at University of Melbourne who is servicing quite different challenges and yet fund and run them in exactly the same way. There are complex and significant community service obligations on non-research intensive universities in the regions of this country which are not recognised nor funded at the moment under our current funding framework. At the same time, Melbourne University, Monash University, QUT, a range of these universities are not competing with one another. They are competing with the rest of the word and yet we are forcing them into a funding and a policy framework which says that Victoria University, Sunshine Coast University or Swinburne will be treated in exactly the same way as these. None of you would treat your staff, and indeed your students, in that way and expect to get an outstanding result. But that is what we are doing with universities.

Why is, for example, that we have 40% attrition rate. One of the four comes back in but three never do and half leave in the first year which relates in part to the culture that said if you don’t go to university that you are not as good as somebody that does. And that is why vocational education and training and apprenticeships and TAFE and getting from school to the workforce is just as much an achievement for many Australians as is getting two or three university degrees.

What is the role of the university in modern Australia? Why is that I go to a non-research intensive university and in the course of my meetings I have a meeting with the union delegation, which I insist on at every institution, and I said to this fellow when I had finished, I said "What are you doing when you are not unionising?" He said "I am the

Associate Professor of Physics." I said "What does that entail?" He said "I teach first year students and I do research." The next institution that I visited was UNSW and I visited Bob Clark and his quantum computer. It was as if I had gone from one planet to another.

As a relatively small country it is obvious that when we have got 20% of the units on offer in universities having fewer than 5 students and 4,200 with 1 student involved - in many cases for good reasons and we have universities with high demand areas and then low demand areas - why is it possible for a student in Jakarta to do a university degree in an Australian institution but not set foot in it but for some reason if I say to the sector "What if we provide you with financial incentives to rationalise your course offerings and offer some of your course offerings online with another institution, people say "we couldn’t possibly do that". What is wrong with that? I don’t understand. There are 22 fundamental courses of education on offer in this country. Thirty five of the 40 main stream institutions offer at least 15 and 19 offer at least 20. Why is that in our country only 0.16% of the university revenues are derived from royalties trade marks and licences and only 5% from contract consulting and research? Because there is a culture that says we do not want to be tied up with grubby private sector money and there is also tax and corporations law which does not make it easy.

The four things that I am determined to drive in part as well are we need national protocols for governments. You cannot run a $300, $400, $500million operation with 40 people on the council who are there to be delegates for another organisation instead of being trustees to the very best they can for that institution. Similarly there has to be rationalisation of red tape and bureaucracies. I have told the Secretary of my department you are a commissar Peter running a politburo. We are determined to reduce the amount of reporting and red tape that is required at universities by us. At the same time universities report a different set of data to State and Territory Governments and especially for dual sector institutions. It is also very important if universities are to be about the creation of knowledge and transferrers of learning how to learn, instead of providing vocational education and training, which quite rightly is the domain of TAFE and private VET providers, there has to be nationally agreed articulation and credit transfer arrangements between the VET sector and universities and all the universities should sign up. And the other thing that I’d also highlight is that Allan Gilbert and I were criticised by some for having the temerity to suggest that Australia should aspire to have a world class university. The Vice Chancellors have said we should have a world class centre for research in each university. The reason for even thinking about a world class university in our country - we already have parts of universities that are world class - not top fifty not top ten but top five or higher. The reason is if we want a world class university it will never be delivered under the current policy and financing framework. It is not going to happen. And what will happen is long after I have finished in this job, and this government is no longer a government, the next generation of children of our society rely upon them and academics will pay a very, very high price for our indifference.

And the other thing that is fundamentally important, for those of us who seem to preoccupied with commercialisation, are the cultural, the intellectual and the moral obligations of universities to pass the soul from our generation to the next. One of the things about which I have been concerned is the place of humanities and fine arts and literature and philosophy has not been well catered for over the last decade or more and it should be. And that is one of the things of many that I intend to bring out in this reform process.

The last thing that I would say is that the Prime Minister announced last night that I will be conducting a major mapping exercise for science, research and innovation. There is a strategy I am looking at which is firstly to look at where is our research and development occurring. Where is the research being undertaken? What kind of research is it? It was interesting the Australian Industry Group told me that only 16% of industry dollar in R & D is invested in universities but at the same time the universities in some cases are coming to me and saying we are desperate for money and we want to improve our R & D. So what we are going to do is to actually map for the first time in our country what occurs and where it occurs, in the public and the private sectors, in universities, at state and territory level.

Secondly, I am about to go Cabinet with a submission which we have now finalised for priority setting in science. Some of you I know were very concerned when I said that one third of the ARC budget would go to nanotechnology, photonics, genome and phenome research and complex intelligent systems and then when in the same breath we were talking about priority setting for the whole country you thought my goodness what’s this. Of course I am aware that when Phillip Ronjolo said to Max Feint in 1778, "Look don’t bother studying physics. Everything that needs to be known is known. Go and do biology", thankfully Planco stayed in physics and of course in 1900 gave us the basis of what becomes quantum physics for which he received the Nobel Prize in 1918.

The concern of course that we should have as a small country is we need to think about what are we good at and what do we want to be good at. What are our ambitions? Not just scientific and technological but also social and human objectives and priority setting in science - that is what it is about.

What I am going to take to offer to my colleagues is a small number of broad thematic priorities. Do we, for example, want Australia to be an environmentally sustainable continent? If we do what sort of research might we need? We’d need engineering technologies. We’d need environmental engineering. We’d need geosciences, engineering fuel technologies, maths and physics and social sciences to influence and inform human behaviour. That is the kind of priority setting process that I am putting to my colleagues having successfully won the first fight where some of them said well we should be putting it all into fighting fires and biotechnology. I mean the Germans in 1973 said "let’s be a world leader in pharmaceuticals." They have increased by tenfold their research in biotechnology. Twenty years later

their international share of the pharmaceutical industry had declined from 17% to 8%. In contrast you look at the US where investment in knowledge for its own sake in a strong and deregulated economy draws knowledge out of the university sector. That is kind of thing we need to be looking at - although we do need to prioritise what we are doing and then you bring the mapping exercise, the priority setting exercise Backing Australia Ability and higher education reform. That is the general basis upon which I am trying to build our future. And some of our critics are going to oppose what we do. And that is disappointing but I think the most important risk you take in life is keeping an open mind because you run of risk of changing it.

All of this is important. I started by referring to Thomas Jefferson. Jefferson was an extraordinary man, (inaudible). Jefferson was the third President of the United States of America, but when he was asked for what he would like to be remembered he nominated in fact three things. He said firstly, co-authoring the American Declaration of Independence. The second was the Virginia Statute for Religious Freedom. But the third he said was the most important and that was founding the University of Virginia. And when asked why that was the case he said because "education is the defence of the nation."

What will defend our children from that which we as human beings fear most (and that is change) is education. Our war against terrorism has not only got to be fought with sniffer dogs and high tech surveillance and military hardware. It is also a war against what Socrates described as the root of all evil and that is ignorance. So one of the things I am trying to do is to persuade our country and to persuade my colleagues to not lose sight of what in the end is at the basis of all of that which drives the uncertainty in our world of fundamentalist intolerance and that is ignorance.

Thank you.




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