Feb 26, 2024 | AI, Governance
The astonishing ability of the new AI tools to increase productivity relies on being able to ‘learn’ by mining pools of data, then detecting and projecting responses based on statistical outcomes of that mining.
The next step, Generative AI, Generative Artificial Intelligence, is the point at which the artificial systems can reason, much as we do. This happens by making ‘neurological’ connections between apparently disconnected data, depth of domain knowledge and experience, breadth of more general knowledge that provides a ‘thinking canvas’ and context. These add up to instinctive responses we sometimes describe as pure ‘gut feel’.
There is however, a middle point.
‘Deep mind’ is a research unit now owned by Google. Their models evolved as AlphaGo and subsequently AlphaZero. These models cracked the barrier that seemed uncrackable, the ‘4-minute mile’ of computing. By beating the best humans at the complex game of Go, it demonstrated the ability of an algorithm to replicate in some form, the neural networks we have in our brains. In short, it can learn from its own experience, not reliant on outside data.
Crossing this Rubicon opens whole new territories to be explored.
It is in effect a ‘rolling probability’ calculation, each step using an estimation of the outcome of the previous calculation to deliver an adjusted outcome, in an ongoing process.
This is how we learn: from our experience.
As a kid I remember my younger cousin crawling towards a campfire surrounded by rocks. The immediate response of most was to grab him to prevent him getting burnt. However, my aunt stopped us, pointing out he would not be badly hurt by the mildly heated rocks surrounding the fire. However, when he touched a heated rock, it would create a memory-response loop that connected the fire to a modest hurt, thus ensuring he would automatically adjust his behaviour, and not go near another fire.
That incident stuck in my memory, and it reflects the way these AI tools are evolving rapidly towards ‘thinking’.
The dystopian view is that such developments over a few decades will see the machines take over. I prefer to think that we humans will find a way, as we always have, to overcome such threats. I guess my great grandchildren might know the right answer.
The header was created with help from DALL-E in about 3 minutes using a short series of prompts.
E&OE: A few hours after posting this post, I stumbled across this post on Medium that might bring forward the passing of the Turing test by a machine back into my lifetime. It records the evolution and current state of Googles 1.5 Pro tool, claiming it is to Current ChatGPT4 what a Model T is to a Ferrari.
The pace of change is astonishing, logarithmic, which makes it hard to comprehend by normal people..
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Jul 10, 2023 | Change, Strategy
As a kid in the sixties, some of my friends had extensive record collections, mostly albums, but also singles of the ‘hits’ from albums. The Beatles dominated, Sgt Pepper’s Lonely Hearts Club Band selling millions of copies when released in 1967, and was still selling millions into the 70’s.
In 1963 Phillips introduced the compact cassette, portable, and it offered the choices of fast forward and replay. I can remember carefully taping favourite songs from the radio to make personalised ‘playlists’. Sales built rapidly, then took off when the Sony Walkman was introduced in the early 80’s.
Meanwhile, Philips had been developing the CD, born in their labs in 1974, and by 2000, held 96% of all sales of recorded music.
Again, parallel development was happening, and the digital audio format called MP3 was born in the late 90’s. This format enabled the conversion of music into a digital file that could be shared. Up popped Napster and similar sites, from which you could download music for free, in breach of copyright, but free.
Meanwhile Apple had made MP3 players sexy by putting ‘A thousand songs in your pocket’ with the iPod. The music industry, tightly held by a small number of large corporations sued, and won, but it was a pyrrhic victory, as Pandoras music box had been opened. As a side note, the sight of an industry body suing to ensure that their product was not distributed is a touch unusual.
Then along came Apple, again, with iTunes and its multifunctional devices we still call phones, followed by more streaming devices and services. Spotify changed the face of the industry, again, and the fight became the more traditional marketing fight for your attention, and money
You can follow a similar path with the development of the movie industry, motor cars, aeroplanes, computers, electricity, and many others.
The point is, the seeds of destruction are planted well before the visible disruption occurs. The timelines we typically think about when considering disruptive innovations are much longer when you step back and look at the lead-up changes that prepared the ground for the disruption.
What is happening in your industry that could bite you on the arse?
Apr 5, 2023 | Change, Culture, Innovation
Never before has the need for creativity been more critical.
Never before have set about crushing creativity before it has a chance to bloom more than we do now.
My nephew is dyslectic, always had trouble at school, with teachers, sitting still, and anything that required him to read and write. In a parent-teacher interview when he was about 12, my sister was distraught and angry to hear that her son, who had by then built a computer from bits and pieces, powered by a cobbled together solar panel on the roof, would be lucky to progress beyond being a day labourer.
He was lucky. After scraping into a regional university with a practical focus, he earned a masters degree in electrical engineering, got bored, and went back and did medicine. He is now an ophthalmic surgeon, restoring sight in the footsteps of Fred Hollows.
Had his practical talent not been recognised by an academic with a long life of non-academic experience behind him, my nephew may have continued tinkering in the garage while making his living on a production line. What a waste that would have been.
How many like him have we wasted?
How many like him will we continue to waste as we dose up the kids who cannot sit still in school, or colour between the lines, with Ritalin?
Back in 2008 an executive coach named Wayne Burkin wrote a book called ‘Wide Angle Vision: beat your competition by focussing on Fringe suppliers, Lost customers, and Rogue employees’. The title says it all.
Creativity and the resulting change does not come from those who can colour between the lines, always behave in a disciplined manner, are prepared to do as they are told at all times. It comes from the outliers, the originals, the rebels, as Steve Jobs noted, those who ‘Think Different’.
Seth Godin’s remarkable essay introducing us to the ‘Purple Cow’ resonates even more now than when it was written back in 2003. Paragraphs 5 and 6 should be reproduced and stuck on every wall of every room that ever has a student of any kind in it, and every office of anyone seeking to be a leader.
Never have we needed those who think different to have their hands on the wheel of the companies and institutions that together make up the economy, and will shape our kids futures more than we do currently.
Header cartoon courtesy of gapinvoid.com
Dec 19, 2022 | Change, Innovation
It has been a busy year, the pace of change keeps accelerating, the need to run always faster just to keep up is absolute. Therefore, the pace of failure is also accelerating, the lives of businesses getting progressively shorter, from the corner store to massive multinationals. They emerge, flower, then disappear, either by being taken over in some way, or just doing an ‘FTX‘ and exploding in spectacular fashion after a life counted in months.
In November, the newest, shiniest thing ever, hit the spotlight.
ChatGPT.
The all singing, all dancing AI system that like all previous new shiny things will change everything. The hype is enormous, and if only some of the promises made are fulfilled, it is truly a step-change, but we have heard it all before.
For those not tuned in, ChatGPT is to the ‘chatbot’ we seem to be meeting whenever we want to communicate with an insurance company, bank, or internet provider, as a go-cart is to a formula 1 car. A sailing dinghy to a 12 meter foil catamaran.
This thing can keep an every-day conversation going, write books, code, explain quantum mechanics to Einstein, beat a line-up of Go grandmasters while sleeping, and the scribblers of blog posts like me, are now utterly redundant. In short, it communicates in natural language, with natural and personalised nuances, backed up by the resources of the web, integrated into a conversation in real time.
Absolutely liberating, or absolutely scary, take your pick.
HAL (Heuristically programmed Algorithmic computer) the product of Arthur C. Clarke’s vivid and futuristic imagination, and star of the 1968 film ‘2001: A Space Odyssey’, is here.
Maybe.
Assuming at least some of the hype is real, and it certainly seems to be, we have another round of introspection about the role of humans in our commercial and creative world about to become a serious conversation. Get ready for it in 2023.
UPdate Dec 27th.
The hype is real. HAL has come home, and seems to be taking charge.
Yesterday afternoon, accompanies by a few post Xmas sherbets, a couple of us (me a business strategist, a scientist, a specialist doctor, and a writer), did some Chat-wrangling to test out the system. Across a range of domains, we were blown away with the capabilities. It is clear that teaching institutions suddenly have a huge challenge to face, as this thing can produce in a few minutes a highly credible response to complex challenges, including references used. That is only the start to the downsides, and while the eminent group of post Xmas testers did begin to see a few upsides, on balance, ChatGPT has opened a door previously locked tightly shut.
Post script January 10, 2023. Chat GPT is only one of the AI tools coming at us. The speed of innovation is way beyoind the capability of regulators to even understand this stuff, let alone regulate the output. This is an informed conversation on ‘Regenerative AI’ and what it is bringing to the table. If you are tbinking about the implications, it is worth a look.
Second Post script January 15, 2023. Commentators everywhere are waking up to the challenge suddenly in front of our education system and educators. ChatGPT has removed the easy ‘tick and flick’ essay marking, from primary school to post graduate levels. As with all technology, it will only become more sophisticated. A final exam in my degree, 50 years ago, was a Q&A exercise. I had plenty of notice of the format, conducted in the home of the professor where he had a wide ‘Gone in the Wind’ type staircase. He started with some questions, and we had a conversation, all the time him indicating I should back up the staircase, or come down. To pass, I had to get to the floor, to fail, I only had to reach the top of the stairs. Eventually, after a nerve wracking 40 minutes or so I reached the floor, and he gave me a congratulatory whack on the back, and a sherry. (hate sherry). The knowledge that this was the format had forced me to think deeply about the subject, and read widely, as well as engaging the Professor several time during the semester to clarify the ambiguities present. At the time I recognised the value, but it was unusual to say the least, and an entirely different approach to teaching. This post from Seth Godin on the way forward for teaching, implies my professor was only 50 years ahead of his time, and me, a guinea pig.
Third Post script Jan 18, 2023. it just keep ‘getting better’ as more is understood about this tool. This article from a medical journal has ChatGPT passing the exams to become a doctor. This has implications both good and bad. For example, the ability to access data base records of bone trauma, malignant growth, could make diagnosis logarithmically more accurate, but I am not so sure about that rectal exam.
These tools have also created a greater opportunity for cybercriminals to get into our collective pockets. This is a truly scary development.
Fourth Post script. Feb 19, 2023. ‘Where to from here’ is the question everyone is asking themselves, and others. I am sure it is keeping Google executives up at night as they see their Golden Goose cash machine strangled by a Chatbot enabled Bing, and probably others finding a crack in the fortress wall.
This post ‘when the internet becomes Chat- People vs Algorithms’ takes the best shot at answering that question I have seen. Hat tip to Mitch Joel who pointed it out to me.
This second post I found, also on Feb 19 explains the workings of ChatGPT, and presumbaly its emerging competiotors. We need to understand this, as the technology is being integrated into our lives at a rate logarithmically faster than anything I have never seen before. How ChatGPT Works: The Model Behind The Bot – Towards Data Science
Fifth Post script Feb 26, 2023. This article courtesy of Stephen Wolfram is a long, but detailed laymans descciption of the workings of ChatGPT, and all other ‘Large Language Models’ that are around, and in development. It is well worth your time, assuming you are one of those who is motivated to understand how stuff works. I am sure there will be many more, between them we digital novices (*like me) might gather enough understanding to make sense when we pontificate.
Sixth Post script March 19, 2023. ChatGPT4 was released to the world on Monday (March 13, 2023). The blurb tells us it is a step change ahead of the previous version, which we are only just starting to come to grips with.
Open AI is as the name implies, open source. Therefore there has been a tsunami of apps coming at us that do stuff that was impossible a year ago, and that tsunami is a ripple compared to what is coming.
Take for example the ability to generate an AI video during a coffee break with no more skill than most of us have already. Synthesia.io can do it for us. The utility of this capability is enormous. It offers the opportunity to save time and money while delivering everything from a public presentation to internal training and induction videos, email list ‘welcomes’, and product demos, better than anything possible until now.
In this short video Seth Godin displays an AI capability that enables characters in a movie to say what you want them to say, and have their lips and movements be exactly synchronised. I understand this is currently available to ‘Hollywood’ producers for bags of money, but inevitably will be open to the rest of us for a few dollars in coming weeks.
The list goes on, and will only grow exponentially as some of the most creative people in the world set their minds to leveraging this stuff of Arthur C. Clarkes imagination.
Seventh Post script. March 25, 2023. The ‘Chatbot’ war is joined. OpenAI has launched ChatGPT4 as a subscription service, and Google has re-released ‘Bard’ after the clusterf**k that was the first try a few weeks ago. This article examines the differances between ChatGPT3 and 4, as well as having some very useful links that give answers to other question in this space that you may have.
Frankly, If you are not thinking about the exponentially accelerating rate of change being driven by this technology, and the ways you can use it, you will become increasingly unable to compete. Like any investment, it takes an ‘upfront’ payment and some risk to put yourself in a position where you can reap a return.
8Th Post script March 29, 2023. This world of AI is regenerating itself at a compounding speed. Scary stuff, or as exciting as anything that has ever happened? depends on your point of view. This video which summarises the latest AI developments is instructive. Hat-tip to Steve Aspey for pointing me to it.
9th post script. April 4, 2023. A further very useful explanation of how ChatGPT works from Stephen Wolfram. It is becoming clearer by the day that we have reached an inflection point, and there is no going back. Currently there is a debate in the US sponsored by several digital luminaries, calling for a 6 month halt in development, concerned that the tech is running too far ahead of the moral understanding we have. Great idea if everyone (Russia, China, north Korea, et al) agreed, but in the absence of that agreement, not a good idea. Why give them a head start in the race of the decade? A YouTube addition to this PS. Howard Weiner pointed out to me that I missed the Youtube explanations of the way this technology works. I learn visually, so the videos have been remarkably helpful in building understanding. Long way to go yet!
10th Post Script April 6, 2023. This space is evolving with lightning speed as we figure out how large language Models (LLM’s) will impact our lives. What about ‘Knowledge Graphs?. Here is an ;interview researcher Kurt Cagle conducted with Chat GPT4. It is not dystopian, but getting there. It is well worth a read, if nothing else, it should spark some thoughts about how you might be affected.
11th Post Script. April 9, 2023. ‘What is next? seems to be a fair question. Who knows should be a fair answer. One of those who thinks deeply about these things then published his thoughts is Christopher Penn. In this piece, after offering a bit of history, he forecasts that LLM’s will actually get smaller, after reaching a gargantuan size, too big for any but the largest installations to process. This makes sense and happens every time in any evolutionary environment. Things get big, then they progressively get smaller and more focussed, the specialist outperforming the generalist at domain specific tasks.
I think he is right, what do you think?
12th Post script. April 20, 2023 AI comes to imagery. You might expect Canva, and other established players to rapidly incorporate AI into their offerings, and this is happening. In addition, there has been a rash of start-ups and SME’s that have led the goldrush. This twitter thread I stumbled across has some mind-boggling examples of AI driven imagery. I sent it to a mate who is a professional photographer, and he just shook his head, and wondered where the next arrow in his back was going to come from.
13th Post script. April 26, 2023. This is getting really interesting!! The pace of innovation is just astonishing. Two things this morning, the first a finished ad, made entirely with AI. https://tinyurl.com/39nftyvaWhatever you think of the ad, making it entirely from AI opens up extraordinary budget productivity increases for marketers seeking ‘Activation’ ads. Then Steve Aspey sent me this video, which is an A-Z on how to make such an ad.https://www.youtube.com/watch?v=h3AhYJ8YVss.
14th Post script May 1, 2023
Academics are inclined to moan, and set out to ban AI tools in exams, thus protecting their territory. This post from Visual Capitalist shows exactly why exams as we all knew them to date, are now utterly redundant.
My brain is hurting.
15th Post script May 10, 2023.
It is fair to be wondering where this is all headed. Clearly, at least to me, AI will impact every person, and every job on the planet more quickly than most would forecast. This in one path, probably one of many, from someone in a position to know. https://www.youtube.com/watch?v=gMsQO5u7-NQ
16th Post script May 18, 2023
Some may have seen references to Geoffrey Hinton stepping down from his role at Google in order to more freely discuss the nature and role of AI in our lives. Hinton is widely known as the ‘father of AI’. His views are not the noisy, superficial opinions that have sprouted like mushrooms after rain since ChatGPT was launched on the world in November last year. They are the views of a polymath who has been researching this area for 30 years, and who trained one of the founders of OpenAI, the ‘startup’ that created ChatGPT.
This article from ‘The Conversation’ examines Hinton’s view that we should not think about AI as a substitute to our own cognitive ability, but as a different sort of intelligence that should be complementary to our own, seeking solutions to problems from a different perspective than we humans bring.
17th Post script. May 25, 2003.
The creative and productivity upsides of regenerative AI are emerging, about as fast as the downsides. The potential for identity theft enabled by this technology is truly scary. I have been following the path of the AI revolution since I first stumbled across ChatGPT in early December last year. I first asked myself the obvious question for us all: ‘Will this take my job’. Clearly the answer in many cases is Yes. This TED talk conversation shows just how easy it will become to be someone else.
Truly scary stuff, evolving at lightening speed. Our regulators have not got their heads around social media platforms despite the evidence of the necessity in the 15 years since they became ubiquitous. We cannot expect anything different this time, which means the world as we know it has changed into a ‘hunger games’ type competition, with us as the prize.
18th Post script June 10, 2023.
I continue to hear, in almost equal measure, those who give almost spiritual power to AI, and those who catastrophise it as the coming end of the world. I sit firmly on the fence, seeing huge benefit to us all, as well as the downsides when (not if) bad people are able to harness the power of AI for their purposes at the expense of the rest of us. balance is required. This post by Marc Andreesson who has some credibility in the field, is firmly in the ‘Pro AI’ team. it is a cogent argument for AI, and worth your time to read.
On the ‘Con AI’ team is a bunch of equally qualified experts who hold the view that the machines will ‘evolve’ to such a point where they do get us. The dystopian movies are just simple forecasts. Firmly in this camp is Mo Gawdat, the former boss cocky at Google X. In this podcast, he paints a picture that might stop millennials having children.
During the week just past, Industry Minister Ed Husic released a discussion paper for ‘Safe and responsible AI’. I am very glad the government has twigged that there is something going on here, and we need to be discussing it, but the reality is that Australia is just a flea on the dogs tail. The US and China will set the rules of the game, and there is no way in my view that they will be compatible. The US is engaged in a huge new grab for position in an industry that will determine the future, and the cash that goes with it. China is all about control, they will exercise it irrespective of what anyone else thinks. Strap in!!
19th Post script August 16, 2023
Into my inbox comes this long post from Ben Evans, which answers the question I first asked way back in December last year when ChatGPT3 burst onto the scene: Will AI take your job? The answer is ‘Yes, it might, but there will be many more jobs created as a result.
The post details the history of labour saving devices from the introduction of coal powered steam through to this current AI revolution. Every time, the introduction of new technology results in an improvement in living standards and the number and type of jobs that emerge. There is no reason to believe this time it will be any different, it is just that we have great trouble doing the forecasting of where those jobs will be. That job requires hindsight.
20th and last Post script. November 7, 2023.
It is two weeks short of a year since ChatGPT was launched on November 30, 2022. It seems appropriate to mark that anniversary with a final PS on this post. Yesterday Chat announced the launch of GPT’s a set of tools that will enable development of bots without any code. To me, it is the first step in the logical sequence of development of AI into tools that car customised to meet the needs of individual use cases. I am sure others will follow, indeed they may be already there, and i have just not stumbled across them.
In any event, the explosion of AI, and we are only in its early stages, the ‘Model T’ era of AI, has already changed lives, and that pace will only accelerate. Good luck managing that!!
Post Script. January 14, 2024.
I had not meant to add to this post, now over a year old. However, the question of the degree to which AI is just another digital bubble has to be asked, and to ask it, who better than Cory Doctorow?
Cory Doctorow: What Kind of Bubble is AI?
May 9, 2022 | Governance, rant
Following is the full version of the edited remarks published in Australian Manufacturing on April 29. I did the editing, as the following was way too long for the publication.
What is blindingly absent from this election campaign, and politics in this country is any recognition that an economy is a system. No part of the economy acts alone, each part depends in some way on every other part. They are interdependent. The entire system is the sum of the interdependent parts and depends on all the parts playing their individual role.
An economy is like a car, which we sadly no longer produce in this country. No part of a car can move you from point A to point B. It is only when all the parts are fitted together, acting in concert, that it has the ability to move. One part fails, and the rest underperforms at best, fails completely at worst.
We seem to think that we can add a dash of pork here, and a bit of pepper over there in an effort to buy votes, and bingo, all will be well. Utter nonsense.
What we are seeing currently is a confected tactical battle of hollow words backed by the opportunity to spend public money chasing the largess of incumbent government. What we need is a strategic conversation, where a wide range of very tough questions are asked, followed by even tougher choices. We need to have an informed and rational national conversation about those questions, and the resulting choices that must be made.
Nobel winner Daniel Kahneman coined the term ‘prospect theory’ which describes the way people value the prospect of gains and losses very differently. The pain felt by an immediate loss compared to the benefits that come from a long-term gain is multiplied many times. The reverse side of the coin is loss aversion, a remarkably powerful psychological impulse. We value the loss of something we already have far more highly than the value of something we may have in the future.
Both political sides use these twin drivers ruthlessly in an attempt to shape behaviour at the ballot box. It is a reasonable thing to do, when coupled with integrity and transparency, both notable only by their omission.
What we are seeing is the expenditure of the financial and intellectual capital of the nation, investment decisions left in the hands of institutions that we no longer trust based on the behaviour over the last 30 years.
What we need is for our leaders to build the political capital to be able to make bold decisions that change the economic and social landscape of the country.
The last time there was a genuine investment of political capital that could later be recovered, was when Howard risked his position when went to the 1998 election with the GST as part of his program.
Following are a few of what I believe to be the key factors which face the nation, but about which we will hear little, or nothing during this pork led competition for our votes.
Income Vs Expenditure. Our expenditure exceeds our income. This is not a blip in the graph, it is a long-term structural weakness. If Australia was a business, it would be broke. The analogy to the household budget is not an accurate one as the government has control of the money supply, but nevertheless, the piper must be paid. There is no sign of any acknowledgement of the debt, despite the current government using deficits as a stick to beat the labour party for as long as I can remember. In addition, there are none of the preparations necessary to build the productive capacity of the economy to repay this debt, beyond wishful thinking and modelling that uses questionable assumptions.
Education. We need to consider education in the broadest terms, not just the stuff you need to know to pass an exam, but the understanding to break a situation down into is component parts. First principals if you like, define, and understand the problem, generate possible solutions, test and learn, then implement and review continuously. Education is a multigenerational undertaking, not just something you throw money at and hope.
You do not need a degree to be smart. Some of the smartest people I know do not have degrees, and several others with multiple degrees are failing as baristas.
Our system has been bastardised over the years to accommodate fiscal and ideological demands. The result is a distortion in the allocation of resources and the increasing polarisation of opportunity for Australian kids. This is in addition to the conversion of education into a privatised profit centre. Now we have qualifications for sale, and an education system dependent on those sales for survival.
If we are to genuinely address the opportunities of the future, the State/Federal squabbles have to be sorted, and resources allocated to deliver that equality of opportunity.
The largely discarded for political reasons Gonski report, now 11 years old, provided a least a starting point for the school system. A similar exercise needs to be done for the tertiary sector, recognising that technical and academic education combined will deliver the manufacturing and operational skills needed for future productivity improvement throughout the economy.
There also has to be the political will to implement, without which, we will continue to stagnate.
Climate change. The science has been in for 30 years, it is a generational challenge, and should not be a political football tied to short term politics in a few seats. Despite the scathing third report by the IPCC (International Panel on Climate Change) released the week prior to the election being called, the silence has been deafening. This is despite increased recognition of the impact of Climate change by the voters. Meanwhile, there are a cohort of independents threatening mainly formerly safe Liberal seats whose priority is climate change, along with integrity in public life.
We need to be thinking differently about the term ‘climate change’. It is too narrow a term, implying we just need to be concerned about the impact of CO2 on weather, and the human and capital impacts of those changes. Instead, we need to be thinking about the challenge more holistically. We humans are just a small part of the ecosystem of the planet. For millennia we had no appreciable impact in the balance between what we took out, and what nature was able to put back. Suddenly, that changed, and we now take out of the planets ecosystem far more than the capacity of the system to replace it.
There is nothing we do that does not come from nature. The oxygen we breathe the water we drink, the food we eat, the materials we use, all come from nature. We are part of the planets ecosystem, whether we like it or not, and we are consuming the resources of the ecosystem at an unsustainable rate. Think of it as you would a balance sheet. On one side you have assets, on the other liabilities and equity. When your assets grow faster than your liabilities, you add to the store of equity. When it is the reverse, you deplete equity. The tipping point is when your equity is gone, and you can no longer sustain the difference between the rate in increase of liabilities over the production of assets. At that point you are bankrupt. We humans have been depleting the assets of the planet unsustainably since the beginning of the industrial revolution, and the rate at which the depletion is happening is increasing. At some point in time, the music will stop, and subsequent generations will inherit an unwinnable challenge.
Apolitical Policy advice. The politicisation of the public service is a problem. The government does not get frank and detailed policy advice anymore. Instead, they are paying consultants, who are in effect paid to tell the government what it wants to hear in relation to policy, while the public service has been relegated to the role of implementers.
Expenditure Productivity. Fiscal debate, such as it is, has been reduced to how much has been spent, with no reference to the return for that spending. We need to increase productivity of public revenues radically or the reduced number of taxpayers in future will be unable to shoulder the burden of an ageing population. The increased demands for the government to look after people down to the minor details which should list as ‘personal responsibility’ will become overwhelming. Promising no more taxes is not sustainable unless coupled with explanations of how the productivity of the current expenditure will be radically increased.
Governance. The parties cannot rule themselves, how on earth can we, the electors believe that they can deliver for the country. Besides, to use Paul Keatings immortal phrase, they are ‘unrepresentative swill’. Both major parties have about 60k members. Such small and skewed numbers are hardly a representative sample from which the political leadership of the place should be drawn. Instead of having people in parliament who genuinely wish to contribute, who have proven themselves worthy elsewhere in the economy, we now have politics as a career. Smart youngsters with degrees, mostly law, getting jobs as political staffers of various types, and progressing by proving only that they are effective political mechanics to the point where they are endorsed as candidates, and they keep trying until they land a spot. Alternatively, they can be shovelled into a range of highly paid roles that are appointed by political fiat. No experience beyond politics required.
As a director of companies, I am subject to the Corporations Act 2001. The act amongst other things, outlines the obligations of directors to exercise their duties in good faith, and in the best interests of the shareholders. In other words, do not tell lies, deliberately mislead, or act in a way that is not in the shareholders best interests. Both sides of the house fail on all counts. If they were also subject to the provisions of the Corporations act, half of them would be holidaying at Long Bay.
A further pressure on the governance performance of current institutions that has long term impacts on the economy is in the management of R&D expenditure. Our federated and short-term driven system works against the focus necessary to deliver strategic outcomes. Billions of dollars are thrown at the wall of grant programs, most of which do not deliver outcomes that add to any sort of ‘vision’ for the Australia we would like to hand to our grandchildren.
CSIRO used to be a relatively apolitical and deep reservoir of scientific capability that was able to collaborate and co-ordinate across sectors and around the nation. That was before it was progressively gutted and politicised over the last 30 years.
The Labour party has just announced as part of their election platform a new defence research agency similar to the successful American DARPA model. It would make more sense to re-fund and expand the remit of CSIRO, rather than starting again and risking duplication and turf wars.
Institutional integrity. We should not need an integrity commission, but sadly we do, desperately. It would appear to the casual observer that the adage that power corrupts, and absolute power corrupts absolutely is at work. It needs to stop, so the public can have some level of confidence that the taxes they pay are not being wasted, and worse, diverted.
Democracies only work when there is trust in the institutions that run them, and by inference, the people in those institutions are trustworthy. The fact that trust is so low is an alarming indicator, something the government should be addressing, both by its own behaviour, and by increasing the level of transparency and accountability. Unfortunately, the perception of the behaviour of governments is very low, and the refusal of the government to sensibly address the question of an integrity commission with teeth makes us assume the worst. Remember the 26 times the current government voted against a royal commission into the banking industry? When dragged kicking and screaming to hold it, the depth of the avaricious and morally bankrupt behaviour revealed was breathtaking.
The end of cheap money. The inflation figures released on April 27th put the annualised inflation rate at 5.1%, up from 3.5% at the end of the December quarter last year. While it may bounce around given the volatility of fuel and food prices, the trend is very clear, and the current election driven lucky dip of spending promises will not help.
No matter the rhetoric, and short-term giveaways that come with an election campaign, Australia is in for a rocky ride, and it will not matter who wins on May 21, the impact will be felt in every corner of the economy, and by every Australian. Most currently in parliament, and those who realistically aspire to be there after May 21 have not been in a management role in an inflationary surge. That is a very dangerous situation, it is easy to make the wrong call through inexperience.
Inflation led cost cutting
When you are in the red, as we are, the temptation is always to cut the discretionary spending. In a corporation that leads to reduced advertising, not replacing employees who leave, sell and lease back assets, in other words, cashing in on the things that will generate the cash in the future. Governments struggle with this as so much of their spending is baked in, and subject to the swings of the economic cycle. Nevertheless, we should be increasing what we spend on education, R&D, and those future cash generators, and aggressively look to reduce institutionalised waste to fund the increases. Unfortunately, this leads to the difficult choice of accepting short term pain in the expectation of long-term gain, not usually a politically palatable choice.
Cyclic mismatch. Election cycles do not match with those that run the rest of our lives. Generations come and go, scientific discovery to product commercialisation usually takes 20 years or more, the constitution has had only 8 amendments since federation in 1901, the last successful one in 1977 relating to the relatively benign question of the retirement age of judges. The world has changed a bit since 1977, and our strategic framework is almost unchanged after 121 years. We must wonder if the constitution is still fit for purpose. There is not much any government can do about this beyond acknowledging the reality and being prepared to invest in the long-term health of the economy by building intellectual, social, and educational resilience. However, we should be able to have an informed debate about the nature and limitations of our ‘institutional guardrail” the constitution, and be prepared to make changes as necessary to meet the challenges of the 21st century
Header cartoon credit: gapingvoid.com
