The Guardian • Issue #1966


Industrial policy for Australia post COVID-19 webinar

This webinar proved to be a most interesting Q&A debate between Sarah Howe, chairing the session and Professor John McKay, Hon. Prof of the Faculty of the Arts and Education at Deakin University. McKay stated that globalisation was impacting economic policy and government control is ending. With this in mind, he spoke about the direction of Australian economic policy and said he believed we had entered a Fourth Industrial Revolution (Industry 4.0) but are still building on the first one. He questioned the challenges and opportunities that are being created.

Since the 1800s, we have experienced three industrial revolutions. Each was powered by a disruptive new technology: the mechanics of the steam engine, the innovation of the assembly line, and the communicative capabilities of computer technology. They were called industrial “revolutions” because the innovation that drove them didn’t just improve productivity and efficiency a little bit – it completely revolutionised how goods were produced and how work was done.

Industry 4.0 began in the Eighties, based on biotech, nanotech, green renewables, AI, robots, drones, etc. – all very complex and leading towards new models of production. The balance between capital and labour is changing because these industries are technology-orientated using little labour. Australia is being left behind, whereas Germany, China, and South Korea are adapting rapidly and creating “factory outfits for the world,” where you not only buy a product but everything associated with that product. Using extremely advanced technology, they are creating the jobs of the future.

Industry 4.0 is powered by the Industrial Internet of Things (IIoT) and cyber-physical systems – smart, autonomous systems that use computer-based algorithms to monitor and control physical things like machinery, robots, and vehicles. Industry 4.0 makes everything in the supply chain “smart” – from smart manufacturing and factories to smart warehousing and logistics. But Industry 4.0 doesn’t stop at the supply chain. It inter-connects with back-end systems, like enterprise resource planning (ERP), to give companies an unprecedented level of visibility and control. Ultimately, Industry 4.0 is a major part of any company’s digital transformation.

The first industrial revolution is still taking place in Asia, which is a large part of the global economy. The second revolution came with electricity, oil, and the internal combustion engine: mass production and the beginnings of multinational corporations. The last decade has seen the computerisation of mass production and innovative technology with transport and control linking supply chains globally. COVID has made us realise how fragile these supply chains are.

Australia’s problems have been caused by denationalisation and removing our car industry which was disastrous, with the effect of de-skilling and removing technical jobs. We need to recreate this by providing education in skills via technical training.

There has been a backlash in the population regarding globalisation, especially financial globalisation. COVID has broken supply chains and added to the global financial crisis. Populism has been the reaction, e.g. Trump’s “unfair competition with China,” right-wing reactions of Hungary and Poland, and Brexit. Now we’re seeing a completely different left-wing reaction in Latin America due to imperialism and colonialism.

McKay mentioned Ross Garnaut’s book Reset, which recommended the new activity of building renewables as a way to create new jobs and new technologies, i.e. green steel instead of digging up iron ore and coal. This approach would alleviate the Labor Party’s concern about losing jobs in the coal industry and mining. The introduction of green hydrogen and green steel is ideal for retraining and employing people in those industries.

He also spoke about regional development generally which is best coming under state or local governments who know the skills existing in their regional areas. This is being considered seriously in the US and Europe. Regions can’t be left behind, and there needs to be equal planning. In Europe, their industrial policy was about this issue, and they are backing regions to realise their potential, which will open up whole new areas. We need decentralisation in Australia with the provision of certain kinds of jobs for poor regions. We need a pro-active development, with flexible specialisations. And he felt our universities are essential in this.

Sarah asked how progressive force could be used to push for change against conservative economic ideas and vested corporations with capitalist interests? McKay’s immediate response was that carbon capture is useless, and we must take the renewables path, which is about much more than rooftop solar! Battery storage is very important, and there is much work being done in this area. Rare earth minerals are plentiful in Australia, but we need a strategic vision to push technologies into the essential areas. Our present government has its head in the sand.

We need people behind innovation, and we need specialist information about the future, which is up to our universities. There is an urgent need for a group to analyse this and provide a “future” policy. An institution acting as a clearing house for alternative visions to show Australia a way to tackle the future. The Productivity Commission needs to be replaced! And a big debate is needed, led by experts. We need a democratic, widely based discussion about the future of Australia.

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