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Standing Committee on Infrastructure, Transport and Cities
Australian government's role in the development of cities

McMILLEN, Professor Isabella Caroline (Caroline), Vice-Chancellor and President, The University of Newcastle

Committee met at 09:06

CHAIR ( Mr Alexander ): I declare open this public hearing of the Standing Committee on Infrastructure, Transports and Cities for its inquiry into the Australian government's role in the development of cities. In accordance with the committee's resolution of 11 October 2016 this hearing will be broadcast, and the proof and official transcripts of proceedings will be published, on the department's website. Those present today are advised that filming and recording are permitted during the hearing. I remind members of the media who may be present or listening on the web of the need to fairly and accurately report proceedings of the committee.

Welcome. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as contempt of parliament. Evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make an opening statement before we proceed to discussion.

Prof. McMillen : Thank you, Chair and members of the standing committee, for providing the opportunity for the University of Newcastle to present to the committee on issues which are absolutely central to the future of the city, the regions around the city and indeed the mission of the University of Newcastle. In this short opening I will address three main areas. First I will talk somewhat about the world in which we work and how our role is to support a social and economic transition in this region from an economy focused on traditional industries, as you would understand, based on resources, mining and manufacturing, to a globally positioned knowledge based economy. I will draw on some of the work we have done with centres across the world to understand the vital elements of a university for that transition. I will introduce the university itself to you and talk about how we've delivered on that mission and some of the issues that will limit or enable the role of universities to be anchor points for regional revitalisation.

We have drawn from the work of a number of global commentators, universities and industry champions, and in particular the 2016 KPMG report Magnet cities, which examined the characteristics and drivers of what emerged out of cities that had been in a decline process and had gone on to be renewed, and how they renewed the urban and regional communities around them. We brought to Australia the authors of that report, together with many university, industry and government leaders who had been part of the renewal of regions and cities, to discuss the role of universities as catalysts in that renewal. Magnet cities took the view that a magnet city was one which has seen growth in its GDP in parallel with growth in population, having experienced a period of significant decline. It used examples from a range of cities such as Pittsburgh, Bhopal, Malmo and Glasgow. I commend it to you; it's an excellent report.

Essentially they talked about 'sticky' cities. Cities in the past were based on trade, then in the Industrial Revolution on building industry, and more recently on people and their ability to retain talent—to be 'sticky' for that talent—by having: a very vibrant city, renewing their physical structure but maintaining their DNA; a definable city identity; very good connections to other cities; strong civic, academic and business leadership; and the ability to attract young wealth-creators. They identified this through case studies of the magnet cities they had interrogated. This is a key piece of work for a university in the heartland, whose graduates can go to CBDs not only down the road but also across the world. Retaining talent is critical if this city and its region are to undergo the full renewal.

The other piece we have drawn upon and whose authors—Antoine van Agtmael, an investment banker, and Fred Bakker, a previous editor of Holland's Financial Times—we also invited here is a book which again I commend to you, The smartest places on earth: why rustbelts are the emerging hotspots of global innovation. They had found that their clients offshore in Asia were now complaining that manufacturing was moving back to the US and Europe, to areas we would define as rustbelts: Akron in Ohio or Eindhoven in Holland. In their analysis they took 37 case studies and distilled why some rustbelts had become hubs of smart innovation. Again the lessons for us were profound: one of the common elements was that strong universities were present in these regions. They had particular differentiated strengths and operated as very strong anchors for innovation. There had to be visionary civic leadership, some government support for basic research, research facilities with deep specialist knowledge, traditional manufacturing skills—people who knew how to make stuff, which of course was present in the rustbelts, but now being purposed to new industry sectors—an appealing work and living environment, vibrant centres and cities, and capital investment.

They could map how and why some areas had revitalised and others had not. Akron has a great university, in an area around the manufacture of rubber for the tyres for the trucks that used to go through. Once that stopped, the polymer science that had come out of the history of rubber manufacturing then created a whole new suite of areas of innovation and manufacturing for that university. Again I commend that to you. We hosted Antoine and Fred. They came up along our Central Coast, through Newcastle into the Upper Hunter, and distilled their findings for us. It was their first visit to Australia. Their insights were both global and specifically enabling to our core mission and purpose. We have drawn on that because ours clearly is and should be one of the key anchor roles.

As our mission we are committed to equity and excellence. We have some 37,000 students, 27 per cent from low socioeconomic backgrounds, which reflects our demographics in the regions we serve, and around a thousand are Indigenous, which is the largest number of any Australian university. Those students go on to study at Harvard, Oxford and Cambridge, because this university since its foundation has served the demographics of the region by ensuring we do not trade equity for excellence: top 10 in research income in Australia, top eight for excellence in Research Australia's assessment, and from our foundation particularly strong in engineering and technology, in health and medical research. We are driving our graduates through programs that are going to reflect the future and creative industries as part of this building. This is exactly an area in which our university is an energy creative city, and we are seeing the advantage of having business co-located with creative industries, but beyond the future industry construction, it's also based on harnessing and driving from an anchor position, supporting innovation with partners. We are highly engaged.

For instance, we have an energy, resources, food and water cluster comprising institutes and centres and working with partners. We set up an international centre for carbon futures with partners in Korea, China and India. That again begins to show the university can have a role as part of a global supply chain for local companies. That is the purpose and view of that. Separately in the Upper Hunter we have been a partner with Ethanol Technologies through the Muswellbrook Shire Council. We have set up a tertiary education centre with about $11 million of investment through ARENA, in which we are looking how and in what way we can take the buffer lands around mining areas and use biomass to generate alternative fuel sources—as a couple of examples.

We earn about $100 million in research income, which places us in the top 10 Australian universities, as I said, and $30 million to $35 million of that is in partnership with industries. Many of those are local businesses brought into partnerships with larger industry partners, sometimes global. That is a very straightforward way of moving forwards, but we have also driven the innovation agenda. We have been supported by the state government in particular to set up an innovation network called the I2N. Our reach is through innovation hubs from the Central Coast in the city centre, with Lake Macquarie and partners in Charlestown, a defence, security and aerospace hub at Williamtown together with industry partners, and then up again to Muswellbrook in the Upper Hunter. Those innovation hubs are places with young entrepreneurial co-workers starting out, where we run programs on innovation and entrepreneurship, evening sessions with red wine and cheese, bringing in entrepreneurs to showcase the journey for our students, staff and members of the community. Williamtown, as we can see with the Joint Strike Fighter, is a critical site which will become a hub of industry, innovation and partnership with both the RAAF and defence industries.

We are both initiators and collaborators. Engagement and partnerships are very key. Underpinning all of this is the power of retaining graduates in the region, because building sustainable regional cities and towns that retain both population and talent requires a university to not only open up with its partners those jobs and future workforce opportunities but support the emerging talent in a liveable environment. We work with the city council, again as partners, on the sorts of changes you see here in transport. The revitalisation of the city is key. Sydney is not affordable for first-home buyers. We will be in a wonderful position if we can continue to revitalise the region to retain graduates. Our graduates are remarkable in their impact. To give you an example, we heard one of our recent students in this building might not be able to complete his PhD—he's in the creative industries—because he has been offered a Hollywood feature as writer-director. That might impact upon his PhD. We understand he might have to pause PhD while he explores that.

Our graduates go to the world, and they come back from the world to tell the stories of what it is a Newcastle education gives—the top one per cent of universities in the world. In the most recent QS rankings the subjects that are right up there are, of course, all through health and medical research, engineering and science. Our health and medical research spans from the mid-North Coast in Port Macquarie through the Hunter New England health district through to the Central Coast Local Health District. We secured—one of only two in the country—centres of innovation in regional health as part of a partnership, a New South Wales regional partnership with ourselves and the University of New England as anchor universities, with those three LHDs and the primary health care network. We are turbocharging the translation of work across those regions with our partners and LHDs. We are building a Central Coast medical and health research institute alongside a $350 million development in the Central Coast to translate outcomes in health—translation is the key—and technology assisted health care, bringing our engineering and technology strengths together with health and medical research. How do robotics improve stroke rehabilitation? How do smart homes support people in independent living? It is integrated health care. Our role in health care provision is in training the graduates who go into health, but doing the innovative work and translating and securing the dollars is important. That just gives a sense of the global backdrop, the role of the institution and we where we're placed in the community.

CHAIR: That's fantastic. I don't think we should have any questions, really.

Mr WALLACE: Thank you, Professor. I want to move to Newcastle after hearing all of that. That is really very inspirational. You're a great advocate not just for your university but for the region. Congratulations on the fantastic work you're doing. I'd like to talk to you about the defence security and aerospace involvement. When I landed in Newcastle last night—this is the first time I've ever been to Newcastle—I am suitably impressed. It is nothing like what I imagined. There is the Wedgetail Boeing aircraft, the surveillance aircraft, at the air base. You have Hornets here and the F-35s will also be based here, I believe. Can you tell us a bit more about what the defence industry sector has done for this region and what your university's involvement in it has been?

Prof. McMillen : I think we're at the beginning of that journey. What we are seeing is the early phases of what is probably going to be a 30-year sustainment project, essentially. We've located what we call our DSAA teams—our defence security and aerospace innovation hub—straight the heart of the Williamtown precinct, which obviously houses the airport, the RAAF and partners. We have Raytheon and Lockheed Martin there as partners, in particular, but others, and SMEs. Essentially, that innovation hub has the co-location, so it encourages our researchers out into the area in which there is the opportunity to have that connection that always comes with co-location with industry players. They can host events and bring industry players in. We will open a doctoral training centre. One of our models is an industry-based doctoral training centre. What happens is you can bring doctoral graduates. One of our big defence projects at the moment is in psychology, around some of the resilience issues. You also get some of the virtual reality programs. So it expands all the way across from defence to health and many areas. We bring in doctoral students whose projects are either supported by all relevant to the defence security and aerospace industry. Cybersecurity, for instance can be very key; or systems integration. We bring those industry doctoral trainees, who have supervisor in industry and a supervisor in the university. Then we set up what is called the DTC. It's hubbed at the innovation hub and it will include Boeing as an industry partner in the aerospace sector.

We've also got one in the mining equipment technology services area, which is being set up in a parallel way. That is really strong area for us. That again has core industry partners, particularly in materials sciences. So these industry doctoral training centres become easy points of contact for removing the barriers. When you're supervising or co-supervising student you come to sessions where they present and others present, and then you hear, as an industry leader, the span of work that is going on and the talent that is available to you through those doctoral training sectors. So there's a nice mutual gain in those. I first saw them in the UK when I visited. It's been running in a system in the UK. Industry partners there spoke very strongly of it. They thought they wouldn't gain a lot, but they found they did, particularly spanning projects and areas that they hadn't quite seen before as interesting areas for them, and also recruiting that talent.

Mr WALLACE: I can just hear John saying, 'What does all this have to do with cities?'

CHAIR: It's a key component.

Mr WALLACE: It is a key component, talking about that sticky city, to try and attract, to keep, to retain our young talent. I shouldn't say 'young' talent, because it might be someone like you. To be able to retain that specialised talent is key to driving innovation in a regional city like this, so you're not losing them to Melbourne or Sydney.

Prof. McMillen : You would not get your ability to attract investment. The defence industry's tough to recruit to this area of New South Wales. South Australia is obviously a powerful defence hub. But you cannot have first-rate academics who are industry focused—so they're willing to walk out the door and work with you—if you don't have talent available, it's of no value. Why would you be here? When you bring your professional staff here, if there's not really a sense of vibrancy in a city or in a region, it becomes very hard to relocate staff. We have the ATO moving into the Central Coast in Gosford. The university's presence there is really key. We've been discussing with those representatives how our business programs can support their staff. This becomes an attraction for people thinking about relocation. As young professionals with families growing up, the availability of a university—this is Antoine van Agtmael's book, and the KPMG stuff.

Mr WALLACE: Can I interrupt you for a second and grab those names?

Prof. McMillen : Perhaps I'll give them to you afterwards. It's here in the presentation. I can't commend them highly enough, because this text—neither of them have a university background. They weren't seeking anything about universities. It was almost a surprise to them that this turned out to be one of the core ingredients when they compared those who had achieved that stickiness and those that had not.

Mr WALLACE: I want to state for the record that when I said 'you', I was referring to you, Mr Chair, about your chronologically challenged nature. Just so there's no confusion, I was not having a dig at you, professor.

CHAIR: Maturity gives you tolerance of those less mature who haven't gained sufficient wisdom through their lack of experience.

Ms McBRIDE: As you know, I'm particularly interested in health. I'm very keen to hear a bit more about innovation in regional health—the partnerships with Hunter New England, CCLHD and the PHN.

Prof. McMillen : We're delighted by this one. As an institution, right from our foundation we have always been strong on the health and medical research. We are in the top eight universities in Australia for funding secured from the National Health and Medical Research Council. That has been absolutely part of our strength. We graduate many of the doctors, physiotherapists, pharmacists and nurses—all the allied health professionals—who work across our region. We are critical both in terms of supporting the workforce and supporting an innovative workforce whose degrees and training are informed by what's coming, not by what's been past practice.

We've always had that strong role, but the translation of health and medical research into the clinic, into the practice into the population, is a tough gig to do. To do it you really have to have partners who work very closely alongside you in the local health districts. We have very strong partners. We have very good CEOs across these LHDs who recognise that and who see us not simply as a source of good graduates but who see us as helping their business.

Health care cost are burgeoning with the ageing population and the chronic disease burden. We are seeing governments across the world focus on how we can reduce that health care cost burden. That's where the innovations in practice, in translation of early diagnosis, in translation of new therapies, the ability to take technology-assisted rehabilitation, where you can begin to deploy some of the wonderful outcomes of sensors in homes—if you've had a stroke, how you begin to use robotics to move the affected them—there are such a great range of new approaches. Harnessing intelligent sensors for movement—I was talking the other day to someone who was talking about Parkinson's and being able to recognise early onset, some researchers are saying, by facial muscle movement changing very early.

All of this wave of new information is coming through. You have to be a portal who understands the way in which the global research is going so you can then deploy that and work with the health districts. That can be in integrated health care; it can be in population health; it can be in community support systems. I hosted a session yesterday, the Universities Australia meeting on the health care professionals of the future workforce. So we are part of an ecosystem. To join that ecosystem up in the region is really critical. We can't all be working in our separate spaces.

So we are joined and we are working together. That partnership includes the primary healthcare network critically. There have been discussions around healthcare innovation precincts, where we would be able to road test early some of the innovations, and equally the use of big data—so as a university, having those who routinely can work with large datasets and understand their use to support what I might call better use of resources in the community and health settings. So it's part of our DNA and really critical, if you think of the zone we span. Each area is somewhat different, and we have to respond to community needs in those areas.

Ms McBRIDE: Is there a particular focus that you have within the CCLHD at the moment?

Prof. McMillen : Yes. There is integrated health care. We brought an international team to work with our regional experts on this. Again, the role of the university is that if you have someone who is the best in the world doing this or who is at the forefront, you bring them in and talk with people who are really thinking about that in the healthcare region and the local health district. As an elderly person you go to your orthopaedic specialist to your hip, you go to your diabetes specialist, you go to the cardiologist because your heart's not quite as young as it was. You spend life in different fragmented appointments, and it seems that everyone has to take your history again. The idea is to put the patient at the centre of it and bring those services around the patient needs.

This has been one of the responses in the global health sector to working better, with more joined up and connected systems, and more efficient and effective systems of health care. In the Central Coast local health district it's much more about the patient care and the way in which the system can work more effectively and efficiently with that patient. At the Hunter we're doing a lot of work with what I might call personalised medicine, new diagnostics and early interventions. In the mid-North Coast is looking at health care needs, particularly in allied health professional care. We differentiate by virtue of our LHDs.

CHAIR: In thinking of what you've said, it seems that there is the seed of any number of enterprises, innovation, high tech and all sorts of opportunities to make this region a dynamic growth area. Often we concentrate on infrastructure and land planning. Sometimes there's a bit of a void—what will people do in this region? Will they just be commuters to another area? So you've obviously got a sustainable concept for Newcastle's growth in this region. What infrastructure do you think you need to facilitate that growth or to turbocharge it to be the catalyst?

Prof. McMillen : As a university we are placed obviously in the civic region—our city precinct—which also includes facilities like a conservatorium and an art gallery. If you're looking across there you'll see land in Honeysuckle where we have options to develop further our city presence. We also have a major campus about 18 to 20 minutes outside of the city, which is again a bushland campus—one of those gumtree campuses that were established in the 1960s and 1970s. Our plans are to establish a STEM precinct.

CHAIR: I think you've misunderstood, or I wasn't clear. I wasn't meaning the university expansion but expansion of the whole city and region.

Prof. McMillen : I will come through that. Our STEM precinct is about industry co-location. We have the advantage of having this bushland campus. We have the advantage of world class Fellows of the Royal Society, members of the academy—huge brainpower on that campus in engineering, technology, science, cybersecurity and big data. We have the opportunity for industry co-location to then be an attractant for biotech and for those data based industries, whether they're well established and seeking to locate from across the world—there is obviously interest from parts of Asia in Australia as a place to locate—or, equally, from across Australia and within the region. By having that as a catalyst it goes to the heart of what it is we can grow here in industry terms.

By looking at the defence site you can see that that's already begun to drive. Looking at the upper Hunter you can see the mining equipment technologies. Now we're into material sciences and new aspects. We're beginning to see, in particular, the Ethanol Tech project and how that will catch the eye of industry and industry investment. To attract industry, to attract other SMEs and to attract players to work with you really do have to have a hub from which there is a clear complementarity—in all the discussions we've had with potential investors there is a clear complementarity—of interests and strengths. Where they're bringing their staff, they need it to be in an area that's affordable, liveable, has a vibrant city life and is a magnet city.

Looking at Pittsburgh—and we've gone across to Pittsburgh and talked with their chancellor, and he's come here and looked at us, as the analogue of Pittsburgh—what was key for them was to turn around the city. It had all of the features of a city in decline, and now it doesn't. They say they've gone from steel to eds and meds. There's been a role for the universities in building the innovation, particularly around the innovation hubs, so now they have the digital industry—the Googles, the Amazons—and separately the medical research component.

CHAIR: Specifically, our inquiry is divided into two: the strategic decentralisation and development of the regions and the retrofitting of infrastructure into our major cities to make them more livable. The previous hearing found that all infrastructure should be master planned and all infrastructure should have an attachment of land use. In this region you actually have a city. With the advent of high-speed rail connectivity to this region and master planning of the infrastructure and the land use around it, where the planning of that infrastructure and the transport and mass transport would happen before the development—which would be unusual in Australia—this region would be competing with Sydney to have companies locate here, because you would have that very close contact but, in your own right, you would have a huge competitive advantage as far as quality of life, cost of housing, cost of living and such. Would you see that as a fundamental—

Prof. McMillen : Totally. In Sydney there's the cost of land, the rental. But there's the ability to have the talent, which is a very particular creative population that wants to live in the hub of a city; it doesn't want to live in an outer suburb in those first 10 years after graduation. So, when we talk about creative industries, we see companies looking to cities like Newcastle, because they can see that we have all of that here. The world is made up of regions. Cities this size across the world are major livable hubs. It is only in Australia that we think of Newcastle as being somewhat regional, a regional university. In the UK or the US, cities our size are seen as absolutely clear hubs that have emerged as magnet cities in their own right. That is the future of Newcastle, because it is self-creating as we look at it. The master plan for the greater Newcastle metropolitan region is a good plan. I think there is some good work in the Hunter Regional Plan. And I think the combined civic leadership of industry leadership together with us as part of that group is always focusing on that. We are not a commuter belt. People here do not wish to leave when they graduate, but they have to leave. People come back willingly when they see the city is revitalised.

One of the difficulties we face—and I think this is often a left hand and right hand of government, not in a political sense but simply in a—

CHAIR: Actually the left is on the right today.

Prof. McMillen : At the moment the government has, for all sorts of good reasons—and we appreciate the fiscal pressures—capped student load. But the consequence of capping student load across universities from now—forever, essentially, because that's the policy that's in place—will challenge regional revitalisation.

Mr WALLACE: Can I just pick you up on something there. I don't want to turn this into a political argument—

Prof. McMillen : Neither do I. It's just simply a—

Mr WALLACE: but I don't want you to be labouring under a misapprehension that the cap is forever. It's only for two years.

Prof. McMillen : I would say that that is not the case. I won't go to the political. I think all the statements we have seen are very clear it's not the case, but I don't want to go to the specifics of that. I simply want to say that every time we work and engage with cities that are emerging—Tamworth, Muswellbrook and other cities—across New South Wales we find that what the regions and the cities within them depend on is holding their students and graduates, because once they've left it's very difficult.

If we wish to have revitalisation of regions, all the transport and infrastructure won't do it. It's actually the talent. It's the wealth creators. It's the professionals. I am under immense pressure as a vice-chancellor of a great university to provide campus opportunities in different parts of New South Wales where there would be a business case based on the demographic to do so. But I haven't got a business case, because I cannot grow student numbers. That's the consequence of our current policy. What that means is areas of low participation in higher education, which are the regions, will be held back.

CHAIR: I think we're a bit off track here.

Mr WALLACE: The VC is seizing the opportunity to bend the ear, and that's understandable.

Prof. McMillen : And I think infrastructure is about people.

CHAIR: We have gone quite a bit over time. Thank you for your attendance here today. You have been asked to provide some additional information, so could you please forward it to the secretary by 19 March. You'll be sent a copy of the transcript of your evidence and will have an opportunity to request corrections to transcription errors. Thank you for your contribution today. It's been really great.