Five Changes Impacting Western Australia
We stand on the edge of fundamental economic transformation that has been masked to an extent by our success in the resource industries. This transformation will shape Western Australia over the next decade. We need to begin now to understand the changes and position ourselves to take real advantage of what we have now and what we will need in the future.
It was refreshing to hear the WA Treasurer, Troy Buswell, speak of economic diversity beyond the resource focus calling for Western Australia to become an international centre for excellence in innovation. Much current discussion and action still revolves around kicking to where the full forward is, not where he is leading. We now need to bring together our expertise to create new futures for Western Australia and be ready for the Next Economy, starting now.
Globalization
Driven by the twin revolutions of technology and communication, we can now distribute and source work, capital and ideas globally. The level playing field or ‘flat’ world described by Thomas Friedman is here and the competition is now for talent and innovative ideas that will drive new markets and opportunities.
The impact of this for Western Australia is that we can attract talent and innovate but it is too often absorbed into the Resource sector or driven from the State to more creative destinations such as Melbourne.
Climate Change
Recent debate around climate change has been overshadowed by economic crises but climate change has not gone away. Our response to this will determine the success of our water strategy and other complex projects such as the Ord stage 2. Our ability to adapt to change as it happens and make the right decsions will also provide innovation capability that will be useful elsewhere in the world if we think now to capture and leverage it.
Quality of Place
‘Most isolated city in the world’, ‘dullsville’ etc - or a destination for thinkers and workers in the next economy? Perth has most of the qualities such as tranquillity and safety to attract what is being called the quinary sector focussed on knowledge and ideas – thinking about thinking. We need to better understand what this is and what whole place conditions will attract and retain the talent necessary to grow this capability.
Cost Shocks
Perth’s isolation, an advantage in some respects but in terms of logistics it opens us up to the impact of energy costs for transportation for example. The world is now experiencing multiple cost shocks around food availability, cost of money etc. How do we respond to this in a way that opens up new possibilities rather than being a passenger in a train wreck?
Economic Diversity
The resource sector in Western Australia is like a spike of economic activity that dominates our economy like a spire. Other growing sectors and our developing capacity to make better use of our talent across all sectors of the economy will determine how we survive big shifts in the viability of the resource sector in a turbulent international economy.
Responding to changed conditions
The correct response to the magnitude of the challenges and opportunities before us is to think differently and to think broadly. Understanding these conditions is one thing, responding in a way that offers us a path to the Next economy is a bigger challenge but one that will place us in a good position globally as we extend beyond the mine.
This means new approaches to adaptation and building into our economic, social and environmental thinking a resilience culture that will continually adapt to new conditions.
This also means establishing an innovation system to develop not only new ideas but develop the capacity to continually do so. This will become a key capability in the quinary sector that can be applied across many other dimension of the economy.
Finally, the application of this level of thinking and talent will vastly improve our effectiveness in existing and emerging industries. This will bring about a shift in productivity that will lead to new opportunity, industries and efficiency. The challenge now is how do we approach this massively complex task without bringing in tools and thinking that were made for different times. What is an 21c innovation environment?
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December 3rd, 2008 at 12:32 am
Diana Eck of Harvard University makes a clean distinction between the term Diversity and the term Pluralism. Diversity, she states, is a demographic fact. Pluralism, however, is the celebration of difference.
I can think of many cities that meet the diversity definition but fall far short of pluralism. Their diversity is segregated into neighborhoods and economic strata. Real innovation requires not only diversity but the celebration of that diversity which encourages connection, blending and interaction. I don’t see or feel that when I visit Perth.
To meet the challenges ahead, Perth must embrace new thinking and invest in their pluralism. This will require transforming the mindset of local government officials and investing in projects that move the current systems toward more resilient outcomes. The opportunity is great in this current economic climate but time is running out.
December 3rd, 2008 at 8:16 am
Good point, Fred and I agree Perth is not yet there in terms of celebrating difference in the way that Melbourne or San Francisco is.
The Treasurer was mainly referring to economic diversity in his talk and I have now loaded a copy of that to this post.
However, your point stands.
December 9th, 2008 at 7:16 am
I like the idea of the distinction between diversity and pluralism - and I think it is useful in the context of race, culture, socio-economic standing and sexual bias. This is where I have a problem with Richard’s (Florida) work in the Creative Class argument. He measures diversity in numbers and not in norms and values of integration. A big difference. And a completely different sense of place is created between a place that is diverse, and in Fred’s argument of celebrating pluralism.
I think the idea that Fred raises of pluralism ahead of diversity is worthy of thought - especially in respect to Western Australia’s economic aspirations.
In my experience of WA, and being a native West Australian, the big resource industries have followed a tradition of economic segregation first laid down by the hefty legacy of agriculture. WA has never really embraced the idea of a deep seeded open innovation system that added value to base commodities. WA’s excellent wool becomes the finest and most expensive Zegna suits. WA’s buys back its iron ore as steel, or cars, and WA’s education system produces excellent designers who move overseas to ‘make it’.
It appears that the shadow cast by a commodity mentality is an invisible barrier to any form of economic diversity, let alone economic pluralism.
The idea of an open innovation system @ scale would provide a platform to break this hold - but not without a firm contract between industry and government to allow new and innovative ideas and entrepreneurship to find its roots. Apart from brief glimpses, WA has not been its best at generating mass-economic development @ scale in anything else other than commodities.
To be frank, I think the world has woken up to relying on anything grown @ scale - especially led by state or national government. Even Obama sees the future of the US is through bottom-up economic development, where Main Street is as critical (if not more critical) that Wall Street.
I think that economic pluralism starts at the base - the grass-roots movers and shakers who generate economic activity as a bubble up notion. And the role of government is to create the space and the levitation to suck it up - or, get out of the way.
WA has always been influenced by the American Dream, and as a West Australian I did benefit from that. That old dream has now become a nightmare and the US is now in the midst of waking up, and reorienting itself to a new dream. One that, if it is smart, will unfold under new principles and processes alongside new practices.
Obama is one of the smartest leaders elected in modern times (or at least, we are very much hoping so), and his economic foundation is about economic pluralism and can be seen in his talk of ’share the wealth’. It can also be seen in his strong belief in economic justice and economic opportunity.
Now, I know to some Americans that this all sounds like socialism - but I don’t see it that way. If you think about it -most of America’s largest and most successful companies were started in a less than rich guys backyard or kitchen table, or on Main Street. Definitely not Wall Street, and not by government. And, the integration of complementary disciplines and industry networks of big and small players wove a tight web of economic growth.
Western Australia, and any other place in a similar state would do well to heed these ideas.
What worked in big economies of the past, doesn’t work anymore!
The idea of an integrated economy where the big and the small are treated equally makes sense - the big ones may come down, and the small ones may be the next Google!
A ‘mash up’ of ideas is what always produces the next big thing.
And, I think the kicker for WA is - commodity based economies are not a sound basis for economic stability. Green is the go, and if WA wants to ensure it doesn’t miss out, it should invest in it now.