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Welcome everybody to this seminar that's put on
by myself and Drew Clark who's Secretary of communications.
I thank you Drew for coming and your team,
and officers from the department of finance as well.
That before we begin proceedings I'd like to
acknowledge the traditional owners, the Ngunnawal people who's
land we're meeting and pay my respects to
the elders, past and present, and indeed the future.
We're very fortunate to have Dr. Nicholas Gruen with us today, thank you Nick.
Many of you will know Nicholas who is widely published policy economist, entrepreneur and
commentator on our economy and society and
innovation and I guess driving innovation without money.
Government is impresarial, is a, a good title to go with.
He has regular columns in many of the newspapers around the country.
And during his career Nicholas has advised Cabinet ministers.
Set on Australia's Productivity Commission, chaired
Australia's internationally acclaimed Government II Task Force.
Also been a chair of a number of organizations.
And we're really lucky within our portfolio that
he does chair, the Australian government's Australia Innovation Board.
And it's probably opportune that we're starting to
embark on, today, around innovation, given that it's
Innovation Month for the Public Service next month
too, Nick, of which, which is happening across government.
Nick's also a patron of the Australian
Digital Alliance, which brings together Australia's libraries, universities.
And major providers of digital infrastructures
such, such as Google, Yahoo and a council
member of the National Library of Australia
which I was on in my previous portfolio.
He's also founding shareholder and chairman of the successful San Francisco based start
start-up, Data analytics, crowd sourcing platform, kaggle.com which I
had a close look at, and played around with last night, but
couldn't really understand it or get any problems solved that I wanted solved.
That, absolutely, fantastic website and organization.
He also founded Electrical Economics, a consulting company, of which
he is now CEO, as well as Peach Financial Group, so.
Just the huge diversity of experiences and skills, this man has.
Building on his bachelor of arts, in history,
graduate diploma in economics, PhD from ANU, law degree.
And not just sort of playing graduate degrees, these
are honors, and first class honors degrees as well.
So, thank you very much.
Nick and we feel very privileged to have you here.
The presentation this afternoon will focus on how innovation and policy, in the current
age of fiscal constraint will allow governments
to drive more innovation and productivity with less.
We have heard that on many occasions.
And the presentation will explore this landscape of
innovation without monies, so we're looking forward to it.
A key part of the presentation will be exploring Vick's ideas about
public goods privately provided and the scope for new kinds of public private
And although we're used to thinking that public goods must be produced by governments,
there is a fundamental and growing class
of public goods emerging from private interactions.
And new public goods like Twitter, Facebook, Wikipedia thrive
on the internet and have ushered in a new age.
But they must exist other public goods which could be brought into
existence by the right kind of partnership between public and private endeavours.
The talk will explore this new terrain, providing
examples whilst expanding the principles on which such
partnerships should be based, and, of course, at the end Nick's happy to take questions so.
And Drew Clark will facilitate our Q and A discussion.
Today's presentation is also being filmed and will
be available on the department of communication's YouTube channel.
And once available I encourage you to share
this presentation with colleagues who could not attend today.
And we did have an absolute sell out.
And I think Mary Ann said we had to turn quit a few people away.
So feel privileged, like I will be, listening to Nick, so thank you, Nick.
Thank you, Glenis.
Well, The description of what I'm going to talk to you about,
is kind of accurate, and that, but you might get the wrong impression.
Because, it's not going to be a kind of
synoptic: how do we do this innovation thing without money.
It's going to be a bunch of ideas.
And I guess I'm reminded of an occasion when I was.
Think your in residents for the Department
of Education and Training and various other things.
And I would often be drawn, taken into rooms and shown five strategic dock points.
And asked to help on those [LAUGH].
And I don't think it's possible, it's sort of it's a productivity is like happiness.
You don't get there by trying to, sort of, do more of it.
You get there by thinking about thinks on
their merits and solving problems, and inventing problems.
You invent a problem when you see an
opportunity, and then you realize there was a problem.
And so I'm going to talk to you about a class
of, or a, several classes of opportunities that I think of.
As really really, big, and they come from a very
interesting, I think a very interesting line of thinking, so that's an ab, that's
a, outline of what i'm gonna talk about, and cuz I'm gonna
go, go out of your pace, and I will move right along.
So there's an information definition of a public good.
And there is a more technical definition of a public
good: that is a good which is nonexcludable and non rival.
And what do those things mean?
Well, excludability is something which, we can exclude people from
this room, but once you're in the room my speech is.
Unexcludable, so if I want to charge you money, I better do it
at the door, I can't do it in here because you can watch anyway
just as the ships can pass by the lighthouse, and rivalrous is
if you, it relates to quality, if you have something, somebody else doesn't have it.
Somebody else doesn't have it.
Here's my watch, if I've got it you haven't got it.
But there's an image and people here can look at it, and
people there can look at it, so it's a very different thing.
Now many of you will be familiar with the term a free rider problem.
We spend a lot of our time talking about free
rider problems and there are free rider problems in the economy.
I'm gonna get my laser pointer out of my key ring.
But an expression that is much less common
but actually more important is the free rider opportunity.
And if you look at that graph, excludability,
lack of excludability creates a free rider problem.
Non-rivalrousness creates an incredible free rider opportunity.
So, the non-rivalrousness of the, this presentation
in the room, means, means that it's all completely free for every
person in the room, other than me, if you like,
or other than the first person that it's made for.
The marginal cost of every other.
One of these units is zero.
What a pretty, what an amazing opportunity.
That's what has got us down from the trees, we weren't
actually ever in the trees but you know what I mean.
That's what has got us to the 10th floor of, of a
of a building, which there weren't any 10 floors, 10th floors of buildings.
A few thousand years ago.
That was from seeing other people ideas and copying them and yet
we talk public goods as a problem because we've been focussed
on non-excludability and those, there are problems with public goods.
There's problems with building roads.
Who's gonna build them if the government isn't gonna build them?
There's problems with building the defense forces.
Who's gonna build them, if the government doesn't?
And if the government's building them it's very hard to work out how
much people want them, because they're not paying for them as they go.
So lots of problems, but think of the opportunities, the public
goods opportunities which we're just, begin, we're just becoming aware of.
Although Thomas Jefferson told us about them a long, long time ago in words
that were more enthusiastic than any modern statesman.
I would have thought.
He was aware of this explosion of possibility that was.
Coming upon our species.
So these are a whole bunch of
public goods that just flew into existence and
something else remarkable has happened which is that if you think about Google.
By the back of my envelope, Google creates about
$1 trillion of value every year for the global economy.
And the poor suckers manage to get by on the smell of an oil lease $60 billion rag of
revenue, just scraped off the $1 trillion that they make.
Now, isn't that remarkable, that Google is
94%, if I've gotten my sums right, 94% a gift to the world.
And they're all as rich as their wildest dreams.
That's a very different model, to the model that Adam Smith was
thinking about when he talking about the Butcher, the Baker, and the Brewer.
Because that's a hundred percent value model.
A hundred percent of the value goes into the loaf of bread, and it goes to the buyer.
That's a simple world, that's a much easier world to work out what to do in.
So, the other amazing thing is that Google could
and all these other platforms they are actually excludable.
That they have forgone the free writer problem.
Forgone dealing with the free writer problem.
In order to grasp the much greater free rider opportunity.
Isn't that amazing?
And there are these kinds of things all over the place.
That, this is a close personal friend of
mine, I've already mentioned him, my talks really get.
Into more than about the fourth or fifth
slide before he makes a visit, sometimes unintended.
And he wrote a book that you will probably have heard of called The Wealth of Nations.
Well, he also wrote The Theory of Moral Sentiments, 17 years beforehand.
And that was essentially about a public good, the public good of
culture, the public good that enabled us all to walk into this
room, all to obey a whole bunch of implicit social rules which
mean that we can share the cup of tea at the end.
We're not going to be fighting over anything really.
We'll just, it's just like the road rules, turning something that could be.
A real bonfire into an amazingly smooth piece of clockwork.
And a way the government sits behind the
public good of decent, people dealing decently with each other.
We invented that.
And then the government came along and said, by the way you're not
allowed to kill people and you gotta obey the road rules and so on.
But these things emerge.
These are emergent public goods and there is one other absolutely
fundamental public good in life and that is language.
And that's simply emerged from human life itself.
There is only one country, I know of, where the government gets involved.
That's not this one.
You're not supposed to say blue jeans if you're speaking French and stuff like that.
And Adam Smith actually wrote a book, or a treatise, about the emergence of language.
And his model for markets, for culture and for
language was this model of emergent public good, or [UNKNOWN].
He didn't use that terminology.
And the other thing I've kind of discovered as
I've gone on this little journey, thinking about this
stuff is that we have a very impoverished idea
of governments built public goods and market built product goods.
And yes, sort of, at the, at the extremes that's completely true.
But what's much more interesting is that there
is always an ecology between public and private goods.
And in this room right now, there are public goods.
We all know that we're part of that group.
And we all know that we owe certain things to the group.
And at the same time we all understand that we have our own private role
in this room, which might differ, but we all
understand that in a football team it's the same, in a nation it's the same.
And when things go wrong.
They've usually gone wrong because this ecology
somehow isn't working out the way it might.
And this is an example of an ecology of public and private goods where this is
basically Adam Smith and Frederick Hayek's story of how the price system which is
another emergent public good simply emerges, it's sort of an ecological product.
Of life going on, in a particular kind of way.
And there are those in the late 80s, it became popular to, to
have the heretical thought that perhaps we could make everything a private good.
And well it was a sort of nice idea, but
we do have some experience with worlds with only private goods.
And that's as close as we've got to them and they don't really work very well.
And that's something that my friend understood as well.
So, I call this, so I've just given some voice to
that idea of this fractal ecology of public and private goods.
And you might be interested to think about how, what drives Google.
How does Google work?
Google is an ecology of public and private goods.
It's offering you a private good.
It's offering you something which is gonna be of use to you privately.
You go onto it, and it's listening.
It's watching and if it serves up a list of
ten things to click on and you click on the third.
And a few other people click on the third, guess what happens?
Your private good is converted into a public good and on we go.
And the same kinds and, and so that's how Goodwill does it, using
logic using utility and Facebook does it using effect.
The same kind of thing and this was all going on
in, on the African savannah when we evolved as a species.
In a, in a different kind of way.
But, it's the same kind of story.
so, this is Facebook, this is Google, and this is Wikipedia, all of those things.
And this is an opportunity to say that, if you were trying
to run any of those platforms for the good of the world, which is what governments do.
That's what they're supposed to do.
Would you be trying to, what, what would you
think would be higher on your list of priorities?
If you can do the same thing at a lower cost,
that would be obviously and self evidently a worthwhile thing to do.
And if you can fulfill your mission better, which would be more important?
Generally speaking, they're both important, but generally speaking running the platform
is much more important because there's so much more more public value.
There's so much connected to it.
That is not in any sense a criticism of
anyone who wants to lower the cost of delivering government.
But it is to say I was, I had lunch
with a very senior Australian businessperson the other day and they
said, well, the government is 30% of our economy so
it's got to be an important part of the productivity story.
Well, I, I informed her that that wasn't quite right.
Yes of course there is an, there is something absolutely evident
about the fact that if you can keep doing something at a low cost, why wouldn't you?
But that is the size of government measured.
Roughly in terms of value added in Australia.
So most of government is cash transfers and that's the 30% and guess what, you
can't make them anymore efficient, except possibly taking
a few basis points out of the transaction.
At least in policy working on the banks, but I won't go into that.
so, and, and that's what it looks like if we take away health and education.
So, it's really important for government to think
about itself mostly as a platform, and it's a
large and expense platform, so if you can cut costs any way you can, that's just great.
But the mission is more important than the costs.
So, implications, the implications of these ideas I think go in two directions.
I kind of startled myself with the fact that
this thinking I was doing connected up these two worlds.
I was thinking about digital, you, you can see some of the implications for digital.
And as chairman of the Australian centre for social innovation, social
capital's extremely like this because it's sort of connected up everywhere.
It's like Google.
If you save a family from going into crisis, if a state government does that, it saves
some costs that so much more other things of
being have, have, have been improved if the school.
Helps a family by helping a son with, wi, helping a child with remedial mathematics.
Think of all the benefits that radiate out, just like Google.
It's the same story.
I'm not gonna talk much more about social capital.
If you wanna have me back, I'll be happy to blow in your ear about that as well.
Okay, so we have this world that I've sketched out for you, which is traditional
public goods or the free rider problem over
there, and the free rider opportunity over here.
And we've found this burgeoning of new things of the community.
And so they sit.
And we have this world, and now we have, now I'm gonna say to you something
else, which is, hang on I'm going back so,
so, what happened here, Australian the mark gonna guess but,.
What has, what's happened here, is that these are all the easy, this is all the easy stuff,
this is all the, these are all the popular
goods that we, that either simply emerge and run
themselves like language or that with a little bit
of money, $60 billion as of these with Google
or $12 million, I think it is with Wikipedia
which is raised philanthropical with a small amount of money.
The thing takes off and it becomes a public group, so there must be
a class of goods and maybe it's really large, of public good that are sort
languishing that wanna come into existence but they can't do it on advertising, they
can't do it on a freemium model, and they can't get enough money from philanthropy.
And so I spent a couple of years looking for these things.
And, and I came up with hokey little examples.
The National Library newspaper digitization website which is a fantastic thing.
Absolutely fantastic thing where you go and
you look at newspapers which have been digitized
and if you find a mistake in the character recognition you can correct it yourself.
Guess how many lines of code, lines of text
have been corrected since it went live in 2007.
That's pretty cool, but it's not like Google, ok.
I wanted to google.
I want something that's going to show this idea isn't just a fancy idea.
It's a big idea.
So that's me as a Urbain Le Verrier.
You see, I've got a lively imagination.
You've already seen I go back to the 18th century quite a bit.
This is the 19th century.
And this guys says to, he says you know what?
He says, I've been looking at the way this planet moves.
And I reckon if you look there your gonna find another planet.
And that's roughly, that's, that's almost exactly
what happened the next night in Berlin.
So that's Uranus and that is Neptune.
That's how Neptune was discovered.
And so I've been looking for my Neptune.
And I looked for quite a while.
And then I saw Cathy, no
Anne Wojciki talk about 23 and me in San Francisco at a health 2.0 conference.
So 23 and me is a consumer genomics company.
You send them $29, sorry $99, and they send you a plastic kit that you spit into.
I'm told that you have to spit quite a lot of spit into it.
I haven't done it myself.
But that's the worst that will happen to you.
After that, you get an e-mail and you get a page on their website and it helps you
do a bunch of things of the social networking
variety like find ancestors, if you want to find ancestors.
That's not always a good thing.
But the big thing is that you can, this is a, this is a partial genomic sequencing.
Of your genome and it will identify certain, it may identify certain susceptibilities.
If you know you are unusual susceptible to bowel cancer, you will
choose to get screened more often than the normal amount.
So then I, so then I realized I had my public private partnership when I was told at the
time the cost was $299, the number of customers
that 23 and me had at the time was 180,000.
They've now got 600,000 on the back of getting
$50 million in the bank, and cutting the price.
Their target market must be two billion dollar, 2
billion people who can be helped by this for $99.
That's not really working all that well is it,
and I immediately, those who know me won't be surprised
by this, went straight down to the front and said
to Anne Wojcicki have I got a deal for you.
And explain this idea of a public private partnership between,
23 and me, or and, and, it, and you shouldn't
think of it as 23 and me, but a service
like 23 and me and think of the Australian health system.
Now, they can't think of the Australian
health system in America because they're Americans, and
they think of their own health system which isn't so much a system as a.
Of, of kind of a collection of things.
And we have a system which is a collection of things and a central insurer, which is
capable of doing population based activity, centralized insurance
funding, and a bunch of other really worthwhile things.
So, America, interestingly is kind of at the forefront of a lot of health of, of consumer
based health innovation without any kind of sense of sys, of a systemic significance.
So, the model here, I think,was just completely obvious.
That, subject to a cost benefit analysis.
I know that sometimes they, they, they, cost benefit analysis
go through cycles of being popular with different parties, depending on.
Where they are in their, in their lives but subject to a cost benefit analysis
I would assert that it's, I would be very very surprised
if having the gnome of a, of an Australian wouldn't be worth.
$99, in fact a lot more than $99.
It would cost less in bulk to get that genome.
And therefore for Medicare to bulk bill.
And for the health system to nudge people into by simply saying when
you go to the doctor, do you wanna take advantage of this free service.
And if you don't, that's fine.
You just opt out.
If you wanna take advantage of it, sign here, tick
here, give us your email address, and you know, a
couple of week's time, a spit here, and in a
couple of week's time, you will be in the system.
We could get millions, millions and, you know, this is, this
is A tiny fraction of the 1% of the target market.
You would think you would get 60% or 70% of Australians, signed up to this.
And the value of it as a research asset, the value of it connected up to the
unit patient record for diagnostic for pharm, for pharma covigilance.
Would be huge.
Here is an example of something that they've done just for their 180,000 customers.
They had replicated 180 genetic association known in th literature.
So what happens is, they look at your genome they get you to fill up quite elaborate.
Surveys about, you know, whether your mother, what your mother and father died of
and, and whether you've got a bad back and all this kind of stuff.
And they've got all this data and then they can simply do a, a,
just do a correlation on their database and work out where likely associations are.
They replicated 180 of these genetic associations.
It costs about $300,000 or $400,000 to do one of those the normal way.
So in a report that's being released on
Thursday that I'll talk a little bit more about,
I worked out on the back of an
envelope that that is a productivity improvement of 10,000%.
So this is, that's productivity surely.
So that's basically the structure of what I'm calling public private partnership 2.0.
The public, private sector, it, it builds a service.
The public sector contributes its resources.
This is the model of 23 and me.
It might be different in different cases.
with, we use with giving access to public networks, with nudges,
with deliberately getting out of the way and not putting up roadblocks like the
like the FDA in the United States has, which is just.
Declared 23 and Me a medical device and it now has to go through a long regulatory treadmill.
Now of course we should regulated so that it's properly delivered
but I doubt that that's been handled in a sensible way.
So there's actually an opportunity for you, 'cause they're looking around.
And financial internalisation is another, is another part of it.
And the final point is what I want to stress this.
I am not saying to you as lots of people have in the past.
Why doesn't government, why isn't government more like business?
Governments and business are different.
There are ways in which each can learn from the other, but they are different.
And if this cannot be done according to the basic traditions of government,
of the, the, government objectivity, gov, government not.
Playing favors with commercial interests, then it shouldn't be done,
because that's more important than a bit of prior activity.
The thing is, it can be done.
We need to invent the processes by which it would
be done, and, and you can imagine what they are.
In this case you would have a tender.
And you would also make a whole range, you would require a
whole range of undertaking from the party that was privileged to become
the public, the anchor in this public private partnership.
You would also retimber every five years and the data would be transferable and sale them.
There are lots, anyway, there are plenty of things to be thought about.
But they're not that hard to think about.
We can stop today, basically.
We can start, we, we can understand the kinds of moves we ought to make.
So, I'm now going to go through a
bunch of more minor examples of public private partnerships.
This is an old one which is Fix My Street.
Where a civil society, effectively this was a philanthropic
in the U.K., set up a website on which
people could record, pot holes in their neighborhood and
so on and that would, that would be fed back.
To the local council to fix those things.
again, a different interface, between public and private.
And a useful one, that's a full profit version of exactly the same thing.
And this was a prototype we build, in,
in the government 2.0 taskforce, called It's Buggered Mate.
And you write in there, what's buggered, where it's buggered, and.
Your own address, your own email address, that you can
help track the unbuggering, that didn't actually make it to
full production but it was, it was a nice, it
actually was a kind of working prototype at the time.
This is a pretty interesting thing and this is a, an attempt to, well,
this is, the way I think about this is this is trying to fast track.
With sensor data.
Which will be the data of the future.
What it took the electricity industry about 40 years to go through.
So what happened in the electricity was that by that about
the 20s a lot of businesses had generators out the back.
And they were all based on different systems.
Some more AC somewhere DC.
Some were this volts some were that volts.
And it was massively inefficient and over the course of about
a decade this was transferred onto the grid with a standardized system.
And once you've got that going if someone's good at generation then
they can set up and generate and send it out on the grid.
So what's happening here is that census for oyster farmers, for
viticulturalists, for fish farmers, for really anyone out in the
environment are supplied to those farmers on a lease basis.
As the, and therefore supplied in a way that that census/s data can be used and reused
again and again, and can ultimately become a kind of platform on which apps can be built.
People will find ways to use this data that will amaze us.
That we weren't expecting, in exactly the same way that, we've go a million apps-
how many apps have we got on iPhones, does anyone know, it's something like a million.
It's an awful lot.
so, and that is an innovation without money but
it's innovation with a very small amount of money.
The money, compared with the amount that it might do.
And you could fund it, you know, and again, when, when
it comes to small amounts of money its probably most sensible to
fund them through central revenue because you, general revenue, because you can
also fund them through industry levies and any number of other makeshifts.
This is Murmur.
Murmur is a employee engagement.
It's startup in Melvin.
And it's very naddy little tool that, and,
would, which can be customized in various ways.
And you take employees through a survey of
how to how well they're being managed effectively.
And a whole bunch of other things.
They've sold it to Adobe and to Box in Silicon
Valley, and they've, they're selling it to business around the world.
And the idea here is for a government to say to this company, although
it isn't to this company, might be done through some sort of tinder process.
What would it take for you to make this tool available for our
they actually have a free version available, it's a very cut down version.
What it would it take to make available a proper version of
this, for free, to business, to all businesses in Victoria, if you're the
small businesses in Victoria, if you are the small business minister for Victoria, or to
small businesses in Australia who're the relevant minister
I don't think it would cost a lot.
That's actually the most efficient way to deliver the service, just
straight out of an economic textbook, because price equals marginal cost.
Which you get an additional benefit and the benefit that
you get, well you get several benefits, but you get
a standard, so most businesses will report to that standard
so, then they can, then comparisons can be made and, and
and, and the government will, as part of
that private-public partnership take on board that data,.
And find all sorts of ways to use it to help people work out
what makes companies, what, what makes these kind, what drives these kinds of results.
There are all sorts of ways in which that
could be useful, all sorts of ways in which the
public, sorry, all sorts of ways in which something
provided as a private good can be hugely more valuable.
Delivered as a public-private, as a public-private would.
This is an example of a, a website which is in, in
construction, and the builder of this website has been to, so it's an internal marketplace.
and, it's being built for, early customers are,
I think KPMG, and consulting companies, and the
person who is building this website came to
see an Australian government agency that will remain nameless.
The person who saw it said, this is exactly what we
need, this is, we really should have a tool like this.
But we couldn't possibly we couldn't possibly get it.
Because it isn't a product that we could tender for.
Cause this is the only one of it's kind.
So, this sort of thing that wha, wha you know, this
sort of way we need to try and get that through.
What we need to think about purchasing.
Purchasing with elements of of, of product development, much more than we have.
And the Victorian market validation program, which was then replicated or,
at the Commonwealth level in a pilot scheme, seemed to be a good start to trying to learn.
About how to do that.
That's another similar, that's another similar company declaration of interest, I
have one in it and, that, that, does optical character
recognition of PDF files for the purposes of gaining semantic mania.
What does all that mean?
It means that if you're putting in a, an
application for the dole, it will improve document handling.
And is being built for mortgage brokers in Australia and around the world.
But there are lots of government uses for it.
But there's a difficulty in government becoming a developing purchaser, if you like.
Because it isn't, it, it's not a mature product.
It's not a mature product class.
So i think, I've given you the example 23 which
I think is a hugely exciting one that I actually think
there is a scope for really fantastic.
Innovation program which has incredibly low costs.
And it would be around the new interfaces that are coming into play,
simply by using existing technology and making things work a lot better.
That's roughly what Silicon Valley does.
It's not a high-tech place.
There are bits of it that are high-tech like Intel,
but most of it you, Facebook Apple are not high-tech.
They're design shops.
They're using existing technology in fantastic ways at the interface.
Connecting things by building a really clever.
Socially inclusive interface, and by socially inclusive I
don't mean like Facebook as in social as in
lovey dovey, I mean general, you know, not, not
point to point but generally, some, some general platform.
So, let me give you some examples a, a very clear example.
It's such a good example, but it's going, I suspect, it will go
perfectly well on site, but this should be on rocket fuel right now.
What does this do?
It takes the silly process that we have for giving your kids permission to go on
excursions and writing down their allergies and all
that sort of stuff, which is paper based.
Wastes a lot of time, and it does it on an app.
and so if your child is on excursion and
they fall ill, or hurt themselves, it's a couple of
button clicks away to know, for the teacher to
know, who's on the app, on their smartphone to know
What their allergies are, what their, what their doctor and
specialists are, what their, who to ring, all really incredibly simple.
So, you can imagine, I hope that this isn't, I don, I'm sure this isn't
I'm sure this isn't going to push you in, into any territory that's unfamiliar to you.
You can image that schools might be, that some schools would do this and
some schools are doing this but it is just taking quite a bit of time.
So, we could have a government scheme to sort of in one way, one
way to think about it would be to say to reverse the elements of proof.
The onus of proof, it's even in the doctrine of negligence.
It says if you do what everybody else is doing, you're safe.
If nobody else is doing it, do it if you want to, but you're okay if you don't do it.
We could be saying, there are these technologies around.
Within a year we want you to have evaluated them.
And to have implemented them, and if you
haven't implemented them, that's fine, but you need
to do due diligence on the process of not jumping into this space and moving along.
and, and again one might also say that a quarter of a percent.
Of the turnover of these sectors should be spent
on, on, on being an accepting interface for innovation.
Because a great deal of innovation doesn't, it lives
and dies on the environment in which it is released.
And so if we can just improve that a little we can do amazing things.
So that's that's what comes up on your smart
phone if you're off on an excursion with care monkey.
And there are other apps, again I stress I'm not I'm not saying this should be done
with care monkey, but care monkey's one possible entrant in this.
And you can imagine how much the whole industry doing these things
would get a shot in the arm from governments acting more vigorously
and how much benefit it would be for them overseas to say
that this was adopted by 60% of Australian schools and so on.
>> This is CloudPhone 3G it's a single phone smart phone for healthier safer families.
It's designed to be the perfect companion for seniors and young children.
But it's more then just a phone, it's a smart
care system that constantly monitors your loved ones well being.
And, our unique cloud technology keeps the whole
family connected iPhone 3G is revolutionizing how we care.
Here's how it works.
Advanced voice controls make calling anyone simple.
Just touch and talk.
>> Who do you want to call?
>> Call my daughter.
>> Hi Mom.
>> Say a panic word, or press and hold the call button to create a family call.
It's an instant conference call that's perfect for
emergencies and shows your location while you talk.
CloudPhone also monitors falls and lack of movement, makes everyday living safer.
If an event is detected, it asks the wearer if they're okay before calling for help.
>> Are you okay?
>> I'm okay.
>> If they're fine, it returns to sleep and doesn't cause a fuss.
Lifestyle 3D also monitors physical activity.
Lifestyle analytics is leading information you need to make you form decisions.
See the real impact of changes in care, medication or behavior on physical activity.
And prevent small health problems from growing into big ones.
CloudPhone is great for loved ones on the go, too.
As Safe Path technology automatically monitors regular
transit activity, like travelling to and from school.
If your loved one leaves the approved path, get
an instant notification and view their location on your phone.
Plus, with automated check in, you know the moment they arrive home safely.
So I think you can see why how exciting that is.
You hear Australian accents in the video.
The guys who, who have come up with that are in Brisbane and they come up
with one of the great ads was slipped in the shower and was you know in pain.
Wasn't able to get up for several hours.
And I thought we'd better be able.
We, we must be able to do better than we can at the moment.
Their not in Australia anymore, there in Kansas, Kansas
in the spring accelerator in Kansas City, only one.
Australian angel investor invested here.
But I think you can see that technology like that is so many, it's such simple technology.
It's not high tech, there's nothing high tech about that.
That is just rolling off the, you know it's like electricity in the early 20's.
It's all done for you and it's a question of how are we going to apply this?
And we have these huge systems with huge amounts of money and they can
lower their own costs by adopting these kinds of things.
And so we have to find ways of, of getting that to happen.
And I think we could build a really fantastic innovation program.
That's very prototype, a very recent, example some similar work
being done by Quanticare Technologies, which is in the Melvin University accelerator.
I found out about it at lunch yesterday.
I told them to send me a picture of it.
I told that wasn't the greatest picture.
But, what is does is it, it's on a, it's on a walker.
And it detects the pressure being put on the walker and falls.
And so it does something similar to the example that you saw earlier.
And you can imagine you could put lots of sensors and [UNKNOWN]
one of the things that that video didn't point out about the.
The device that they built is that it's actually quantified self for the ages.
So what they're going to do with that device is
they're going to build a whole lot of biometric data
and start saying how can we use it to predict
when somebody might fall and all that kind of stuff.
And they've also, I've, I've seen, if anyone's interested I can send you a picture
of the next generation which is fantastic looking
as second generations of things tend to be.
And it's a, it's a kind of a, a plastic necklace
that, that's a very elegant looking necklace that just comes around there.
Which you're much less likely to take off once you get in the shower.
The way you would probably do with that prototype.
So these are, these, it just seems to me that this is just waiting to happen.
I haven't seen a government anywhere in the
world that has said let's really go after this.
And if, if I'm wrong and it doesn't work out, well we won't spend a
lot of money we won't spend a lot of money, we won't have spent any money.
So, I think it's a bit of a case of what's
there not to like, to quote Kimi from Cath and Kimi.
Here is HealthKit, declaration of interest, I have an interest in this company, and it is a
free, it's free, medical practice software.
And makes it's money from SMS reminders and credit card payments and things like that.
Now we are, at the moment policy is trying to push doctors and Allied Health into compu,
into computer Even now, lot's of doctors and Allied Health are not fully computerized.
And more to the point online, and
once they're online fully online with online systems.
The data that you can get out of that is extremely powerful.
If a medical practitioner ready con to GP or a psychologist or whatever, wants to know.
Which software package to use?
That isn't a very easy problem for them to solve and I suggest
that governments need to step away from their default, which is, oh we couldn't
do anything about that 'cause that would be picking winners [UNKNOWN] association to say
that it is an important part of the public good to have a system.
That we've now invented on the net with
TripAdvisor and Yelp and any number of other sites,
to have a system which helps to harvest the
views of consumers and helps to inform that process.
That can be an objective system; it won't, it wouldn't be
a system in which the government came up with a preferred.
It would be a system that the government helped to bring into existence.
May not even mandate it might just sort of work with the industry to
bring it into existence to say hey, we need a trip advisor for medical software.
Because, if we have that we'll get better medical software, we'll
get much better take up, we'll get standards developed and so on.
So this is a whole bunch, I haven't been through
all of my repertoire of what I call government as impresario.
And the idea in impresario is of course someone who
makes fantastic things happen off smell of an oily ray.
So that's the, that's the idea.
I can go into any of those things but I wanted to move right along and I will go into
another area which is open data and it's somewhat related and where I'm releasing.
A report that we've done for the, media network,
to feed into the G-20 process on Thursday morning.
But there you go.
That's a number from McKinsey's that open data is
worth $3 trillion a year to the global economy.
That's the open data.
To come, not already it's worth more than that, one would imagine.
So, what is open data?
well, that's, that's again from McKinsey and you
can see there that there is only a very small part which is government data.
And then there's all this other data and
we've, I've intimated what that data could be.
Quantified self-data from.
That device, all sorts of other things.
And so, if we can find ways that respect both privacy
and ownership of data, to get more of that out there.
We can do great things.
Firstly, we can do a better job of releasing public sector information as the.
Condition of order pointed out.
We haven't been too good at that and I'll show you some examples.
There's also our research data but there are a whole lot of other things we can look at.
That's a graph and we've got accessibility here and different data sources.
Those circles correlate roughly with the circles there, not entirely.
But take this one for instance.
We've got most closed, accessibility, individual genome.
Well, see what I mean?
You can find ways to build systems in which that data comes out.
Anonymized so it doesn't compromise people's privacy.
But, all that data is now, possibly a better term
that McKinsey sometimes uses is not open data, but liquid data.
Data that can travel places and be used, and
have value there, even if it isn't completely open.
And I'll give you another example of
We've talk to you about that already to some extent and
there are ways one could imagine of getting that out there.
And that's a set of repertoires that could be used at
the level of government to help this data ecology be more open.
Sensitivity is another example.
To get in and preempt the architecture so the architecture is much more open than closed.
This is, when, when I did the government 2.0 task
force in 2009, I would say, not that we'd knock the
people collecting these kinds of figures, but I would say that
there were three countries regarded as clear leaders in that agenda.
The UK The US and Australia and
it is quite clear now that within the G20 we are third or fourth
but among other countries we are seventh or eighth particularly
among the UK which comes to the top of all of these things.
And they're really doing remarkable things.
And we, there's no reason why we couldn't be as well.
That's the Midata website, where there is a partnership of all of those organizations,
public and private, to empower citizens to authorize the use of their data.
For to, to, to go to other places, if you know what I mean.
So, someone might say, if you give me your shopping data, I will
send you specials, and find better deals for you, but it's up to you.
So they're building this whole architecture in which that kind of thing can happen.
And that's about the only way we can deal with the ways
in which privacy concerns stop data flowing, which is to absolutely respect them.
And then to build the architecture around people controlling their data.
We don't so, so, so here's some examples in Australia, where
we, where we have made an open dialer declaration, but for instance
in the State of the Service report, we have lots of
data, but it isn't data that could reflect on any particular agency.
That's not the way they do it in the United States.
And guess which agency came near the bottom of the rankings for employee
satisfaction at about the time of hurricane Katrina, before hurricane Katrina?
So this stuff has genuine forensic and managerial value.
He is okay.
So this is a site which a guy called Felix Barbalet who worked in the tax office
set up to generate value, private value for himself and public value for the community.
And his customers in understanding Commonwealth employment data
that was public, so I'll just show you.
>> APSJobs.info is a new information product for any
business in Australia that interacts with the federal government.
If you're a technology vendor, it gives you access to the
name and phone number of around 80,000 senior APS decision makers.
And you can instantly find those relevant to your product.
If you're a recruiting firm, it gives you access to
the name and employment history of around 120,000 APS employees.
You can search for candidates based on their job
title, department, location, position type, APS level and much more.
You can view detailed job specs.
and instantly see who is appointed into a position.
If that person has joined or moved in the APS in the last five years.
You can see their job history too.
This is an incredibly rich information source that your competitors are already using.
Information is pivotal, so don't let your business slip behind.
So, that data, yes I know, there's a few sideways glances around the room.
So that data is acquired from that website which is PDFs and Word files.
And you can imagine that's not, people don't spend much time on that website.
If you look at what happens when they visit
that website, they stay longer and they look longer.
Rather like Seek but not like the public sector version of that scene.
and, so that's, that's the That's the page in the,
in Australia, and that's what it looks like in the
United Kingdom, which is a very elaborate invitation for you
to get the data pretty much in any format you want.
They're trying to solve the interface problem.
They're trying to make the thing flow, to make the data liquid.
And the value here is very substantial, but I'm afraid the business isn't keeping up.
Scraping the .pdf files, because they keep changing the format of the .pdf files, and it
costs them too much to reprogram everything to get the information off the .pdf files.
So I guess he can just set the website up for.
UKP has jobs, UKC has jobs, I guess.
And add the value there from here.
So let's let's ask a naive question.
Why don't firms release their employee engagement data?
Well, that sounds obvious, doesn't it?
Because they might be embarrassed by the, that, there
might be things that are there that embarrass them.
But, that doesn't answer the question of why the best ones don't release that data.
And, I think that reason they don't release the
data is there is no standard to report to.
Because if Price Water House Corpus is doing a
better job of them Deloitte and it shows that in a survey.
It's very easy to design questions, well, at least, that look just good as those.
As, as those, Answers.
So, that opens up the possibility.
Again, public good.
Standards in the religion, public good, most
of the time, To convene standard setting, voluntary.
Standard making and reporting.
Governments could report to that standard to help it get going.
The ABS could do a survey of firms in Australia.
Which would give firms the complete lay of the land
if they wanted to use that standard where they were placed.
And of course they would then be free to, they
would then be free to report that against the standard.
And, they could make claims like, in the top quarter in terms of family friendliness.
In the top, in the top decile as far as.
Rewards you know, as far career paths or whatever.
That would strengthen the market for good management.
It would, I am sure, the stock market would take an interest in
that data because you would find correlations between results and more and more.
The data would come out, because you built it in a way, to get it out.
It wouldn't all come out.
But, it would be a lot better than, it is now, and it would be free.
eh, so, so I think that's a huge, that's a huge, a hugely beneficial thing.
Now, the, the report, we've just done this report on open data.
Which I mentioned and we tried to estimate the value of these kinds of policies plus
the fact that governments have got a lot of suasion or control over health and education.
So, the can do a lot of this stuff
and say get a standard together and report against it.
So we gave nothing, so, so that stuff that I showed you of Felix Barbalits site.
Which should be fixed up of you've got the policy right.
We counted that for nothing.
We said, we said if you have better
job matching you're going to lower stress at work.
Let's say it's between 5 and 10%, so that's some money.
We counted zero for productivity growth which I think, well we just didn't have the,
we don't know enough about this to be sure and we did the job quite quickly.
But we did find something about them the benefits of better job matching in education.
Essentially if you get better job matching in education, you
get an, and effect equivalent to an increase in teacher quality.
And we know something about the value of improvements in teacher.
Quality, and we said that if you got one quarter
of those benefits, that would give you that kind of result.
So that's our rough calculation, of huge underestimate,
of the efficiency benefit from those kinds of policies.
the, the mathematicians, the arithmeticians in the room.
Will be wanting to know something and the answer is it's a rounding, you should.
>> Okay, and that's a, that, that's, that's a, a whole bunch
of what, what we do is we talk the things of the G20.
And those things are mentioned there and we sketched
out if you like what we thought was a reasonable
estimate of the sorts of benefits that you might get
from open data and all of these things cost essentially.
So that's the, these are, this is the repertoire of
open data and I've mentioned some of those things to you.
And these are doing exactly the same thing, which is building
public goods from private resources just by doing things a little smarter.
so, a few other things.
There is a long list of these things.
I should say, I should've said at the outset,
I'm not speaking on behalf of University of Australia.
I'm not speaking on behalf of anyone but myself.
But we are looking at this agenda of innovation without money.
And, I think there are just lots of examples and I
wanted to give you a very strong look at one good area.
But let me just take you through a couple, a couple other things, and then I will finish.
According to my watch I am pretty much within
my 15 minutes, and then I'm happy to take questions.
[NOISE] [SOUND] Okay,
so what's happening there is that a man is firing at a Segway.
And why is he doing that?
because in the army some years ago.
Somebody said, hey we're doing target practice the way we did it
back in World War II, surely we can do it better then that.
So they, rang up that they managed to make contact
with the University, some software engineers at the University of Sydney.
And they, and the software engineers went and bought themselves some Segway's.
A plate of them, stack a mannequin on them that
can take something like 20,000 rounds from a three oh three.
How you build a mannequin that can do that, i'm not too sure.
And started building these.
These things sell for about 100000 each, I think.
And they can be programmed to behave in different kinds
of ways and they can do complete scenarios of the
kind you saw and that's a, that's a business sort
of built out of nothing, okay, built out of an idea.
We, we, government isn't 30% of the economy as you've heard, most
of it is making payments, but it is 14% of the economy, and
imagine if all the public servants, or the people working for the public
were, felt empowered to say hey, we can do this a different way.
There is technology everywhere.
I'm a bit of a fan of low-tech.
This low-tech, effectively.
There's nothing leading edge about any of that.
And yet, it's, it's word 5, $10 million a year as a business already.
And, it's a, it's a great thing to have a crack at.
A couple of other things.
I think we've got regulation, our approach to regulation,
Governments around the world have tried this idea, that you, well they've
tried what I call, what I call, the Michelangelo theory of regulation.
And Michelangelo said.
That's when someone asked him how he sculpted those magnificent sculptures he said well I
just take the marble that doesn't belong there away and then you've got the sculpture.
And that's roughly the approach we've got to regulation.
If we've got a strong enough barrier against
new regulation we'll be left with fantastic regulation.
There are lots of problems with that, but I think we could try to regulate more
on behalf of innovators, because innovators, in today's world,
fight their way through a thicket of little, of what I call the death of a thousand cuts.
Just try and organize a school fair with sandwiches.
>> So we have to try and think about that for innovators.
So not a sort of full-frontal assault
on regulation, which becomes highly, highly ideological.
And very, the, the, it has just never been very successful.
And try to think about how we help
innovators clear the path for new things through regulation.
An example, th, th, that's one example of what happens with our current approach.
I'll let you just gnaw on that.
And that, that was mean asking that question.
And that was the federal office of road safety saying we can't really afford
to make our regulation up to date because that would require a regulatory impact study.
Christopher Joy, setting up Rismark.
Rismark is, a financial instrument that you use to
finance your house and you don't pay interest on it.
You don't pay interest on it?
No, you don't.
You pay twice the capital gain that you made on the house back.
So you pay no interest, and if they lend you 10% of the house,
you pay 20% of the capital gain back to them when you sell the house.
And that was $4 million of legal fees, and, I think,
two and a half years to get through the regular tree maze.
This is the loss of innovators and we have
major project facilitation because we can see the project.
It's a $400 million pulp mill, and we say.
We're your buddy.
We'll help you get through the hoops.
We should do it for innovators.
so, here's another example, Earth Sanctuaries.
It was the prohibition on exporting native fauna that basically drove,
Eight fantastic sanctuary, sanctuaries for our native animals into liquidation
and were no anti-regulation campaigners trying to fight that fight.
So, so those are, those are a bunch of things we believe.
Here's another innovator who wanted to have property investment, where the commission
was part with held based on the performance of the investment property that was sold.
And ran into problems.
Did this mean that it was a financial, did they need a financial services license?
Were they selling a derivative?
And there's the innovator, or failed innovator in this case.
So there are, there are lots of little things.
Lots of little things that get in the way and we have this Manichaean idea.
This sort of good versus evil approach to regulation
and I think we should be much more like.
The way Toyota runs its factories, which is continuous
improvement, trying to drive intelligence about the system down
to the coal face to find lots of little things that we can do to do it better.
and, and we should have active innovation facilitation.
Specific areas of regulation, innovation on the NBN.
We talk about telling medicine, well that's gonna get down
to occupational regulation, and a whole bunch of things like that.
Those are the things that we need to go out and, and tackle in a positive way to
make things happen rather than sit there with our
regular dream fact statement and say no new regulation.
And another one and I'll leave it there is drug regulation.
We spend on some estimates $1.3 million on research for
every successful drug and yet 90% of those costs are in Phase III trials.
With safeties frequently not an issue, the issue
is efficacy, and if the issue is efficacy then
we ought to be able to build an institution
where that efficacy can be tested in the marketplace.
And it seems, that's not a complicated idea, and
I think that it's an idea that could be solved.
To the public if we had leaders who understood it and believed
in it, and we would have people beating a path to our doorway.
We'd get copied fairly quickly, in fact, but we would get a lot
of activity here, and it would be great to have for it's own sake.
And for what it could do for our industry.
So, that is what I have to say.
What is there not to like about this kind of thing?
Because if you're wrong.
The you, you haven't wasted any decent amount of money.
You've tried something and you've got things going.
I'll leave it there.
Thank you very much and happy to take questions.