Ms O'NEIL (Hotham) (17:27): It's a great pleasure to make a contribution on behalf of the opposition on the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019. I will move a second reading amendment at the close of my speech but, in part of my comments, I'll speak to some of the aspects in that second reading amendment. Intellectual property laws can perhaps sound a little bit dry to the ordinary person, but the bill before the parliament today actually relates to one of the most pivotal discussions that we have in this chamber, and that is: how do we create a high-skill, high-wage economy for Australians for this generation and the next? This is a really urgent question. You would have seen, Mr Deputy Speaker, that the Governor of the Reserve Bank made a statement today about some of the critical concerns he has about the Australian economy's performance. He raised three issues in his statement today. He talked about this persistent problem of low wages growth that is affecting the quality of life of the people in the communities represented by every one of the 151 people in this chamber. He talked too about the declining productivity growth we are seeing in our economy and the downward investment spending. These are really crucial problems for us because they're telling us something not just about what's happening in the Australian economy today but about what's going to be happening tomorrow and in a year and in the year after that. The bill we're talking about today strikes right at the heart of these latter two issues that the Reserve Bank governor discussed. They answer the simple question: how should we in this parliament reward the creation of a new idea? What benefits, privileges and protections should this parliament provide to new inventions that make sure that the very clever people of this country are incentivised to spend their time and their energy thinking about something new rather than exploiting something that already exists? Last October the government put forward some plans to make some quite substantial changes to the way that our intellectual property system works in Australia. One of the biggest changes that they proposed was to abolish something called the innovation patent scheme. It is a special eight-year patent which ostensibly is designed for small and medium enterprises around Australia. It is the sort of bill that comes before the parliament, and I think it would have been easy for opposition parties to play some cheap political games with this, but we really did want to engage with this bill on the substance, because I think the evidence is there that there are really significant issues with the way the innovation patent has been used in Australia. We have a Productivity Commission report and IP Australia coming out and saying the scheme isn't actually being utilised that well by small and medium enterprises and it should be reformed. The issue that Labor members of parliament raised in reaction to the bill is that the government was essentially proposing that we abolish this bill—that we take away something that exists specifically to assist small business—and not put anything in its place. We had a great problem with that. The reason for that is that the only alternative that would have left would be the standard patent systems. Standard patent systems are difficult: they're very complicated, it's very expensive to get one and it's administratively burdensome. That's fine when you can absorb all the expenses associated with that into a company which might have a whole legal department and might have its own intellectual property lawyer, but if you're running a small business with a couple of people on the books there is just no way you can put the effort into creating an application for something like that. So we were very worried about that on behalf of the 2.2 million small businesses of this country. We know that the people running these businesses are the economic dynamo that drives growth in our country. It's incredibly important that when we design public policy in this chamber, we don't design policy that will only suit the top 20 businesses listed on the ASX. We actually want to help these 2.2 million small businesses grow. So we were concerned about the removal of the innovation patent, and to address this gap we proposed two substantive amendments to the bill that's before the House which would have allowed some improvements to this problem, which I'll describe. I just want to place on record the opposition's acknowledgement about the way the government handled our critique of the bill. I don't think it's wrong for me to point out that there is a bit of petty stubbornness that can permeate the work that we do in this chamber, but we didn't get that from the government. We got good reactions from them and good consultation, and, ultimately, I think the government recognised the merits of the reforms that we were proposing and agreed to support them. The changes that were made because of our suggestion were twofold. The first was that we want to make sure that there's a proper, thorough statutory review done into the appropriateness of the IP system for small business, to make sure that we are thinking about these 2.2 million small businesses when we create a system and when we make legislative change. The second part of this was just giving small business a bit more time. So many of the people I talked to about this were concerned at the pretty crude nature of the cut-off point when innovation patents would no longer be accepted. So we were able to negotiate with the government to provide quite a significant amount of time for businesses to transition to the new system. Notwithstanding the concerns with the bill as originally introduced, there is a lot of merit to some of the things that the minister has just talked about that are outside of this innovation patent that I've discussed. We shouldn't be in any doubt that there is bipartisan support for the main intent of the bill across the chamber. I want to quickly mention some of the issues that we do see in the innovation patent, and I hope that these will be fed into the statutory review that's undertaken on this matter. The Productivity Commission, in its review of intellectual property in Australia, raised two issues with the way this works at the moment. Probably the most critical one was that the innovation threshold to get an innovation patent—basically how 'new' does the thing that you've invented have to be to get the protection of the law—was just too low. What the law was doing was effectively protecting things that probably didn't deserve the chamber to create a special legal mechanism for them. One of the examples that the Productivity Commission likes to point to was a pet bed—literally a small raised bed that sat above the ground. That was the subject of an innovation patent. The other one the Productivity Commission likes to talk about is the pizza box that converts to a bib, which also obtained the protection of the innovation patent. It's very useful for many, I'm sure! So I think there was an issue around the inventiveness and innovation threshold that you had to reach before you were able to get an innovation patent—it was a bit low. The second one was, having created a legal protection for something that wasn't as difficult to attain, that of course lawyers—doing what they do in their very clever way—were actually using the innovation patent to game the system. The one thing we do not want our IP system to do is be used by people to stop other people inventing and innovating—that would be a failure for an innovation and IP system. So it was a bit concerning that in fact there were plenty of examples where patent attorneys were advertising the way that they could help someone use an innovation patent to stop other people in the economy inventing something. Of course, when we see the law being used to subvert innovation in that way, that's certainly not something that the innovation minister would want, and neither would I. We understand the government is committed to raising the inventive step requirements for standard patents, but, given their initial approach was to scrap the whole thing altogether without thinking about how we might do it differently, that was really where our concern came from. Furthermore, IP Australia identified a problem with low usage. Basically we had this system where we had the innovation patent but SMEs were actually not the main users of the patent, even though that's what it was designed for. So we had around 400 innovation patents a year by SMEs. Approximately 70 innovation patents were actually certified and went to that extra step of achieving enforceable rights. In comparison to that, Australian SMEs filed between 1,000 and 1,400 standard patents each year. The standard patents are the ones that require that extra step and extra administration. So we can see there that the standard patent is being put to use much more by SMEs in the economy. I think that, having resolved some of the issues—and I'm very glad that the government was able to see things as we did: that it was important that small business have more of a voice in this reform—we're very pleased to be able to support this bill with the amendments that Labor was able to negotiate with the government. I want to broaden the discussion a little bit and make some comments about the overall picture of innovation in Australia, because the IP bill that we are discussing of course sits within a framework that is very broad about is about all the things that the government could do or should be doing to make sure that we have an appropriately innovative economy here in Australia. We had a very flourishing discussion in this parliament about innovation for perhaps three months when Malcolm Turnbull came in, and there were the ideas boom and all the other things that went on, but it was pretty clear that, as soon as Malcolm Turnbull was no longer Prime Minister, the government effectively dropped that issue like a hot potato. We had the former Prime Minister come out recently and say that innovation is not in the Prime Minister's comfort zone. We didn't really need to be told that, because it's incredibly obvious from the things that are not being done to make this system work and that are very clearly urgent national priorities. Leadership isn't about operating in your comfort zone; it's about operating in the national interest. That's the big opportunity that's being missed at the moment. On the government's watch, Australia's innovation ranking has fallen on the World Intellectual Property Organization's Global Innovation Index. The recent Harvard Atlas of Economic Complexity has us 93rd in the world in economic complexity. This is a very famous global study that looks at how many different things are working in an economy to create growth. It is a very effective predictor of future growth for a country, and we are 93rd, behind Morocco, behind Senegal. The truth is that too much of what we export in this country is grown or dug out of the ground, and I say that not in any way to trivialise mining and agriculture. These are critical parts of our economy, and we're generally world-leading in how we do both. But diversity and a bigger focus on value-add to what we do would be a good thing. There was a notable Treasury report released earlier this year that showed that, on the whole, the best-performing Australian firms lagged global best practice. Meanwhile, the government is not doing anything to address any of these pivotal challenges that are going to profoundly affect the economy that we have in five years and in a decade, and the economy that my six-year-old is going to graduate into in 2032. The specific innovation things I've talked to are only part of the picture here. This government has introduced cuts of $2.2 billion from universities over the coming years. A further $3.9 billion was removed from the sector with the closure of the Education Investment Fund. Today, of the 34 advanced nations, Australia ranks 30th in government spending on universities. That is the sound of the ball being dropped. How do we expect that we are going to have a world-leading economy in 30 years time when we are underinvesting at this rate? Since the Turnbull era, the coalition have become really timid in this area of innovation and technology. They're too scared to go near the ball, but that's the ball that needs to be used to kick goals, and we just can't take that approach any longer. Something about this has to change. We see the same thing when we look at our research and development spending as a country. Our national spending on R&D is less than 1.8 per cent of GDP. World-leading countries are spending more than four per cent of their GDP, and the OECD average today is well above ours, at about 2.4 per cent. What really scares me is that when we look at the numbers, even knowing that this is a problem—and I'm sure the minister across the table, Minister Andrews, knows this is a problem—we see that our spending is falling. When we look at the numbers for 2015 to 2016 versus 2017 to 2018 we see that government expenditure on R&D fell almost 20 per cent in real terms. This is an incredibly important problem. Just because the Prime Minister might not feel comfortable talking about innovation issues, it doesn't make them any less important. This is the pointy end of a longer-term issue. There are actually 2,000 fewer people working in government funded R&D programs today than there were in the mid-1990s. We've got further issues coming before the parliament. The government has mooted big changes to the research and development tax incentive. That is the main way that government incentivises spending on research and development, and there's absolutely a reform opportunity there. I don't deny that we can improve how we use that money, but the primary goal of government seems to be to return money to the budget bottom line. It'll see a further reduction in the R&D spending that we do as a country. The other thing I'm very worried about is the way that this money is being spent. With somewhere in the order of two per cent of the global R&D spend, we're a pretty small country here. And the mechanism the government uses to fund different types of research and development projects around the country is an indirect one—that is to say, you qualify for your project and, no matter what the subject of that project, you're given government support to undertake it. The best-practice countries around the world are thinking much more strategically about how they make the very best use of taxpayer dollars in this space. With our two per cent of the global R&D spend, instead of thinking that we might be the best at everything in the world we need to target that spending, to think about how we use that money to make sure we get the best bang for our buck. To sum up this conversation about research and development spending: there was a report by Universities Australia in 2019 that said government spending on R&D today is the lowest it has been in four decades. How scary is that? We're going into this great unknown future of a tech-dominated society, and our R&D spending as a country is the lowest it's been in 40 years. This just can't continue. I really hope that, behind closed doors, people in the government are pushing to see this critical problem addressed. I want to make two other quick points about some of the issues in our innovation system that we are really going to be pressuring the government to address over the next two years. One of those is our rate of collaboration as a country. What we know from best-practice countries around the world is that we are going to get the best out of our innovation system if different sectors of the economy work together. So we want to see the brightest minds in business, universities and research institutes actually collaborating. That's where the brilliant new ideas will really spark and come to the fore. Collaboration between industry and the scientific research sector in Australia is much, much too low. The share of projects being run in partnership is around 43 per cent in Germany and 37 per cent in Japan. In Australia we're running at four per cent. That's actually the lowest number in the OECD—lucky last. But it's not the sort of thing you want to be lucky last in. Absolutely this could and should have been addressed by the government seven years ago, but I'm still urging that we have a look at this very significant problem. I want to mention one area where the issues in investment are starkest, and that's artificial intelligence. There is absolutely no doubt that over the coming decades artificial intelligence will be one of the pivotal drivers of growth in our economy. In fact, one estimate is that $22.9 trillion will be added to the global economy by 2030 just because of artificial intelligence. I realise that some people feel very nervy about artificial intelligence. It does mean that things done today by humans might in the future be done by computers. The point is that $22.9 trillion is going to be invested somewhere, and all of these countries around the world who can see that prize are competing and fighting and trying to get the investment in their own country. The countries that lead on this are going to create so many jobs out of it. For example, the Chinese government's latest venture capital fund is expected to invest more than $30 billion in AI and related technologies. In fact, one Chinese state alone will devote $5 billion into AI technologies and businesses. There's a major port in Tianjin which is investing $16 billion in its local AI industry. Stanford has recommended that the US government invest $120 billion in various AI initiatives over the next decade, France is committing $2.4 billion over five years and the South Korean government is committing $2.7 billion over that period. In Australia, the Morrison government has committed to $29.9 million over four years—that is million, not billion. Anyone can see what's going to happen if nothing changes and that is we're going to get steamrolled in this new economy. I just want to finish by making a couple of comments on science, technology, engineering and maths. We've talked a little bit about other aspects of the innovation system, but, if we don't have enough Australians who are actually here to capture these brilliant opportunities that are being created, we're not going to be able to reap the benefits. We know how important STEM education is to our economic future. A very widely quoted statistic is that 75 per cent of the fastest growing occupations around the world require some kind of STEM training or expertise, so this is going to be an issue that will be incredibly important for our national growth. If there's a canary in the coalmine in all of the discussion we've had today about this, it's this: participation in STEM subjects in Australian schools has been declining for decades. Enrolment in these subjects today is the lowest that it's been for 20 years, even given everything we know about the direction our economic future is heading. Performance in STEM subjects is slipping. In 2003, five countries outperformed Australia in maths. By 2012, it was 16. That's a big slide in nine years. The proportion of Australia's population who have a post-school qualification in STEM has fallen in the last decade. I think this statistic shows it better than anything. In 2002, the number of Australian domestic students completing an IT related degree was 9,494. Last year, it was 6,302. I have just one final set of numbers. According to Deloitte, over the next six years Australia is going to need 121,000 workers with undergraduate or postgraduate training in IT related fields. On our current trajectory, we'll produce 38,000 graduates in that time. So what we're talking about here is 83,000 high-paying, permanent jobs of the future sitting right there. On our current trajectory, we're going to be short 83,000 young Australians to fill those jobs. That's not good enough, and it's not meeting the expectations that Australians have for the work that we do in this chamber. I know these are big and difficult problems, but they're fixable. The thing that worries me most when I look at what is going on with innovation policy is the lack of focus. We don't hear about this from the other side of the parliament. In fact, I think Scott Morrison has hardly uttered those words since he came to the prime ministership because he doesn't want to be seen to be talking about this issue. I say to the government today: we don't have a choice in the matter. This is going to happen and the question is: will Australia reap the benefits of the changing economy or will we simply pay the cost? That's the choice that we face. I move: That all words after "That" be omitted with a view to substituting the following words: "whilst not declining to give the bill a second reading, the House: (1) acknowledges that protecting the intellectual property of Australia's businesses is critical to the innovation system and our future economic growth; (2) notes that Australia's ranking on the World Intellectual Property Organization's Global Innovation Index has fallen during this Government's time in office; (3) expresses concern about broader issues with Australia’s innovation system which have not been addressed by the Government, such as falling government expenditure on research and development, declining collaboration between industry and the scientific research sector, 20-year low enrolments in STEM subjects in Australian schools, and record low performance in maths; and (4) calls on the Government to: (a) re-engage innovation as a key driver of Australian productivity and economic growth; (b) implement a policy agenda that improves our national STEM performance; (c) improve our research and development system with real reforms and greater investment; (d) better support smaller and medium sized business to access our patent system and innovate their way to growth; and (e) start developing a coherent plan to secure the high wage, high skill economy for the next generation of Australians". The DEPUTY SPEAKER ( Ms Claydon ): Is the amendment seconded? Ms Collins: I second the amendment and reserve my right to speak.