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Print FriendlyClustering Consortium - Number 5
This newsletter is for members/friends of the Australia New Zealand Advancement of Clustering (ANZAC) Alliance….the title will be changed in due course.
Whisper 8 - Regional Funding
I reported in March that the Commonwealth package was close to finalisation, and that the $ amount was around $1 billion, spread across infrastructure, education, health, communications, natural resource management, marketing/promotion, business development. By April, Minister Costello had knocked the joy out of people - about the time the East Timor scrap was putting a hole in the Budget….oh really!
Latest word is…'Regional Solutions Fund'…..no further comment.
DISR - TDP Application
As reported earlier, DISR is interested in our industry cluster application being directly linked to making widgets - not analysis. I sought interest as to anyone was interested in identifying a group of companies or non-Commonwealth to cough up $100k - perhaps $25k in-kind. I think we have two takers - one in SA and one group in Victoria.
DCITA
Tom Lindsey, ex-Warrnambool CC, but still the long-standing Chair of the Greater Green Triangle has gone into the consulting game. And has he hit the ground running! Prof. Henry Ergas, the telecoms guru (with whom I worked and frolicked at OECD) asked me to join him in bidding for the main consultancy to the Besley Inquiry on Regional Telecoms - I took the Packer approach and roped in someone more knowledgeable than me - voila, Tom is hard at it assessing different models. Actually, I'm doing the capacity building section, including regional branding which the Committee expressed specific interest
The relevant Inquiry terms of reference state that:
“… the inquiry shall have particular regard to:
(e) Potential new technologies, products and market models (e.g. competitive tendering of the USO) that are likely to enhance the delivery of telecommunications services, particularly in regional, rural and remote Australia.
It shall also provide advice to the Government on:
ii. Whether existing and future technologies combined with the competitive market model are likely to continue to meet the telecommunications needs of all Australians”
The background to the Inquiry is that over the last decade, the telecommunications sector has been progressively opened to competition. In 1989, open competition was permitted in the value-added services sector and in the provision of customer premises equipment. In 1991, network competition was introduced to the then Telecom via the sale of AUSSAT and the licensing of the successful bidder (Optus) as a general and mobile telecommunications carrier. Open resale of services provided on the Telecom and Optus networks was permitted, and a third mobile carrier licence was issued to Vodafone in 1993.
On 1 July 1997 open competition in the telecommunications sector was introduced. Competition was encouraged by the amendment of the Trade Practices Act 1974 to provide for a telecommunications-specific access regime and competition regime, and other pro-competition measures, such as pre-selection requirements and provision for number portability.
Since 1 July 1997 competition has grown strongly in the telecommunications sector. Telstra market shares in major markets such as mobiles, domestic long distance and international long distance calls, have declined considerably, and significant benefits have flowed in terms of price reductions and service quality improvements. However, it has become increasingly apparent that competition has grown more slowly in regional, rural and remote areas than in metropolitan areas, and consumer benefits from competition have been correspondingly lower. Relatively ‘thin’ demand in less densely populated areas and the greater costs involved in rolling out new networks and supplying services in these areas have contributed to highly marginal or non-existent business cases for potential new carriers and service providers operating under the traditional model.
Please contact Tom Lindsey - tlindsey@regionalinnovation.com.au or me for more info.
E4
Our Welsh/Kiwi member, Ifor Ffowcs Williams, continues to keep us abreast of his activities. I think we should call him the Wandering Albatross - last month he was in Scotland, then in US meeting with Stu Rosenfeld et al, then a series of workshops in Queensland, today he's in Bologna at an OECD conference, then Newcastle NSW and lastly the Bendigo Regional Development Conference (Wed 28- Friday 30 June) Ifor and I may run a cluster session on the Saturday. Wow! I trust I haven't broken any confidences, Ifor, but a few Aussies are keen to involve you in Australian agendas. Don't forget there's other kiwis out there too - Paul Frater is a consultant and Anne Probert (with Plymouth CC, from memory). Like every good kiwi, they're close behind us! Actually they are great people with great insights into industry clustering. You should be able to get their email address via this newsletter.
Foundation For Rural & Regional Renewal (FRRR)
The first round of funding is being finalised. We are down to last 30 - from 150 or so. Peter Cook, ex Esperance WA is doing assessments for FRRR (Would that be correct Bruce in the west?). He might be the CEO?
TCI Conference
The Conference is on first week of November. There is now info on the website, so I'm told - www.competitiveness.org. One South Aussie has put her hand up, and me of course…I'm sure there'll be some more takers.
Porter's Latest Piece
A bit of Porter's latest material seem relevant to Australia. The document is "Location, competition, and economic development: Local clusters in a global Economy"
Economic Development Quarterly, Thousand Oaks, Feb 2000, As follows.
Clusters provide complementary products for the buyer.
In tourism, for example, the visitor's experience is affected not only by the appeal and quality of the attraction (e.g., beach, historical site) but also by the quality of the hotels, restaurants, souvenirs, airport facilities, and transportation, making the different parts of the cluster mutually dependent. Such complementarities across products in creating buyer value are common, being present not only in service delivery but also in product design, logistics, and after-sales service.18 The co-location of firms and industries within a cluster makes it easier to achieve product-service coordination and creates internal pressures for improvement among parts of a cluster in ways that can substantially improve overall quality and/or efficiency.
Marketing complementarities are also generated. The presence of a group of related firms and industries in a location offers efficiencies in joint marketing (e.g. firm referrals, trade fairs, trade magazines, marketing delegations), It also can enhance the reputation of a location in a particular field and
makes it more likely that buyers will consider a vendor or manufacturer based there. Buyers can see multiple firms in a single visit. The presence of multiple sources for a product or service in a location also can reduce perceived buying risk by offering buyers the potential to multisource or
switch vendors if the need arises.
Strategic Investments Program
This Program is effectively run by the Prime Ministers' Office. It enables the Government to offer investment incentives to 'strategic investment projects in limited and special circumstances, where the project would generate significant economic and employment benefits for Australia'.
The incentives generally take the form of grants. The decisions are taken on a case by case basis, and Cabinet makes the final decision. The criteria are mostly indicative. They are paraphrased as follows:
- would not be likely to occur in Australia without the incentive.
- provides significant net economic benefits - substantial increase in employment, substantial business investment, significant boost to R&D capacity, significant benefit to other industries (cluster investment), does not involve substitution of production capacity that would provide an unfair advantage over competing projects.
- complements Australia's areas of competitive advantage.
- incentives are open to foreign and domestic investors.
- quantum of assistance takes into consideration the availability of other assistance from Australian or State governments.
- incentives consistent with Australia's international obligations.
Note the second dot point above!!
Examples
- $40m incentive package to Visy Industries to establish the world's first unbleached mini kraft pulp and paper mill (This is the only example provided in the program material)
- Adelaide-Darwin rail, $150 million
- Jervoise Bay Marine Precinct, $80 million
- Australian Museum, Canberra, around $130 million
- plus smaller projects, but generally at least $20 -30 million.
Drive safely. See some of you at Bendigo.
Rod Brown (Silverhawk)