University of Newcastle Submission: Senate Select Committee Inquiry Into Jobs for the Future in Regional Areas

University of Newcastle Submission: Senate Select Committee Inquiry into Jobs for the Future in Regional Areas

The University of Newcastle welcomes the opportunity to provide a submission to the Senate Select Committee Inquiry into Jobs for the Future in Regional Areas. As a university of our regions, we welcome a policy focus on the future of jobs, skills and innovation in regions. Increasingly, universities play a key role in regional growth and development. Partnerships between universities, civic leadership, government, business and the community can be powerful vehicles for change, with the ability to align opportunity, skills and knowledge in our regions. Global examples of these multi- faceted collaborations abound, and the leaders in the Hunter Region are strong collaborators for change. Our submission follows collaborative discussion between key Hunter Region organisations, including the City of Newcastle, Hunter Business Chamber, Australian Industry Group, Hunter Joint Organisation, Committee for the Hunter, NSW Department of Industry, RDA Hunter and Muswellbrook Shire Council.

About the University of Newcastle The University is research intensive and serves more than 37,500 students, 2,580 staff and 140,000 alumni. Built on the principles of equity, excellence and engagement, the University has created a remarkable legacy in education, research and innovation over the last 53 years. Currently, the University is ranked 207 in the world, and it is in the top 8 universities in Australia in terms of research excellence, and top 9 for research income. The University has campuses in Newcastle (Callaghan and City Precinct), the Central Coast, Sydney, Port Macquarie and Singapore. Through our Department of Rural Health, we have a presence in Tamworth, Taree, Moree, and Coffs Harbour, as well as other locations in the Hunter New England and North West region. Our Centre for Rural and Remote Mental Health coordinates services across NSW from Orange. Covering such a large area of the state, we have a significant stake and important role in helping all of our communities to meet the challenges of the future. The University’s student population reflects our regions: • a majority are mature age • 20-25% of the domestic students come via an enabling pathway • 4% of our students identify as Indigenous Australians, the highest proportion in Australia • 25% are from low SES backgrounds.

a. New industries and employment opportunities that can be created in the regions Universities are anchor institutions in regions The Hunter Region is undergoing a long process of diversification – from reliance on manufacturing and resources to emerging jobs growth in the service sectors and knowledge economy.

Such regional growth and diversification is supported by research-intensive universities serving as anchor institutions, according to international experience: More than just local job engines, anchor institutions are the exact kind of business most communities want in today’s knowledge-based economy, where product value emanates from innovation, not mass production. Medical centers and research universities foster an entrepreneurial climate that attracts other young professionals and leads to spin-off companies in the growing tech economy … [They] provide a knowledge foundation for their home cities ....2 Regional investment in university infrastructure supports the core business of research and teaching creates additional jobs, even if a university is not actively supporting regional development3. Where universities do support regional development, in partnership with regional leaders in other sectors, major economic and industrial transformation can occur.

Universities are International Gateways for Regions Like other major regional institutions, universities are able to act as an international gateway, drawing in international talent and fostering international collaboration. In doing so, tourism within the area is promoted, which can in turn support social inclusion and ethnic diversity. Moreover, a region is able to gain international recognition and foreign direct investment due to the profile and promise of its research and entrepreneurial achievements. Entrepreneurial mindsets are critical to remaining competitive in the workplace and the global economy. This promise is not being fully realised in Australia due to a lower entrepreneurial intent compared to other advanced economies, which some attribute to a culture harbouring a fear of failure. Framed in a regional context, these challenges increase in magnitude outside Australia’s capital cities, where there may not be a critical mass of visible entrepreneurs and innovators to emulate, nor an obvious pathway for progressing ventures.

The Role of Policy Setting in Regional Growth and Diversification It is important that Federal Government and State Government policy is sufficiently nuanced to leverage the important economic and social role of cities like Newcastle, and its university, that have large regions. Current policy settings based on ABS codes for metropolitan and regional areas do not always reflect the diversity of non-capital universities’ students, communities and industries; nor do they reflect the lived reality of many communities’ experience of social and economic disadvantage. Communities like Windale in NSW, for example, are categorised at metropolitan, but have some of the lowest socioeconomic indicators in the State; communities like Maitland and Rutherford are classified as major cities of Australia while having small population centres and being effected by major resource industry cycles. While the ABS uses sound methodology to create these definitions, policy makers must apply them judiciously where they form part of national policy.

2 Kleiman, N., Getsinger, L. and Pindus, N. (2015), “Striking A (Local) Grand Bargain – how cities and anchor institution can work together to drive growth and prosperity”, National Resource Network – New Solutions for Cities. 3 European Union Regional Policy (EU) (2011) “Connecting Universities to Regional Growth: A Practical Guide”, Smart Specialisation Platform, http://ec.europa.eu/regional_policy/sources/docgener/presenta/universities2011/universities2011_en.pdf

3 Regional universities can create and attract new industries – examples Example: Strategic Planning Universities like Newcastle can shape the future of their regions through concerted effort and long-term planning. The University is currently in the process of renewing its strategic plan through a process of extensive consultation to more closely reflect the needs of its regions. At its centre will be engagement domains (i.e., ‘healthier living’) that reflect both regional need and institutional strength. These domains will help focus researchers and teachers in their engagement with stakeholders, making the University’s strengths more specific to our regions.

Example: Integrated Innovation Network: creating new businesses New industries and jobs can be created through partnerships between universities and business. Launched in October 2016, the University of Newcastle’s Integrated Innovation Network (I2N) has a central aim of being a catalyst for regional transformation through innovation and entrepreneurship. In just under three years of operation, the I2N has welcomed more than 6,000 innovators and entrepreneurs from all industries, at different stages of their journey, and regardless of their affiliation with the University. At the heart of I2N are three strategically positioned entrepreneurship centres. They are in Newcastle City, Williamtown (in the airport’s aerospace precinct) and in Muswellbrook. They offer incubation facilities that are complemented by a series of connection events and cohort-based programs to build the enterprise skills and to build a community of practice in entrepreneurship in the region. Since establishment, I2N has launched 2 spin-outs and 16 start-ups. These companies have raised over $1m+ in funding, generated hundreds of thousands of dollars in revenue, and have created dozens of new jobs. All remain headquartered in the Hunter Region, critically diversifying our regional economy. The University and NSW Government have committed a further $10m to the development of a fourth entrepreneurship centre in the I2N. That will have capacity to house more than 120 members. It will be part of an expansion of the University’s Newcastle City campus, which is scheduled to open in early 2021. This networked innovation ecosystem is growing, realising a promise to contribute significantly to the transformational change of the Hunter and Central Coast to a knowledge-based economy. The Federal Government recently announced $18 million in funding towards a new Health Education and Innovation precinct in Gosford, on the Central Coast. Example: Urban Revitalisation: University’s City Precinct The University of Newcastle opened the landmark $95 million NeW Space building in Newcastle’s CBD in 2017. It is drawing students, staff and business into the city centre, with about 5,000 students based at the Coty Campus. This strategy was supported by State and Federal government to drive city centre renewal and re-urbanisation for the Greater Newcastle region. A study by the Hunter Research Foundation Centre in 2016 found the City Precinct would contribute $1.3 billion to the Hunter economy. Example: Central Coast Clinical School and Research Institute A partnership between the University, the Local Health District, and state and federal Governments, the new Central Coast Clinical School and Research Institute will both reflect the needs of Central Coast communities, and it will foster creation of new industries. The Institute will have a focus on ‘integrated healthcare’ – creating a centre of excellence for wellness, prevention and coordination of services. By gathering international expertise, reflecting community need, and creating a new niche in healthcare, the institute will attract new investment and create new jobs.

4 b. The number of existing jobs in regional areas in clean energy technology and ecological services and their future significance Partnerships focussing on the evolution of advanced energy, and the integration and management of different sources of energy, will be essential to the future of regions dependent on resources.

Example: Newcastle Institute for Energy and Resources As the gateway to a major coal producing region, the University of Newcastle has established world- leading expertise in industry engagement on energy and resources. That has been led by the Newcastle Institute for Energy and Resources (NIER). NIER was established with a clear agenda to provide a multidisciplinary model for transformational research in energy and resources. Driven by a vision of global leadership, NIER addresses challenges of the rapidly emerging issues of resource sustainability, productivity and competitiveness associated with energy and resources infrastructure. NIER works in partnership with our local energy and resources industries and all levels of government to ensure that our research and training expertise can help to create genuine economic and social opportunities for the people of our regions. Examples include: • The ARC Industrial Transformation Research Hub for Advanced Technologies for Australian Iron Ore, which engages with mining and mining services companies to unlock future value, grow markets and develop innovative technologies for the sector; • A Doctoral Training Centre in Advanced METS, advancing fundamental knowledge and identifying key emerging opportunities in the sector through industry-embedded research training; and, • Sector deployment of leading research innovations to boost productivity – and import revenues, including the Reflux Classifier and Jamieson Cell, and full-scale demonstration of other technologies, including the Reflux Flotation Cell, through the Global Innovation Linkages Program. Through the collaboration of industry and academia, NIER aims to deliver solutions that contribute to the sustainability of resources and the environment and address rapidly emerging issues, including critical resource sustainability, the transformation of the energy system, and national productivity. A critical element of our success is a commitment to quality engagement with our partners, developing the collective capacity to facilitate technological advancements whilst maintaining environmental and economic stability.

Example: Upper Hunter Biorefinery Disruptive changes in the energy industry in Australia extend beyond generation to supply networks and the mechanisms used to retail energy. The University of Newcastle is involved in a range of pilot projects in the region that are helping to address some of these challenges. The University-supported, bio-renewables research facility is the first of its kind in the Southern Hemisphere. In partnership with Muswellbrook Shire Council, NIER and the NSW Government, Ethanol Technologies (Ethtec) is developing an environmentally sustainable process to produce biofuels and other renewable chemicals from crop and forestry waste. Being able to demonstrate these technologies at pilot plant scale is an essential step on the commercialisation pathway. The facility aligns with a global push to capture value from waste streams in forestry and agriculture. This plant, and related enterprises, have the potential to bring new and innovative skills to the Hunter region, complementing existing industry and supporting needed economic diversification in an area exposed to fluctuations and long term shifts in international market prices for exports, such as coal.

c. Lessons learned from structural adjustments in the automotive, manufacturing and forestry industries and energy privatisation and their impact on labour markets and local economies

Structural Adjustment in the Hunter Region The Hunter Region has experienced the effects of a dominant set of industries and structural transformation in those industries. During the 1960-70s, the production of coal in the Hunter accounted for 60 per cent of the total for NSW, and 40 per cent of total Australian production. The Hunter also provided 80 percent of the supply of electricity within NSW in this era. In the same era, the BHP steelworks accounted for 12,000 jobs in the Newcastle region. Consequently, closure of BHP steelworks in 1999 was a significant shock. In combination with the lingering effects of the Australian recession in the early 1990s, unemployment within the region remained high in ensuing years. Notwithstanding, following the closure of BHP, the Hunter Region has been able to transition into a more diversified economy. In recent years, investment in the education and health sectors (including the roll-out of the National Disability Insurance Scheme) has witnessed job holders shifting from traditional manufacturing roles into opportunities that require high levels of human capital.

Universities help prepare regions for the jobs of the future Example: Working with Industry to identify future skills needs Universities play a key role collaborating with industries, government and the community to identify long term skills needs of regions. In the Hunter Region, the University of Newcastle is working closely with industry to ensure that the region has the skills to support the F35-A Joint Strike Fighter program. This program is projected to deliver up to 6,000 jobs and add AU$1.2 billion to Australia’s GDP by 2038. The University has partnered with industry to identify skills needs related to JSF, this year launching a Bachelor of Aerospace Engineering. We have also developed new programs to meet the needs of industry, building from our areas of research strength and capability – in cyber security, renewable energy and entrepreneurship. On the Central Coast, the University is meeting the health and ageing needs of the population by creating a hub of world-leading expertise in integrated healthcare. This development includes establishing the Central Coast Medical School and Research Institute. The institute will draw together international expertise on integrated healthcare and launch new courses, such as the Bachelor of Public and Community Health. Research pursuits that reflect regional challenges are also critically important. Universities like Newcastle have the capacity to deliver evidence-based outreach programs by combining social, health and community engagement with excellent research. The outreach then cultivates feedback that can directly augment program delivery. This result is seen in the University’s: • Family Action Centre, which delivers pre-enabling programs to disadvantaged communities to help overcome barriers to education • Centre for Excellence in Equity in Higher Education, which conducts research into educational equity closely linked to program delivery

6 • Enabling programs, where staff who are involved in delivering our nation-leading pathway programs are also involved in research on success, feeding their findings directly into program design. Example: lifting educational participation Many regions have rates of educational participation that are much lower than the national average. That creates a regional problem as new ways of working and automation mean that jobs creation and new industries must be matched by skills and education.

Chart 3: Educational Attainment in Regions

The University of Newcastle lifts the capacity of people to participate in higher education through a broad suite of programs in our regions, including: • An extensive suite of programs run in and with schools in our regions, which are tailored to each school’s individual needs, and range from familiarisation with university and removing barriers to higher education to identifying courses for high performing students. • Uni4You, run by the University’s Family Action Centre, which provides workshops, information days and a range of other supports for people from disadvantaged backgrounds who are considering attending university, with support for program participants who go on to university. • Australia’s oldest and largest enabling (pathways) program, where students from all backgrounds can prepare for university in a supportive environment. 3,500 students come through this program each year, and up to one-in-four of our students come via this pathway.

The role of policy makers in a region’s cyclical industries Decision-makers in government, in business, and in the community need to understand the ‘system dynamics’ of the regional towns and cities in which they live and work. They have to understand how

7 these areas respond to the effects of external factors, such as weather and international markets. Many of these factors cannot be predicted, which presents uncertainty in two dimensions. One aspect is the uncertainty about what is likely to happen. Another aspect is uncertainty about one’s capability to handle what could happen. While the future cannot be predicted, our capability to handle various events can be boosted. In this instance, with regional jobs, evidence-based policy and research that is specific to regions can help to track what is happening and align and unite business, government, and the community in determining what can be done to today to better prepare for future challenges. Example: Muswellbrook housing cycle The University of Newcastle’s Hunter Research Foundation Centre conducts economic research specific to the Hunter Region. That helps business, government and community organisations to understand how the region is changing in order to avoid a vicious downward spiral that boom-and-bust cycles can precipitate. The learning capacity can be seen to contribute to a ‘virtuous’ cycle, where better understanding of changes locally and better understanding of local implications of global changes and global megatrends contributes to more astute economic diversification and smart specialisation. Such learning is essential to prevent over-investment, as suggested by the charts below. A rising coal price stimulated capital investment in mining, greater employment in the sector, and the building of more houses in the Hunter Valley town of Muswellbrook. However, there was a time lag. Peak rents occurred four years after the coal price topped out. A stimulated housing market led to too many houses being built. As a result, the rental price for a 3-bedroom home in Muswellbrook dropped dramatically, while rents in nearby Cessnock remained steady. The decline in rents led to low-income families migrating to the area, boosting the local need for social services. Chart 4: Rental price and Thermal Coal price

These boom-bust-recovery dynamics that are more pronounced in Australia’s regional areas – particularly those dependent on resources and agriculture - can be understood. That understanding can reduce problems caused by delays, under-correction and over-correction. That suggests a need for policy supporting the study of change in resource regions and sharing of findings among key

8 stakeholders in those regions, something that a suitably designed, ‘engaged research’ program in regional universities can achieve.

d. The importance of long-term planning to support the diversification of supply chain industries and local economies Long-term planning to support economic diversification must involve early consideration of education, training and research, from preschool age to university and beyond. Such long-term planning must be undertaken in partnership with local businesses, government bodies and the community sector, as they will be engaged in implementing and realising the plans.

Example: University of Newcastle Greater Bank Finance Lab With the predicted growth in knowledge-based industries, financial services and teleworking in Newcastle, the University and Greater Bank have established a five-year partnership to build financial literacy in the community and to boost student experience with real-world challenges. With our combined strengths in education, banking, community engagement and a regional focus, the partnership between Greater Bank and the Newcastle Business School provides a hands-on learning environment, community education programs, and experiential facilities that support informed financial decision making. Located on level one of the University’s new state-of-the-art CBD campus, the Finance Lab is a hands-on learning environment. Business School students build their skills in financial decision making, risk management and economic systems by engaging with real financial data and real decision-making before they graduate.

Higher education and employment in resource-dependent regions Education and training must be at the heart of long-term planning. Despite the diversification in the Hunter economy, educational participation lags, while unemployment remains closely linked to resource cycles. As noted, a healthy regional economy depends on achieving a balance between industries where job numbers fluctuate – such as natural resources or agriculture – and alternatives that may offer more steady or climbing employment. For example, some regions combine natural resource development, agriculture and employment in the government supported areas, such as in education and health. Exposure to markets and environmental conditions that lead to this sort of cycle repeating is heightened the more rural a region is. Contributing factors are a reliance on export commodities seen as ‘staples’, where average demand remains strong for decades, such as with coal or iron ore. Such regions can go through repeated cycles of boom, bust and recovery if the resource development continues for decades. Similar cycles have been observed to occur in larger towns and regional centres that are closer to capital cities. In the Hunter region of New South Wales, for example, youth unemployment fluctuates dramatically – climbing or dropping 5 percentage points or more – with changes in the coal mining industry. Statistics indicate that the Hunter Region is last in NSW in the percentage of young adults who have completed university study. This result may be related to the ease of employment in major industries that do not require higher education but still offer well paid jobs. Insight into the dynamics of such regional economies has been provided by Ryser et al (2014). They have updated what they refer to as ‘staples theory’, which was introduced in the 1930s by Harold Innis

9 in assessing the situation in Canada in regions where the natural resources were international staple commodities, such as forest products and oil and gas. This variation comes on top of known seasonable variations in job needs in the agricultural sector (e.g., planting and harvesting seasons) and forecasts of long-term transitions. These long-term transitions may be due to changes in climate, or flow-on effects, such as a reduced demand for Australian coal. Additionally, in the agricultural sector, one sees a long-term consolidation in farm ownership (a process that has taken more than 100 years) and increased automation that is reducing labour demands. Investment in major infrastructure, such as road and rail, to service regional areas creates temporary jobs – construction workers and support industries arrive, complete their work in a period of from months to years, and then depart. A fluctuating labour market and long-term transitions in that market necessitate an adaptable and educated workforce.

e. Measures to guide the transition into new industries and employment and the role of vocational education providers, including TAFE, in enabling reskilling and retraining Close links with the vocational education sector (for the University, in particular with TAFE NSW) are essential to developing skills that match the needs of our communities. Increasingly, skills and knowledge will need to be modular and adaptive, and students’ ability to move both ways between TAFE and university to gain the skills they need is essential. Co-location, such as the University’s successful shared campus with TAFE NSW at Ourimbah, co-badging of programs, such as our co-badged Bachelor of Electrical Engineering, and ‘string articulation’ pathways are essential. Universities in regional areas, like the University of Newcastle, can act as anchor institutions, a critical function in regions with boom and bust cycles and long-term transitions in the job market. They can offer not just training and steady employment for their own staff, but incubation, investment, insight and foresight in relation to the region itself. The university can also be a relationship broker across sectors, such as across business, government and the community sectors, as the University of Newcastle has done in its development that is helping to revitalise the Newcastle and Gosford CBDs. Predictions of a shift to a knowledge-based economy suggest we need knowledge-driven – but locally connected – institutions. The future of jobs for regions depends very much on how wisely we develop the human and economic resources of those regions.