Professor Hugh Bradlow FTSE
President of the Academy
For Australia to continue to be a successful democracy with a vibrant economy in the 21st century, it is essential we maintain our reputation for astute technology adoption. In the coming decades this is really about riding the ever-swelling wave of digital technology.
Many businesses mistakenly assume digital transformation is a web presence, an e-commerce site or perhaps a mobile app. However, real digital transformation requires a complete redesign of the way we conduct business.
As a simple example of digital transformation, businesses should abandon running their own IT environments and avail themselves of the economies of scale of the cloud.
Fully using the power of technology is going to be even more important as new technologies emerge.
The “Internet of Things” is enabling us to use cheap, low-power, tiny sensors to measure the physical world (including our bodies) and transmit those measurements into cloud data centres. This enables us to analyse our environment, which in turn allows us to exert an unprecedented amount of control over our physical world.
The most important analysis, known as “Machine Learning”, effectively mimics functions that previously only humans could perform, thus resulting in the ability to automate all sorts of activities such as driving a vehicle, diagnosing an X-ray, recognising a skin cancer, identifying areas where crops are failing to thrive and many, many more.
If we want world-class transport systems, health systems, agricultural systems, financial systems, etc., it is essential that our economy aggressively adopts this progression of abundant computing (cloud systems), abundant data (sensors) and smart analytics (machine learning).
Our businesses need to be constantly planning for how these technologies will change their activities, and our governments need to be identifying new regulations needed to keep our economy transparent and effective.
Imagine a world in which instead of a complicated cycle of GPS, specialists, pathologists, radiologists, to address a heart concern, we have a simple single-lead ECG device that we always wear and which measures our heart rhythms 24 hours a day, with a machine-learning algorithm warning us proactively of impending heart issues.
The richest 1 per cent will control an increasing proportion of the country’s wealth unless we do something about it
The digital transformation has enormous potential for good but, unchecked, it can also destroy western democracy as we know it, leaving millions without jobs and causing a massive concentration of wealth and power.
Numerous economists have produced studies showing that increases in productivity result in overall job growth and they see no reason why this will not be the case with the current round of emerging technology.
What they neglect to say is that even if there is overall job growth, the people being displaced from today’s jobs do not have the skills for tomorrow’s jobs. In addition, labour’s share of wealth is declining, which implies that the jobs are becoming less valuable.
Yes, governments will need to invest heavily in education and workforce training, but they will need to go beyond this. We need new social welfare systems that ensure that those displaced from the workplace are catered for. This will require new ideas and new solutions that cannot be dictated by the businesses driving the change.
Australia prides itself on being a country that stands behind the “little guy”. However, digital technology creates new forms of wealth concentration through data and intellectual property so this will be increasingly difficult to sustain.
The richest 1 per cent will control an increasing proportion of the country’s wealth unless we do something about it. Clearly our tax system needs a radical overhaul.
However, anyone who thinks that the simple expedient of lowering corporate tax is a fix is sadly deluding themselves. For example, since the Trump administration’s corporate tax cuts, wages have hardly moved but share buybacks have doubled. All that the corporate tax cuts have achieved is to feed the growing concentration of wealth.
While corporate tax cuts may have a role, a simplistic measure such as this done in isolation from the overall tax system is not an answer.
Any discussion on the distribution of wealth tends to raise a series of spurious and self-interested arguments such as the old chestnut “it kills incentive”. Besides the fact that there is absolutely no data to validate this claim, I defy anyone to tell me that if we introduced a tax system that capped individual wealth say at $100 million (pick a number, it does not matter), we would kill anyone’s incentive.
We live in exciting times. We have powerful new tools to address poverty, healthcare, climate change and urbanisation but in isolation from a progressive legal, tax and social system, those tools will be our undoing. I have faith that Australia has the moral outlook to rise above these challenges and to be the leading country of the late 21st century.