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4 June 2019 Speech

Check against delivery

I would like to begin by acknowledging the Gadigal people of the Eora nation as the Traditional Owners of the land that we are on today, and pay my respect to their Elders past and present.

Thank you Richard for your welcome and opening remarks.

And thanks for having me today to share Australia's ongoing quest to decode disruption.

After experiencing today's agenda of speakers you will all want to go out there and be disruptive. We need that right now.

Why? Because Australia has a problem. An innovation problem.

I won't bore you with telling you the world is changing faster than any other time in history, or that we have serious problems – you are all well aware of the impending battle between China and the US, the disruption of digital, and the growth of pandemics  polymorphic viruses both in the biological world and in the cyber world.

You probably know that most businesses are being disintermediated from their customers, by digital platforms that suck the profit out of the supplier customer relationship and become immensely valuable companies without actually producing anything.

There are so many problems, in fact that the UN has created 17 Sustainable Development Goals to try to address them.

17 seems like a lot, but actually Australia has even one more, our innovation dilemma.

While our OECD peers have focused on innovation and the shift to a knowledge economy, we have languished last.

It may not feel like we are last because our economy has not known a recession in almost three decades, but that's reality.

So, the world has 17 Sustainable Development Goals, and Australia has one more.

But it may surprise you to hear that the UN's goals can't really be solved. CSIRO's science has shown that they are so interconnected that you can only solve two or three concurrently  because if you focus on more, you go backwards on others.

It's groundbreaking work, published in Nature that the world is still arguing about.

I say, let them argue – we need solutions not rhetoric.

There is an old Chinese proverb that reads: "When the winds of change blow, some people build walls and others build windmills."

The time is now for us to up our innovation game.

On 18 June, CSIRO will release our Australian National Outlook report.

The Outlook is a bold undertaking to use science to map out the future for Australia.

In addition to CSIRO's 2,000 customers and 39 university partners, we worked intimately alongside 50 leaders across more than 20 leading Australian organisations across industry to look at two scenarios:

An Outlook Vision of what it would look like if we start taking decisive action to turn disruption into Australia's opportunity to shine again, including building windmills.

The other is the 'do nothing' scenario, or 'building walls' – which leads to either jobless growth or the long slow decline into the sunset.

I don't want to give away the findings of the report, but the 'do nothing' scenario is, quite frankly, terrifying.

The gulf between those who are being disruptors and those who are waiting is growing exponentially – and the trouble with exponential technologies is once you realise they are competing with you, they have already raced far ahead of you.

To maintain a competitive edge, to ensure our nation is viable and to create a sustainable existence for future generations, we must begin to embrace the opportunities disruption presents by solving the challenges right in front of us.

So, if the 17 goals don't quite cut it, how do we solve the challenges we are facing?

At CSIRO we spent the past two years using science and our partnerships to identify the challenges where our research and innovation would provide the greatest value and the most unique advantage for Australia.

We are investing in what we identified as the six greatest challenges. These challenges were chosen because they require a multidisciplinary approach and deep collaboration across the system to solve. They include:

  1. Creating resilient and valuable environments: making industry and environment partners not competitors, like mitigating damage to Great Barrier Reef.
  2. Food security and quality: achieving sustainable regional food security and growing Australia's share of premium AgriFood markets.
  3. Health and wellbeing: enhancing our health through preventive, personalised biomedical and digital health services.
  4. Future industries: creating Australia's future industries for Australia as well as the jobs required by collaborating to boost innovation performance and STEM skills.

    AI/Machine Learning is one of the biggest industries and disruptions that I'll talk more about. We will target AI-driven solutions across all the challenges I am mentioning here. No area will go untouched.

    We are also supporting Australia's goal of tripling the Australian space industry by 2030 by creating world leading capabilities in observation, satellite communications and tracking spacecraft.
  5. Sustainable energy and resources: navigating our transition to a zero carbon economy without derailing our economy.
  6. And the sixth challenge is maintaining a secure Australia and region: safeguarding Australia from risks such as war, terrorism, regional instability, pandemics, biosecurity, disasters and cyber-attacks.

In the area of Biosecurity, CSIRO recently announced a new tool that helps us understand how human infectious diseases found overseas might spread in Australia.

The tool uses machine learning to draw on multiple datasets, including reported dengue cases, tourist surveys, geo-tagged social media posts and airline travel, and combines them in a way that allows us to understand the trends that underpin the spread of diseases.

Helping to predict outbreaks so that hospitals and biosecurity agencies can be as prepared as possible.

On face value some of these may sound a bit "warm and fluffy" but when you look at the underlying problems we are solving you begin to see their significance:

  • With 11 million Australians suffering chronic disease – do we try prevention or cure?
  • How do we feed 3 billion more mouths in the world when we are the driest continent on the planet, and getting drier?
  • 40 per cent of today's jobs won't exist in 10 years. How do we create new opportunities and industries?
  • How do we combat rising temperatures of 2 degrees Celsius when more than 35 per cent of our tax receipts come from coal, oil, LNG, iron. How do we transition into new sustainable export industries?
  • Pandemics are on the rise and with a world that is more interconnected than ever, diseases can spread across the globe at record rates. Are we prepared to manage an outbreak?
  • Cyber attacks will cost the world $6+ trillion annually by 2021. Cybersecurity was a $US90 billion a year market in 2016, predicted to be worth more than $US220 billion by 2021.

So now you can see there are sound financial drivers for using science to transform these threats into opportunities for growth.

At CSIRO we are not new to tackling big missions. But today more than ever we need a market vision to focus our science and innovation on solving real problems that matter to real people – in essence making our science real.

Market vision is the heart of every startup – an ability to see a different future where you create something the world didn't expect.

It's often based on an uncomfortable truth, and always driven by breaking from conventional wisdom.

Science needs this market vision even more than entrepreneurs do, because science can take years to cook – so you want to be sure you aim it in the right direction up front.

This is a simple, but a highly controversial idea – steering science.

We have been re-steering CSIRO the past five years.

CSIRO itself was a bit like Australian innovation – for 25 years while the country experienced uninterrupted growth  CSIRO shrunk. In fact, all R&D investment by business has shrunk continually since the global financial crisis.

To brace ourselves for the future and be in a stronger position to weather the cold winds of change our approach had to change.

We recognised a significant opportunity to help shape the foundations of Australia’s future industries through great science and technology.

We created Australia's first science accelerator, ON; and Australia's first venture capital fund investing in science through Main Sequence Ventures, which has produced an unprecedented number of spinouts and start-ups, collaborating across 36 universities.

Today, if CSIRO was Australia, we would top the OECD list for collaboration rather than be at the bottom. In fact, Thompson Reuters now rank CSIRO in the world's top 20 most innovative institutions, putting Australia as a country in the global top 10.

Has it done anything for our business? The short answer is yes. It's reversed a 25 year trend and we've now delivered four years of growth  both top line and EBITDA.

Have we done it at the expense of science? No. In fact, our investment in blue sky science has grown nearly tenfold, fuelled by the growth in our customers.

Likewise our equity portfolio has grown tenfold, because we are sharing risk with our customers and they in turn share reward with us. Now that's innovation.

Equally we have increased our engagement with existing companies, especially small and medium businesses – who bring products, customers, and market share but don't have the leverage to use science to reinvent themselves to be more competitive globally.

When we invest our science into them it can be game changing – as it was for Medical Developments International, or MDI.

For a mere $1 million investment in science, we grew their domestic and international markets for their painkilling Penthrox "green whistle" and their market cap tenfold to over $200 million – now that's a venture investment.

For us at CSIRO – we are investing in science.

Science working with business together will solve our six national challenges.

Today I want to talk more about three bleeding edge sciences that have the power to change life itself. They will be more disruptive than the digital platforms that are currently eating the world.

These are:

  • Synthetic Biology,
  • AI, and
  • Quantum Technologies

Now when I was a kid we dreamed of flying cars but now that's happened we must look to the next frontier of science to turn science fiction into science fact – I'm talking about - eternal life, teleportation, invisibility, time travel – all of which have progressed under these three areas of science.

Now these may seem far-fetched and far away, but let's look at what we delivering right now to business – in three key areas that every Australian worries about: Food, Energy, and Health.


First, in the area of food. With a big global market pull of 3 billion new mouths to feed  how do we double our water efficiency, and grow differentiated crops with higher margin and higher yield despite climate change?

If you mix synthetic biology with AI and robotics, you get an ability to rapidly engineer, test and iterate prospective strains of crops, then breed them naturally so they are fit for human consumption.

The result? A wheat yield that is slightly increasing, despite climate conditions driving down traditional wheat yields by 30 per cent.

When you have this combination of genetics and AI, you can also engineer in multiple traits like human health benefits in addition to climate resilience.

Our science created a start-up Digital Agriculture Services (DAS) with the first ever software to comprehensively assess and monitor rural land anywhere in Australia.

It taps decades of data from every imaginable source, and uses a combination of artificial intelligence, machine learning and cloud based geospatial technology.

Big data has also created tools like YieldProphet, which helps farmers make planting decisions based on localised conditions, and the national drought map, which brings together disparate national data sources to inform government and insurance decision-making around drought relief and support.

The internet of things is enabling products like RapidAim, a CSIRO spin-out that uses AI to identify when a fruit fly is spotted in a crop to trigger a speedy response, replacing the current practice of manually checking fruit fly traps.

Or Ceres Tag, a product we're calling 'a fit bit for cows', which clips on to their ears to monitor their movements using a GPS and sensors. It can not only tell you if cattle are on the move, but also if they're going into labour.

We've worked on a network of sensors within a crop to measure moisture levels, triggering watering systems only when needed, and reducing water wastage.

And CSIRO's long history of developing healthier foods is already being accelerated through the power of AI to analyse genetic coding faster and identify traits for selective breeding.

Each of these science breakthroughs, as brilliant as they are, has only delivered because of business – because we didn't just invent the science, we engineered it into a prototype, tested it with real customers and got it into the hands of a real company to turn it into revenue.

From potential to profit – science is a game changer for business.

Jumping to the bleeding edge, we are growing vertical farms entirely indoors, doing integrated farming on chips (just like semiconductor electronics), 3D printing food, and creating aquaculture from plants.


In the area of energy there is a global market shift to renewables. China, using great market vision, invested heavily to dominate both the solar and lithium battery markets.

Whilst Australia's economy depends heavily on the taxes paid from $160 billion in fossil fuel exports; which we will lose in this transition unless science can solve the seemingly impossible – again.

At CSIRO we first asked, can we reinvent coal itself? One example  liquid coal. A fuel that can power a modified engine and produces 30 per cent lower greenhouse emissions than a gasoline engine.

We are working with the largest engine manufacturer in the world to test this as a transition fuel – and while it's not zero emissions, it's sure better for powering the ships that export lithium batteries and solar panels than bunker oil.

But we didn't want to stop there. We had to ask, how can we go all the way to zero emissions, without losing our valuable export markets? Could we create a new export market instead? The answer, could be hydrogen.

That coal engine I mentioned also runs on ammonia – ammonia has no carbon, just hydrogen and nitrogen. We looked for a way to convert seamlessly between pure hydrogen and liquid ammonia.

I mentioned we accelerate breeding using AI, well making unique synthetic materials is similar – what we call synthetic biology. We have done a similar accelerated process there to create a unique membrane material that passes only hydrogen – so liquid ammonia goes in one side and the purest of pure hydrogen out the other, which is perfect to drive fuel cells.

Over the past four years we've focused on building the value chain to export hydrogen, working backwards from the market - Japan and Korea, to Toyota and Hyundai, whose cars we refuelled last year for the first time using the purest Hydrogen produced from our liquid Ammonia fuel, through our hydrogen membrane.

But the big breakthrough came when the Fortescue Metals Group stepped up to produce hydrogen domestically. As brilliant as the science and engineering are – it doesn't amount to anything until a big Australian resources company is willing to bet on it.

When it comes to hydrogen, we are not just creating a new industry and jobs, but also contributing to a different energy future that is secure, affordable, and sustainable. We are at the forefront of this energy revolution.

Jumping forward to the bleeding edge of science - is our most ambitious AI project to date  Energy Oracle.

We are attempting to predict the future of energy by managing the predictions of weather, climate, energy usage, solar, wind and end user demand.

It's an AI driven model not just of the electricity grid but the entire market – it has the potential to transition us to zero carbon without sacrificing energy, security or comfort.


The area of health is also not to be left out. We are using a product called PAPT which has saved millions of dollars for Queensland hospitals by predicting what type of accidents would happen so they can roster the medical skills to match.

It's the world's 1st proof of data saving lives – because the hospitals measure improved mortality.

Our genetic breeding programs have also created activated starch grains which prevent colorectal cancer and is marketed and sold throughout Asia by Tejin.

We've also done it using genetics for cancer, not just to predict whether you might be susceptible, but to actually detect if you have it – it's a simple blood test which replaces the other less pleasant test that you may have experienced where you poo in a bag and mail it to a lab.

Colvera, the company created by this breakthrough is growing sales in the US, creating export revenue, local jobs and directly addressing our health challenge.

We created a gluten free grain – which went on to make the world's first gluten free beer and was sold to the Germans.

We are also seeing a shift from focusing on treating illnesses to keeping healthy people healthy.  

We are creating integrated platforms to help manage a person's health throughout the course of their life through highly tailored food, nutrition and lifestyle interventions based on their gene, their gut biota, and other individual traits.

Another huge break through for us has been the recent discovery of human gene responsible for our immunity to disease – again using genetics assisted by AI.

It's a theme we've seen across the organisation, collaboration between the best human brains and the synthetic – that combination extends into the physical where we have actually fabricated replacement parts for humans and saved lives in the US, Europe, and Australia.

We used our science to power up a little Aussie SME called Anatomics and enable their global market entry.

The combination of new materials to replace body parts, and management of the genetics of immunity, coupled with our work on nutrition should extend life.

In fact, science has already shown a fivefold increase in the lifetime of simple organisms like worms – that's equivalent to humans living close to 500 years.

Imagine living to 500 years – what new challenges would that create!

With geopolitical unrest between the world's superpowers, exponential growth in pandemic disease, and cyber crime, it will take technologies like quantum, AI, and synthetic biology that have the power to change life itself – to solves these challenges.

The future can seem a bit scary, but Australia has been here before.

A hundred years ago Australia was a stark inhospitable place recovering from the first world war -crops wouldn't grow because the prickly pear dominated our landscape anywhere there was water, cotton wouldn't grow in our soil and even if we could find the water to graze cattle we couldn't export them – it was too far away.

Wool was unusable. You couldn't weave it, pleat it or even wash it.

Before we could create a wool industry – we had to reinvent first. Create new value by making wool wearable into suits, inventing the permanent pleat so it could be pressed and inventing Softly so it could be washed.

Then we reinvented all of Australia's cotton species – today we are top 20 per cent world – including 30 per cent of Egyptian cotton.

We invented the method of shipping beef to Britain in the next war, and a new type of radar to defend Darwin – then Australia's first computer, then the dish to watch the moon landing, then we invented WiFi – and today we are building Australia's end of the Square Kilometre Array  the world's most powerful interconnected telescope, which handles more data than the internet.

So we've been here before, and come out on top. We can do it again. But it needs all of us – especially you in the investment community  to have the courage of our convictions and back the future. The rewards are there for those willing to take the risk.

So, let's go knock down some walls, and build windmills powered by the winds of change!


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