Speaker:  Jennifer Westacott AO, Business Council chief executive

Venue: Via zoom

Delivery:  Friday 17 September, 2021

Topics: Tertiary education, regional education, regional jobs, innovation, Australia’s COVID-19 economic recovery

**Check against delivery**

I would like to start by acknowledging the Traditional Owners of the land we are meeting on today, for me that’s the Ngunawal and Ngambri people, and pay respect to their elders past, present and emerging.

Thank you for the introduction.

I’m really pleased to be here with you today, and to talk about some of the issues the Business Council is focused on through our current piece of work on Australia’s economic future, our Living on borrowed time discussion paper.

This work looks at the global forces converging on Australia and then examines the shifts we need to make to transform our economy to meet those challenges and set us up for the next 30 years of economic prosperity.

We believe that by refashioning our economy, we can better deliver the type of society we all want.

So, today I’d like to focus on the pivotal role and potential of universities in the post-pandemic recovery and beyond, with a particular focus on how regional universities can be growth enablers.

There’s no doubt that if we are to be a more advanced, resilient and digital economy and a fairer society – universities will be at the heart of that transformation.

So first, let’s look at the vitally important role universities play in the economy.

The numbers speak for themselves.

Pre-pandemic, universities:

• contributed more than $40 billion to GDP.
• international education was our fourth largest export
• they supported around 260,000 full-time jobs, and
• international students spent about $12 billion a year in the visitor economy – even more than the spend by visitors travelling here for a holiday.

That impact is felt in the regions as well as the big cities.

We know that Regional Universities Network members contribute $2.4 billion in economic activity to their regional communities.

These economic statistics are impressive, but they don’t capture the full importance of universities, particularly in regional areas.

In regional towns like Armidale, Bathurst or Toowoomba – and their surrounding areas – local universities are part of the fabric of the community and major employers.

At the Business Council, we want to end the geographic divide and ensure people in the regions can both contribute and share in the benefits of growth.

This starts by rethinking the way we plan and prioritise around key places that have the potential for growth.

We believe one of the essential ingredients for any place to thrive is an existing university that can work with a TAFE to provide the skills and training people need throughout their lives.

Regional skills models need to be part of a broader strategy to grow regional economies.

Pre-pandemic, Regional Universities Network members were credited with creating over 11,000 jobs in regional areas.

Again, these numbers don’t tell the whole story.

It’s important to remember that regional universities don’t just add extra jobs and economic heft.

They also help to diversify the economic and employment base of a region, providing greater opportunities.

That helps to improve the resilience of regions to economic shocks or natural disasters that might knock down a single industry.

This is an important part of our work – we are examining the imperative to complement our existing strengths in areas like resources and agriculture while also further expanding into new high-tech, high-productivity and high value areas.

Diversifying our industrial base is key to Australia’s post pandemic recovery and accelerating our growth into the future.

It’s how we attract more investment and become more productive and internationally competitive.

It’s how Australia meets the challenges create by global forces of change that we outline in our Living on borrowed time paper from the world changing around us.

These include:

• the acceleration of technological and digital change
• the rise of Asia
• the accumulation of more than $1 trillion of government debt, and
• the long run challenge of climate change which will directly impact one in four jobs in Australia. 

To meet these challenges our paper also outlines the six big shifts we believe the country needs to make:

• diversification
• shifting to a low carbon economy
• remaining open to the world and competitive
• lifting the skills of our workforce
• making sure no one gets left behind, and
• rebuilding our public finances.

As you can tell from that list – the role of universities in the nation’s ability to make those shifts is crucial.

How successfully we can do this will depend on having a greater focus on innovation, creativity, research and development.

The focus must extend beyond developing world class knowledge, capabilities and skills.

We need to leverage these to ensure we are commercialising and scaling up research and development to create new high tech and highly skilled jobs and industries.

When it comes to research excellence, we can achieve a better return on our investments by improving research translation.

As someone who sits on a university council, we need to change the incentives in institutions to drive more research commercialisation: from publications to patents and production lines.

We rank 8th in the OECD for highly cited publications per capita but when it comes to the outputs of our innovation system we sit in the bottom half of high-income countries.

In Australia, we need to change the mindset so it is accepted that universities are crucial parts of the enabling economic infrastructure to drive economic activity.

We find pockets of success here, but it’s not the same widespread culture that you find in other parts of the world.

Part of this cultural shift means building stronger collaborations between industry and universities.

Other countries do this better than us, for example the Fraunhofers in Germany and the Catapults in the United Kingdom.

Instead of being all things to all people, their efforts are concentrated, deliberate and very purposeful.

Co-location is another critical enabler of successful research partnerships.

Physical proximity helps make connections and build trust, which is hard to do remotely.

That’s why we are big supporters of innovation and investment precincts that bring universities together with businesses large and small.

Precincts support knowledge sharing and skills formation and can pair that with manufacturing capability to bring products to market.

This precinct model underpins the exciting development of the Western Sydney Aerotropolis which will include a jobs and innovation hub.

I’m fortunate to chair the Western City Parkland Authority, and we are forging a new way for business, governments and universities to work together.

I’ll talk about our new education model a bit later but this site will serve as a magnet for new high-tech, high-productivity industries that are positioned to dominate the global economy in areas such as:

• space technology
• defence
• agri-business
• pharma
• freight and logistics, and
• health and education.

In Australia, we need to really ingrain this idea that we’re adopting at the Aerotropolis of universities and businesses working together.

Australian universities are recognising the importance of this link to business, and this is reflected in the growing number of universities joining the membership of the Business Council.

I also believe more can be done to improve broad incentives.

The research and development tax incentive for companies has been constantly changed and altered.

It is still not providing the right incentives to encourage companies to collaborate with research institutions.

By turning our great ideas into products and services, we can solve real world problems and improve our standard of living.

Traditionally, a lot of the focus and funding for research has been centred in the big city universities.

But there’s great potential for regional universities to have an outsized impact as research catalysts.

They work better with strong connections with local industry, leveraging strengths and aligning with national priorities including in:

• agriculture
• clean energy, and
• regional health

It is encouraging to see the federal government committing $20 million as the first tranche of funding to increase research capacity at regional universities.

I know several Regional University Network members have been successful through that program, and the research projects – including on hydrogen, drought and regional mental health – are terrific.

We want to see more investment along these lines.

I want to turn now to look at skills.

There are two ways of looking at the skills agenda:

• one is it’s alignment with the commercialisation agenda, and
• the other is the need for new education models.

Let me go to the alignment first.

We could consider assigning National Priority places or even lifting the funding cap for university degrees and short courses in areas that align with the modern manufacturing priorities or around 10 priority capabilities that are crucial to developing new jobs and new industries.

These could include:

• agricultural science
• quantum computing
• engineering
• IT, and
• data analytics.

One of the appealing things about regional universities is their focus on their students, on employment outcomes and on the needs of their communities.

That focus on delivering the skills needed to succeed is commendable.

We often hear about needing a skills pipeline, but I think about it more as a skills ecosystem.

That means having a variety of ways to develop skills, complementing formal qualifications like degrees and certificates with short courses and micro-credentials for upskilling.

On the whole, Australian universities do an important job of providing initial post school qualifications – it’s a critical foundation for learning.

But we’re not always so good at supporting up-skilling and re skilling for people later in their careers who are looking to switch jobs, re-enter the workforce or upgrade their skills within a job.

There are a range of transformational changes facing the Australian economy, in the form of changing technology, a changing global environment and the need to transition to lower emissions energy sources.

These changes will be keenly felt in the regions and universities in these areas will have an important role to play in supporting the transformation of regional economies.

They must provide an important avenue for people to reskill and retain.

It’s why we need the education system needs to provide more flexible and tailored options that Australians can choose from, group together, and stack, depending on their individual needs.

With the right mix of learning options, universities can extend their role in this skills ecosystem, in partnership with industry, and also with the VET sector – we need to see more integration there.

There’s a great example of this underway at the Aerotropolis

A key feature of the development is a New Education and Training Model that will allow students to study specialised TAFE and university micro-credentials at the same time as working in one of the nearby international corporations.

This innovative skills model is a big selling point for global companies like GE and Hitachi that are lining up to be a part of the new Parkland City precinct.

As tertiary education adapts to economic and digital disruption, regional universities can build on their strong learner-centric focus by trialling new education models.

We know the federal government is considering a package to support improved commercialisation through partnerships with industry, and the BCA has been closely involved in that work.

This will only work if these partnerships and alliances we have established maintain coordination and momentum.

The government will only treat universities with value if they can see value – and that’s where you come in.

You are critical to the future of your communities, and their ability to prosper in a changing world.

As you’ve always done, this will require regional universities to continue adapting and respond to the challenges that lie ahead.

Your business model will be disrupted.

If not by COVID but by the speed of change in the structure of work and skill formation.

You need to rethink some aspects of your training and tailor them to industry.

You need to rethink your incentives to drive the commercialisation focus.

But mostly you need to coordinate on an unprecedented scale.

Australia is too small to have everyone being a centre for excellence in the same things.

I can’t tell you how many times communities tell us that they are going to lead the way on defence, on aerospace, on robotics.

When you give in and you ask:

• what is the demand and where do you think the markets are, and
• what do you think the size of that market is – the answers get thin.

So, coordination to drive scale is essential.

The health sector worked out years ago that not everyone could be a teaching hospital. Instead, the network model was created.

This combined with the case mix funding model were the two fundamental policy interventions that took the health system out of its rolling funding crisis.

I wonder what that would look like for University sector?

I am sure there will be push-back about autonomy and independence.

But the alternative is this:

• you compete with each other, not to drive innovation, but to survive
• or, you drive coordination, networking and productive competition so that you and the nation thrives.