The dollar drag on our knowledge elite

The tide is changing very quickly for the Australian labour market and threatening to leave the Abbott Government's approach to research, innovation and tertiary education stranded.

The problem, which has been apparent for some time, is a that while unemployment grows, so too does the demand for more highly skilled labour -- the kind our university system and the skilled migration program are, between them, supposed to provide.

Those skilled workers help create the firms that employ the swelling ranks of lower-skilled workers.

There is a global shortage of workers in the so-called STEM sectors -- science, technology, engineering and maths -- the professions that get on with the business of innovating and boosting productivity.

Addressing this shortage always comes down to two interrelated policy areas -- education and migration.

On the first of those two, big changes are afoot one way or another. Education minister Chris Pyne is having a hell of a time getting deregulation of university fees through the senate -- and there is talk that if he cannot, funding cuts might have to be the alternative.

The question, from a skills point of view, is what either of those two paths would mean for the mix of degrees offered by universities, and the numbers enrolling in each.

As noted previously, Labor's big push towards 40 per cent of youngsters holding degrees by 2025 was a policy looking for an economy that needed that many graduates -- and ours does not, because too many graduates do not have the qualifications in the shortest supply (The real threat lurking in universities, October 17).

Moreover, for those that do graduate with degrees that will ultimately boost innovation and research, their early-career job options are being crimped by federal government spending cuts.

As Greens MP Adam Bandt complained after the last budget: “If we keep cutting spending on science, research and innovation, the country's ‘brain drain' will continue and we'll wake up when the mining boom is over to find we're a hollowed-out uneducated quarry with nothing left to sell the rest of the world.”

And that is where migration is supposed to balance the outflow of graduates looking to add real-world experience to their academic qualifications.

For years, as Australians headed to Silicon Valley, Europe, the UK or to our Asian neighbours, we did pretty well at importing PhDs or engineers from those nations to balance things up.

During the booming final years of the Howard government, for instance, that prompted nations at the 2007 APEC meeting to ask “can we please have some of them back” (When the brain drain turns north again, September 18). 

So what's changed? We for one thing, workers smart enough to handle nano-technology, medical research or cutting-edge renewables systems are usually pretty well equipped to understand exchange rate fluctuations.

In the past couple of years, the salaries offered for, say, post-doctoral fellowships, have changed in value when converted into one's home currency.

Compare and contrast: the Australian dollar has fallen by more than 18 per cent against the greenback since April of last year. At the same time, the British pound/US dollar is down only 4.4 per cent and Britain is on track to record GDP growth of 3.1 per cent this year -- beating other European nations by a country mile.

In pure financial terms, Australian companies, universities or research groups hoping to lure America's best down under have to find about a fifth more salary to be internationally competitive, made worse if the prospective migrant checks out the cost of housing in Sydney or Melbourne.

On top of the finances, the political climate here is one in which there is no longer a dedicated science minister (having had one between 1931 and 2013), a ‘budget emergency' and funding cuts to our previously world-beating research institutions such as the CSIRO – it's cutting 500 jobs, closing eight facilities and, reportedly, now uses highly trained scientists to “clean laboratories, write promotional material, sort mail and refill photocopiers”. None of those count as innovation.

Would the Gillard government's dream of a ‘high-skill, high-wage' economy have developed had Labor not lost power?

Well, probably not. But the issue today is a perfect storm of economic forces beyond our control, and government short-sightedness that is not, combining to put the ‘high-skill, high-wage' future further out of reach.

With the release of the federal budget in May, the government tried to argue that its ‘$20 billion medical research fund' would offset the half-billion in cuts to the CSIRO. However, its critics point out that the fund is unlikely ever to materialise, mainly because it was to be funded by the stalled plan for a $7 co-payment for Medicare-funded medical appointments.

When even New Zealand is surging ahead by attracting expat brainboxes home, the alarm bells should be ringing. Are we to be a pool of low-skilled workers to staff innovative NZ businesses? That alone should bring out our competitive urges and force us back to building a larger knowledge elite of our own.