Good morning, everyone. I'm Diane Smith-Gander and I am the Chair of CEDA. And while we have had an opening address, I am here to formally open CEDA’s 44th State of the Nation conference.
And what a wonderful Welcome to Country we had from Paul House. Just a few short weeks ago in this building, the houses of our federal parliament passed legislation enabling the referendum on The Voice.
This year's conference theme is navigating disruption. I commit personally to voting yes for The Voice disrupting indigenous disadvantage in Australia. This is one of the six issues we'll explore over the next two days by unpacking the opportunities The Voice will bring. We will also explore five other key issues that businesses and governments are grappling with.
· Tackling Australia’s big infrastructure challenges
· Becoming a leading economy in decarbonisation and climate adaptation
· What's next for cyber security? Protecting data without stifling innovation
· And can Australia be more innovative by improving dynamic capability?
Our sponsors are very much up for this conversation. Major sponsor Aurecon - and supporting sponsors Amazon Web Services, Curtin University, Indigenous Business Australia, TechnologyOne and Telstra. Sponsor support is essential in enabling the independent work CEDA does and making events like this State of the Nation a key part of all of our calendars.
The last topic I mentioned was exploring how Australia can be more innovative by improving dynamic capability. I’d like to explore that myself just a little.
You know, I’m often asked by business leaders how they can be more effective. The one change I always need to recommend is they spend less time being ‘busy’. I tell them “Your calendar is over jammed. Clear it for at least an hour each day. Do some thinking work. It’s not how busy you are that will be noticed but rather the quality of the ideas that you are turning up with.”
So it came as little surprise to me that CEDA’s new research reveals that Australian firms are strongest at sensing opportunities for innovation but not necessarily putting this into action by transforming their businesses. The companies are behaving just like their leaders. Too busy to really think.
CEDA’s research explored the dynamic capabilities of Australian businesses. Capabilities that help businesses survive and thrive in uncertain times. Businesses are only able to harness dynamic capabilities when they have the space to do ‘thinking work’.
According to the Australian government, there is a widening productivity gap between Australian businesses and the rest of the world.
The Productivity Commission’s recent 5-Year Productivity Inquiry highlighted the government’s reduction of the annual productivity growth assumption from 1.5 per cent to 1.2 per cent. This implies that in 40 years’ time, without change, the average Australian will be 20 per cent poorer.
I’m surprised this didn’t make more headlines. It certainly concerns me. Of course, over 40 years a lot can happen but complacency is never a strategy. Now is the time to focus on our productivity growth.
No one, not even a government, can simply wave a magic wand to lift productivity.
In the last 120 years, it is sustained investment – in buildings, machines, technology and intellectual property - that has accounted for nearly half of labour productivity.
The onus is on managers and boards to think, then take risks and invest in growth for the future.
Investment has been weak in recent years – and is at the same levels as the 1990s recession. This is a real drag on productivity.
To get productivity growth back to 1.5 per cent we need an increase in investment growth from 2.2 per cent up to 3.3 per cent.
There is high economic payoff. Real wage growth is facilitated, inflationary pressures are eased, and doing more with less. This is imperative in a world with an ageing population.
But how do we get there?
Three key changes have the potential to make all the difference.
First, boards encouraging Australian managers to be more dynamic, innovative and jump on opportunities.
Second, building a better regulatory environment to support business investment. Australia’s inefficient tax system, lack of cyber security preparedness, and complex foreign investment rules can all deter investment.
Australia can copy lessons from Asian powerhouses South Korea and Singapore. The first reduced barriers to foreign direct investment in the early 2000s, paving the way to introduce key technologies, improve management skills and boost economic growth. The second established an Economic Development Board centralising decisions and policies to attract the best global capital.
CEDA’s research reveals that onerous compliance regimes can hinder the development of dynamic capabilities. This might explain why accountants and lawyers are so well-represented on company boards. But we know that Board diversity – of experience and expertise – can really enable organisations to be more agile in the face of adversity.
CEDA’s research shows that 81 per cent of top-performing companies had at least one female board director, at least one director with science and technology expertise and at least one with international experience.
This may not be particularly surprising. What is surprising is that Australian boards still lack diversity. It’s an issue you all know I’ve been very vocal about in the past.
Finally, better migration settings can ensure Australia attracts top global talent. Thinking talent who will be critical for driving productivity gains. The Federal government has made good progress with the establishment of a three-tier system of skilled migration.
I’m a businessperson, so unapologetically my solutions are always anchored in changes business can make. Investment in a period of rising interest rates can be challenging but it can make all the difference to Australia's future prosperity. So really it’s time to start thinking.
The Dynamic Capabilities research yet again reinforces how CEDA taps into Australia’s pressing challenges. For 64 years, CEDA has consistently pushed the dial when it comes to the issues that matter for the Australian economy. This is something that CEDA will continue to do across both our research and our events programs.
Now in the coming session, I will be facilitating a panel on tackling Australia’s big infrastructure challenges.
When it comes to lifting our productivity as a nation – getting infrastructure right enables us to achieve some big wins. But the art is in the prioritisation of major projects. And holding that prioritisation through the electoral cycle, effectively removing the politicisation of critical infrastructure and capabilities. We have Federal and state government bodies established for this very purpose. Given the amounts of capital and capability needed to deliver these projects getting it wrong and expecting a do-over is not really an option. Working out how to tackle these challenges is critical.
On that note please could you please welcome Jim Betts, Secretary of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts to commence the next session.