Into the valley of death: Editorial

“The Australia of the future has to be a nation that is agile, that is innovative, that is creative.” – Malcolm Turnbull PM, 14 September 2015

I imagine that our new PM’s victory speech would have elicited a lot of sighs of relief across the nation. It was a breath of fresh air after the previous massive cuts to science and technology research, not least to universities, CSIRO, NICTA, ARENA, and CEFC.

The full extent of Mr Turnbull’s plans will be revealed in the Innovation Statement next month. So far, he seems to be matching those words with actions. In Christopher Pyne, we now have a minister for Industry, Innovation and Science.

Data61 – the new name for NICTA, which has now merged with CSIRO – has had its funding restored. It is now the largest data innovation group in Australia, bringing together academic research and industry innovation to improve our competitiveness. Data61’s output will be of great interest to actuaries working in data analytics.

At the appointment of the new Chief Scientist for Australia, Mr Turnbull even ventured to explain the concept of the Valley of Death to the press.

“It’s a metaphor for what happens is a technology gets funded, it gets started but then there is a long, long slog before it gets to commercialisation and actually gets to meaningful customers and getting through that is what is called the Valley of Death, it’s actually the Valley of No Cash Flow is and of course a lot of enterprises fall by the wayside. So that is where Government support can be, as is the case now, and the case in the future can be supportive.”

Gone are the plans to hobble the CEFC by banning investments in wind farms and small scale solar. The CEFC will continue to bridge the Valley of Death by funding clean energy investments. ARENA, which focuses on research into renewable energy, also has a part to play in crossing the Valley.

Australia desperately needs innovation. At times it seems like the bedrock of our economy is digging holes in the ground for iron and coal, and selling high-rise apartments to overseas investors. In the US, more than 10% of GDP derives from venture-capital-backed companies. In Australia, it is 0.2%.

There is no doubt that we have the high levels of education and talent needed to drive an innovation economy. We also happen to have a huge pool of investment funds driven by our compulsory superannuation contributions system. Where we have failed miserably is bringing the funding and the talent together to drive commercial enterprise. Within the actuarial sphere, there are plenty of opportunities for innovation, not least amongst the FinTechs that are disrupting the financial services industry.

Transforming our economy won’t happen overnight. There are no political easy solutions, and it’ll require a long term sustained effort to develop and implement the right policy framework. Ironically, if Mr Turnbull lasts long enough to see the results of his efforts, it could be the most surprising of all innovations.

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