Discussions about the COVID-19 pandemic invariably raise the question of how the country can get back to ‘normal’, but a prominent economic analyst sees the crisis as an opportunity for Australian industry to reshape its thinking around skills and digital transformation.
“I hope we don’t go back to normal,” Andrew Charlton, a director with business consultancy AlphaBeta, said during the latest Australian Financial Review Reshaping Australia Dialogue.
Australia was already “in a rut of slowing investment”, he said, that was driving economic and productivity stagnation before the virus emerged at the beginning of the year to cause a “very significant economic event that will be with us for some time”.
Australia lost over 169 million work hours in April alone and its economic shock was far greater than even the global financial crisis a decade ago, Charlton said, noting the benefits of massive government intervention that had propped up the economy.
Yet with a financial cliff coming when early interventions cease or slow down at the end of September, Charlton warned, companies need to be thinking differently about their businesses to cushion the potential fall and pivot towards a “very delicate balancing act” addressing areas such as automation, employee skills development, and innovation.
Using data better, together
Many large corporations had begun that balancing act long before COVID hit, with Fortescue Metals CEO Elizabeth Gaines noting that data-driven transformation had already helped the iron-ore exporter post record outcomes “long before we had heard of COVID”.
Investments in automation, digitisation and data analytics had helped the company slash costs and downtime in areas like maintenance, where scheduled maintenance shutdowns had been replaced with the use of operational data to determine when critical equipment actually needed maintenance.
Digital-led business optimisation is “about close collaboration, it is through digital and through innovation, and we are continuing on that journey,” she said, citing an entrepreneurial worldview that had helped Fortescue pivot towards potential opportunities in areas like hydrogen storage.
“Good quality data is the raw material of good quality decisions,” Charlton agreed, flagging efforts by organisations like the ATO, ABS, banks and private firms to pool and share new data sets that have provided unprecedented real-time visibility into the effect of the pandemic and government interventions.
The looming second phase of digital data-sharing legislation, national former Productivity Commission chair and current member of the government’s National COVID-19 Coordination Commission Peter Harris said, will redefine the way government data is shared for the long term.
“This idea of sharing data sets is a tremendously important shift yet a dull and boring one,” he said, noting the importance of ensuring that potentially insightful and useful Commonwealth data sets “are more readily available and not impeded by current data custodian rules”.
Collaborate, don’t compete
While better access to data had helped guide a rapid response to the COVID-19 crisis, panellists warned that Australia’s attitude towards innovation – which had shown signs of promise – needs to overcome well-entrenched mediocrity
“Australia has been at least 10 years behind the US in digital,” CSIRO CEO Dr Larry Marshall said, “but I would argue that because of COVID Australia has accelerated at least five years in the last five months.”
Fuelled by necessity, for example, COVID-19 had fostered new agility as organisations like the Therapeutic Goods Association, ResMed and Defence Science and Technology (DST) worked together to quickly design face shields and ventilators from the ground up.
Enterprises had moved quickly, and often successfully, to preserve their operations through remote working but real change would require far more extensive commitments to digital technologies that let companies reconsider how they manage product development, marketing, supply chains, and customer relationships.
“What is important to acknowledge is that there is a digital supply chain in operation in every industry,” Microsoft Australia managing director Steve Worrall said, “and it was the organisations that came into this crisis with an understanding of their digital supply chains – investing in it, securing it, and strengthening it – that were in a better place to pivot and adapt to the challenges we have experienced.”
Yet despite the “tremendous opportunities” of the changing world, Coca-Cola Amatil group managing director Alison Watkins said, “it’s not easy for everyone to see what’s possible” and Australia risked losing opportunities if it couldn’t develop a coherent skills development strategy.
“We can improve our whole infrastructure around how you understand what opportunities are out there and match your skills to that,” she explained. “We can make it so much easier for people looking for jobs to know where the opportunities are, to be able to translate their skills into what’s required, or to know what skills and micro credentials they need to build.”
Australia has historically been “remarkable at commodities and we are a very fast followed,” Marshall said, “but we are not good at new things.”
Sustaining the spirit of COVID-19’s collaborative spirit would pay off manifold, he continued, “if we could bottle this spirit of collaboration in good times, rather than competing against each other all the time.”
Yet, Gaines warned, recent policy decisions had hobbled Australia’s ability to reshape itself as it needed to.
“Australia’s economic recovery will be led by investment,” she said, “and that will lead to job creation as there are opportunities for people to retrain, reskill and work in industries they may have never thought of.”
“But there is a challenge with R&D,” she added, “because the settings aren’t there to encourage R&D from a tax perspective; in fact, it has actually been harder to get those incentives.”
Ultimately, the panellists said, post-COVID investments needed to be assessed against two key criteria: whether they will build business confidence, and whether they will promote employment – a “tremendously important” goal.
“Our success in this pandemic, the spirit of cooperation we have shown, and some of our achievements in battling the virus, show us what’s possible when we work together,” Charlton said, “and, at least from an economic perspective, I believe that Australia can do a lot better.”