Analysis and Commentary

Election 22 the real issues – industry policy by bureaucrats or consultants

Analysis and Commentary

@AuManufacturing’s occasional editorial series on the real issues in the 2022 federal election continues today with a critical assessment of industry policy, and the role of multi-national company consultants. Here Lance Worrall and Glenn Downey look at the policy advice challenge

Whichever coloured ties and scarves (blue or red) forms the majority of the House of Reps members later this month, hopefully their wearers will quickly address the piecemeal and passive approach to Australian industry policy.

This is critical to reverse the hollowing out of the Industry Department’s internal advisory base.

Australian industry is engaged in a multi-faceted, long term, and dynamic set of extremely competitive global markets.

Even with the odd, individual company exception, Australia’s overall global standing continues to fall using existing metrics – whether in economic complexity, innovation, entrepreneurism, digital competitiveness, commercialisation or business expenditure on R&D.

Or you could just use your eyes as a traveller to other countries or simply by reading global market press.

We are failing our future generations. Badly. Government has a key role to address these failings, yet it’s been MIA for twenty years.

This shouldn’t really come as a surprise because what passes for a national industry strategy – a coherent set of industrial sector policies – of where and how Australia should ‘play’ in these global markets, of what capabilities we should be building and supporting, and ensuring we have the infrastructure, systems and resourcing to effectively execute the strategy – is nowhere to be seen.

It hasn’t been evident for a very long time.

Meanwhile, there have been squadrons of McKinsey and BCG, Big Four, and other consultancies proverbially flying in on their very expensive helicopters to drop piles of (confidential) stone tablets to the presiding minister.

And then, just as quickly, they fly out to leave industry department management and staff to execute on programs and initiatives that quickly lose context, have no continuity, and seemingly no outcomes.

Was it the strategy, the execution, or both that failed us? When responsibility is conveniently divorced from accountability, good luck improving the system.

This continues to bring untold frustration to industry, and to those in the department that really want to make a substantive and positive difference to Australia.

Unhelpful cynicism begins to take hold. How do we get to better outcomes when no one trusts the system, and most have given up on Government’s rightful role, and others just want to game it?

Imagine, for a moment, that in each of the dynamic sectors our industries compete in, the national sector strategy and its execution actually inform each other, and the continuous ability to synthesise, analyse and respond was permanently within the department’s capacity?

Imagine, for a moment, that some of the well over $100m the department spent in just the last year on consultancy reports, was instead invested in its own capability enablement? Say, for example, by recruiting industry subject matter expert teams on a fulltime basis for each of the major critical industry areas where Australia needs close coverage.

The napkin version is for teams of 3-4 genuine market sector experts across each of 100, even just 50, industries, from semiconductors to water chemicals, from pharmaceuticals to quantum, from agriculture to AI, from blockchain to batteries, from alternative energy to autonomous systems, from education services to minerals, and so on.

Fifty sectors doesn’t cover everything, but then the consultants haven’t covered even a fifth of this for five times the cost.

And they are gone. The department’s permanent subject matter teams would be, by contrast, well, permanent.

It’s not like this is a completely unknown concept in parts of the public service. We have permanent defence subject matter experts within defence, each covering many different aspects of defence.

Over at the RBA we have over 1,200 staff, many of whom are subject matter experts in just one subject, money.

Similarly, within agriculture and energy and education there are subject matter experts.

But where is the industry development angle of each of these sectors represented within the industry portfolio itself?

If we look at countries such as Taiwan or Singapore, their ITRI and EDB organisations respectively have developed, supported and continuously evolved the strategic-execution mix of their countries’ industry policies over long periods of time. Each country has reaped enormous benefits.

Instead of what are often simply generic business support programmes with ‘manufacturing’ in their titles, the development of internal expertise could help give us forward-looking policies based on an understanding of the sectors, together with the key points within their global value chains Australia has to hit to maximise benefit and grow strong onshore industry clusters.

Public sector experts would collaborate with industry using agreed industry roadmaps and plans, working to publicly-enunciated goals and timeframes.

While cautioning against technocrat rule, such domain and market knowledge expert teams also give career track public servants a further avenue for development, skill attainment, promotion and deeper direct policy involvement.

It may even become attractive for some industry-government fusion to occur, with mutual sabbaticals and secondments.

But, best be a little cautious of this. In the national interest – that is for all the rest of us, and our children, and our children’s children – we wouldn’t want regulatory capture of the policy making function by vested industry interests to happen, would we?

Is there no alternative to a lurch from one helicopter expert visit to the next?

Glenn Downey is executive director of The Maltby Group based in NSW. Lance Worrall is an industry development specialist based in South Australia.

Pictures: Main, Glenn Downey, and below, Lance Worrall

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