From Rust Belts to Brain Belts
By Professor (Hon) I. Caroline McMillen AO FAHMS
Taking Newcastle as a case study, Professor Caroline McMillen explores the economic transformation of small cities and their regions through innovation, and argues that this approach will be crucial in the decades to come.
During the past two decades, advanced economies have made the transition from a historical reliance on traditional manufacturing or resources to advanced manufacturing industries based on integration of cyber and physical systems cast as emerging, frontier or Industry 4.0 technologies. In their 2017 book, The Smartest Places on Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation, Antoine van Agtmael and Fred Bakker review 37 case studies of cities across Europe and the US that made successful transitions to an innovation-based economy.
During this period there was also a global focus on factors underpinning the economic recovery of cities that had experienced economic and social decline before emerging as what were characterised as “magnet” cities. In 2014, KPMG analysed the five-year net growth in population and GDP in over 160 non-capital or second cities across the world categorised by the size of their population as large (>1.75m), medium (850k–1.75m) or small (<850k). Case studies were also carried out on nine cities that had gone through a period of economic decline before emerging with growth in high-skilled jobs and GDP. There was a strong correlation between variables that indicated the presence of a high proportion of young wealth creators aged between 25 and 34 and the city’s economic growth rate.
Australia 2030 prosperity through innovation
The reliance on traditional industry sectors, in Australia, will no longer maintain national economic growth, productivity and living standards. The 2017 landmark report, Australia 2030: Prosperity through Innovation, articulated a clear vision that, by 2030, “Australia will be counted within the top tier of innovation nations and take pride in our global reputation for excellence in science, research and commercialisation.” Strategic opportunities identified in the report included increasing institutional support for commercialisation by establishing a dedicated stream of funding for translational activities.
While Australia traditionally focuses on the role of its “mega” and large cities as drivers of economic growth, Australia’s smaller cities and regions such as Geelong in Victoria and Wollongong and Newcastle in NSW have actively responded to the loss of traditional industry sectors.
The City of Newcastle
Newcastle, like all of colonial Australia, was born modern. The landmark innovations of the Industrial Revolution, Watt’s steam engine and Hargreaves’ spinning jenny, were both patented in the decade prior to the departure of the First Fleet in 1787. The city of Newcastle was formally established in 1804 and was founded on a strong base of coal, steel and manufacturing, while its port shaped its international identity as a trade hub in resources. In 1989, the city was hit by an earthquake with a Richter magnitude of 5.6 affecting more than 200,000 square kilometres and leaving a damage bill in excess of $4bn, which was the first event to redefine newcastle. This was followed by the closure of BHPs Newcastle Steelworks in 1999, resulting in significant economic hardship for individuals and communities across the city and region.
The University of Newcastle
The University of Newcastle (UON) was established in 1965. As the Chancellor of the University of California, San Diego, Pradeep Khosla, stated, “It’s good for every one of us to have a history, but to have a past that we cannot break away from is not good.” A university must adapt its strategy to the forces of change in order to be a transformative agent in the community.
During the last decade universities in regions facing economic challenges have worked to co-design innovation ecosystems that have harnessed the key assets from all partners within that ecosystem. Realisation of the value of those assets requires a clear strategic plan, execution of key initiatives with collaboration and precision, and a capacity to track performance through shared measures.
Reinvigoration of the City of Newcastle
UON developed a Ten-Year Estate and Capital Investment Strategy to build an iconic presence within the Newcastle CBD and reinvigorate the city centre. It delivered an award-winning, technology-enabled learning and teaching facility for up to 5,000 staff and students in the heart of the CBD. This was a key part of a city renewal plan implemented by the city and governments at all levels.
Building industry partnerships, innovation and impact
UON established interdisciplinary Global Impact Clusters (GICs) offering opportunities for partnership with relevant industry sectors. UON was ranked in the top eight of Australia’s universities for industry-related research income and (as the top university by the Federal Department of Industry) for “Innovation Connections” in terms of grants secured in collaboration with business. The Better Health Care GIC was built on the strengths of UON as a Top 8 university in Australia for health and medical research and of the Hunter Medical Research Institute. These organisations were also supporters of the biotechnology company, Viralytics, founded by a UON staff member and acquired by Merck for >$500m in 2018. These results build on decades of leadership designed to ensure that effective industry research partnerships underpin the strategic vision of the university and support the regional economy.
UON also attracted investment from the NSW government to develop an integrated network of innovation hubs (I2N), established through collaboration with major industry, government and venture-capital organisations. The intent of I2N is to nurture start-up communities, attract investment and businesses to the Hunter and encourage innovation and commercialisation. Together with the Newcastle City Council, Hunter Digit, Newcastle Now and over 30 other partners, UON and the City of Newcastle were supported by the NSW government to build a new $20m Hunter Innovation Hub in Newcastle CBD. In addition, UON launched a Defence, Security and Aerospace Innovation Hub alongside the RAAF base where the Joint Strike Fighter Project and defence industry partners were located.
The UON Upper Hunter Hub was also launched, resulting in the facilitation of a partnership with Ethanol Technologies, which received $12m from the Australian Renewable Energy Agency to establish a demonstration facility to deliver a new technology converting multiple agricultural waste streams into biofuel and green chemical products. These represent the next phase of harnessing Newcastle’s global performance in health, energy and resources research to deliver innovation and enhance local industry performance.
Building equity of access to higher education
UON has supported equity of access to higher education for students no matter their background or location. The salary and employment premium resulting from a university education reflects the critical roles graduates play in shaping the future workforce in an Industry 4.0 era. UON was the first university in Australia to have more than 1,000 Indigenous students enrolled based on more than three decades of leadership and support from Indigenous elders. These students are enrolled across medicine, law, engineering, science, education, nursing and other professional programs and many have secured prestigious scholarships for further study at Harvard, Oxford and Cambridge universities.
In summary, the journey of UON, the City of Newcastle and the Hunter region reflects the statement in the “Race to the Top” review of the UK Government’s Science and Innovation policy (2007) that “the paradox is that while innovation is a global phenomenon, the role of regions as the critical nexus for innovation-based economic growth has increased”. In 2014, UON stated that it would “stand as a global leader distinguished by equity and excellence to support the economic and social transition of its regions through engagement with partners to deliver innovation and impact”. In 2013, UON was ranked at #298 in the QS World University Rankings; by 2020, it was ranked at #197. The journey for this young university into the Top 200 occurred while the university faced economic and social challenges within its regions. The future of cities and their regions across Australia will depend on collaborations that harness global ambition and regional delivery to support equitable prosperity, environmental sustainability and better health for all.
Professor Caroline McMillen is the chief scientist for South Australia, having taken the role in October 2018 after serving as vice-chancellor of the University of Newcastle. She is a fellow of the Australian Academy of Health and Medical Sciences, a fellow of the Royal Society of New South Wales and a Bragg Member of the Royal Institution, Australia.
Video: Professor John Fischetti - School of Education - The University of Newcastle.
