It Seems Australia Is Really Finding It Difficult To Make The Hoped For Digital Transformation!

This appeared a little while ago:

The Productivity Commission’s digital transformation report: unravelling the puzzle of why Australia should be doing better

Gilbert + Tobin - Andrew Low, Peter Waters and James Johnson

Australia September 5 2022

The Productivity Commission (PC) is half-way through its second five‑yearly review of Australia’s productivity performance. The first five-yearly review, “Shifting The Dial”, made recommendations to focused on non-traded markets such as health, education and town planning, but as yet there has been no substantive response from the Commonwealth Government.

In the period since, Australia’s productivity has continued to slow. The Grattan Institute’s research presented at the Jobs and Skills Summit leads to the sharp assessment that Australia is “older, fatter and slower”. The Institute identified as one of the reasons “a declining contribution from technological advancements”, which is striking when you think about the accelerating pace of technological change.

In the lead-up to the summit, the PC released two Interim Reports, Interim Report 1: Key to Prosperity and Interim Report 2: Australia’s data and digital dividend. We focus on the digital dividend report.

Australia’s digital puzzle

At the heart of the PC interim report is the following observation:

“While we do well compared to other developed economies on foundational aspects of technology and data use (such as internet connections and data volumes), we are falling behind on some more advanced indicators. Australia’s internet speeds are relatively low and business use of data-driven technologies, such as AI and analytics, trails uptake in other countries”.

The PC interim report identified the following digital economy parameters where Australia does well, if not outperforms globally:

• 99% of Australian businesses had access to either a fixed or mobile internet connection in 2020, ranking Australia up there with Denmark and Finland, and ahead of Germany, France, the UK, Japan and even that ‘digital poster child’, Israel;
• Australian businesses have high rates of cloud technology adoption (71% of businesses purchased cloud computing services in 2021), ranking Australia third in the OECD;
• Australia was ranked second out of 94 countries in publishing government data, with particularly high scores in the national statistics, high-level budgets and geographical information; and
• the share of IT university graduates in Australia is 6% — higher than in the US, UK and Canada.

The PC interim report identified the following areas where we fall down:

• a global ranking of businesses using data analytics or artificial intelligence placed Australia at 26th spot;
• 26% of Australian business who participated in a recent survey reported digital literacy as a key skills gap. Digital literacy within the agriculture sector has also been identified as relatively low; and
• while Australia was the third-most targeted country based on ransomware intrusion volumes in 2021 (with 67,500 cybercrime incidents in 2020-21, up 13 per cent on the previous financial year), the investment Australian businesses make in cyber security is modest compared to other countries.

Hence the puzzling dynamic between take up and engagement of some digital technologies, whilst we are languishing in others. Clearly, we should be doing better than we are, but why aren’t we?

----- Lots omitted,

Conclusion

The aspiration of the PC interim report is clear: it is about how declining productivity can be addressed through a better digital economy. Earlier this month, Treasurer Jim Chalmers also said that he hoped the digital dividend report would spur a genuine national conversation about how to reverse the poor performance, and flagged that boosting productivity would be a focus of the Jobs and Skills Summit.

While the PC interim report is a strong statement of why Australia should be doing better than it is, its recommendations seem to fall short of the mark. Better digital infrastructure, data sharing, data skills and digital regulation are important enablers to digital transformation, but what Australia seems to lack is a stronger, shared national sense of urgency, ambition and preparedness to take risks in the transition to a digital economy.

The explanation for this missing ‘digital oomph’ cannot be that we lack the necessary scale, since, as the global comparisons in the PC interim report show, smaller economies like Ireland, Netherlands and Finland have 4 or 5 times the level of usage of advanced data analytics and AI. It also can’t be that Australia lacks the ‘secret sauce’ of imagination, creativity or an ability to think outside the box. In discussing Australia’s poor digital performance in creative industries, the Australian Broadband Advisory Council notes that we punch above our weight globally in traditional media industries such as film, demonstrating that we have “a strong talent base of creatives and professionals, and a healthy academic and training infrastructure, both in a stable political, legal and social environment.”

At the Jobs and Skills Summit, the Grattan Institute called for “a substantial upgrade of the public scaffolding from government – especially the enablers [including]….. digital policy… to provide a positive ecosystem for investment”. While the interim PC report provides a good base to build on, ‘this ain’t it’.

Here is the link:

https://www.lexology.com/library/detail.aspx?g=713c8a21-e9dd-45f6-9f4b-ec36dc83d295

Distinctly this report card is in “Could Do Better” category. We need to keep a close eye on progress!

David.