by Chris Becker
I really hate bad news – to the point that I pointedly do not watch any regular news or read the mainstream dailies (especially the terrorism mongers at Newscorp). There is an amazing amount of positive informative things happening around the world all the time – especially in exciting fields of biotechnology, communications, materials science and my favourite space exploration and aerospace in general.
Unfortunately you’ve got to call a spade and spade and use said shovel to hit people over the head with the injustices and plain stupidity of their elected officials. Especially when it directly relates to our current and future prosperity.
From Fairfax:
The Australian government’s investment in research and development has dropped to its lowest level in 30 years, an analysis of government figures shows.
Science and innovation spending has fallen to 2.2 per cent of total budget expenditure this year, the lowest share since 1984-5, a Fairfax Media analysis has found.
This is the third consecutive year government R&D spending has fallen as a share of either GDP or total budget spend.
R&D investment has grown at less than half the rate of total budget expenditure over the past two decades. At an average annual rate of 2 per cent, real growth in science spending lags far behind transport (23.5 per cent), public safety (8.8 per cent) housing (6.6 per cent) and health (5.5 per cent). Total budget expenditure has increased 4.4 per cent in real terms since the mid-1990s.
Budget figures also show science and innovation spending has fallen to its lowest share of GDP in 25 years.
Australia is by any measure one of if not the most wealthiest countries in the world. It saddens me deeply that we decide as a voting public to not fund the very essence of what makes it so well off.
Instead, like in the past, Australia is hell-bent on riding whatever boom, fad, bubble or frenzy that comes along and then hide under a protective skirt (British, American or Chinese, take your pick) or coattail that suits the commentariat at the time.
It truly is not rocket surgery to work out that investment of any kind into research (pure or applied) has long impacting benefits for the public and the business sector:
The Australian Academy of Science president Andrew Holmes said there was substantial evidence that public investment in research increased productivity.
A 2012 study found investment in basic research led to 30 times more economic growth than investment in physical capital such as infrastructure. Investment in applied research led to 10 times more growth.
Chief Scientist Ian Chubb amongst others wants R&D to lift to 3% from the current paltry 2.2% as Australia continues to languish at the bottom of the table at 18th out of the G-20 for government R&D spending as a share of GDP in 2013.
When I spoke to Professor Chubb at a conference earlier in the year (where I pitched my Research Bond idea: securitising the idle low-yield cash in super into direct funding of research) he reiterated the top-down strategy that Australia needs in a post-mining boom economy. And its not just about scientific advances:
(he)said one of the major effects of government investment in research was that it encouraged businesses to take “creative risks” to develop and apply that new knowledge. This has flow-on effects for jobs and the economy.
“Without research funding from government, business will not take risks,” he said. But Professor Chubb also said Australia desperately needed a national science strategy to highlight where future money would be best spent.
“If the public really understood all the benefits that accrue to them on a daily, if not hourly, basis from research and development that was done somewhere in Australia, or was brought to Australia, then they would be ensuring that our politicians understood the importance of this for the future of the country.”
Exactly. What is intimately missing in this country is the notion of risk taking, which is vastly different from speculation. This is borne out in the dwindling number of IPOs, the paltry lending to business both directly by the banks and indirectly by an immature corporate debt market and a focus on fruitless financial speculation, on houses and holes.
What has happened is a classic crowding out as easy money chased easy returns. Why invest in what could be astounding payoffs (read: CSL, Cochlear) at very high risk of no return (as these endeavours can usually result in) when its easier to ride the lucky wave of a minerals boom? Why bother about trying to re-engineer and focus your manufacturing sector when its easier to dig minerals as fast as possible out of the ground?
Its called the Miracle Economy by some, on the back of the Lucky Country meme – I wouldn’t call it luck though:
“We’ve been lucky so far, but with a mining boom that is slowing and an economy in transition, that luck could run out,” Holmes said.
“If we don’t strategically invest in science and research, we’ll be ill-prepared for future challenges whilst other nations are powering ahead of us reaping the rewards of increased scientific investment.”
The whole point of the good times is to save and invest for the low times and the changing uncertain future ahead. If Australia had boosted its spending on research, supported its tertiary education and other institutions, encouraged a general atmosphere of risk taking and of entrepreneurship in the many hundreds of fields available to such a smart country, it would not find itself facing a cliff wall of regret and worry over the end of this mining boom.
It wouldn’t have taken a sovereign wealth fund either, just targeting the increased revenue from national income properly instead of pissing it up against a wall in tax breaks, a rigged superannuation system and record high house prices.
Its not too late, and we have the funds, the talent and know how to re-engineer the economy in the post-mining boom era. All we need now is the leadership and some guts.