Malcolm Turnbull Address to ‘The Innovation Economy’ forum, APEC CEO Summit

Thank you very much; it’s wonderful to be here in Peru to talk about innovation and to recognise that innovation is the key to success for every country, for every business everywhere in the world.

You mentioned the mining industry - mining is a very old business but it is a very innovative business. The miners that are successful - and that includes our leading Australian mining companies including those who are operating so successfully in South America - are at the cutting edge of technology.

In Australia we have driverless trains, remote control trains, remote control vehicles, the levels of coordination increasing all the time. And that is one of the reasons why Australian mining companies have been able, in a very tough commodity market when the cycle turned against them, to remain competitive and indeed to remain profitable.

We shouldn’t, just because an industry is an old industry, agriculture I guess is an old industry too. You see remarkable innovation particularly in the area of water management and soil management at soil sites - and again it is a key part of our Australian experience.

Just dealing with the issue of innovation at a higher level - if you accept, and I think we must, that the tenure of our times is change at a pace and scale unprecedented in human history. Then, it follows that if you are going to be successful or remain successful, to remain competitive, you have to be innovative. That requires cultural change as well as more conventional leadership. It requires organisations - whether they are government departments or governments, whether they are big companies or indeed small companies - to be much more open to doing things in different ways.

Courtesy is always important, but deference can be very dangerous if it is overdone. Not inventing here is a very, very dangerous attitude to take.  Because of that pace of change too, we see an enormous disruption in industries and it can create of course job losses as industries are overtaken, as technology overtakes and in many cases replaces jobs.

Now, there is often a tendency to blame job losses of this kind on globalisation or indeed free trade. For the most part, these changes are driven by technological change, in particular the rise of automation. Our colleague from nuTonomy will be able to talk about that in much more detail.

But if you accept that the technological change you are going to see, changes your businesses which result in job losses are the result in those opportunities no longer existing, then you need to have strong economic growth to create new opportunities. You can’t just say stop the world, I want to get off, let’s just freeze technology – that’s not going to happen.

It’s critical that the government, returning to my role as Prime Minister, that the government promotes innovation and do everything it can to encourage it.

So, we talk about it a lot and that is clear, cultural change is clear. We have set out, as one of my first initiatives as Prime Minister, an innovation and science agenda to put innovation, education and science right at the very heart of everything we do. And so we are promoting greater STEM education in schools – this has been one of the areas where I think for most countries, while the opportunities in STEM have been increasing, we’ve seen less students, fewer students studying STEM subjects, including fewer studying at university and indeed in particular, this is relevant to what Christine Lagarde was talking about earlier about the empowerment of women in the economy. We’ve seen a real decline in many countries, including the United States and Australia, of female participation in STEM subjects at university. That is a genuine market failure that has to be redressed - we have to promote that. We have to also promote entrepreneurship and that requires us cutting away, as we’ve been doing systematically in Australia, as much red tape and regulation as we can. We want to do everything we can to make it easier to start a business. We want to make it easier for people to find the capital to start a new riskier business, a startup. So, we have provided new tax incentives for the early stage of investment, where we felt there is genuinely a market failure. We don’t think that there is a problem with businesses when they are getting to the point where they want to raise $100 million or $200 million. That very early stage, it has been harder than it needs to be, so we have to provide it some real incentives there.

Another critical element that I think we have to recognise is the importance of education, not simply as a means of giving people the skills that they need to realise their full potential - but educational institutions and in particular universities and other higher education institutions, as being real drivers of economic growth. They are economic engines and so the colocation of businesses, particularly the innovative ones, with the universities, with that collaboration between primary research at the university and of course applied research, and its counterpart in industry is critically important. We’ve seen so many good examples of that. I was a few days ago in Geelong in Victoria in Australia seeing yet another example of great collaboration between Deakin University, and in that case, the [inaudible], previously a company that has the world’s leading carbon technology for making wheel rims. Similarly Monash University, also in Victoria, has got a similar biomedical discovery precinct.

Of course, the sort of [inaudible] story is well known to all of us. So education and collaboration is vital - so again, we’ve identified that in Australia. We do a lot of things very well but one thing we have not done well enough is collaborative work between research at universities and business and industry. So we’re providing new incentives to make sure that more research is done in collaboration with industries.

In summary, the fact is we know what we have to do, we have to ensure that our nations, our businesses, our cultures are much more innovative. That is the key to maintaining strong economic growth. If you don’t have that strong economic growth, there are consequences that the inevitable technological disruption or disruption caused by technology, will be much more severe.

Those who resist innovation are not defending themselves against the consequences of technological change, they’re making themselves vastly more vulnerable to it.