Australia’s economic recovery is being held back by the long-term lack of investment in technology and innovation, a new report has revealed.
Contrary to fears that the ‘robots are coming’ for Australian jobs, innovation has been declining for years – and this is partly to blame for the lack of new, high-paying jobs, Australia Institute Centre for Future Work director Jim Stanford argued in his new paper.
At least 200,000 Australian jobs are under threat because of the absence of business innovation, he told Yahoo Finance.
And if robots and automation were really triggering a loss of jobs for Aussies, productivity would have accelerated – but this isn’t the case; Australia is in fact facing the lowest levels of productivity we’ve ever seen.
“The underlying assumption that technology is in fact accelerating, let alone that it is the driving force of workplace change … deserves critical scrutiny,” Stanford said.
“To the contrary, according to several different indicators, development and application of new technology by Australian employers is slowing down, not speeding up.”
Compared to previous periods in history and to other countries, automation is actually moving at a “snail’s pace” in Australia.
“And by some measures (such as the overall capital-intensity of production, and recorded labour productivity), the economy is actually going backwards.”
Tech doesn’t steal jobs, it creates them
Fears of technology ‘stealing’ jobs from Australians are overblown: new technology often requires human labour to develop, engineer, manufacture, install, and operate the machinery.
For example, the creation of the smartphone resulted in hundreds of thousands of new jobs around the world, from production to phone apps that wouldn’t have existed beforehand. “The same spin-off effects on employment are possible with many other new technologies,” Stanford said.
“In this sense, new technologies can be a complement for labour, rather than just a substitute.”
The nation’s lack of technology innovation also stems from a deeper, long-standing problem, he added: Australia’s tech investment has been “historically slow for most of the past decade”, reflective of a “broader failure of Australian business sector to innovate, accumulate capital, create jobs and advance living standards”.
As a result, most of the new jobs created in Australia have been on the lower-paid end, according to Stanford.
High-innovation sectors have created 236,000 new jobs between 2014 and 2019. In contrast, low-innovation industries, where average wages are low and jobs are insecure, created 525,000 new jobs during the same period – more than double.
“There is a clear risk that more and more Australians will be consigned to lowtech, insecure, and poorly-paid jobs in private service sectors like retail and hospitality.”
Previous analysis from the Centre for Future Work reveals that Australia would gain $50 billion in new sales and 400,000 new jobs if Australia produced as much as we consumed.
‘Non-invasion of the robots’
Australia’s lack of investment in technology has occurred in a number of ways, according to Stanford.
Firstly, Australia’s commitment to the “spirit” of innovation in business is, despite former Prime Minister Malcolm Turnbull’s innovation strategy, on a “negative trajectory”: innovation started to rise in the early 1980s, but stalled when the GFC hit – and hasn’t recovered since.
Investment in machinery and technology has also faltered, as has business capital spending in general, including machinery, research and development, software, and other forms of investment spending.
In terms of research and development, Australia ranks 18th among OECD countries. Job security is actually threatened by the lack of research in this area, said Stanford.
“It is clear that the problems faced by Australian workers do not stem from too much automation. More likely, they are due (at least in part) to the failure of Australian innovation and investment policies,” he said.
Science and tech start-up incubator Cicada Innovations chief executive Sally-Ann Williams told Yahoo Finance that venture capitalists such as Blackbird, Airtree and Square Peg were continuing to invest – but that more was needed.
“Where we have cause for concern is in business investment in R&D and government policy around R&D. We know Australia is not investing as a nation in our capacity in R&D at the same levels as other developed economies and we need to understand the implications of that,” she said.
Business and government leaders needed to “set the right levers” to drive engagement in the long-term, she added.
“We can either consume the outputs of R&D from other markets or we can create it locally and expand our capability.”
Cicada Innovations is home to many ‘deep tech’ firms that are at the early stages of bringing their solutions to market, and have been working on issues already prevalent before the pandemic, namely health, energy and food.
“If we can nurture them through this period they will be a foundation for recovery and a platform for growth,” she said.
“If we fail to do so we will be playing catch up on other global economies who are investing in the sector as a means of building the foundations for future growth.”