Recently, NSW Education Minister Rob Stokes challenged the dominance of Science, Technology, Engineering and Mathematics (STEM) in education and argued education needs to champion a wide range of subjects including the humanities.
Two figures should suffice to illustrate the importance of a broad education: service sectors represent around 70 percent of Australia’s GDP and employ 4 out of 5 Australians; 97 percent of Australia’s private sector is made up of SMEs employing less than 20 staff (more often than not sole traders). Our private sector needs a raft of tools that will come from the humanities, arts and social sciences (HASS) toolbox.
In 2014, analysis by the Business Council of Australia categorised Australia’s industry sectors between those with strong global growth outlook where Australia could be a leader; those with a lower global growth outlook but which are critical to the domestic economy; those with strong growth outlook but less critical to the economy; and, those in need of structural reform or where skills should be redeployment into critical and competitive areas.
Opportunities for growth means different things in these scenarios. Where there is strong growth and high criticality, product innovation is front and centre; in low growth sectors process innovative solutions are needed to lower costs and increase efficiency; in high growth-low criticality sectors policy intervention is required; and in low growth-low criticality sectors a mix of business model redesign and retraining is required.
What is striking is how HASS are so fundamental to this analysis. For example, the sectors where BCA identifies Australia as global leader are Agriculture, Tourism, International Education, Finance, Mining and Extraction – three out of five are HASS-based industries. So, too, are the two sectors where we are global leaders but which are less critical to the economy – Entertainment and Professional Services. In both cases, product innovation will come from core knowledge provided in HASS education.
Likewise, in sectors where lowering costs and increasing efficiency are key to success, it will be business, management and supply chain – all ostensibly social sciences – that will play a transformative role. Finally, it will be application of education that will allow us to redeploy the workforce in our flailing industries.
In other words, the solutions to fostering and maximising research and development in Australia will come out of the HASS playbook: where Australia is most competitive globally it is likely to be a HASS-based sector; in our other industries, core HASS competencies will provide the tools to innovate.
This is not to imply that STEM is not very important – but on its own STEM will not fuel Australia’s growth. The point is that there should be a balance – which is not currently the political case for sectors like manufacturing or technology. In fact, HASS research is explicitly excluded from the list of eligible activities under the Federal Government’s R&D Tax Incentive scheme.
Another feature of the R&D Tax system is that smaller R&D active firms are less likely to claim R&D Tax concessions than larger firms. Yet, the demand from business for research capabilities clearly exists – a recent study by researchers at the ANU has identified a large ‘hidden job market’ for PhDs – while only 20.7 percent of non-academic job ads asked for a PhD qualification, as much as 43 percent required skills that are obtained in PhD training. So the appetite of SMEs to innovate must exist.
What we require is public policy that ties all of this together – at once supporting our competitive advantages across industries like finance, international education and tourism; unlocking expertise to drive efficiency; lowering costs in other critical industries, and facilitating innovation across SMEs.
Australia has an opportunity to differentiate our knowledge economy in the global market – to develop a thriving eco-system of SMEs across the service sectors. Instead the economy is still too dependent on mining and the housing bubble, and HASS is still undervalued in the innovation agenda.