Fund R&D, then maybe universities can support industry

Industry Minister Ian Macfarlane let his discretion slip this week in a speech to the Queensland Media Club when foreshadowing an upcoming report on research funding and competition. Distancing himself from the awarding of funding based on prior researcher publications, he signalled a distinctly different approach that is likely to inform policy in the near future.

Noting that research grant funding “can work better”, he suggested that:

the current arrangements are based on the number of papers [researchers] produce, which is great if you’re into producing papers, but I’m into producing jobs and producing products that are commercialised from an IP that a scientist or researcher might have developed.

It cannot be denied that the minister has a point – some academics, when they write, primarily have an audience of other academics in mind. This is probably most true in the social sciences, and increasingly less true in the physical and medical sciences. However, to suggest that this phenomenon is prevalent – in any field – is simply overstating the point.

In other respects, the minister misses the point. Current arrangements acknowledge and reward researchers who garner industry buy-in (through the Australian Research Council (ARC) Linkage Projects, for example) and those that address defined national research priorities. Generally, the experts at the ARC and National Health and Medical Research Council (NHMRC) finally decide which applications are funded (prior, that is, to any ministerial veto). They would be unlikely to fund any research that lacks relevant application.

More broadly, the minister’s over-simplification of the current arrangements and his linking of patents and job creation (in the absence of more basic forms of research) does not square with much that we know about research, innovation, economic growth and job creation.

Australia among its peers

The minister has in mind, one suspects, a more innovative economy where research spurs innovation and the creation of well-paid jobs for highly skilled workers. As a vision for Australia, such an approach has much to offer.

Australia certainly lags the OECD in relation to patents, but also in relation to aggregate research and development spending. Notable among OECD nations with higher aggregate R&D spending are the Nordic nations of Finland and Sweden and other nations including Israel and Switzerland. Their governments have long adopted an activist industry policy to support high-technology industry emergence.

Common among all of these exemplar nations is a strong commitment to government investment in research and development. This commitment is sorely lacking in Australia.

Industries in other countries have more involvement with university researchers – but they also have higher R&D spending.

The locale of innovation

Most international research that examines the linking of basic research, applied (commercial) research and job creation adopts a number of key assumptions. An exemplar of such work is the Triple Helix model developed by Etzkowicz and Leyersdorf. This approach emphasises the central role of universities as hosts for both pure and applied research. Indeed, it is the exploratory elements of puzzle solving that drive the essential creativity that underlies all innovation.

The US is often seen as an exemplar of market-facing university research. Yet the massive historical subsidies for pure research in materials science and information technology – initiated to assist in the development of defence-sector innovations – have created important spin-offs that today form the basis of much of the US high-technology sector.

In both the European and US contexts, universities that harbour pure researchers often form the anchor of important industrial districts. It is in pure research that academics and applied scientists develop the skills that they will later apply to develop innovations. It is impossible to sustain the suggestion that applied research and patenting can occur in the absence of the technical literacy that pure research engenders.

Indeed, if the literature on innovation districts has a common theme it is that close relationships develop between inventors of knowledge, entrepreneurs who commercialise that knowledge and institutions that facilitate commercialisation. The notion that you can skip to the commercialisation stage in the absence of a supportive knowledge base is nonsense.

Doing more with less?

The big issue, regardless of how the research pie is sliced, relates to the ongoing retreat of the Commonwealth from adequate funding of research – in universities, at the CSIRO and through funding agencies.

The processes of cutting funding started under the previous Labor government. The cuts have continued under the Coalition with gusto.

Research tends to be seen as a soft target when tough cuts are required. Researchers’ contracts simply are not renewed. They head off to other work, losing for the nation the accumulated capabilities that have cost hundreds of thousands of dollars to develop.

If the minister is serious about creating jobs, his leadership is needed to ensure that these cuts are reversed and Australian investment in R&D increases. In the current political context, researchers should not hold their breath on this.

The Conversation

John Rice is employed by Griffith University and has received Category 1 funding from the ARC, ALTC and CWL. He is a member of the Australian Labor Party and the NTEU.

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Wenco wins Whitehaven Coal fleet management contract

Wenco International Mining Systems has won the fleet management contract for Whitehaven Coal’s Maules Creek mine.

The mine is currently in a major ramp up period, and only last month advertised for 450 new workers for the operation

Despite a decision to stop clearing the Leard State Forest in winter, Whitehaven Coal said its $767 million project is nearly halfway complete, and on track to produce first coal in March 2015.

Wenco’s fleet management system will be installed on all vehicles at the coal mine, allowing for real time operating data to be provided on site, as well as maintenance information.

In addition to the main system Whitehaven will also use Wenco’s Maintenance Monitor and the MobileST dispatching systems, as well as BenchManager for the mine’s earthmoving operations.

Commenting on the win Wenco Systems and Hitachi Construction Machinery Australia sales manager Rod Taylor stated Wenco is “excited to be in business with Whitehaven Coal. They play an important role in Australia’s mining industry and we look forward to getting on board with them”.

This isn’t the first major win for Wenco in Australia.

The Meandu coal mine has already begun implementing the fleet management systems at its site in line with Hitachi’s trial of a fully automated truck fleet at the mine.

The Roy Hill iron ore mega mine also implemented 34 Wenco units across the mine’s shovel, truck, and dozer fleet, with additional units likely to be installed as production increases.

Once at full production, Maules Creek will produce 13 million tonnes annually, of which 10.5 million tonnes will be saleable coal, and is estimated to pay $6.5 billion in royalties and corporate tax over the first 21 years of its life. 

Caltex to launch new diesel fuel products

Caltex is launching new Australian-developed diesel products in to the Hunter Valley mining region.

It comes on the back of Caltex upgrade its Newcastle terminal, which has “enabled customers access to new fuel products that would help address a number of maintenance and performance challenges known to be contributing to higher costs of maintaining their diesel fleets,” the company said.

According to Caltex general manger marketing Bruce Rosengarten, the new packages are focused on boosting engine power output and reducing fuel consumption.

“Caltex has responded to these challenges by introducing the Caltex Tec Diesel Advantage, a package that includes three new advanced diesel products along wit fuel filtering processes, site-specific engineering solutions, and a fuel saving low viscosity engine oil,” Rosengarten said.

Independent tests, carried out by Orbital Corporation and designed to replicate Australian conditions, showed the packages provided increased power output and fuel economy savings through improvements to injector cleanliness, he added.

In addition to this a new diesel filtration system has been installed at the Newcastle terminal to remove more microscopic abrasive contamination compared to conventional diesel fuel alone.

Kerman win Sino iron ore contract

Kerman Contracting has won a $146 million contract for works at Sino Iron’s Cape Preston operation.

The contract will provide structural, mechanical, piping, electrical, and commissioning works, with construction to begin this month.

Scope of the works include the AG mill, pebble crushers, and stockpile tunnel areas for processing lines 3 to 6 at the Sino Iron project.

“By installing 15 000 tonnes of structural steel, 800 pieces of mechanical equipment, 40 km of pipe, and 80 km of cable, Kerman will contribute significantly to complete the remaining four processing lines at Sino Iron,” Kerman project director Klaus Hartmann said.

Kerman is already working on site at Sino, delivering a $54 million project which includes civil and concrete works for processing lines 3 to 6. 

It also just completed the $13 million installation works at the AG mill ring motor for line two, ahead of schedule.

Pacific National welcomes five new locomotives

Pacific National has taken delivery of five new 88 Class locomotives for its Queensland coal haulage operations.

The locos, which were designed and built by CSR Qishuyan in China, have been purpose-built for the Queensland heavy haul coal rail sector.

According to Asciano, the holding company for Pacific National, key features of the new coal haulage 88 Class locomotives include an MTU turbocharged diesel engine with Stage IIIA emissions compliance; ABB traction alternators and AC traction control as well as an ABB solid state auxiliary power supply; a Voith cooling system; NYAB electronically controlled pneumatic brakes; Faiveley air compressors; Simmico Queensland Train Radio and communications equipment; and Wabtec event recorders and wastewater treatment systems.

“To ensure the new locomotives meet the functional requirements of Australian operations, Pacific National employees in Gracemere, Queensland were consulted on the cabin design,” the company said.

“The procurement model for the new 88 class locomotive has achieved a cost effective solution that will help drive a more efficient haulage operation for Pacific National in Queensland now and into the future,”  Paul Griffin, the general manager of Queensland for Pacific National, said.

The new locomotives left Shanghai in February and arrived in Gladstone in March. They have now cleared customs and been relocated to Pacific National’s maintenance facilities for performance and safety testing.

Defeating dust on site

The issue of dust is a constant one on mine sites, whether they be open cut or underground, the problem is the same.

Airborne dust presents a major issue on coal mines, which are often located to close to local communities.Late last year the New South Wales Environment Protection Authority’s Dust Stop Program was developed to enforce new standards on dust control, aiming to achieve an 80 per cent dust reduction by this month.

The program required all 30 of NSW’s open cut coal mines to assess their dust control plans including minimising haul road emissions and enforcing poor weather operation standards.

“Mine haul roads are generally dirt roads and sustain continuous heavy vehicle traffic,” EPA acting chief executive Mark Gifford said.

“Dust generated from haul roads within the mines is the biggest source of fine dust particles on most mine sites, contributing about 40 per cent of total emissions.

“When it is windy and dry, this [overburden] dust is more likely to leave mine sites, so tighter control is needed at these times,” Gifford said.

Despite being in practice for 12 months, miners are still facing air quality management issues. In July BHP Billiton’s Mt Arthur coal mine was fined $3000 for a failure to comply with conditions of approval after excessive dust levels.

Departmental response took place within half an hour of the offence being reported, in time for an officer to witness trucks dumping overburden at an elevated level in windy conditions.

Shire of Muswellbrook mayor Martin Rush told Australian Mining that environmental planning conditions requiring the use of best practice techniques to minimise the harmful emission of dust “are not there to decorate mining consents”.

“The conditions are real: They are real because there is no safe level of dust emissions and reducing dust is therefore in everyone’s interest,” he said.

With this in mind, Mantek has developed Settler, a wetting and dust control product that compacts and settles dust of almost any surface.

The product works by reducing the surface tension in soil to allow for faster and deeper water adsorption, which in turn reduces and settles dust to provide better air quality management on site.

“Better dirt compaction eliminated shifting during machinery movement and blasting, which reduces airborne dust,” the company added. 

A heated issue: Vehicle fire suppression systems

Flammable liquids, combustible materials, and extremely hot machinery combine to make the mine site a veritable powder keg.

It’s a simple fact that combustible dust and super-heated metal and motors don’t mix.

Unfortunately these two things meet face to face on a constant basis, creating the potential for a dangerous incident.

This is especially the case for mining vehicles and non-road mobile equipment on sites, and adding to this is the remote nature of many mine sites.

Protecting your workers and equipment is not just a financial and regulatory necessity, but also an ethical one.

The best way to fight fires on equipment is to prevent it from occurring in the first place.

With this in mind Tyco Fire Protection Products has developed the ANSUL CHECKFIRE 210 electronic detection and actuation system.

According to Tyco Fire Protection it has been “designed for mining vehicles and non-road mobile equipment, and alerts operators about potential fire hazards and actuates the fire suppression system if a fire occurs, helping to protect vital assets such as personnel and property operating in extreme environments” such as mining.

CHECKFIRE 210 uses mining specific ANSUL fire suppression systems, including the ANSUL LVS vehicle fire suppression system which uses a wet chemical agent that provides not only fire suppression, but also a cooling effect on superheated vehicle surfaces while at the same time blanketing the fuel and cutting off oxygen to the fire, snuffing out the chance of reflash.

Its A-101 fire suppression system uses FORAY dry chemical agents for Class A,B, and C fires; while its A-101/LVS twin-agent fire suppression system combines both dry and wet agents.

“The CHECKFIRE 210 system will integrate seamlessly with current mining equipment, enabling operators to further strengthen their fire suppression systems with this detection and actuation technology,” Tyco Fire Protection’s director of pre-engineered systems, Mark Neumann, said.

He went on to say “the CHECKFIRE 210 system offers colour-coded, plug and play connectors for easier installation and an isolate feature that enables continuous detection and protection from actuation during maintenance”.

The fire protection system is also equipped with two independent detection circuits for different applications that allow the system to fit specific site hazards and machinery needs such as “single-, two-, and cross-zoned detection and discharge pressure feedback monitoring or alarm only”.

Dual-zone protection allows operators to set the system to monitor two independent zones, ensuring the system only activates when one zone detects a fire.

Cross-zone protection is designed for operators that need to monitor more than one zone at the same time, and causes actuation only when fire affects both the outlined zones.

“The features and enhanced interface are intuitive, which provides ease of use, which is important when a fire situation arises and time is of the essence,” Neumann said.

The system also features supervised plug and play circuits; automatic or manual actuation; an internal reserve power source; a compact display unit with two mounting options to fit machinery design; either linear detection for wider ranging hazard areas or spot thermal detection for targeting specific hazards in smaller areas; continuous system updates; and is FM approved and CE marked. 

Tempo wins Rio Tinto Cape Lambert port expansion contract

Tempo has won an SMP contract for Rio Tinto's Cape Lambert port expansion project.

The $13.4 million contract will see Tempo Australia, through its subsidiary Tempo Construction and Maintenance, provide structural, mechanical, and piping miscellaneous works as well as commissioning support for Rio Tinto's expansion works at the port.

Tempo general manager Daniel Hibbs said the company is "pleased to have been given the opportunity to execute the miscellaneous SMP and commissioning support works at Cape Lambert".

This win is Tempo's first major contract directly with Rio Tinto.

FTA opens Japanese doors for Australian business

When Japanese Prime Minister Shinzo Abe arrives in Australia to talk trade and investment in Canberra and sign a free trade agreement between the two countries, it will kickstart a relationship first formed in 1957.

The Japanese Trade Minister Abe (the current prime minister’s grandfather) signed the Commerce Agreement with John “Black-Jack” McEwen, Australia’s Country Party deputy prime minister and trade minister, that enabled Australia to finally embrace its geography and take commercial advantage of the industrial giant that Japan later became.

Back in 1957, with the memory of the Pacific war still in everyone’s mind, and with cold war tensions afoot, it took great courage to negotiate the deal, and as it turned out, great foresight given Japan’s subsequent economic development.

Now, Abe knows he needs Australia as an economic partner to achieve his current goals to revive Japan’s growth and the Japan-Australia Free Trade Agreement (JAFTA) has plenty on offer for both countries, particularly in agriculture and services.

For its part, Australia has been seeking cuts in tariffs and non-tariff barriers and more openness in Japan’s previously closed rural and services markets for some time, while Japan needs energy security from Australia – particularly in terms of liquefied natural gas (LNG) given stiff competition from both South Korea and China.

But there are a number of other potentials. The first one is foreign direct investment. A more open Japanese economy will give Australian companies better opportunities to work in-market in Japan. According to the Australian Bureau of Statistics (ABS), only 3053 Australian businesses export to Japan (a number that has fallen by over 500 companies since the GFC) and according to Sensis, 14% of all Australian exporting small and medium enterprises (SMEs) sell to Japan.

Fewer than 100 Australian businesses have offices or investments in Japan (compared to over 3000 in China for instance) despite Japan having a long-held position as Australia’s number one export destination until very recently.

Another opportunity is finance. In a paper for the Lowy Institute, Huw McKay and Malcolm Cook point out that Australia and Japan are both regional leaders when it comes to the size and sophistication of their financial markets. China may be growing but their market is still in its early stages of development. Particularly as there have been frequent calls for reform of the world’s major economic institutions, Japan and Australia could play a key leadership role in financial issues facing the Asia-Pacific region.

While Australia-Japan trade flows are dominated by resources, there’s clearly room for expansion in trade in services between the two nations. During his term, former Prime Minister Koizumi introduced a number of reforms in areas like education, healthcare and government services which were regarded as “untouchable” parts of the Japanese economy.

According to a local services sector expert, Professor James Kondo of Tokyo University, Australian exporters have a comparative advantage in many areas that will open up: “The healthcare, wellbeing, education and the lifestyle sectors have traditionally been closed in Japan, but this will soon change to Australia’s benefit”.

A demographic phenomenon known as “freeters” may also play its part. While Japan is often talked about as the land of the greying sun because of its ageing demographics, there is an influential younger generation with different attitudes to travel, culture and work. This is particularly evident in the labour market, where the Japanese tradition of lifetime employment and salary-men working for the same company has been replaced by the “freeter” phenomenon where casual employment and ever-changing jobs and careers changes the dynamics of the Japanese employment relationship.

There has been debate about the freeter concept. Some older scholars have claimed it is the choice of younger people to not be tied down to one employer or one job, while many freeters themselves claim that they would prefer more job security but cannot find permanent positions because of the changing nature of work in Japan.

Nevertheless, the freeter phenomenon however has opened up opportunities for Australian service exporters specialising in job placement and career services. For example, Australian Terrie Lloyd, President of Linc Media, who set up (and later sold) an online recruiting company, aimed at “freeter” job seekers.

He sees this as a boom market as “traditionally Japan engineers society, but now Japanese society is opening up in a manner that is neither engineered or controlled.” The rise of the Internet, mobile phones, SMS messages, Lloyd believes is “setting up a whole new youth sub-culture based of the information revolution which is more open to western influences than ever before.”

Despite the potential gains to be had from the FTA – early studies estimated JAFTA to be worth $39 billion and $27 billion to the GDP of Australia and Japan respectively – there is still little awareness about the agreement, especially compared to talks with China. In fact, according to a survey by logistics company DHL, only 35% of exporters thought an FTA with Japan would benefit their business compared to 61% who were positive about a China-Australia FTA.

But there is some early evidence of “head-turning”, with 59% saying that once the potential FTA with Japan came into being, they would increase exports to Japan, while 22% of total exporters said they would now start exporting to Japan as a result of JAFTA, while 22% said they would develop a new product or service specifically for the Japanese market.

Japan enabled Australia to have a beach head into the region in the second half of the 20th century, now Japan and Australia will again be key players and partners as Australia tries to cement itself in the Asian Century.

The Conversation

Tim Harcourt does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

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Australia-China FTA a stepping stone rather than an end point

Going from raw data the Australia-China trade relationship should be a source of celebration and congratulation. In 2013, bilateral trade came to A$140 billion, up 20% on the year before. Even better, unlike most other developed economies, the balance of trade was in Australia’s favour – two-thirds was exports, one-third imports.

There was an imbalance in the inward and outward investment figures too, though less dramatic, with Australia having slightly less than A$30 billion newly deployed in China, and China slightly more than the A$30 billion back in Australia.

But underneath the healthy statistics for trade and development are two nagging issues, the link between them being sustainability. The first concerns the composition of exports to China.

Of the A$94 billion in 2013, more than half were in resources. The Chinese addiction to using stuff dug from the ground in Australia to fuel its own growth has decreased as China’s growth rate has slowed a little, but still remains strong. When we come to services, however, the numbers reduce dramatically. In 2013, Australia exported A$6 billion of services to China.

Radical change

As the nature of the structure of the Chinese economy changes however, these figures will need to radically change. The services figure needs to rise, and the resources figure, stabilise. In fact, it is likely to fall.

We know something about what Chinese leaders want the structure of the Chinese economy to look like in the future from what current premier and macroeconomist-in-chief Li Keqiang has said in the past few years. According to him, China needs to raise domestic consumption, deepen its urbanisation from 50% to perhaps 70% of the population by 2020, reduce capital investment in fixed assets, and (the objective of critical interest to Australia) raise its services from 40% contribution to GDP growth at the moment to closer to 50% or 55%.

In late 2013, the Plenum document issued from the central government explicitly referred to this when it talked of the need to create an indigenous national finance system. It is into this market of urban living, service sector-using, higher-consuming Chinese that Australian companies have to find ways to sell their services and goods.

This market will need to grow as the avalanche of resources sold to China starts to dry up. The bottom line is that reliance on such high levels of resource sales at the moment is unsustainable. The structure of Australian trade to China has to change, and the services and finance strengths of Australia need to be used to address this.

A more diverse relationship

And this comes to the second issue. Reliance on bilateral trade alone will not be enough, and Australia will need to envisage a more diverse economic relationship. Foreign direct investment matters here, and the likelihood is that much more Chinese money will need to come here.

It will need to be outside the current favoured areas of state-owned enterprises in resources and private Chinese money into real estate. Over the last few years, Chinese investment has changed slightly from being 95% from the state companies to 85% in 2012-13. But non-state companies are likely to become more active in the external investment story.

This is important not just because of their potential as a source of job creating capital, but also because strategically they can serve as potential partners for Australian companies trying to find ways to get into the domestic market referred to above with its potential for demand and growth. We know that China is not an easy market to break into.

A free trade agreement

Smart Australian companies in sectors as diverse as agribusiness and hi-tech manufacturing, or services, may well consider selling equity to a Chinese partner to have someone to help them get access to the Chinese market. Conceptualising an intimate link between our two economies is unorthodox, but in the era of high globalisation, surely this sort of framework helps.

Over both these issues hangs the matter of a bilateral Free Trade Agreement. An FTA is of more political than economic use, but without the political framework nothing else can happen. The FTA negotiations offer a moment for China and Australia to forge a consensus on how much they have a shared understanding of these two challenges of sustainability and how to address them.

An FTA which lays the foundations for higher service and trade provision between China and Australia, and a more diverse investment relationship will be tough, but is a fight worth engaging in.

As we all know, however, once an FTA is in place it is up to companies to use their wits to secure better market access and go for sources of growth in each other’s economies that are more sustainable and offer a long-term future.

[Image: Top News]

Professor Brown will be a panellist at the 2014 Economic and Social Outlook conference, hosted by the Melbourne Institute, on Thursday, July 3. He is the author of The New Emperors: Power and the Princelings in China, which has just been published.

The Conversation

Kerry Brown does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

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