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Changing the Culture: Keynote address to the 1991 Engineering Summit, Canberra

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C h eck A g a in s t D e l i v e r y COMMONWEALTH




Thank you Martin for your remarks and your invitation to address

your Summit, which I do in my capacity both as Minister for

Science and Technology and Minister Assisting the Treasurer.

I think that today most Australians would recognise the importance of the issues that your Summit is addressing. This would not have been the case before the eighties.

Australia has real challenges before it, some of which have been

outlined in the Institution's discussion paper. But I do not propose today to respond to all the points made in that paper. Rather I will concentrate on some key aspects of particular

interest to me.

As we all know, Australia must sell more goods and services to the rest of the world. This is essential to our long term

economic strength.

For the present, Australia will continue to be a significant

exporter of primary commodities.

In the case of these commodities, for which we currently supply

world markets, we need to work towards increased returns and

profits. Relatively efficient rural and mineral producers will

have to become even more efficient.

However there are limitations to the profits to be gained from

selling extra bales of unprocessed wool or basic iron ore or


There will need to be more processing undertaken to add value to

these commodities. These commodity producing industries will

need to be part of a more balanced and integrated economy where

other sectors such as services and more sophisticated manufacturing operations have a larger part to play.

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And what is Engineering's part in all this?

In many respects, potentially the most critical part of all.

In many areas of manufacturing, engineering skills are essential

for the successful application and commercialisation of research

and development.

Since recently becoming Minister and meeting with Martin and Bill Rourke, I must say I have been impressed by the the way in which engineers are facing up to these issues in a professionally organised way.

This Summit, with its aim of developing a course of action for

engineering within a productive export oriented environment, is

a good example.

The challenge will then be for the profession to communicate that course of action to its members and to spread the message

further afield.

In part, Australia's future economic prosperity depends heavily

on its capacity to become a supplier of manufactures, especially

elaborately transformed manufactures (ETM), both for our

domestic market and for export. Traditionally Australia has not

been a sustained exporter of ETMs.

Trade in ETMs is the fastest growing sector in world trade and is the one offering the best opportunities for substantial

margins and profits.

If Australia seeks to participate in world trade in ETMs we have

to overcome Australia's lack of track record in producing and

exporting ETMs by building stronger reputations for quality,

delivery, price and service, as well as having the enthusiasm

and determination to retain market share.

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We will also have to overcome current limits on our access to world markets by developing closer linkages with the economies

of our existing or potential major trading partners. This is

not beyond us.

As a result of Australian's past protectionist policy, Australian industry was too inward looking and not interested in either being internationally competitive or in exporting.

Exports of manufactures were sporadic and often in response to a downturn in the local market or as a result of a temporary


This climate is changing.

The March Industry Statement makes it clear that the walls are coming down. There is growing acceptance that fundamentally we have to be internationally competitive.

There is no doubt that the Government has done much to foster this healthy climate of change since taking office in 1983.

The Government's policy approach has had four key elements;

getting the fundamentals of the macro economy right

restructuring our economy to ensure international competitiveness

taking initiatives to improve individual finns' competitiveness, and

moving to improve linkages between industry and our

scientific base.

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Let me deal with aspects of each of these elements in turn:

A sustainable level of lower inflation comparable to or better

than our trading partners is being achieved. The Accord has contributed greatly to this by ensuring wage restraint.

Initiatives to fundamentally restructure the economy include;

. freeing up the financial sector and floating the $A,

. increasing the exposure of Australian industry to market

forces through reductions in tariffs implemented steadily since 1983, given impetus in the May 1988 Economic Statement through to the March 1991 Industry Statement;

. removal of unnecessary regulations and restrictions- for example the removal of licence controls on imports of

secondhand engineering, construction and materials handling equipment.

Engineering specific and other measures to improve individual firms' competitiveness have included:

. Introduction of the National Industry Extension Services

Network (NIES).

. Introduction in August 1989 of the Metal Based Engineering


. Indefinite extension of the 125% allowance for eligible R&D.

. Grants for Industrial Research and Development Scheme.

. Advanced Manufacturing Technologies Development Program.

. Refocusing of CSIRO activities more in tune with industry.

Establishment of the Cooperative Research Centres Scheme.

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. Establishment of the National Procurement Development Program.

In addition, as you will know, the Government recently addressed the question of how best to seek Australian industry involvement

in major projects. The Government decided not to attempt to develop Australia's engineering industry by mandating the use of local suppliers nor require particular levels of local industry

involvement in major projects.

Rather the Government expects that international developers will

give a fair and equitable opportunity to internationally competitive local suppliers to participate in these projects.

Response by industry to these fundamental changes has been


Over the eight years to the March Quarter 1991:

. manufacturing output has expanded by 21.5%;

. manufacturing investment has increased by 42%.

None of this however, is to ignore the fact that we are in a recession which is causing much hardship for many Australians and their families.

In addition to the cyclical effects of the recession there is no

doubt that the measures taken to restructure the economy and

introduce greater efficiencies into industry have also caused


This is well understood by the Government.

This brings me to the fourth key element to which I have

referred and one of specific portfolio interest - namely

improving linkages between industry and our scientific base.

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The aim of your Summit is to set a course for engineering within a productive export-oriented environment. It is particularly in building the linkages we need that engineering can make a

critical contribution.

As I said earlier, our future prosperity is to a great extent

dependent on our capacity to become a better supplier of ETMs to

the world markets.

Our competitors have a substantial advantage over us in many areas and are not being idle.

As a consequence Australia will not become a credible long-term supplier of ETMs overnight.

To make it happen will require an investment in getting things right such as access to capital, an appropriate tax regime,

fertile environment for innovation to flourish, flexible workforces and management and efficient internal transport

services to name but a few.

There will need to be a considerable effort to capture markets

from the established suppliers who have enormous resources

devoted to research, testing, development and marketing.

For all this to occur two factors are critical;

. we have to harness in a more coordinated fashion all of the

existing resources devoted to R&D

. we have to make Australia a more scientifically and technologically aware society.

Australia has a number of world class research organisations but

regrettably we have not to date built upon the work of these

organisations to a sufficient extent in the development of our


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Some reasons for this include;

. a reluctance to invest in new discoveries - for example gene shears;

. inadequate linking of basic research with the requirements

of industry;

. a naiveity in dealing with the hard bargainers in this


In order to get the most from Australia's science, technology and engineering and in order to set appropriate and effective directions and priorities for research and development, it is

essential to improve the linkages between the different parts of

the system.

Each component of science, technology and engineering has its own role to play but is closely interdependent with the other: the outputs from one part of the system being inputs to other


The people being trained by the education sector form the pool

from which industry and government as well as the education

sector itself, recruit their skilled staff. Society's

qualitative and quantitative needs for research and other skills

should be one of the inputs into the planning process within

individual universities and the education system as a whole.

Similarly, the technological opportunities identified by research sectors will benefit Australia only to the extent that

they are made known to and are taken up by research users. At

the same time, the market needs identified by industry have to

be translated into research programs by the research performers

if they are to result in commercial gain.

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Strengthening linkages between different players in science,

technology and engineering has been a major policy concern for

some time and is at the heart of the solution to Australia's

competitive problems. A variety of mechanisms has been established, especially to develop linkages between those

performing research and those with the capability to exploit

research findings and the interest in doing so.

This is the explicit and major objective of programs such as the Cooperative Research Centres Program and the National Teaching

Company Scheme.

Indeed, almost every science and technology program at the Commonwealth level can be seen as helping to build stronger links between the various parts of science, technology and


If the benefits of Australia's considerable research base are to

be fully exploited, it is essential to develop a widespread awareness of the role of science, technology and engineering in

our economic and social life. This general awareness is

currently lacking. Its absence is inhibiting the development of

an innovative and competitive industrial sector and may be one

factor leading to the anticipated shortfall in the number of

scientists and engineers in the workforce.

The Government's Science and Technology Awareness Program is a

positive step to correct this situation. But Government action

is only a part of the answer. Awareness raising and agenda setting by the industry players themselves, like today's Summit,

is the real focus.

There is no benefit to be gained in having superb research

facilities if they are not supported by adequate engineering.

Unfortunately there is much evidence that Australia has not had

the engineering capability to utilise its research discoveries.

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Too often in the past we have been content to purchase designs,

products and trained staff from overseas.

Failure to realise the value of engineering as an input to product and process design leads firms to follow rather than lead market trends in areas, where quite often Australia has a

basic R&D advantage.

Fortunately it is not all bad news. Change is in the air.

The Government's economic and industry policies are starting to

work to improve competitiveness and so to establish a sound

future for Australia as a growing industrial nation.

But, the cultural change required leading to an export/productive culture in Australia will require considerable and sustained effort. It will take quite some time to see it

fully achieved.

Increasingly the community is more receptive to change.

Economics debates are now much more a part of our ordinary daily

discussion. The quality of the debate has improved enormously

over the eighties.

This Summit is a further step in raising the profile of engineering and in making its particular contribution to national development. It follows logically the presentation to

the Prime Minister's Science Council which sought to increase

the numbers and quality of our engineers and to upgrade their

standing within our society.

As you know the Council decided to form an ad hoc Committee to examine these proposals.

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This Committee will be recommending actions to the Science

Council and responsible Ministers relating to:

. improving the quality, numbers and spectrum of engineering professionals and sub-professionals, including the setting

up of advanced engineering centres,

. introducing three year degree courses for engineering technologists; and

. establishing "teaching factories" to provide workers for the

"factory floor".

Your Summit has as its aim the further development of these proposals accompanied by identified targets and specified

timescales. This process will contribute greatly to the work of

the ad hoc Committee's consideration of these issues.

The Government will be considering the broad directions of science and technology policy in the context of the White Paper scheduled for the second quarter of 1992.

I note that you will be discussing the Institution's proposal

for the development of a National Technology Policy. I will be very interested in the outcome and will ensure that your views

are given very serious consideration in the context of the White


I congratulate the Institution on your initiative in organising

the Summit and look forward to being involved in future consideration of these issues in these vital areas of our national economic life.

I wish you well with your deliberations.