Check against delivery

Introduction

Thank you Professor Coaldrake and thanks to Universities Australia for inviting me to take part in this year’s conference.

It’s an honour to be here, sharing the stage with Professor Coaldrake and Professor Chubb.

As Professor Coaldrake has outlined, Ian and I have been asked to speak on the theme of “Universities and the new era”.

I will talk about three aspects of that:

•    The first is what characterises the new era, and the implications for the Australian economy and wealth creation.

•    The second is the critical role of universities as part of our knowledge infrastructure.

•    The third is ensuring that education as a product remains fit for purpose.

The new era

So, how might we characterise the new era for the purposes of this morning?

If we take major forces of change and a major and relevant implication of each:

First, global competition.

70 per cent of global trade is now in intermediate products and capital goods rather than final products. To compete, Australia has to find its niche in those global supply chains. 

The second force is demographic change.

We need to stop talking about offshoring and recognise that the market for labour is global.

In Australia, many of the entry level roles for graduates are significantly diminished in number if not gone.

The third force is digital technology and its displacement of middle and lower skilled jobs.

We are seeing the reality of robots as carers.

There has always been change, but the difference now is the pace of change: interestingly, at the WEF in January one of the persistent underlying themes was that the pace of change now exceeds our ability to adapt.

This new era we’re talking about has been visible for maybe five years, but it’s been building for 15.

Between 2000 and 2010, post the dot.com era, the changes were unfolding under the radar:

•    Research into artificial intelligence/machine learning.

•    Orders of magnitude increases in computing power.

•    Increasingly ubiquitous mobile communication.

In 2007, the introduction of the smart phone changed everything.

And now we have “clouds” everywhere.

We have to ask ourselves, how is Australia placed?

The Intergenerational Report, released by the government last week, reinforces what the stakes are here.

On the one hand, our aging population and other pressures are growing the demand for public spending. On the other, fewer people in the labour force and lower terms of trade are weakening our capacity to afford the level of spending.

As the BCA has outlined in its Budget submission, also released last week, the overriding objective is to bring the rate of increase in large spending programs under control.

While growth alone will not address the structural issues in the budget, nonetheless we must also focus our collective efforts on driving the innovation that will deliver the next wave of economic growth and create the wealth that will:

•    Allow governments to reinvest in physical and knowledge infrastructure, in skills and in the social safety net.

•    Allow businesses to reinvest in business model adaptation and transformation, and hence sustainable job creation.

Creating national wealth is the imperative for the new era because if we don't have enough wealth, we cannot afford to reinvest in our future prosperity and the things we most value as a nation.

The returns to labour will not be enough to generate the required level of wealth. We must now focus on the returns to knowledge.

While the link between knowledge and economic prosperity may not be unequivocal, the counterfactual certainly is.

Role of universities and knowledge infrastructure

In this context, universities need to recognise and promote themselves as being a critical part of the knowledge infrastructure that underpins Australia’s innovation system.

There are several aspects to this infrastructure:

•    the physical infrastructure universities control

•    the body of knowledge itself, and

•    the people (faculty and students) within universities who create, hold, preserve and refresh that knowledge.

Physical

The physical infrastructure held by universities is hugely important.

Let’s start by asking whether it could be reoriented better to meet the needs of the new era.

1. Could the buildings that were used as venues for lectures in the days that students physically attended lectures be used differently

While many universities are redesigning learning spaces, it’s a costly exercise. Can we apply design thinking to repurpose existing spaces more cost effectively?

Would they be of greater value if universities moved to a more tutorial based model like Oxford and Cambridge?

2. How can universities use their physical presence in the local geography, and purposefully enhance their engagement with the people and businesses who live and operate in their environs to create a micro innovation ecosystem?

We all talk of Silicon Valley as the exemplar of how universities can impact their geography.

But there are multiple examples of how this is being approached by Australian universities.

•    UTS is a driving force in the emerging creative precinct in Ultimo.

•    Flinders University has strategically adapted itself to the challenging socio economic demographic of its surroundings in Adelaide.

•    The University of Wollongong is working to help its post industrial community to reconfigure for the digital economy.

3. In the context of physical infrastructure, I do want to raise the issue of The National Collaborative Research Infrastructure Strategy (NCRIS).

NCRIS is critical for enabling universities to fulfil their role as part of the nation’s knowledge infrastructure.

We have to ask ourselves the question about NCRIS: how have we come to this? 

How have we come to a point where a government feels it can use assets, publically funded to the tune of over $2 billion, as a hostage in a political process?

Where it is prepared to jeopardise over 1500 highly skilled research jobs and the continuing operation of 27 national facilities?

Shame on us.

We have to see this as a failing on the part of the research sector, including universities, and on the part of business.
 
•    Our collective lack of advocacy over time, and

•    Our inability to promote the importance of knowledge infrastructure and the role of these research facilities.

Body of knowledge

Turning to the second dimension of knowledge infrastructure: the stocks of knowledge themselves.

Like physical infrastructure, knowledge atrophies if it is not maintained. R&D should be seen, not as a discretionary “cost or flow” concept but rather as an “investment in stocks” concept.

It refreshes and augments our national stocks of knowledge.

We all know what happens when we don’t adequately maintain our roads and bridges. Just because knowledge is less visible doesn’t mean it is any less vulnerable to the consequences of poor maintenance.

However, both public and private funds available for research are constrained. This is the reality, so how do we do more with less?

Do we have the appropriate mix of investigator-led and industry facing research activity? There is a strong view that the balance in Australia is skewed to investigator led (because of the incentive structure) and that the result is disparate knowledge creation, not necessarily aligned with adequately maintaining the critical mass of strategic stocks of knowledge.

Do we have enough research generating knowledge that will enable us to break into all-important supply chains?

If the mindset in universities was “knowledge enabling new business models” rather than the “commercialisation of IP” would the economic value impact be greater?

Are the bodies of knowledge to which universities contribute good enough to give Australia a seat at the international table?

People

Turning now to people – the glue in our knowledge infrastructure.

Ultimately, it isn’t universities or businesses that innovate, it’s people.

If we are to have ideas generated, with the potential for innovation and the potential for wealth generation, we need bright people.

Universities are responsible for creating the environment for bright people to undertake research, and to educate other bright people. 

The interface between faculty and students is the essence of what created Silicon Valley.

Big ideas are not, by and large, dreamt up in a person’s garage.

They may start with a brainstorming conversation between tutors and PhD students in a tutorial room.

They may crop up over a cup of coffee.

The capacity of a university to create the environment for serendipity is crucial.

Universities are one of the few remaining “open spaces”, where minds can rub against minds, with outcomes that are unpredictable.

Consciously preserving “open space” is a central feature of universities’ role in the new era.

Just to reiterate a key role of universities is to recognise and advocate for the concept of knowledge infrastructure and its place in generating national wealth.

Education

I do now want to spend a moment on the question of the education element of our knowledge infrastructure.

Education is important at a personal level because it provides an individual with the opportunity to have meaningful jobs and to contribute to overall wellbeing.

At the national level, people with meaningful lives and wellbeing strengthen community cohesion, and enable the innovation and wealth generation that underpin the national reinvestment cycle.

Being blunt, universities need to ask whether their product is fit for purpose in the new era.

Are the purchasers of the product fully informed? Can they assess the personal return on investment? Are they encouraged to think of alternatives?

We could be pure and say that a degree is all about education, not training – but given scarce resources, do we really have the luxury of that distinction?

We still operate substantially on a campus style model, but with the predominance of drive in – drive out students, juggling at best 12 contact hours a week, the opportunity for that serendipity of contact that I spoke of earlier is significantly compromised.

Is the product fit for purpose given the level of unemployment and underemployment among graduates, and the time it takes them to find their first job.

The prospects for new graduates are the worst for three decades – I have already noted the disappearance of those vital entry level roles.

Further study is often the only option – is this a good use of resources, either personal or public?

Are we restricting people by having a rigid semester framework?

Several universities are working towards a more continuous program, flexible enough to enable work and study to mix.

Are four and five year degrees appropriate, with students not in jobs until they are heading into their mid-twenties. What a waste.

UTS requires students to think of themselves as “professionals” and workforce participants from day one.

Perhaps this approach will help the purchasers of the product be better informed and not leave them in that comfortable cocoon where confronting the question of employment can be deferred or ignored.

To ensure that the university product is fit for purpose for the new era requires a mindset shift on three levels.

The education continuum

First, universities need to view their product in the context of an education continuum which spans the majority of a person’s life.

If we undervalue any part of the continuum, we abrogate our responsibility as a nation to maximise the potential of both individuals and the nation overall.

Currently, this continuum is not operating effectively.

•    Its parts are siloed.

•    The barriers between them are rigid.

•    Where pathways exist, they’re difficult to navigate.

The stock of skills intrinsic to education need to be introduced and nurtured across the continuum, starting from primary and pre-primary.

The quality of the university product is predicated on certain inputs from schools. That means universities have a responsibility to look down the supply chain into schools and pre-primary.

They need to advocate for curricula which will enable students to get the best from not only their university experience, but from whatever post compulsory education experience they choose.

So why are we continuing to have the same conversation on STEM in primary schools around which we all agree, but still nothing happens?

We will never have the required level of IT graduates because the pattern is set in years 1 – 3 at school.

What are universities doing to influence state education ministers and the Australian Curriculum, Assessment and Reporting Authority (ACARA) on the need for a digital technology stream in the primary school curriculum?

That's the level of detail universities need to be going to. You have the voice, you have the credibility and you need to be a strong advocate.

You need to take responsibility rather than complain about the quality of students enrolling in your institutions.

Why have prerequisites been relaxed or abandoned?

Why do we have an ATAR system which is systematically gamed by teachers and students?

Where do school teachers learn to teach?

Are universities equipping student teachers to teach the broader skills and competencies young Australians will need to take up opportunities and manage the risks associated with the new era?

The education continuum of which universities are a part requires a very different mindset towards VET.

Are universities valuing the VET sector as a crucial, equally valued player – a sector we need in order to facilitate seamless employment transitions for people across their adult lives.

It is antithetical to the new era for universities to be competing with the VET sector for raw numbers of students.

Tertiary education as a market

The second shift of mindset is seeing tertiary education as a market - a market with students at the centre - and designing it accordingly.

Markets are not entities. They are created by public policy.

The tertiary education market has to be designed around students because it is their experience of it that will deliver on economic and social objectives.

Vice Chancellors’ call for deregulation comes with a significant responsibility to make sure the value proposition is there for students.

They need to hear the message from the Intergenerational Report and accept that public funding constraints are inevitable, as are private providers entering the system.

Australia has developed an inspired scheme where people who are beneficiaries of tertiary education make a contribution through an income contingent loan.

This is the kind of debt government should maintain, and the Business Council wants it to be available beyond the narrow group of students who currently have access.

For government, it is a strategic investment in people’s capacity to establish prosperous, independent lives.

It’s an investment that provides business and industry with the skilled people we need to stay competitive in a global marketplace.

But universities have a responsibility to encourage and enable potential students to make informed decisions about the level of debt they are taking on, the likely return on their investment and the compromises it might involve down the track. 

We are now in a time of low wages growth and so the impact of a large HECS debt as a constraint on life options is now very real and increasing, and this will militate against innovative capacity including providing an incentive for people to leave the country.

Collaboration

None of the new era opportunities can be realised without far more effective collaboration between the university sector and industry.

I’ve been tough on universities this morning, but we in business are equally accountable for driving a mindset shift around collaboration, and how we facilitate and exercise it.

We cannot afford to be having the same conversation in ten years’ time about the mismatch between the people the education system is producing and the people industry needs.

Between us, we need to be thinking about the application of knowledge from the day a person starts to acquire it. 

Industry needs to constantly and systematically signal back through to institutions along the education continuum, including universities, particularly now as our skills requirements are shifting so quickly.

We need formal, permanent structures that feed information about skill requirements through to students, and help them plan for their careers right back in primary school.

We cannot continue with a system that leaves careers counselling in the hands of teachers who carry the responsibility on top of their normal workloads.

The Business Council is committed to finding ways for our member companies to help young people prepare for the world of work.

There has to be a better way of integrating work and learning, and there is no doubt that it involves close collaboration between our sectors.

This is why the BCA has joined with Universities Australia and other business groups to develop the National Work Integrated Learning Strategy, announced by Belinda Robinson yesterday.

This is a valuable initiative which recognises that business cannot engaging effectively with universities one on one. You need to work as a group.

The collaboration we need for the new era cannot afford to be episodic.

It must be deep embedded in the way we approach our respective roles and responsibilities to the nation.

Conclusion

Let me conclude by reiterating some key points.

We need to reframe the argument that universities need more money for research to one that focuses on the quality and health of the nation’s knowledge infrastructure.

The Intergenerational Report makes it plain that needing more money is not a compelling argument.

The importance of preserving and augmenting infrastructure that underpins our business models of the future – the physical infrastructure, the stocks of knowledge and the people – just might be.

We need universities to look at the educational product they offer and how it relates to other products in the market.

We need them to take responsibility for ensuring purchasers are informed and equipped to make decisions that will profoundly impact their lives.

That involves universities looking back down their supply chains and playing an active role in the education continuum, including where it intersects with the world of world.

The question we all need to grapple with is have we pushed more and more students to complete secondary school and enter into tertiary education and missed a fundamental point about the interface between education and employment?

We have created a serious discontinuity between education and work.

Is there a better model, more suited to the new era, where from the age of 16 all young people pursue a dual track that combines education and work, with the balance varying depending on the person’s proclivity?

Universities could take the lead in probing the question and potentially re-inventing this all-important interface.

When they are leading, the impact universities can have is nothing less than intergenerational transformation.

National Strategy on Work Integrated Learning in University Education