Australian cure for a Dutch disease

There is a chance for Australia to defy the high dollar and a two-speed economy. In fact, now is the best time to plan for it.

Megan Clark, the chief executive of CSIRO, was talking to one of her Chinese research colleagues and she asked him why China was putting so much effort into partnering with Australia, given the opportunities they would have with much larger research nations like the US, Germany and Japan.

Clark says he looked at her with puzzlement, "we’ve done our numbers”, he said "and by 2050 you will be the richest nation per capita country in the world, you can feed yourself, you have abundant energy resources, and you have an educated population which means you will be able to innovate”. Then, Clark says, the Chinese scientist looked at her as if to say "have you not realised this about yourself already?”

It was an ‘aha’ moment for Clark and it should be for all Australians.

So while we fret about the peak of the mining boom, and what that means to incomes today, Chinese counterparts are looking 40 years into the future and asking themselves where they need to be ensure competitive advantage for the long term.

It is something Australia should learn from the Chinese.

Thankfully, Clark decided to put her scientists to work on what the big problems of the future will be. They came up with six global megatrends;

1. More from less: The world will consume as much food in the next 60 years as the whole of human history, while arable land is disappearing. That means higher and more volatile fuel prices and potentially wars over resources like water. Our growing population will need more energy and the increased use of coal, oil, gas etc., will have implications for carbon emissions.

2. Going, going… gone?: We are seeing a continued decline in the planet’s biodiversity. Species, genes and ecosystems are disappearing. The loss of habitat not only has deep cultural implications but also may have yet unquantifiable cascade effects on our food supply.

3. The silk highway: The locus of the world economy is shifting from West to East, and from north to south as billions transition from poverty to middle class. That will have big implications for consumption of everything from commodities, to education to financial services and health.

4. Forever young: As the population grows older and lives longer there are not only the health implications and cost of living issues but also great opportunities to utilise the brainpower of retired workers.

5. Virtually here: The rise of online activity will require research into areas like cyber security, logistics for online retail, and how to provide stable connections for remote workers.

6. Great expectations: As society becomes wealthier, we move away from basic needs like water and food and want higher-level experiences. We spend more on entertainment yet at the same time are becoming lonelier as the number of people living alone rises.

The CSIRO is devoting 40 per cent of its research to the above areas, a sensible approach given that countries and companies will be looking for answers to these problems. Speaking at the Creative Innovation conference in Melbourne, Dr Clark said that they have already had a significant breakthrough in food production. She told the audience that a young, French CSIRO researcher has made huge strides in improving the yields of wheat, and possibly rice, by 20 to 30 per cent – an innovation that would go a long way to alleviating that potential food security crisis.

Australia is in an enviable position to devote time to these things. Practically every other western country is slashing expenditure in a desperate bid to reduce government debt. That gives us a great opportunity to encourage researchers, like the French grain expert above, to come to Australia and contribute to organisations like the CSIRO.

Instead we obsess over a balanced budget and will likely choose a government on the current government’s ability to bring in a number that is close to zero, plus or minus $10 billion.

Let’s put that into perspective. Megan Clark’s counterpart at China’s National Academy of Sciences has an annual research budget of $30 billion, and R&D investment in that country is growing at 15 per cent, twice the rate of GDP growth.

By contrast, the CSIRO’s government funding is $700 million.

If we are going to worry about Dutch disease, let’s at least worry about how to plan for that future in 2050.

‘Necessity is the mother of invention’ as the saying goes, and when the resource revenue runs out there will be enormous necessity. That is the case today in Europe and the US, who failed to use their once-strong manufacturing base to create a post-China future.

Ultimately however, necessity is not the mother of invention. Difficult and time consuming science, a good education system, a strong collaborative relationship between industry and academia, and supportive government policy are the mothers of invention.

Perhaps we should adopt another aphorism to deal with our Dutch disease: prevention is better than cure.

For an example of Australian scientific innovation, watch the video profile of Dr Fiona Wood above.