InnovatIon - Australian Academy of Technology and Engineering

InnovatIon - Australian Academy of Technology and Engineering
Australian academy of Technological sciences and engineering (ATSE)

                                                           Number 156
                                                         June/July 2009

                  ARE WE GETTING IT RIGHT?
      Contributors discuss the Federal Budget
  impact on innovation and commercialisation,
             the focus on picking winners and
                 how Australia can do it better
InnovatIon - Australian Academy of Technology and Engineering
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InnovatIon - Australian Academy of Technology and Engineering
contents                                 3
                                                                                                                                                                                                   Jun/jul 09

            Commercialisation gets
            a Budget boost
            By Rowan Gilmore

            Innovation – have we
            got it right yet?
                                                                                                                      NICTA’s Smart Transport and Roads (STaR) project – page 7.

                                                                                                                   13 	The march of (technological) progress
            By Ron Johnston                                                                                        18 	Budget energy and innovation initiatives

                                                                                                                   19 	Eight visionary Australian innovators honoured
                                                                                                                   23 	STELR boosted by Federal funding
                                                                                                                   25 	ESE: a great recipe for hands-on science
            Picking winners is
            government’s real task                                                                                 26 	We need a scientifically literate nation
            By Michael Vitale                                                                                      30 	ATSE helping develop tomorrow’s scientists
                                                                                                                        and engineers
                                                                                                                   30 	Energy White Paper: more strategic
                                                                                                                        technology planning needed
              AustrAliAn AcAdemy of technologicAl sciences And engineering (Atse)

                                                                         number 156
                                                                       June/July 2009

                                                                                                                   32 	ATSE hosts Taiwan workshop on water and
                                                                                                                        energy issues
                                                                                                                   32 	Water and climate collaboration key to
                                                                                                                        national benefit
                                                   InnovatIon                                                      39 	ATSE in Focus
                                ARE WE GETTING IT RIGHT?
              Contributors discuss the Federal Budget impact
              on innovation and commercialisation, the focus
              on picking winners and how Australia can do it
                                                       better                           Front cover: Enduring image of innovation – the Sydney Opera House.                       Photo: Brad Collis, Coretext

                                                                                                                   ATSE is an independent body of eminent Australian engineers and scientists established
                                                                                                                   to promote the application of scientific and engineering knowledge to practical purposes.
                                                                                                                   ATSE Focus is produced to serve this goal.
                                                                                                                   Opinions expressed in this publication are those of the authors, and do not necessarily
                                                                                                                   reflect the views of ATSE. Material published in Focus may be reproduced provided
                                                                                                                   appropriate acknowledgement is given to the author and the Academy.

ATSE Focus is produced to stimulate discussion and                                                                 CEO: Dr Margaret Hartley
                                                                                                                   Editor: Bill Mackey
public policy initiatives on key topics of interest to the                                                         Technical Consultant: Dr Vaughan Beck FTSE
Academy and the nation. Many articles are contributed                                                              Australian Academy of Technological Sciences and Engineering (ATSE)
by ATSE Fellows with expertise in these areas. Opinion
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pieces on topics of national interest, particularly                                                                Postal Address: GPO Box 4055, Melbourne Victoria 3001
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31 July 2009                                                                                                       Design and production: Coretext 03 9670 1168
InnovatIon - Australian Academy of Technology and Engineering

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innovation              5
                                                                                                                                jun/jul 09

Commercialisation gets
a Budget boost
The view that pumping more money into research does not automatically increase
innovation within an economy seems finally to have become respectable thinking in politics

                By Rowan Gilmore

          ne of the unexpected announcements in the Aus-       ment risk, governments should not necessarily step in. The
          tralian Government’s 2009-10 Budget was the al-      Commission argued that government intervention could
          location of nearly $200 million in seed funding to   be justified only when there were costs that had to be borne
          establish the Commonwealth Commercialisation         by a market leader that would benefit other followers (that
Institute, and ongoing funding of $85 million per year.        is, spillover effects), and when there was additionality (that
With such a commitment, commercialisation, particularly        is, the firm would not have invested in commercialisation
of publicly funded research, looks set to accelerate once      without government incentives).
more.                                                               Of course, that was 2007 and the world view of the fi-
    As noted by the Minister for Innovation, Industry, Sci-    nance sector and some economists has since changed. In           Pumping
ence and Research, Senator Kim Carr, on Budget night,          all sectors of the economy, we observe much more stimula-        more money
the challenge will be to leverage capital from industry, and   tory activity on the demand side, rather than solely on the      into research
particularly the superannuation funds, to co-invest in tech-   supply side.                                                     does not
nological innovation and, through that, to help shape the           What seems to be obvious to most of us involved with        automatically
Australian economy for the future.                             commercialisation – that pumping more money into re-             increase
    However, with an Australian culture that prefers in-       search does not automatically increase innovation within         innovation.
vestment in real estate and the occasional
flutter on penny mining stocks, this could
prove difficult. Indeed, most Australian
venture capital funds investing in new
knowledge-based industry have achieved
historically poor returns.
    As measured by their cumulative per-
formance since inception, such funds es-
tablished between 1985 and 2007 had a
pooled return at the end of June 2008 of
–1.4 per cent, although that rises to 3.9 per
cent measured over a five-year horizon.
    The return of the government to invest
in pre-seed, seed and early-stage compa-
nies is not only welcome – it is a brave de-
cision as well.
    Even when confronted by the venture
capital data above, many economists deny
there is market failure with early-stage
    For example, in 2007 the Productivity
Commission argued that just because the
private sector would not take the invest-
InnovatIon - Australian Academy of Technology and Engineering
6        innovation
jun/jul 09

               an economy – seems finally to have become respectable             good track-records for picking winners, particularly with
               thinking in politics. Measures to stimulate the many new          pre-revenue, early-stage companies. It is simply impossible
               value chains that could be created from this research are         to know from the multiplicity of seeds that are sown which
               back in favour around the world.                                  will become thriving plants.
                    Furthermore, by helping early-stage companies com-                What is critical is to ensure that the well-known suc-
               mercialise products and services, government has recog-           cess factors for growth are in place, and to judiciously re-
               nised that, as well as yielding demonstrable economic             duce both the technical and market risks as the firm pro-
               benefits by growing emerging industries, positive environ-        gresses. Equally important is tolerance for the losers that
               mental and social outcomes result in many cases as well.          wither, recognising that in cultures such as Silicon Valley,
                    The infusion of government-funded stimulus into the          it is by learning from their earlier mistakes that ‘losers’ be-
               clean-energy sector is a good example where the outcomes          come ‘winners’ when they try again.
               will benefit the nation along multiple dimensions.                     Perhaps cognisant of this, the government will want to
                    However, there are undoubtedly many who still believe        ensure that it is not capital alone that it provides, but also
               that government should not co-invest in companies that            the commercialisation expertise of organisations like the
               commercialise publicly funded research. Their first posi-         AIC to provide additional skills in developing collabora-
               tion is to deny that market failure exists.                       tions, and in implementing commercialisation strategies.
                    Yet the amount of venture capital invested in Austra-             Although funding and resourcing might be the big-
               lia in genuine early-stage research is so low that markets        gest challenges in commercialising research, establishing
               in early-stage IP or pre-revenue companies barely exist.          the collaborations necessary to develop a new product or
               The evidence of the past 18 months in the biotech sector,         service and delivering it into new markets are also essential.
               where the commercialisation chasm is well documented, is               With the lowest collaboration rate between the uni-
               that private capital has essentially dried up totally.            versity sector and industry in the developed world, this
                     In 2008, only $10 million was committed in Austra-          problem must be tackled on a number of levels.:
               lia specifically for seed-stage investment, compared with         ¢   researchers need to be motivated to collaborate more
               $6.3 billion for all private equity investment. Not only is            with industry, perhaps through the grants process;
               there market failure, there is almost no market!                  ¢   market research needs to become much more wide-
                    The second criticism will be to blindly recite the man-           spread to ensure the value proposition is both unique
               tra that ‘governments can’t pick winners’. My view is that             and has value to a customer; and
               this claim needs closer observation.                              ¢   boards of companies need to recognise the imperative
                    First, the bailout of banks around the world would                to collaborate and embrace open innovation, rather
               suggest that even the highest-paid and smartest analysts               than do it all alone, if they are to prosper as the world
               within industry have done an exceedingly poor job of pick-             economy recovers.
               ing winners or, at the very least, in undertaking proper due           With a 25 per cent increase in support in the May Bud-
               diligence. One could argue that the due diligence required        get, innovation is again high on the national agenda.
               to receive a $2 million injection of funding from a venture            ‘Front-ended’ by big increases in science and back-end-
               capitalist (or a government grant for that matter) is much        ed by the R&D tax credit, direct support for commerciali-
               higher than that which preceded the numerous multi-               sation itself and programs on collaboration promise new
               billion dollar investments by many investment banks into          life for Australia’s emerging technological industries. t
               their repackaged derivatives.
                    Further, at least in Australia when allocating innova-       Dr Rowan Gilmore has been CEO of the Australian Institute
               tion grants, it is not ‘government’ that makes the decision.      for Commercialisation (AIC) since 2003. He is responsible for
               Typically a panel of research peers or an industry advisory       leading the organisation in its mission to provide innovation
               board will review the applications and sort the wheat from        and collaboration services that help businesses grow. Prior to
               the chaff before advising the relevant minister. The probity      his role at AIC, he was based in London and Geneva from 1998
               standards are exceedingly high and generally well managed.        as Vice President of Network Services (Europe) for the airline IT
                    Finally, the number of Australian companies that have        company SITA, now part of France Telecom. He is an engineering
               suffered lapses in governance with shocking consequences          graduate of the University of Queensland and earned his doctorate
               for their investors recently (for instance, in timber schemes     from Washington University in St. Louis. He also holds adjunct
               or childcare centres) would seem to indicate that perhaps in-     professorships in both the School of Business and School of
               dustry is not as good at ‘picking winners’ as it might believe.   Information Technology and Electrical Engineering at the U
                    The truth is, neither government nor industry have           niversity of Queensland.
InnovatIon - Australian Academy of Technology and Engineering
innovation            7
                                                                                                                                       jun/jul 09

NICTA’s Smart
Transport and
Roads (STaR) project
will enable traffic
managers and road
users to predict and
respond to traffic
Photo: NICTA

Innovation: have we got it right yet?
Minister Carr may have to shoulder the additional challenge of reform to the
public service to achieve his vision of an innovative Australia, powering ideas

                      By Ron Johnston

             uch has been written about innovation in Aus-                So this time, it’s fair to ask the question: have we got
             tralia. Since the Australian Centre for Innova-         it right?
             tion was established in 1992 there has been a                The evidence presented in the Cutler review indicates
             major review of innovation on average almost            that, more than ever, getting innovation right is a press-
every two years, and many more reports in which innova-              ing matter for the future of the Australian economy. It as-
tion is central.                                                     sembles a range of indicators which show that Australia’s
    Consider this quote:                                             innovation-related performance has declined over the past
    “The picture that is emerging suggests a nation needs to have:   decade relative to many comparable OECD countries:
      world-class firms capable of introducing innovations;             “Australia has slipped from fifth to eighteenth in the World
      a system capable of quickly diffusing expertise and               Economic Forum’s Global Competitiveness Index. Our multi-
         technology throughout the economy;                             factor productivity grew 1.4 per cent a year on average
      competence at commercialising significant discoveries             between 1982-83 and 1995-96. Growth has averaged only
         and major technological advances; and                          0.9 per cent a year since then.”
    ¢  the capacity to generate its own innovations.”                   It points to declining government investment as the
    Sound familiar? Terry Cutler’s review Venturous Aus-             key cause of this decline:
tralia or the ‘Powering Ideas’ White Paper? Well, no. This              “Commonwealth spending on science and innovation has
quote is actually to be found in The Innovation Framework:              fallen 22 per cent as a share of GDP since 1993-94.”
Recent Findings released by the Department of Industry                   Hence, the substantial increase in investment in re-
Technology and Commerce in 1993!                                     search and innovation by 25 per cent over the 2008-09
InnovatIon - Australian Academy of Technology and Engineering
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                                                                                                                                       jun/jul 09

Budget to $8.58 billion must be welcomed, particularly
given the deficit being faced.                                     In Australia government is certainly a significant
    But the key questions are whether and how this invest-         funder and promoter of innovation. But
ment will enhance Australia’s innovation performance.              the vision of government departments and
    First, there is a significant restructuring of the archi-      agencies as beacons of innovative achievement,
tecture of governance of the innovation system. A consid-          leading in the development and adoption of
erably strengthened Chief Scientist and Prime Minister’s           innovations in meeting social challenges and
Science, Engineering and Innovation Council (PMSEIC)               delivering public services, is nowhere to be seen.
will be charged with introducing a greater foresighting ca-
pacity to innovation policy.
    A series of Innovation Councils have been established             But the 25 per cent increase would only raise the Aus-
to provide advice and intelligence on industry and inno-         tralian proportion of innovation firms to 37.5 per cent,
vation system needs. Enterprise Connect has the role of          still well behind our competitors. Nor is it clear how Enter-
developing and delivering services to firms. In addition,        prise Connect and the Clean Energy Initiative will deliver
the establishment of the Commonwealth Commercialisa-             it. What may be needed are even more demanding targets,
tion Institute, presumably to replace the axed Commercial        and mechanisms to drive their achievement.
Ready scheme, has been announced.                                     Perhaps the biggest gap in the White Paper, particular-
    Much of the success in promoting innovation in coun-         ly when compared with a recent similar report in the UK,
tries such as Finland and Sweden has been attributed to          is the role that is charted for government in empowering
the strength of their intermediary organisations linking         innovation. In Australia government is certainly a signifi-
the worlds of research and commerce. Hence much will             cant funder and promoter of innovation. But the vision
depend on the performance of the new intermediary or-            of government departments and agencies as beacons of
ganisations in Australia.                                        innovative achievement, leading in the development and
    Second, seven Innovation Priorities have been identi-        adoption of innovations in meeting social challenges and
fied to focus the production, diffusion and application of       delivering public services, is nowhere to be seen.
new knowledge. This is a significant step towards elevat-             Indeed, there is reason to speculate that this and pre-
ing the place of innovation in national performance, but         vious reports on innovation have not achieved their in-
their generality, as in ‘supporting high-quality research        tended effect at least partly because the procedures and
that addresses national challenges’, ‘a strong base of skilled   practices of modern public management, with their appro-
researchers’, ‘fostering industries of the future’ and ‘more     priate emphasis on accountability, risk management and
effective dissemination of new technologies’, will pose large    outcomes, have created an ethos that has great difficulty in
challenges for implementation and assessment.                    encompassing the new, the different, the unexpected.
    Third, most of the new funding addresses major con-               Minister Carr may have to shoulder the additional
straints in the public research sector.                          challenge of reform to the public service to achieve his vi-
    While appropriate, strengthening Australia’s supply-         sion of an Innovative Australia, powering ideas. t
side inputs to innovation appears to be largely a continua-
tion of past policy and what we know how to do best. The         These views were nourished by fruitful discussions with my
approaches to the more difficult challenge of promoting          colleague Don Scott-Kemmis
an enterprise-based culture of innovation, which lies at the
heart of the Cutler analysis, are less well developed.           Professor Ron Johnston FTSE, founder and Executive
    The significant exception is the replacement of the          Director of the Australian Centre for Innovation at the University
R&D tax concession by tax credits, which would appear            of Sydney, has worked for more than 25 years in pioneering better
to be far more supportive of the many small and medium-          understanding of the ways that science and technology contribute
sized enterprises that perform the great majority of the in-     to economic and social development, of the possibilities for
dustrial R&D and innovation in Australia.                        managing research and technology more effectively, and of the
    An apparently bold target is announced: to increase          processes and culture of innovation. He is also one of Australia’s
the proportion of businesses engaging in innovation by           leading thinkers about the future. He led the major national
25 per cent over the next decade. Latest OECD data shows         foresight study ‘Matching Science and Technology to Future Needs’
that currently less than 30 per cent of Australian firms re-     by ASTEC. Over the past eight years he has conducted more than
port a product innovation in the past two years, whereas in      100 futures projects for private and public sector organisations in
most other countries the figure is around 50 per cent.           Australia, Asia, Europe and the Pacific.
InnovatIon - Australian Academy of Technology and Engineering
10        innovation
jun/jul 09

Picking winners is
government’s real task
Objections to picking winners are generally either philosophical or practical – both lack
factual support and fly in the face of actual government practice

               By Michael Vitale

                       he goal of government support for commercial            funds directly, without the competitive proposal processes
                       R&D is to encourage projects with large social          typical of many grant programs.
                       benefits but inadequate returns to private investors,       For example, Healthy Futures, the 2006 Victorian Gov-
                       and around the world many governments offer             ernment statement on the life sciences, included $50 mil-
               such support.                                                   lion to support the expansion of the Walter and Eliza Hall
                   There have been relatively few rigorous attempts to         Institute, $16 million to facilitate the merger of the Austin
               demonstrate the benefits of such support, and there is an       Research Institute and the Burnet Institute, and $35 mil-
               ongoing dispute about ‘picking winners’ – although theo-        lion to create a new Australian Regenerative Medicine In-
               retical objections to that approach rarely seem to stand in     stitute at Monash University. The statement contains no
               the way of accepting cash when it is offered, even if not all   justification for the choice of these particular institutions
               the companies shall have prizes.                                to receive government support, nor any indication of how
                   Objections to picking winners are generally either          the success of these investments will be judged. The exer-
               philosophical – the government should not be making             cise must be seen as a clear instance of picking winners.
               choices among competing demands – or practical – the                In the commercial sector, the Victorian Govern-
               government is not able to make such choices successfully.       ment VicStart program awards funds to assist companies
               Both sorts of objections lack factual support and fly in the    to utilise and exploit science and technology for export,
               face of actual government practice.                             growth and profit – another instance of picking winners.
                   Taking the philosophical question first, governments            The point of these examples, and the many others that
               are constantly making choices – that is, they are constantly    could be given, is that governments are already in the busi-
               picking winners – and there is no reason that this behav-       ness of selecting the individuals and organisations that they
               iour should not extend to selecting recipients of support       believe to be the most worthy recipients of citizens’ money.
               for R&D.                                                            There is no other sensible way for many government
                   Grant programs, for example those run by the Austra-        programs to function, and there is no reluctance on the
               lian Research Council and the National Health and Medi-         part of many governments to dispense funds to winners
               cal Research Council, are exactly exercises in picking win-     chosen by processes that are neither revealed nor measured
               ners. How else could they be run – as lotteries?                – just reluctance to admit that that is what they are doing.
                   It might be argued that the government itself is not            The practical objections to government attempts to
               directly picking winners in these cases, but surely working     pick winners often exhume examples such as the Victorian
               through proxy peer-review committees chosen by govern-          Economic Development Corporation, a venture capital
               ment does not change the essence of the situation.              fund that lost $110 million before it collapsed due to poor
                   Moreover, in many cases, government does dispense           management and a lack of accountability. (It is not often
                                                                               noted that VEDC’s $15 million investment in AMRAD
 Grant programs, for example those run by                                      eventually earned back almost half of its losses, nor that its
 the Australian Research Council and the                                       investment in Biota kept licensing revenues from the flu
 National Health and Medical Research Council,                                 drug Relenza in Australian hands.)
 are exactly exercises in picking winners. How                                     There is no question that investment decisions must be
 else could they be run – as lotteries?                                        made in a careful and transparent manner. The fact that
                                                                               things are sometimes not done properly is not proof that
innovation            11
                                                                                                                                       Jun/jul 09

they cannot be done properly, or indeed proof that they are     Further reading
not usually done properly.                                      ¢ 
                                                                  Den Butter, Frank A G, and Seung-gyu Jo, ‘Pros and Cons of
     In fact, published peer-reviewed studies show that             ‘Backing Winners’ in Innovation Policy’, Tinbergen Institute
governments have been, and can be, effective at selecting           Discussion Paper 09-012/3, February 2009, http://papers.ssrn.
commercial R&D projects to receive support. It is impor-            com/sol3/papers.cfm?abstract_id=1345748
tant, of course, to design appropriate selection procedures     ¢ 
                                                                  Hollinger, Peggy, ‘France bets all on picking winners’, Financial
and to measure the outcomes, but these are what citizens            Times, 24 June 2005, 13
would expect of any program that disburses public funds.        ¢ 
                                                                  Klette, Tor Jacob, Jarle Moen, and Zvi Grilliches, ‘Do subsidies
     It should also be noted that, in general, performance          to commercial R&D reduce market failures? Microeconometric
shortfalls are only rarely taken as an indication that gov-         evaluation studies’, Research Policy, 29 (2000), 471 – 495
ernment should not be involved in a particular area. From
transport and health to bushfires and swine flu, govern-        Professor Michael Vitale teaches, researches, and consults in
ment bodies have recently performed less than adequately.       the areas of commercialisation and innovation. He is the Director,
However, in many such cases government does not even            Commercialisation, of the Asia–Pacific Centre for Science and Wealth
admit to the existence of problems, much less propose that      Creation at Monash University, and is a member of the University’s
it not be involved in the future.                               Commercialisation and Intellectual Property Advisory Committee.
     Yet the failure of some admittedly high-risk invest-       Professor Vitale also teaches at the Melbourne Business School,
ments in R&D seems to frighten the horses and raise con-        Macquarie University and the Australia and New Zealand School
cerns about ‘backing winners’.                                  of Government, as well as in executive programs in the public
     Given that neither the philosophical nor the practical     and private sectors. He is chairman of the Australian Centre for
objections to ‘picking winners’ hold up, what is behind the     Posttraumatic Mental Health and a director of Australian Science
concerns that continue to be expressed?                         Innovations Inc. He is president of the Harvard Club of Australia
     From the government side, it may simply be an unwill-      – Victoria and a member of the Victorian Branch Committee of
ingness to make a commitment that will be measured by           AusBiotech.
the objective and unambiguous terms of the marketplace.
     Picking individual winners for research grants or or-
ganisational winners for uncontested funds has an advan-
tage for government: the winners are not going to com-
plain, and neither are the losers, who hope to get in on the
next round. Moreover, the success criteria are generally suf-
ficiently vague as to make retrospective analysis unlikely.
     Picking winners in the commercial realm is subject
to much clearer outcome measures, and may therefore be
avoided via an appeal to philosophy and practicality.
     From the commercial side, objections to picking win-
ners often seem to boil down to objections to the picking
of other winners.
     In essence, the reluctance of government to pick win-
ners and the objections from some elements of the private
sector to having the government pick winners may boil
down to a reluctance to compete on a level playing field
and a reluctance to be measured.
     While these are understandable human emotions, they
must not be allowed to stand in the way of effective govern-
ment support for commercial research and development.
     Logically, private sector executives who object to gov-       Picking
ernments picking winners should refuse government mon-             winners –
ey when their organisation is chosen and, equally logically,       governments
responsible government employees who have a principled             are constantly
reluctance to make choices and be evaluated on the out-            making
comes should find another line of work. t                          choices.
32nD Atse nAtionAl sYMPosiuM
BRisBane, 16-17 novemBeR 2009
Future - ProoFing AustrAliA
Rising to the Challenge
of Climate Change
The academy welcomes participation by sponsors to support this
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The 2009 symposium will continue the academy’s long, successful
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 promoting the application of scientific and engineering knowledge to
   practical purposes.
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Atse Ceo                                               2009 symposium Convenor
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innovation           13
                                                                                                                               jun/jul 09

The march of
(technological) progress
Technology sometimes moves more quickly than our ability to absorb the changes –
even in such simple devices like remote controls and mobile phones

                By Ziggy Switkowski

          ur forebears 100 years ago could not have dreamt      an ambitious plan to build a national high speed, 100Mbs
          of the emergence of television, computers, satel-     broadband network.
          lites, lasers, iPods, or Google and Facebook. Nor         In 1996, wireless text messaging was not available in
          of a global population (then approaching 2 bil-       Australia – at all. Today more than a billion SMS messag-
lion) trending towards 10 billion people 150 years later in     es are sent each month, a volume to be further increased
2060. Or that a 21st century challenge would be an ageing       by the number of tweets being broadcast by the Twitter
population, not a prematurely dying one.                        message service. Subscription television had just been
     The defining technologies of the 21st century may not      launched on the back of a controversial dual cable rollout,
yet have taken form, but we can be certain that society’s       but plasma and LCD screens were yet to appear.
challenges, our way of life, and our standard of living will        The past two decades have seen an evolution from
be reshaped and improved by inventions and system leaps         analogue products (think vinyl records, black telephones
yet ahead.                                                      tethered to wall sockets, photographic film, 26-inch boxy
     Looking at the recent past, when Paul Keating handed       televisions) to an all-digital ecosystem largely shaped by
government to John Howard in March 1996, none of am-            advances in the broad categories of IT, communications, eBay, Google or Yahoo! were yet a significant         and the internet. The last industry to convert to a digital
public enterprise.                                              base is free-to-air network television, which will belatedly
     All subsequently listed in the following three years and   join the 21st century by 2013 according to the Govern-
helped propel the era.                                  ment’s timetable.
     In 1996, one in five Australians owned a mobile phone.         Spending on information technology has lifted to
The phones were mainly analogue and in the hands of             about half of many firm’s capital budget with large invest-
commercial and tradespeople. The mobile phone had just          ments still ahead to address remaining legacy issues and
arrived as an important productivity tool. Today, there are     new opportunities.
more phones than people and all are digital with features           Ubiquitous communications have given meaning to
far beyond simple voice calls. And they resemble mobile         the concept of 24/7. Technology sometimes moves more
video handsets more than telephones. No business – or           quickly than our ability to absorb the changes – even
teenager – can operate without one.                             in such simple devices like remote controls and mobile
     Although the personal computer had appeared in the         phones.
early 1980s, by 1996 only one in three Australian homes
owned a computer and fewer than one in 20 had internet          Where are we heading?
access. Today, more than three-quarters of homes and all        The CEO of IBM, Sam Palmisano, recently offered his
businesses have a PC, and almost all of them also have          perspective about a world becoming smarter as intelli-
some form of internet access.                                   gence is incorporated into more environments, which are
     In 1996 domestic internet access speeds were just          increasingly linked.
14.4 kilobits a second. Content was text-only – no video,           He pointed to the following:
let alone YouTube. Outside of engineering and technology        ¢ two billion people (out of a global population of seven
firms and universities, email was just appearing in the more       billion) will be on the web in 2011. At the same time,
progressive businesses. Today, almost all enterprises have         we are heading toward one trillion connected objects –
internet access, with the Government recently announcing           cars, appliances, cameras, roadways, pipelines;
14        innovation
jun/jul 09

                   ¢  one in two people globally now own a mobile handset                      more complex market than our currently damaged debt
                       – 3.4 billion;                                                           markets;
                   ¢  an estimated two billion Radio Frequency Identification              ¢  food distribution – addressing supply-chain inefficien-
                       (RFID) tags were sold in 2007, embedded in products,                     cies, reduction in ‘food miles’ (the distance travelled
                       passports, buildings, toll-road sensors – even animals.                  by food from farm to your kitchen) and ensuring the
                       This number should rise to 30 billion by next year; and                  integrity of the food and minimisation of food-borne
                   ¢  massively powerful computers can be affordably applied                   infections;
                       to processing, modelling, forecasting and analysing just             ¢  healthcare – online access to a patient’s health history
                       about any workload or task. And to monitoring the in-                    and records would cut administrative costs, reduce
                       teractions between these trillion connected objects.                     medical error rates and improve patient outcomes; and
                        For the first time in history, almost anything can be-              ¢  traffic systems – congested roadways, imperfect se-
                   come digitally aware and interconnected – and it will be.                    quencing of lights and searching for parking spots
                   He goes on to list modern society’s key processes and how                    probably cost us billions of dollars annually in lost
                   they will be transformed and made safer and more effi-                       hours, petrol costs and polluting exhaust emissions.
                   cient. For example:                                                           He goes on to cover air travel (1400 new international
                   ¢  energy – where homes and individual appliances will                  airports by 2050), weather forecasting, oil field manage-
                       be continuously monitored, and an intelligent electric-              ment and water systems. His point is that information
                       ity grid balanced to reduce energy costs to users;                   technology from, say, 1996 couldn’t even have begun to
                   ¢  financial systems – even the most sophisticated systems              seize the opportunities and attack these problems. Neither
                       designed and deployed just a decade ago were built                   could you have done it four years ago – IT was too expen-
                       for a different world. He says that given the complex-               sive, too hardwired and too underutilised, with too many
                       ity, speed, and scale of today’s financial markets, those            distributed parts in an unconnected world.
                       systems are as antiquated as the horse and buggy. For                     Now there is the potential in 2030, when computers are
                       instance, in the global currency market, US$10 trillion              expected to rival the capacity of the human brain, to suggest
                       can be traded on a single day. This is a far bigger and              unimaginable opportunities ahead. One well-known global

Getting the best for industry                                                                               using these highly competitive facilities to
                                                                                                            quite different levels.

from R&D infrastructure                                                                                         Meanwhile, although the capabilities now
                                                                                                            exist in Australia, and while similar facilities are
The Australasian Industrial Research Group’s           NCRIS and the MNRF program before it, the            being used overseas by industrial competitors,
(AIRG) winter conference in Canberra                   Synchrotron, the new nuclear reactor at              some major Australian companies (or even
will examine how the nation’s research                 ANSTO and lots of other instrument-driven            industry sectors) might not be fully aware of
infrastructure can impact the R&D and                  capabilities in universities and CSIRO, all of       what could be available locally and how it
innovation activities in various industrial sectors.   which are capital-intensive.                         might then impact upon research productivity
    This focus is driven by a belief that                  It is recognised that many of these              and outcomes.
heavy investment in major government                   pieces of major equipment, and the skilled               The meeting will explore the impact of
and university research infrastructure is not          people who work with them, have significant          industry usage and consequent measurable
bringing optimal results for industry.                 potential to accelerate the progress of              economic impact on the economy. Several
    Titled ‘The importance of Australian               Australian industrial R&D, although their            other key issues potentially impacting the
national research infrastructure to industry and       present use by industry appears to be less           consideration of Australian industrial R&D
the economy’, the conference will discuss this         than optimal.                                        staff relative to its use of this national research
disparity and the economic impact of better                Therefore, it seems timely for the AIRG to       infrastructure will also be considered.
access to and usage of this new infrastructure         sponsor an assessment of how the nation’s                The conference will be held at Parliament
by industry.                                           research infrastructure can impact on various        House on 20 August, preceded on 19 August by
    The conference program notes that both             industrial sectors’ R&D and innovation activities.   a dinner with key Opposition Parliamentarians.
Australia and New Zealand have invested                    A brief informal survey conducted by
heavily in major research infrastructure –             some AIRG members has suggested that                 More information:, or
examples of which (in Australia) include               various Australian industry sectors may be           Meg Caffin, 03 9864 0913
innovation           15
                                                                                                                               Jun/jul 09

company’s mission statement ‘To digitise all the world’s in-    location-based products and services and appliances to
formation’ no longer sounds like corporate hubris.              proliferate. Low, earth-orbiting satellites will provide de-
    Still, to help you recover your composure about such        tailed views of all surface-based features – as Google Earth
upcoming technology intrusions into our ordered lives,          hints at today.
let me note that many interesting innovations of recent              Continually increasing affordable computer process-
years mostly arise from technologies and systems that have      ing power, bandwidth and data storage, friendlier user in-
evolved in a leisurely fashion, sometimes over decades.         terfaces, coupled with proliferating devices (Blackberries,
    The concept of machine-readable barcodes was patent-        iPods, motor vehicles) will most assuredly push personal
ed in 1952, but the Universal Product Code that helped          and corporate productivity to record levels, while raising a
revolutionise supply-chain management became ubiqui-            number of public policy issues such as privacy.
tous only in the past decade.                                        But predictions can also misjudge the uptake of seem-
    The fax machine – a basic business tool from the 1980s      ingly appealing products and processes.
– facilitated development of home-based businesses when              In the recent past the promise of video telephony/
affordable models led to accelerated use in the mid-1990s       conferencing, voice activation technology, smart cards,
and drove the installation of a second phone line in many       HDTV, telecommuting, virtual reality and artificial in-
Australian homes. Of course, it is heading for extinction.      telligence have fallen short to various degrees, although it
    Since some productivity-enhancing innovations often         may well be just a timing issue.
emerge in prior periods, it should be possible to predict
some of the technology forces that might shape this gen-        Systemic changes ahead
eration’s experiences. For example, smaller more powerful       During the 1970s France showed how a national strat-
batteries will increase portability and underpin wireless in-   egy obsessively followed could build a better future for its
teractivity of … everything.                                    citizens. Traumatised by the impact of the first oil shock
    The Global Positioning System, available for civilian       in 1973-74, which saw interruptions to their key energy
use since 1983, together with continuing microminia-
turisation of componentry (such as cameras), will enable

mContext (a NICTA Project)
enables mobile devices to
compress large amounts
of data – in particular,
XML, text and multimedia
information – while
maintaining low access
and update costs for all
desired operations, which
is essential for devices with
limited resources such as
mobile phones.

Photo: NICTA
The NSW Office for Science and Medical Research
Promotes growth, innovation and the public profile of science
and medical research to achieve better outcomes for the people
of NSW through:

• Funding to foster and build NSW research capabilities

• Legislative, regulatory and policy advice

• Creation of research networks and hubs

• Science communication and public engagement

• Forums, workshops, conferences and promotions

• Strategic investments in areas of State strength

NSW Office for Science and Medical Research
T: 02 9338 6700
innovation            17
                                                                                                                                         jun/jul 09

fuel – Middle Eastern oil – and massive price hikes, a           ernment leadership makes an emphatic difference and ac-
coalition of industry, trade unions (communist) and the          celerated progress follows.
government agreed to introduce nuclear power to achieve
national energy security and independence.                       Technology-friendly culture
     In the next 15 years, 57 nuclear reactors were built        Many factors influence a nation’s productivity, competi-
(now 59), which now generate about 80 per cent of                tiveness and wellbeing: education, work practices, quality
France’s electricity while supporting ‘non-nuclear’ nations      of infrastructure, regulatory framework and so on. The
such as Denmark and Italy with exported nuclear power.           role of technology and innovation is especially important,
France is a country three times ours in population and           although the near-term connections are sometimes hard to
GDP but with a smaller greenhouse gas footprint!                 quantify.
     Australia does not yet see its industrial processes under       The modern economy runs on brainpower and skills.
similar threat, although the GFC may yet come close to           Initially, the new digital economy was owned by the
having such an impact. But with considerable vision and          young. Beginning in 1996, most high-school graduates
conviction, the government is putting in place key tech-         were internet trained. By 2016, 20 years later, half the Aus-
nology policies with principles around which our industry        tralian workforce will be of the internet generation, where
and society will organise.                                       web usage, and search and networking dexterity will be
     First, the commitment to clean energy, while still hotly    core skills – albeit in the hands of young people where only
debated in some quarters, will inevitably see dramatic in-       35 per cent of 25 to 34-year-olds will have a bachelor-level
creases in efforts directed at new energy platforms and          qualification.
solutions that prevent GHG emissions from fossil fuels               And mobile computing devices will be the ubiquitous
reaching the atmosphere.                                         tool of trade.
     ATSE has published a number of authoritative techni-            Technically competent people will be needed – to help
cal reviews in this area which I have no doubt will grow in      allocate increasingly scarce capital to the best investment
consequence. There appear to be few truly objective com-         alternative, to manage large and small engineering projects,
mentators on the subject of global warming and climate           to inform and drive public debate and policy and to make
change. Of course, ATSE’s members cover the spectrum of          reasoned judgments about new technologies, which are
public opinion on this subject, but the Academy’s techni-        not always free from controversy and concern and some-
cal judgments are supported by the wide and deep exper-          times push us out of our comfort zones.
tise of its members leading to scholarly, well researched            Realising the potential within our technically enabled
and authoritative studies to date.                               society will not happen automatically. There is an impor-
     The second strategic initiative is the commitment to        tant technology leadership role – for our universities,
building a high-speed national broadband network. Few            CSIRO, our national and industrial R&D laboratories,
government or individual industry strategies will have as        our great Academies, our governments – which could also
wide-ranging and important an effect on our economy as           deliver community understanding and support.
the availability of affordable internet access with world-           And it seems to me that ATSE, through forums such as
class bandwidth by all Australians.                              this evening, is leading the way in illuminating the central
     This policy is an example of informed government            role of science and technology in modern society and in
leadership and will lead to an environment within which          celebrating our technology heroes. t
many exciting and unforeseen applications and businesses
will emerge even as the details of NBN execution poten-          This is an edited version of Dr Switkowski’s address to the
tially lead down unexpected paths.                               ATSE Clunies Ross Awards dinner in Sydney in May.
     On the topic of technology, there are certain laws that
can be relied upon to produce breakthroughs as well as           Dr Ziggy Switkowski FTSE is chair of the Australian Nuclear
continuous change – like experience curves and Moore’s           Science and Technology Organisation (ANSTO). In 2006 he chaired
Law. These often underpin our confidence in claiming that        the Prime Minister’s Review of Uranium Mining, Processing and
no matter the (technical) problem, a solution will most          Nuclear Energy, whose report re-introduced nuclear power into
certainly be found. The only points of dispute might be in       Australia’s energy debate. He is a former chief executive of Telstra,
the time estimated or the emergence of social issues such as     Optus and Kodak (Australasia). Presently he is a non-executive
ethical considerations and privacy.                              director of Suncorp, Tabcorp and Healthscope, and Chair of
     But when a nation agrees on its priorities, especially      Opera Australia. Dr Switkowski is a graduate of the University of
when reinforced by a real and visible urgency, strong gov-       Melbourne with a PhD in nuclear physics.
18            innovation
jun/jul 09

Budget energy and innovation initiatives welcome
The Academy welcomes a number of the 2009           and innovation increased from $6.9 billion in         from the corporate tax rate and thereby
Federal Budget initiatives, particularly in the     2008-09 to $8.9 billion in 2009-10 – an increase      create greater certainty in the level of
area of energy and innovation.                      of 25 per cent, the largest increase on record.       assistance.
    ATSE applauds the Government’s Budget               The 2009-10 Budget allocation to science           “ATSE particularly welcomes the four-year
decision to invest $4.5 billion to support the      and innovation is 0.73 per cent of GDP, which      funding extension of $185.5 million to National
growth of clean energy generation and new           returns expenditure to levels that existed in      ICT Australia (NICTA) to ensure the long-
technologies, and to reduce carbon emissions        the mid-1990s.                                     term viability of this vital centre of research
and stimulate economic activity through the             “The Academy continually argues its belief     excellence, which is a key asset in Australia’s
Clean Energy Initiative.                            that enhanced RD&D in our key science and          innovation system,” Professor Batterham said.
    ATSE sees this as a strong response to          technology fields is a key to a technology-led         ATSE acknowledges a number of other
its recent call for an investment of $6 billion     recovery from the global financial crisis – and    Budget initiatives and its increased focus on
by 2020 on RD&D in new power generation             to successfully addressing the challenges          science and innovation.
technologies (made in ATSE’s December 2008          of climate change, rising health costs and             ATSE also welcomes the Government’s
report Energy Technology for Climate Change:        increasing global economic competition,”           response to the Review of Australian Higher
Accelerating the Technological Response).           Professor Batterham said.                          Education, Transforming Australia’s Higher
    It supports the Government’s proposed               ATSE has been calling for a greater            Education System, and its allocation of some
investment of up to $100 million in                 recognition for research collaboration             $2.6 billion over four years.
partnership with the energy sector for the          with industry in the allocation of funding             Some of its key features include:
development of a new National Energy                to universities, given that Australia ranks         a demand-driven, student-centred model;
Efficiency Initiative – using 21st century          last in the 26 OECD countries on rates of           funding provided for each student eligible
technology to assist transition to a low carbon     collaboration between firms and universities.         for a university place;
economy by encouraging a smarter and more               The Government has the aim of doubling          increased participation, targeting a lift from
efficient energy network, using smart grid          the level of collaboration.                           32 per cent (now) to 40 per cent (2025)
technology and smart meters in homes.                   Several Budget initiatives were relevant in       of the 25 to 34-year age group holding a
    ATSE also commends the commitment               supporting collaboration – the Joint Research         bachelor degree or higher;
to invest $4.1 million over three years to fund     Engagement Exercise, Collaborative Research         an extra 50,000 commencing tertiary
a strategic approach to the nation’s energy         Networks, new research infrastructure,                students by 2013; and
security. This reflects the importance of ATSE’s    the Commonwealth Commercialisation                  infrastructure funding through the
April communiqué calling for a major increase       Institute, the renewal of the CRC program             Education Investment Fund. t
in base-load electric power generation              and the proposed improvement in Enterprise
capacity and the urgent introduction of new         Connects’ services to firms.
energy technologies to meet the expected                ATSE notes that, while these initiatives
growth in demand to provide the energy              are valuable, there is a need for a more
security Australia requires (communiqué             strategic approach to achieve coordination
from ATSE International Workshop, April 2008        of the multiple programs that are currently
titled Electricity Generation: Accelerating         supporting collaboration.
Technological Change).                                  It welcomes other Budget initiatives,
    “These Budget measures accord with the          including:
Academy’s focus over the past year on clean,          Sustainable Research Excellence – funding
adequate, reliable and affordable energy               for the indirect costs of research will more
as a fundamental for Australia’s economic              than double over time, with the aim of
prosperity,” said ATSE President, Professor Robin      raising the average level of support to 50
Batterham, in a media release.                         cents in the dollar of direct competitive
    “We also welcome the innovation focus              funding by 2014; and
in Powering Ideas: An Innovation Agenda for           R&D Taxation – for several years ATSE has
the 21st Century, supported by a proposed              been calling for a revision of the taxation     Energy Technology for Climate Change:
$3.1 billion boost in funding over the next four       treatment of R&D. The Government will           Accelerating the Technological Response called for
years,” he said.                                       replace the tax concession and introduce        an investment of $6 billion by 2020 on RD&D in
    The Commonwealth spend on science                  a refundable tax credit that is decoupled       new power generation technologies
innovation                   19
                                                                                                                                             jun/jul 09

Eight visionary Australian
innovators honoured
                                                               Robotics systems
Hugh Durrant-Whyte                                             Professor Hugh Durrant-Whyte FTSE, Research
                                                               Director, Australian Centre for Field Robotics, Faculty
                                                               of Engineering and IT, University of Sydney
                                                               Hugh Durrant-Whyte is a leading national and international
                                                               figure in the research, development and commercial
                                                               exploitation of robotics systems in applications including cargo-
                                                               handling, mining and defence.
                                                                   He has made substantial contributions in both research and
                                                               commercial applications of robotics technologies, especially in
                                                               large-scale field applications of key importance to the Australian
                                                               economy. His vision of robotics science and application, and

                                                               the passion with which he articulates this vision, have played
         he winners of the prestigious 2009 ATSE Clunies       a critical role in raising the visibility of Australian robotics in
         Ross Awards are eight leading Australian innova-      government, industry, academia and the community.
         tors impacting global development in fields such as       Professor Durrant-Whyte is an Australian Research Council
         robotics, remote renewable energy, mobile phone       (ARC) Federation Fellow. He leads the ARC Centre of Excellence
technology, health and mining.                                 for Autonomous Systems and is also the Research Director of
     The awards recognise Australia’s pre-eminent scientists   the Rio Tinto Centre for Mine Automation, the BAE Systems
and technologists who have bridged the gap between re-         Strategic Partnership for Autonomous Systems and the DSTO
search and the marketplace.                                    Centre of Expertise in Unmanned and Autonomous Systems –
     Winners are honoured for having persisted with their      all based at the University of Sydney.
ideas, often against the odds, to the point that their inno-       His research contributions have focused on two main areas:
vations are making a real difference to the economic, social   autonomous vehicle navigation and multi-sensor data fusion. He
or environmental benefit of Australia.                         pioneered the field of autonomous navigation, particularly the
     The 2009 awardees follow in the footsteps of past         development and application of probabilistic methods, critical
luminary winners such as: Dr Fiona Wood, inventor of           for robust commercial application of large outdoor robots. He
spray-on skin; Professor Ian Frazer, inventor of the cervi-    was also the originator of Simultaneous Location and Mapping
cal cancer vaccine; Professor Graeme Clark, inventor of        (SLAM) method. This allows a robot vehicle to be ‘dropped’ into an
the bionic ear; and Nobel laureate Dr Barry Marshall, who      unknown environment and to incrementally map the environment
discovered the bacteria that cause stomach ulcers.             and use that map to navigate the environment – perhaps the
     “It is safe to say that the 2009 ATSE Clunies Ross        single most important step in achieving robot autonomy.
Award winners have touched all our lives and are playing a         He pioneered work in Decentralised Data Fusion (DDF)
significant role in enhancing Australia’s international rep-   in which information from a network of sensors is
utation for innovation,” said Mr Bruce Kean AM FTSE,           put together to produce a single coherent picture
Chairman of the ATSE Clunies Ross Foundation.                  of an environment. He built some of the very first                    Chris Nicol
     Mr Kean was speaking at the ATSE Clunies Ross             sensor networks, in applications such as surveillance,
Award presentation dinner in Sydney attended by more           demonstrating key DDF features such as modularity,
than 350 eminent entrepreneurs, decision makers, govern-       scaleability and fault-tolerance.
ment officials, researchers, academics and business leaders.
It was the first timer the awards had been made in Sydney.     Mobile phone technology
     Key speakers were Dr Ziggy Switkowski, Chairman of        Dr Chris Nicol FTSE, Chief Technology Officer,
the Australian Nuclear Science and Technology Organisa-        Embedded Systems at NICTA, Sydney
tion, and Professor Penny Sackett, Australia’s Chief Scien-    Chris Nicol is a key figure in how Australians use their
tist, who also presented the Lifetime Achievement Award.       10 million mobile phones, having had a hand in a
     The 2009 ATSE Clunies Ross Award winners are:             number of the key technologies that have led to an
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