The 2019 Morrison cabinet faces challenges no other government has encountered in our history.
The Conservative Party is acutely aware that global technological change is happening apace and it’s important that Australia does not get left behind.
The Australian reports, during the next three years the fourth industrial revolution will really take hold as technologies in the physical, digital and biological spheres begin to come together under the impetus of the “internet of things” , artificial intelligence, robotics and additive manufacturing.
But the revolution goes much further than totally transforming service industries like banking, medicine, sales, law and accounting.
The chairman of the A.T. Kearney Global Business Policy Council, Paul Laudicina, came to Australia last week first to alert us that the new era has begun but, secondly, to point out that globalisation, which has dominated economic development for half a century, is now being replaced by “an island mentality” in many developed regions including North America and Europe.
And, in a third development, communities are demanding a greater voice in the way changes are being made. Google and Facebook, along with many other technology leaders, are discovering the force of the people power which they helped create.
Paul Laudicina is warning governments and companies around the world that they will need to develop strategies for what Kearney calls “digital disorder” .
In physical terms the revolution is staggering, with 3.9 billion people now having access to the internet (up 400 per cent since 2001); 3.2 billion active on social media; e-commerce embracing 17.5 per cent of global retail sales by 2021 and mobile payments reaching $US14 trillion ($20 trillion) in three years.
The two great drivers of the revolution, the US and China, are on the surface having a trade war over where manufacturing plants should be sited. But the real war is about leadership of the fourth industrial revolution. In backing the US for defence reasons, there is a risk Australia may have chosen the losing side.
“If the development of artificial intelligence is an arms race, then China wants to become the world’s unchallenged AI superpower,” Kearney says. “While the National Science Foundation in the US has no increase in funding this year, China has promised to ‘vigorously use governmental and social capital’ to dominate the industry.”
But we also need to understand the other fundamental changes. Globalisation delivered great wealth to the world, particularly Australia, but it left many areas with suffering and, as President Trump showed, these groups can be mobilised. With greater communication the differences within nation states becomes stark.
In the US, states are dividing on issues such as carbon emissions and abortion. In Europe, migration was a key factor in Brexit and is dividing the continent. In this month’s Australian election, we saw very different views in Queensland and across the nation and the mobilisation of retirees and people of faith was amazing.
Laudicina’s message to those leading government and business is that it is extremely dangerous to look at technology in isolation. The technology changes will require careful management or there will be a revolt. And there is a final twist.
People no longer trust institutions whether they be governments or corporations, but they want to trust (and usually do) the person who provides their employment.
The power of small and medium sized enterprises to shape the nation has therefore never been greater. But just as free trade is on the decline, so is exploitation of smaller enterprises. The so called “gig” economy provides 36 per cent of US jobs.
Laudicina says this method of employment will dominate the fourth industrial revolution and if contracts are not fair then it could potentially stall the revolution.
Australia’s small business tax tribunal, new fair contracting rules and fast payment steps are world precedents and it was no surprise that the ministers who implemented them, Michaelia Cash and Stuart Robert, were both promoted in the 2019 ministry.
