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Australia needs to plug innovation gap

Being at the crossroads of technological change, Australia should decide if it wants to be a producer of cutting-edge applications or be contented with just being a user of technology

Australia needs to catch up with other nations that are investing more in innovation and emerging technologies such as artificial intelligence (AI), or be left behind.

Speaking at the Sydney leg of the Amazon Web Services (AWS) Summit, Daniel Petre, co-founder and partner at venture capital firm AirTree Ventures, said although there are pockets of success in Australia’s startup community, such as the likes of Atlassian and Hyper Anna, innovation and research and development (R&D) in the country still lacks behind the likes of China and the US.

“Australia is at a crossroads,” he said. “We all know that technology is changing at a fast rate, and at light speed that has never happened before. We have a choice about whether we want to participate and be a producer of the world’s greatest applications, or be a user.”

Noting that China, in particular, is pouring investments into AI by spending $1bn a year to groom data scientists, with ambitions to be a leader in AI by 2030, Petre said Australia, on the other hand, has few projects that can scale and perform complex tasks.

“We have lots of science projects, but what we’re doing is not special,” Petre said, citing the example of training pigeons to identify breast cancer cells in x-ray images – which is about applying pattern recognition rules and often do not require higher order skills.

“A whole lot of jobs that apply these rules will disappear. And what we have to do as a country is to work out how to take on new roles and application use cases,” he said.

Australia currently ranks 20th among nations in the Organisation for Economic Cooperation and Development in R&D investment, which amounted to 1% of its GDP in 2015, compared with 3.6% in Israel, 2% in Germany and the US, and 1.6% in China.

Petre said some Australian companies, such as a large grocery chain, operating in oligopolies are the biggest culprits, having been protected by market characteristics and structures. “They watch for things coming over and respond, as opposed to looking over the horizon for what a product should be in 10 years’ time – we need to have a little disruption there,” he said.

Earlier this year, the country’s national science and innovation body, Innovation and Science Australia, released a report to steer the nation forward, calling for businesses to ramp up their focus on innovation and R&D. The report included 30 recommendations, such as increasing R&D spending, as well as improving education and access to skills. 

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“Our skills base is small and growing, but we do not have skills for jobs that need to be done,” Petre said. To that, the Australian government is piloting a visa programme for a year to attract scarce innovation and technology skills to the country, following a controversial move to axe the 457 visa scheme being used by many IT professionals in Australia in 2017.

One Australian company that has been raising its innovation game is Visy, a supplier of packaging products and shipping boxes. Its executive chairman, Anthony Pratt, said at the AWS Summit that the company has opened an industrial technology hub in Singapore to explore the use of AI and robotics in its global operations.

Having already moved its core systems – such as SAP – to AWS, which has lowered IT costs by 30% and improved application performance by up to 10 times, Visy is now counting on robotics and automation to stay relevant and make labour costs irrelevant, countering the view that manufacturing is dead in developed markets like Australia, Pratt said.

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