One on One– Professor Stephen Martin

AMT: Let’s start with your professional background and how you came to your current role.

SM: Well, I was a Federal Member of Parliament representing the Wollongong area, which of course was a great manufacturing base for Australia. In fact I put myself through university by working in the steel industry, and my grandfather was a coalminer. So in terms of what historically underpinned manufacturing in Australia, I had some background.

I represented Wollongong for 18 years in Parliament. I was Speaker of the House, Parliamentary Secretary for Foreign Affairs and Trade, and Shadow Minister in various areas including terms in Defence and in Trade. After 1996, during my time in opposition, I completed a PhD in economics part time through the University of Wollongong, which examined financial deregulation under the Hawke/Keating Government.

I left Parliament and took up various senior roles in universities. I was at the University of Wollongong in Dubai as a chief executive/president, I was Pro Vice Chancellor International here at Victoria University in Melbourne, Deputy Vice Chancellor (Strategy and Planning) at Curtin University in Western Australia. I also did some consultancy work in higher education.

Then four years ago I was appointed to the role of chief executive of CEDA. I knew CEDA was a highly respected organisation and I was delighted to become part of the furniture.

AMT: So tell us about CEDA and its key activities.

SM: CEDA is Australia’s leading independent, membership-based organisation responsible for looking at what is good public policy from an economic and social perspective. We do this by undertaking research, publishing four pieces of work on an annual basis.

We also try to engage people in discussion of public policy, through events and forums that we put on around Australia. We attract people from the Prime Minister, to premiers, federal and state ministers, to senior businesspeople, academics, departmental heads and so on, who come along to present or take part in panels on a variety of issues. CEDA has elevated itself to be regarded as the premier independent economic public policy entity in Australia.

It’s a membership-based organisation – approximately 700 of Australia’s major organisations are part of the CEDA family. We also have pretty much all the universities in Australia, and a number of prominent individual members, but essentially it is the top corporates that make up that member base. I think it needs to be clearly understood that we’re a not-for-profit organisation that really is about undertaking good public policy research work.

AMT: What would an ordinary day in the job entail?

SM: Probably starting at home in the morning, over my Sultana Bran, reading the major newspapers online, particularly the economics sections. That would kick off my day. By the time I get to work, certainly by eight in the morning, on a normal day it would involve again rechecking the newspapers.

During the day there would be any number of meetings, either internally with staff here, particularly my research team, or out and about meeting our principal trustees. We have a number of categories of membership, and with our premier national members I take some responsibility in terms of relationship management. It could be going out and talking to them, or somebody we need to engage with, potentially to become a CEDA member, or to speak at a forum. A typical day in the office would end around 5.30 or so, and during the course of the evening I would continue to monitor what’s happening by watching copious news bulletins.

Probably two days a week involves travelling interstate. We have offices in every state in Australia, and if we have ministers – particularly Federal ministers – or significant business-people speaking at our forums, I try and be there to host those events.

AMT: CEDA highlights advanced manufacturing as a key source of economic growth for Australia. How can we make the transition from more traditional forms of manufacturing?

SM: CEDA identified early on that there was a lot of media attention on the fundamental proposition that Australian manufacturing was dead, particularly around the time of the decision to cease car production here in 2016. Having seen what had happened to the steel industry in Wollongong, I was aware that remnants of traditional industry would continue in Australia – albeit in much modified form – but that a new advanced manufacturing was well and truly alive and well. It just hadn’t been spoken about.

The simple fact is that Australia is an economy in transition, underpinned by economic questions around where the dollar is going to end up, interest rate regimes, job prospects and training opportunities. All that gels to the fact that advanced manufacturing is going to offer an opportunity to Australia if there is support from industry and government and an embracing of the fact that you have to be involved in global supply chains to really see benefits flowing to the industry itself, but more importantly to the Australian economy.

The fact is most advanced manufacturing in this country is going to be much smaller in terms of number of people employed. They’re going to be much more highly skilled than ever before – and we have to continue to support our education. It’s going to be very much confined to SMEs, so again this is a break from tradition. When people see manufacturing, they see big plants, they think of car-makers, and steel-makers. That’s gone. That’s not what Australia is going to be! We can’t compete in a high-volume, low-cost environment any more. We are in a high-cost, low-volume, export-oriented environment with high levels of R&D and innovation.

We already have advanced manufacturing in this country. We do mining engineering better than most. We have a pharmaceutical industry that does it better than most. We have a whole raft of cutting-edge stuff coming out of innovative organisations like the CSIRO or DSTO. But people don’t seem to know this, they don’t recognise it.

And certainly there are questions whether the government will continue to support that, particularly things like our defence industry and what’s going to happen with submarine building in South Australia – are we really going to trade it away to the Japanese or Germany? Are we going to lose all that intellectual capacity and the capability we already have in Australia? Are we not going to sustain our industrial base by having something that we can do ourselves? That’s just one example that gets me excited about lack of clear vision and foresight and what government is really all about in sustaining advanced manufacturing. So that’s why CEDA got involved and published our report last year.

AMT: So what should government be doing?

SM: What they need to do is clearly spell out in their industry plan what it means in a real sense. It’s all well and good making glib statements about supporting six sectors and understanding advanced manufacturing is important, and then in the next breath looking at ways to continue to support the mining industry.

You’ve got to put your dollars where your mouth is. You’ve got to have a clear and fundamental commitment to improving education opportunities, particularly in STEM. The cuts in last year’s budget for the CSIRO, as one example, I just find incredible. If we’re trying to compete internationally, why would you cut funding to organisations at the cutting edge in developing advanced manufacturing techniques?

Industry has to lift its game in terms of R&D, but most of the players in advanced manufacturing are SMEs; their capacity in R&D is not the same as the big corporations. Where is the support to the private sector? Should there be some incentives given there? What about the marrying together of Australia’s university sector, integrating it much more with private industry, where they do the intellectual work at university, but turn it into commercialised reality within the private sector? Let’s see some more opportunities there. Let’s really work out how you can have those very bright people at work in the fabulous universities here in Australia, taking them to work for industry. There’s going to have to be a partnership between industry, the university sector and the government.

AMT: What do you see as the biggest challenges for the sector?

SM: One is getting the media to understand first and foremost that advanced manufacturing is alive and well in this country and should be supported. There should be more stories about how well it’s going, instead of negative stories about smelters closing down or car-makers quitting Australia – that’s old news. They have to talk up what is happening. The digital revolution that the media itself is involved in is an entire new advanced manufacturing industry. Start talking about that sort of stuff.

Secondly, government policy: clear, unequivocal commitment to innovation, to R&D, supporting those organisations like CSIRO, supporting universities so they can continue to do cutting-edge research. That has to happen. Not using CSIRO and universities as scapegoats in terms of cutting funding because of perceived budget imperatives.

Thirdly, industry itself must be prepared to commit to this. Industry has to recognise that to be successful in the world now, it has to take a much stronger role in global supply chains, global value chains. We’ll find is that we may be able to manufacture things here in Australia – as we do – that end up on the tail of an A380 jet that flies back to Australia. We may not assemble it here, but we’ve made it here. Industry needs to recognise where these niches could be, and they can do that, with support from government.

And of course, part of that whole policy question is: are there incentives through the tax system that might be relevant to Australia’s future economy? We seem to give all sorts of concessions to the mining industry, but we don’t do the same in terms of high-tech, value-adding advanced manufacturing.

AMT: And what are Australian manufacturing’s greatest strengths?

SM: The intellectual capacity of people here, and the fact that our universities and vocational education and training areas generally turn out highly skilled, highly qualified people. But some of those skills are undervalued in this country. If there were more opportunities to work within an industrial base here, rather than going offshore to find their niche in life, that would be a useful thing. But we have a highly skilled workforce, and a committed workforce.

The other advantage is that our location geographically gives us a terrific opportunity to engage with the fastest-growing economic region in the world: Asia. There are all sorts of opportunities that can create for Australian advanced manufacturing. It doesn’t matter if it happens to be in mining services, or computer-generated technologies, or pharmaceuticals. There is a market there, and the integration within that market is an opportunity that we can’t drop.

AMT: Where do you see Australian manufacturing in ten years’ time?

SM: I’d like to think it’s going to be a major contributor to Australia’s economic wherewithal. I’d like to think in ten years we’re not still going to be regarded as either a quarry or a farm. I’d like to think it’s recognised by government, by industry itself, that this is a sector with a clearly defined innovation and R&D strategy, supported by government, that has clear employment opportunities, and that has been integrated into a global value chain, with markets not only in China, or Indonesia, or Japan, but throughout Europe, Africa, even North America.

In ten years’ time is all that going to happen? I’d like to think it is.

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