Telecoms & Broadband Business Newsletter - April 2014

Editorial - Where is the economic plan for the post-manufacturing era?

Interesting discussions were taking place and good questions were being asked regarding the disappearance of a large section of traditional manufacturing industries in Australia, followed by statements from the government that more of such economic transformations will take place, with more job losses to be expected.

Only recently we discussed some of the effects of this changing economy and the need for large-scale economic transformation. See: Developed economies not ready for an ICT-driven recovery. http://www.buddeblog.com.au/frompaulsdesk/developed-economies-not-ready-for-an-ict-driven-recovery/#sthash.xZjWQFnU.dpuf

The effects of technology on jobs is enormous and a large number of ‘old’ jobs will be lost. Some predict that 50% of jobs could potentially be replaced by technology, and that these will no longer simply be connected to administrative functions. The next sectors that are going to be affected include healthcare, public service and education.

For example, data analytic capabilities based on M2M and other data-collecting technologies can for example already much better predict fraud and diagnose illnesses than accountants and doctors can.

However governments are ill-prepared for such changes. While the politicians continue to claim that they have planned for this post-manufacturing environment they failed to articulate such plans and as a result we might again see some policy-making on the run, while what is really needed is a long-term vision with long-term strategies attached to it – no stop-gap measures and bandages.

I admit that I am biased here, but I was puzzled that nobody in the media questioned why we are losing traditional jobs, what are the underlying, structural reasons for it. As BuddeComm has been saying for over a decade technology is causing changes in elements such as productivity, innovation, costs, skills and so on. Whole sectors have already been affected by it: publishing, entertainment, retail, finance, music, to name just a few. We see successful companies utilising digital productivity, e-health advances, smart grids, cloud computing and e-education. In some instances productivity gains of up to 80% can be achieved – on average however, this works out at around a 20%-30%; the key is that what the digital economy is doing is taking costs out of the old economy.

Technology should be a crucial part of any post-manufacturing economic plan for our country and, with the government spending $43 billion on technology in relation to the NBN; I am puzzled that no one asked if and how that investment can assist in such a plan. Nobody in the government seized the opportunity to mention this in relation to the economic transformation they were talking about. Nobody – not even the Minister for Communications or his parliamentary secretary – used recent media appearances to talk about the potential social and economic benefits of that investment.

Sadly, during that same period the Federal government rebuked the Tasmanian government, where they were talking about those social and economic benefits in relation to the rollout of the NBN in their state. The Tasmanian government will have to make do – in their own words - with a second-rate solution for its digital infrastructure, despite coming up with good plans on how to address the only issue the Federal government is worried about – that of cost.

This is a bad omen for the many local councils who have asked similar questions of the Federal government and come up with similar alterative plans.

I mentioned that we have seen several positive moves from the government in relation to its NBN policy, distancing itself from its radical position of the past, but the rebuke of the Tasmanian government should be seen as a serious step backward. At the same time the government admitted that it was wrong in claiming that the NBN in its original format would cost $90 billion, it now admits it to be closer to $56 billion. The gap is closing, but it doesn’t look as though the government will use this to review its hard-line position – and that instead it will continue to deliver its second-rate NBN solution.

Despite its massive investment and its critical function in transforming the economy the government doesn’t seem to include the NBN as part of its post-manufacturing plan. Nevertheless the NBN can and will help the country to propel itself into the future, where innovation and many of the high quality new jobs will have to come from.