Australia likes to talk a big game. We pride ourselves on our smarts and yet, all too often, simply wrap ourselves in comforting illusions instead of standing back and understanding what's really going on. Take our manufacturing industry, for example. The OECD has 38 member countries, so where do you think we'd rank in relation to industry size in relation to domestic purchases, or in other words making things we want to buy. About the middle, maybe? The actual answer? Dead last. We import nearly double our domestic output.

This wouldn't matter if this country was just importing simple things made more cheaply overseas, but we're not. Despite being (nominally) the 14th largest economy in the world we limp in at 74th in terms of the complexity of our production and the gap's growing bigger. The reality is we rely on China buying our iron ore and on exporting coal and gas. Educating international students is the only significantly knowledge-intensive 'export'; and you can make up your own mind about the importance of potential residency and low admission standards are to the success of this particular sector.

Over the past decade the Coalition government did little to reverse the negative spiral that had gripped industry. Perhaps this explains why former Labor senator (and industry minister) Kim Carr recently became only the second politician awarded the Academy of Science medal; the other was Bob Hawke. We usually associate conservative politicians with big business, but it seems this isn't the same thing as backing innovation or developing a dynamic industrial sector capable of producing what we need. This is the challenge confronting new Industry and Science Minister Ed Husic: how to embed the capacity to make sophisticated, world-leading and intellectually-intensive products here.

Speaking at the National Press Club last week, Husic laid out his plan to deliver on his promise. Part of this is investing in human capital (particularly STEM education) and boosting tech jobs, which is great but the sort of stuff we've heard for years. What's far more critical and suggests the minister has actually got a plan to turn the decline around is the establishment of a $15 billion fund that will invest in future industries and businesses.

Husic knows, for example, companies like Tesla and SpaceX didn't just become overnight successes by themselves - they thrived because of government investment. Exactly the same thing is needed here. There's no shortage of great ideas or technologies in Australia; the problem is nurturing them and providing the funds to transform them into business successes.

This is vital for our future.

Two months ago, for example, the two chemists who founded Licella received a (comparatively tiny) $12 million government grant. This will allow them to build a plastic recycling facility in Altona in Melbourne and develop a critical new technology and scale it to commercial success. It's significant because it works on soft plastics, the sort of packaging we used to send overseas to dispose of until other countries refused to accept it anymore. These sorts of breakthroughs come when we think outside the box, and this is the point of this column. We can't afford to just keep ploughing the same old field in the same old way and wonder why nothing's growing any more. To succeed we need to change, and this brings us to defence.

Despite a continuing and precipitate decline our ability to engage in complex manufacturing, we seem to think we can still build and operate nuclear submarines. This is quite regardless of the fact mastering this technology would be at least as complex as getting to the moon, as expensive as many years of the total defence budget, and would continue draining a crippling amount simply to keep in service. Although mastering a technology that initially became operational in the 1960s is exactly the sort of intellectual challenge you'd expect our forces to lust after, unfortunately the rest of the world's moved on. This model of deterrence was relevant in the past. Today, however, the effort of building a nuclear submarine fleet isn't a wise use of limited resources. The best way to defend our coastline isn't to build vessels that will sit deep in the water waiting to destroy enemy invasion fleets. The war will be long over by the time that happens.

The war in Ukraine is just the latest demonstration of how new technologies are transforming war. The Russians are currently using missiles to destroy critical infrastructure. It doesn't matter to Vladimir Putin that these are attacking (primarily) civilian targets any more than it concerned Winston Churchill, who nightly sent his bombers to destroy German houses in World War II. New ways of waging war create asymmetry, which is exactly what commanders search for. They don't want to defeat the other side by hard fighting, slogging it out punch by punch. They want to win quickly and unexpectedly, defeating the enemy by doing something he doesn't expect.

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Although the role of drones in destroying Russia's armoured columns has been overemphasised, this is what the Ukrainians achieved in the initial weeks of the war: using a simple, easily available and capable technology in an unexpected way. And, in exactly the same way, this is exactly what Australia needs to do today.

Husic has wonderful plans to develop quantum tech, robotics, sensing, energy generation and storage technologies, but these are useless without real-world applications. The current problem with the defence force is its procurement process is sclerotic and not fit-for-purpose. Attempts to ensure the 'best' equipment is purchased results in hugely long programs with the result that by the time approval has been granted the equipment is no longer wanted. That's the situation today with the purchase of the new armoured infantry carrier, Land 400. The tender was issued five years ago, but by the time the winner of the contract is announced we will no longer require the vehicles.

Defence desperately needs the injection of a bit of Husic's innovative flexibility.

Nicholas Stuart is a Canberra writer.

Nicholas Stuart is a Canberra writer.

QOSHE - The minister the ADF needs - Nicholas Stuart
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The minister the ADF needs

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04.12.2022

Australia likes to talk a big game. We pride ourselves on our smarts and yet, all too often, simply wrap ourselves in comforting illusions instead of standing back and understanding what's really going on. Take our manufacturing industry, for example. The OECD has 38 member countries, so where do you think we'd rank in relation to industry size in relation to domestic purchases, or in other words making things we want to buy. About the middle, maybe? The actual answer? Dead last. We import nearly double our domestic output.

This wouldn't matter if this country was just importing simple things made more cheaply overseas, but we're not. Despite being (nominally) the 14th largest economy in the world we limp in at 74th in terms of the complexity of our production and the gap's growing bigger. The reality is we rely on China buying our iron ore and on exporting coal and gas. Educating international students is the only significantly knowledge-intensive 'export'; and you can make up your own mind about the importance of potential residency and low admission standards are to the success of this particular sector.

Over the past decade the Coalition government did little to reverse the negative spiral that had gripped industry. Perhaps this explains why former Labor senator (and industry minister) Kim Carr recently became only the second politician awarded the Academy of Science medal; the other was Bob Hawke. We usually associate conservative politicians with big business, but it seems this isn't the same thing as backing innovation or developing a........

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