Good morning and special thanks to the Australian Financial Review for the invitation to speak this morning, particularly editor-in-chief Michael Stutchbury.
Since I last had a chance to speak with you, a lot has happened – not surprisingly.
However one of the thoughts I’d like to press today doesn’t concentrate on the volume of events.
It has more to do with some key moments that signal an important shift.
What made me think about this were some observations made in Thomas Friedman’s work, Thank You For Being Late.
I wasn’t attracted to it because of my generous approach to punctuality.
An exceptionally good walk through the recent history of – among other things – tech and the influence it’s had on global communities.
FROM ONE THRESHOLD YEAR IN 2007
Friedman reminds us that, like wine, tech has had some vintage years.
Points where individual breakthroughs tallied up in a short space combine to profoundly shape events and behaviours down the track.
He picks a period running late 2006 through 2007 as one of those vintage, threshold years. During that time, Friedman observes:
• The internet crossed one billion users worldwide
• Storage capacity for computing exploded
• Development begins of an open-source platform for software collaboration, called GitHub
• Two platforms are opened up to a wider audience: they’re called Facebook and Twitter
• Google buys YouTube and launches a new open standards platform to compete with Apple’s operating system – Android
• A machine called Watson starts getting built
• A person called Satoshi Nakamoto starts working on a digital currency – it’s called Bitcoin
• Amazon unveils a thing called the Kindle
• The idea of AirBNB conceived in an apartment in San Francisco
• A guy in a skivvy called Steve Jobs walks onto a stage brandishing a gadget called an iPhone
• And from that point in 2007, US telco AT&T will report that traffic on its national wireless network will grow 100,000 per cent to 2014.
TO 2018 – THINGS HAVE CHANGED
It’s hard to argue against Friedman’s claim 2007 was a threshold year.
But can I put to you – rather brazenly given I’m following Thomas Friedman – that 2018 will be recognised as another threshold year.
Because I’d say to you that while 2007 was the year that a swathe of tech tools emerged … over ten years later, 2018 has emerged as the threshold year for how we use those tools and how they are used on us.
And you just knew this was a threshold year looking into the eyes of a bloke reading severity in the faces of people looking back at him.
This bloke had become accustomed to adoring, admiring eyes staring at him. But the eyes he was looking at back in April were far from admiring. He knew that.
And when we watched his face on our TVs and smartphones, we knew he knew that.
As Mark Zuckerberg stared at the faces of angry Congressional members and must have wondered: how did it get to this?
Hauled before Congress to not only apologise for the way Facebook’s had allowed the public’s data to be abused…but to utter words few would expect a Silicon Valley gargantuan to utter: “it is inevitable that there will need to be some regulation.”
Silicon Valley and tech has had the dream ride in most western economies: regulation light, taxation light.
But in the aftermath of the Cambridge Analytica scandal we not only saw $45bn wiped off Facebook’s value – but politics began to signal that the dream ride was coming to an end.
And by the quote I read earlier, I think Mark Zuckerberg knew it.
This is the year we have seen a sharp shift in views about the way:
• companies and governments use our data,
• the way we use tech personally,
• the way tech will be used in our places of work.
If you want proof of that look at just the last few months:
• from Apple revealing it would let iPhone users measure their screen-time,
• to the backlash over My Health Records here,
• New rules about data use in the EU kicked in,
• We’re seeing rising concerns about the impact of AI on jobs.
That’s just to kick things off – expect this focus to continue until the public (and its’ governments) judge that a comfortable equilibrium has been reached.
And before we reach that point, governments still need to wrestle with the challenge being posed by big tech to competition law and taxation regimes.
Taking into account the central theme of this year’s AFR Innovation Conference – Prosperity Through Innovation – there’s an undoubtedly an appreciation that new ideas can create economic success and help people do better.
But the judgement of the result – I’d argue – has a tougher edge now:
• who is actually benefiting;
• how widely are we all benefitting; and,
• are some paying a higher price for others to do better?
These points are similar in nature to what I put to you last year.
But I’d argue the focus has sharpened, driven by a broader public discourse around the way business relates to wider society.
These are the times in which live and have our views shaped.
YEAR IN REVIEW
I note that the other element to the conference theme around Innovation is “making it happen”.
It’s just clichéd now to observe the retreat of a Coalition government from the very thing that helped it rebadge itself nearly three years ago.
And I’m not going to waste time doing that.
But it is odd to watch the occasional, timid tip-toe back to the theme, with one announcement after another designed to create the appearance of activity.
I’ll give the government full credit for its ability to pump out news but their announcements should be backed by decisions, fulfilled by action, results delivered.
Look at the last 12 months:
• At this conference last year, the Government released a discussion paper inviting input into the development of a Digital Economy Strategy, which would outline how “…we can seize the benefits of digital transformation and secure Australian jobs”. It was supposed to be released early in 2018. Where is it?
• A few months after that they announced the creation of a Small Business Digital Taskforce that would excitedly “help small businesses get on board with digital technologies” – but they forgot to get a single small business voice onboard the taskforce membership. Not surprisingly the report was sheepishly handed up to government in March.
• You’ll hear from ISA chief Bill Ferris today – he brought down recommendations on R&D reform in 2016. The government finally responded in May – few are publicly cheering its decisions.
• It’s been a year since a shock announcement on 457 visa reform that stunned our skills starved tech sector.
• Reforms to the government’s equity crowdfunding framework: stuck in the Senate. Not due to our opposition – the government can’t be bothered to bring on the vote on to get its laws through. Laws they introduced last September.
• Meanwhile, early stage innovators are turning to Initial Coin Offerings as an alternative capital raising pathway, prompting ASIC to set up a taskforce to keep tabs on those who might bend the rules to burn investors.
• Reforms to improve the sorry performance of the fintech regulatory sandbox – where only four local fintechs have used our local arrangements: delayed.
• And a UK-Australia Fintech Bridge the government announced is triggering concerns from some local fintechs who think the only innovative thing about it is that it’s ushering in “digital re-colonisation” – allowing the UK’s established, stronger players to enter a local market where lacklustre fintech reforms leave us at a disadvantage.
• Turning to digital transformation in government… over the course of the last year or so the website of the Australian Taxation Office has crashed as many times as months in a year. It’s just one of 15 project derailments in the government’s digital transformation program.
• And while on the subject, the government promised better input from Australian SME’s into ICT procurement and digital projects – yet in the first six months of this year two major multinationals have won sizeable contracts, begging the question: where’s the local input and encouragement for local industry?
• Finally, the NBN. Enough said. The public’s lived experienced of this under the Coalition makes the point better than I can.
Having rattled off these observations about government performance, we have enough proof of challenge.
But that should not be an excuse: the public is expecting not only delivery from government but leadership on issues that will have a substantive impact on the future.
IT’S ABOUT PEOPLE…
I mentioned earlier that 2018 is the year people start to really think about how tech is being used, the actual benefits that are being accrued and who is benefitting.
Last year I said to you how we should focus on tech as a tool, what mattered was what it let us achieve.
Having said that, it’s very clear that tech will force us to reconsider how we operate as a society and how we will respond.
One of the biggest tests is how we invest in our human capital, as a result of the impact triggered through a combination of AI, robotics and machine learning.
Once considered a niche obsession, the future of work is now one of the biggest issues in the minds of business and labour alike.
Yet it’s one of the biggest issues being ignored by national government.
Automation will trigger serious examinations of the way we skill people – from the young to those in the workforce now to those who should’ve retired but will still want to participate in the workforce somehow.
That enhancement of our human capital is a massive issue.
Pressing right now because as the Australian Computer Society and Deloitte Access Economics found – though the 2018 Australia’s Digital Pulse report – demand for digital talent is red hot: the Australian economy will need an additional 100,000 ICT workers in the next five years alone.
But if we want to be an international leader in digital skills and employment we need to generate an extra 100,000 ICT jobs – in addition to the 100,000 already forecast.
Beyond that we have heard the statistics outlining the likely impact of automation on the Australian labour force, impacting on roughly 3.5 million jobs by 2030.
Sitting in the background is a harrowing IMF research paper recently released – suggesting that automation will have its harshest impact on those with the lowest level of skills attainment.
That’s why I say to you: investment in human capital has got to be one our pre-eminent tasks.
Now, let’s look at this through a local lens – to factor in a local challenge.
Across the country there are employment regions where youth unemployment is nearly double that of overall unemployment.
From Southern Tasmania to Townsville to North Western Melbourne to North Perth to New England to Gippsland to Illawarra; the unemployment rate for young Australians in regional areas is double.
These are people born around the year 2000.
By virtue of when they were born many have been dubbed the “digital natives”.
They live in an increasingly digital world.
And in a country where digital skills are in high demand.
They are also the deserving beneficiaries of this tech evolution, the ones who will have to live with the decisions that we make today.
Yet they sit unemployed while employers cry out for talent.
At the same time the digital economy is developing across many industries and bringing with it many opportunities.
For example this year the EU lost 15 per cent of jobs, but also gained 15 per cent new jobs.
At the moment, you just don’t get a sense of urgency from the Australian Government about this issue.
Every time you quiz the Turnbull government about what they’re doing to prepare for the future of work challenges they tell you to relax, “we’ve got a consultant looking at it.”
That’s my exaggerated way of summarising the Government’s response to Opposition questions about this during the May round of Estimates. We need better than this.
As an Opposition we’ve announced a number of major initiatives in this area.
• Creating an Australian Skills Authority to project Australia’s future skills shortages – so we can train local workers with the aim over time to get as many of the occupations off the skills shortages list.
• Examining reform of the post-secondary education framework – to better integrate vocational and tertiary education systems, in part to help us prepare for anticipated future of work challenges.
• Underpinned by this is a commitment to invest skills and learning across schooling, TAFE and universities.
And our response is not limited to these steps.
We’re currently talking with and listening to industry, unions and the education sector to determine the shape of investment approach required to tackle our digital skills drought and prepare for what’s coming.
In the digital economy arena, I’d personally say the biggest issue is skills. Most other issues pale against this.
DON’T REDUCE THE CHALLENGE
Having said that I would hate for people in business to think that the simple response to automation and the future of work challenge is a training program.
In this year where we are challenging HOW tech is being used, the expectation on business to explain how it is preparing and how it will invest in its people is very real.
I’d say the pressing, immediate questions for Australian business include:
• Will you make the investments in tech to ensure your firms remain strong and competitive in the future?
• Have you mapped out the likely impacts of technology on your workforce?
• How will you invest in their skills and ensure the expected productivity uplift is shared?
But – again – it’s not just about a training package.
It’s also a tougher question about how business is prepared to share the change dividend.
Let me put it this way: in a climate where the average employee is finding it hard to see any movement in their wages – or where underemployment and insecure work has become a serious issue – tech driven workplace change will be exceptionally challenging.
Because it will challenge how businesses that makes decisions that have a disruptive employment affect will treat their employees on the way through – and it will also test whether the benefit of that change will be felt by wider society.
NATIONAL CENTRE OF AI EXCELLENCE
One technology whose presence will be increasingly felt in the workplace is AI.
AI is shaping up to profoundly change lives and supercharge economies.
Other countries have wasted little time recognising this and are actively planning to seize on AI’s potential.
For example, in our own neighbourhood China is muscling up to become an AI leader by 2030 – and it sees a $1 trillion industry emerging as a result of these plans.
Within a nation that reportedly has as many AI researchers as France, we have the Australian brains that can make AI work for us.
We can’t stumble or scramble our way to success with this.
We need to think, plan and act in advance.
Realising too that at the same time that the challenge for Australia is: how do we bring people together to work as one for the broader good.
Which is Labor will commit to invest $3m to help establish a National Centre of AI Excellence.
On common ground, we will see:
• the emergence of an AI Lab whose mission will be to champion the development of ethical AI;
• the nation’s first AI accelerator for industry – coming up with ways to generate new firms and strengthen existing ones;
• It will advance the generation of new jobs and think deeply about how to help people manage the impact of technology on the world of work.
• It will encourage all levels of government to think about the evolution of AI and plan for its use to improve policy and decision making – State and Territory governments will be invited to support and work with the Centre.
• It will band together with the thinking and effort currently being dedicated to AI development and application in different parts of the country and help provide unified direction.
• It will think about the collaboration we can strike up with ASEAN neighbours thinking deeply about how technology will affect their economies.
What Labor has successfully done in the past, we seek to do again in a new time.
Drawing on the talents of those from different backgrounds – business, unions, education, the civic – bringing them together with common purpose, thinking and acting on common ground.
That’s the thinking at the heart of a National Centre of AI Excellence.
The concept of a Centre has been championed by Australians with a sustained and deep involvement in AI R&D, such as A·kin CEO Liesl Yearsley.
Liesl previously headed up the firm Cognea, acquired by IBM and with Cognea tech forming a part of IBM’s Watson platform.
In Government, Labor would engage with stakeholders to agree how this funding can best be used to support research, advice and industry acceleration. We look forward to engaging in that process.
At the moment we run the risk we develop and apply AI within a limited frame of view, where benefit accrues commercially.
Yet a breadth of vision is what is needed most – to ensure many gain from the way we use AI, and that we prepare well in advance for impact and transition.
At a time where the narrative of the day levers off division and dispute, we think the Centre provides the perfect ground to think and act together for broader benefit.
And this is exactly the point I want to finish on.
The common ground.
As much as I have reflected upon the sharper issues that will test us, I genuinely believe there is the chance to be able to gain from circumstance.
The debate around automation and change gravitates towards the negative and fear.
That shouldn’t be an automatic trajectory.
But it will veer to that where the confidence in our preparation is absent, where leadership, explanation, collaboration is non-existent.
Our current public climate is dominated by division, yet on this issue – the impact of tech in our workplaces, in our personal lives, in broader society – we have the chance to work together.
And this is ground on which our side of politics works best – drawing together different viewpoints and different players from different backgrounds and putting them to work.
Because I’d put to you – the retreat you’ve seen from the Coalition from innovation will remain because of an inability to interpret the circumstances, public mood and then crystallise the thinking into national action.
There is a better way and we’re working for the chance to prove that point.