By Roger Raven
PERTH - The biotechnology park at Coogee here is part of a larger development (Port Catherine) which is going ahead nicely. However, the core of the biotechnology aspect of the park is the large abattoir currently operated by the Australian Meat and Livestock Corporation. For political reasons, the National Party minister for primary industry is having the abattoir closed down by June, though it may be leased to a private operator after then.
The privately owned abattoirs greeted the news with delight; sheep and cattle farmers are a great deal less enthusiastic. A single large private operator could quickly dominate the whole system and force sheep and cattle prices down, yet have insufficient kill capacity for peak times of the year.
The general idea of a technology park is that if businesses involved in related technologies are close to one another, they will tend to cooperate and perhaps come up with some really new and useful products, particularly if they can get access to the research facilities of a tertiary institution as well.
The first industrial park arose in Manchester in 1896. The most well known one at the moment would be Silicon Valley in California, although between 1984 and 1987 it suffered severely from Japanese competition.
All states have at least one technology park. Werribee in Victoria and Fern Hill in the ACT are said to have done reasonably well. It has, however, been suggested that real success requires decades, and occurs only in certain circumstances. In other words, sometimes they work and often they don't. WA's own technology park has enjoyed a doubling of employment since 1989, at which time 400 persons were employed by about 30 companies.
Australia's industrial base may derive modest benefits from technology parks. When they work, the businesses spawned by such places can be come very big, if they have good management and are able to borrow money when they most need it. Even if they don't get far, they won't have cost much, and the investment will generally have been in something useful.
The Multi-Function Polis is a bit different. It has more of an emphasis on leisure activities, with some research functions. It is at least partly an attempt to increase the penetration of the Australian construction and research sectors by Japanese business.
Agriculture
Biotechnology has an increasing role in agriculture; in fact agribusiness firms see a great deal of scope for using some of the technological advances to further exploit small farmers.
Australian farmers over the past three decades have become increasingly dependent on transnational oligopolies - upstream for supplies such as fertilisers and machinery, and downstream for sales and processing of farm products.
To the extent that agrobiotechnology research is occurring in Australia, it generally involves joint ventures between local (generally small) firms and overseas companies. Much of the rewards from successful research inevitably go to the dominant partner.
What is reportedly Australia's largest private biotechnology firm (Biotechnology International) was recently sold by CRA to Hoechst.
Commonwealth Serum Laboratories (now CSL Ltd) is Australia's largest public biotechnology organisation; it is due to be flogged off about the middle of 1994. The public float is expected to raise about $250 million. However, the 5% limit on individual foreigners' holdings can exist only during the initial public float; once it goes onto the stock exchange, here comes Hoechst or Monsanto or Hoffman LaRoche.
Conversely, the private sector has repeatedly wasted valuable scientific research. Most of us have heard about the loss of gene shears technology overseas; it is but one of a legion of examples.
Governments can't do much about that, unless they commercialise the product through a government business enterprise. The private sector doesn't like to be shown up, and it would say so.
Processing
The essence of the thinking behind the biotechnology section of the park is that a good few bits and pieces of a slaughtered animal would be worth a lot more if they were further processed. For instance, bone can either be ground into meal (worth 39 cents a kg) or converted into medical grade collagen ($1500-2000 per kg).
The bioprocessing projects suggested for the park in 1990 were: leather tannery and fashion park (happening), chitin extraction from shellfish (happening), cholesterol recovery from animal organs, recovery of valuable chemicals from animal glands and the extraction of heparin and serum from blood.
Fellmongers remove the wool from sheepskins; it is hoped that at least one such business will move to the park, together with a wool scouring plant. Until the recent construction of several fellmongering plants, some 90% of WA's lamb and sheepskins were sent to Europe for processing. Again, by-products such as collagen, gelatine, and lanolin can also be obtained.
As there is only one significant refiner of wool grease in Australia, almost all the 7020 tons of wool grease produced in 1989 was exported for further processing. Pesticide residues are an increasing problem. As usual the CSIRO has come to the rescue with an effective process: Sirolan PRL. Again, the private sector has an opportunity to market a pesticide-free version of an existing commodity, and thus gain an edge overseas.
Expressions of interest in the Coogee Park as a whole were said to total some $200 million at the end of 1992.
Finance
The first problem is to find an abattoir; this means reversing the closure of the AMLC abattoir, and renovating it.
The second problem is all about management and finance. The promoters of new ventures are generally too optimistic. Most ventures that survive that over-optimism succeed or fail according to the quality of their management. Senior Australian management is noted for its mediocrity.
Finance for new ventures can be almost impossible to obtain. Most big firms started off as little firms; they needed outside money to start up and they often needed it to expand. No finance all too often means no firm and no jobs.
The Rural & Industries Bank of WA Ltd is due to be flogged off in 1995 but, being a state-owned bank, is an especially convenient example for the sort of role that government needs to undertake.
Government business enterprises deserve a much more prominent role in industrial development. As with the marina at Port Catherine or the Darling Harbour monorail, international private capital increasingly aims for unproductive mega-projects with a rapid return; being unproductive, they will rapidly devalue and may end up receiving state subsidies.
In this case, a local biotechnology firm could be bought out, then restructured and expanded to run the show. The total biotechnology operation would probably cost some $120 million and employ 90 people.
The management of the ventures would be handled by a specialised section of the Bank. The eventual aim would be to have an international presence; international trade is all about market power, so an organisation generally needs to be large and well funded to be a significant exporter of manufactured products. It would expand one step at a time, by takeovers where possible, and by the cautious use of joint ventures.
Initially such an organisation would have to pursue projects that were profitable in the narrow commercial sense, not only to build up a capital base, but also to strengthen public support, create a history of success, and gather the collective experience and memory that are necessary for more ambitious schemes.
Later, it would need to operate within the framework of state or national indicative planning.
Rural poverty
The low returns earned by many farmers are a fundamental barrier to land rehabilitation and the economic and social stability of rural areas.
Generally speaking, farmers' incomes tend to rise more slowly than their costs. This cost-price squeeze was the main cause of some 34,350 farms being closed between 1951-2 and 1988-9. Farmers and farmer organisations have spent the past 20 years resolutely pursuing policies that must ensure their own marginalisation: strict cost efficiency (economic rationalist cost efficiency) throughout the economy. The result is extreme urbanisation, together with the ageing of the rural population and the impoverishment of rural regions.
Few farmers are in any position to invest in the downstream processing projects that are constantly touted as being the answer to low profits for commodities like wheat, wool or sugar.
Therefore, farmers supplying a biotechnology venture (or any associated abattoir) established under such a plan would receive dividends based on the value of the goods supplied. Unlike private sector schemes, the farmer would not have to supply any capital.
The venture would eventually aim to build industry clusters in regional and rural Australia: places where manufacturing industry is now an endangered species.