Going forward, what are some of the key design principles and priorities to consider as building blocks for a comprehensive, evidence-based industrial strategy, which both creates and adapts to the technologies and jobs of the future?

The government already has a Future Made in Australia (FMiA) plan for achieving economic resilience and a pathway to net zero. An urgent priority should be to join up this plan with the further development of the research and innovation system so that new industries as well as existing ones can participate effectively in global markets and value chains.

For example, the Industry Capability Network (ICN), which connects small and medium enterprises (SMEs) with large projects, would be in a position to add more value and foster greater business dynamism if it was also funded to promote new technologies, like the US Small Business Innovation Research (SBIR) program.

The ICN is Australia’s longest surviving industrial policy agency and reminds us that the Hawke-Keating era of economic reform through its Accord with the trade union movement was not just about floating the dollar and tariff reductions but also targeted industry plans, structural adjustment measures and workplace best practice programs.

Consequently, a second priority for industrial strategy would be to establish an institutional coordinating focus, along the lines of many other advanced economies, such as Vinnova in Sweden, METI in Japan, InnovateUK and TNO in the Netherlands.

This is long overdue and would address the fragmentation of Commonwealth funding for the research and innovation system across 151 separate budget line items and 14 portfolio areas. It might also streamline the extraordinary multiplicity of business improvement programs – 712 at last count – across both State and federal jurisdictions.

A tripartite mission-led strategy could begin with a “technology foresighting” exercise to identify current and future areas of competitive advantage in consultation with industry, unions and research institutions, including CSIRO. This would enable interventions not just to respond to market failure but to shape markets.

Third, an important emerging theme in submissions to the SERD is that the traditional linear “lab to market” approach to research commercialisation has been or is being superseded by networks of place-based innovation ecosystems.

Examples include the Fraunhofer system in Germany, High Value Manufacturing Catapults in UK and Norway, ManufacturingUSA Institutes and the National Science Foundation (NSF) Regional Innovation Engines. These are proving to be a more effective way to embed industry-research collaboration and attract knowledge-based global investors.

Australia has its own examples of collaborative hubs, such as the Advanced Robotics for Manufacturing (ARM) Hub and UTS Tech Lab, but these are mostly at an embryonic stage. And while Cooperative Research Centres (CRCs) make a valuable contribution, their funding is short-lived, as well as being disconnected from the wider system.

A fourth priority is the vexed issue of finance for industrial transformation, which must be activated and available at all levels of the Technology Readiness Level (TRL) scale, from basic and industry-led research to early-stage ventures through to the scaling of SMEs.

There are already significant financial resources in FMiA and related equity, loan and grant programs established in Labor’s first term of office, not to mention government procurement. But barriers to access and eligibility need to be addressed, along with enterprise “ absorptive capacity” on the part of industry.

The superannuation sector also has a responsibility on behalf of both current and future members to diversify its immense asset base from investment in residential housing and overseas share portfolios to building Australia’s sovereign industrial capability.

Finally, management capability and worker voice are critical to productive performance at the enterprise level. Research commissioned by the last Labor government showed that while managers in “frontier” firms are second to none, most lag far behind world best practice.

The area where Australian managers lagged most was in a category headed “instilling a talent mindset”, in other words the ability to draw on the talent and creativity of workforces. This has for decades been a defining feature of the “ quality movement”, but one currently lost in the distracting focus on penalty rates.

Clearly, training and education are essential for building workforce and management capability, but so is the need for employees and their representatives to be involved in the decisions affecting them, including the deployment and use of artificial intelligence.

Productivity may be an elusive concept, but it remains critical to the future of Australia’s economy and its people. The Albanese government has an historic opportunity to remake our trade and industrial structure for a world of rapid technological change and shifting geopolitical alliances. It should not be missed.

Read Part 1 of this two-part series from Roy Green.

The views expressed in this article may or may not reflect those of Pearls and Irritations.