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Senator Sam Dastyari Chairperson Senate Economic References Committee Parliament of Australia Parliament House CANBERRA ACT 2600

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Senator Sam Dastyari Chairperson Senate Economic References Committee Parliament of Australia Parliament House CANBERRA ACT 2600 Monday, 15th September 2014 Senator Sam Dastyari Chairperson Senate Economic References Committee Parliament of Australia Parliament House CANBERRA ACT 2600 Dear Senator RE: SENATE INQUIRY INTO THE CHALLENGES TO AUSTRALIAN INDUSTRIES AND JOBS POSED BY INCREASING GLOBAL COMPETITION IN INNOVATION, SCIENCE, ENGINEERING, RESEARCH AND EDUCATION. At the suggestion of your colleague the Hon Senator Kim Carr on a recent visit to our business in Ararat Victoria, we have prepared a submission to the inquiry by the Senate Economic References Committee as outlined above. Please find our submission attached herewith. Should you require any further information or clarification of the issues we have chosen to submit to you and the Committee, then please do not hesitate to contact us. We wish the Committee success in its deliberations of the critical issues involved in this Inquiry. Yours sincerely PETER CARTHEW AM Chairman and Managing Director 1 | P a g e AME SYSTEMS PTY LTD. 18 GORDON STREET, ARARAT, VICTORIA 3377 AUSTRALIA. SUBMISSION TO THE ECONOMIC REFERENCES COMMITTEE OF THE SENATE STANDING COMMITTEE ON ECONOMICS, PARLIAMENT OF AUSTRALIA Inquiring into “The challenges to Australian industries and jobs posed by increasing global competition in innovation, science, engineering, research and education”. SEPTEMBER 15th 2014 TERMS OF REFERENCE That the Economic References Committee of the Senate Standing Committees on Economics inquire into:- The challenges to Australian industries and jobs posed by increasing global competition in innovation, science, engineering, research and education, with particular reference to: (a) The need to attract new investment in innovation to secure high skill, high wage jobs and industries in Australia, as well as the role of public policy in nurturing a culture of innovation and a healthy innovation ecosystem; (b) The Australian Government’s approach to innovation, especially with respect to the funding of education and research, the allocation of investment in industries, and the maintenance of capabilities across the economy; (c) The importance of translating research output into social and economic benefits for Australians, and mechanisms by which it can be promoted; (d) The relationship between advanced manufacturing and a dynamic innovation culture; (e) Current policies, funding and procedures of Australia’s publicly-funded research agencies, universities, and other actors in the innovation system; (f) Potential governance and funding models for Australia’s research infrastructure and agencies, and policy options to diversify science and research financing; (g) The effectiveness of mechanisms within Australian universities and industry for developing research pathways, particularly in regards to early and mid-career researchers; (h) Policy actions to attract, train and retain a healthy research and innovation workforce; (i) Policy actions to ensure strategic international engagement in science, research and innovation; and (j) Policy options to create a seamless innovation pipeline, including support for emerging industries, with a view to identifying key areas of future competitive advantage. -1- EXECUTIVE SUMMARY This is a submission from AME Systems Pty Ltd of Ararat Victoria to the Economic references Committee of the Standing Committee on Economics of the Senate of the Parliament of Australia. The submission endeavours to respond to the Terms of Reference referred to the Committee on 18th March 2014, which directed the Committee to report by the first Senate sitting day of July 2015 as to:- “The challenges to Australian industries and jobs posed by increasing global competition in innovation, science, engineering, research and education”. AME Systems Pty Ltd (AME) is a privately owned business situated at Ararat, approximately 200 kms west of Melbourne, in Western Victoria. It employs approximately 300 persons and has a current annual turnover of approximately A$35 million. AME is the archetypal Australian small-medium enterprise (SME). The company is a “Tier 1” supplier to the heavy vehicle and related industry (trucks, off- road equipment, heavy mining equipment, defence equipment etc). The principal products are wiring harnesses which control on-board electrical signal distribution and vehicle management systems on the vehicles in which they are installed. Principal customers are businesses in the “on-road” truck and omnibus industries, builders of “off road” agricultural/civil engineering/mining equipment, rail and tramcar builders, defence related equipment and applications, and some “static” applications of wiring harness technology. This submission is unashamedly based entirely on the experience of AME over forty (40) years as a manufacturing business engaged in the processes of elaborately transformed manufacture of relatively unsophisticated components into high technology products and systems to supply to the largely domestic Australian market of heavy vehicle original equipment manufacturers (OEM’s). The submission does not draw heavily on theoretical economic research, but rather addresses from a very practical “real world” perspective the terms of reference of the Committee as they affect a typical Australian SME working at the “coal face” of investment, innovation, new product development and redevelopment, research and design, manufacturing, market development, and employment. In summary, our response to the ten (10) specific Terms of Reference is as follows:- (a) The need to attract new investment in innovation has never been more urgent and relevant to the future health and well being of all industries in Australia, in particular manufacturing based industries. Moreover, we believe that there is a general failure to understand what “innovation” actually means, and that there is a fundamental need to uplift the general and specific understanding of Australians as to the genuine meaning and implications of the whole area of “innovation”. -2- (b) Regarding the Australian Government’s approach to innovation, we believe that there are significant opportunities for Governments (at both elected and bureaucratic levels) to significantly upgrade the knowledge and importance of innovation, research and development, and the growth of significantly industry funded activities in these areas which will create and maintain an environment and culture of innovation as the norm rather than as the exception. We believe very strongly in the support offered to industry by the provisions of the R&D Taxation Incentive Program which recognises the critical importance of R&D at the level of the individual business and SME. (c) We strongly believe that research MUST be translated into clearly identifiable social and economic benefits for all Australians. The clearest manner in which research output can provide economic benefits for Australians is by the maintenance and up-skilling of existing jobs, and the creation of new and ever higher skill based jobs. Research and innovation purely for the sake of research and innovation is, we believe, not supportable - unless it manifests itself in the creation of new and/or more employment opportunities, then the investment becomes purely academic. (d) The relationship between “advanced manufacturing” and an innovation culture is in our view absolutely critical. We believe that this cultural revolution has to start in the education space, and at all levels - primary, secondary and tertiary, and post tertiary. Moreover, we believe that there is a clear and urgent need to “up-class” contemporary views of what actually constitutes “manufacturing”, and at the same time to raise community perceptions of the manufacturing industry - the days of “manufacturing” as being typified by being the “smoke stacks” of industry are long gone! (e) Policies as they relate to funding and procedures of Australian publicly funded research and related agencies need renovation in our view. There is a clear need and opportunity to establish “ownership” in the output of these agencies by a significant uplift in private sector involvement, engagement and financial co-operation. We do not believe that Australia needs to “re-invent the wheel” in this aspect - we provide one classic and highly successful example from the UK (the Warwick Manufacturing Group) which we believe could and should provide a perfectly adequate model for the development of (in particular) a culture of innovation in the advanced manufacturing sector. (f) We have included comments concerning this Term of Reference in the immediately previous Term (e). (g) We believe that we are not in a position to competently comment on the effectiveness of mechanisms within universities and other industries as they relate to the development of research and career pathways. -3- However, we believe that there are significant opportunities to establish mechanisms as and between research and academic institutions (including the CSIRO) on the one hand, and individual private sector enterprises on the other hand which would significantly improve understanding of the respective roles played by each, and more importantly provide deep understanding of the needs and capabilities of ach sector in the eyes of the other. (h) & (i) & (j). We believe that these three terms of reference are inexorably interwoven, and are best left to the policy makers in Government to determine. -4- ABOUT AME SYSTEMS PTY LTD. AME Systems is a privately owned proprietary limited company situated at Ararat, Western Victoria, and is a “Tier 1” supplier to the heavy
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