In an age where nothing seems stable, new research is translating global policies into unexpected outcomes and opportunities. A new cutting-edge computer model could allow government policy makers and companies to understand their would-be impact on regions and industries and seek new ways of prospering.
Senior Lecturer in the School of Systems, Management and Leadership, Dr Stuart Nettleton, admits the Faculty of Engineering and Information Technology seems an unlikely place for such influential work. However, the research by Nettleton and his colleagues is already generating an exciting buzz.
“My work is about Australian infrastructure and networked production. There’s a phenomenon that happens with globalisation whereby industries switch from country to country very quickly – like our Bonds industry, which went to China.
“There needs to be a study of international competitiveness and policies for Australia and how competition can best prosper in our free markets. My research is the study of these things and the inventing of tools to quantify them into numbers so that policies can be analysed and created.”
Nettleton has developed a computable general equilibrium modelling tool named Sceptre. It is used to understand economic performance and the dynamics of the economies of whole countries, or regions within a country.
This new approach allows Nettleton to work in what is known as intertemporal modelling, which can expand results up to a predefined number of years.
“Sceptre is quite different to other modelling tools. It deals across the interface between geophysical constraints and networked economic performance. It also projects forward rather than looking backward.
“The main distinguishing feature of Sceptre is that it can generate 1000 realistic free markets in commodities, labour and investment under a policy scenario. In comparison, traditional computable equilibrium models have maybe 30 or 40 equations and try to find a single solution. It’s the performance of free markets, and how they lose or become resource-expansive under new constraints, that is the most important feature in understanding the future industrial performance of countries.”
Nettleton recognises it is a dense subject. “Let me make an analogy regarding the importance of modelling. On a motorcycle, the front brake is used to stop. The back brake is used to straighten up the motorcycle and give it stability.
A constraint on a market in a free economy does just this – it gives the market stability. So it’s the study of the stability of constraints in free markets and what that means for trade and geopolitics that change the way trading blocks work, along with the way domestic economies work.”
The scope of Nettleton’s work is broad, looking not only at various industries in Australia but also moving it to geo-political analysis – looking at the big security issues around water, food, air and energy.
“We live in a very small and populated world where wars are fought over these securities all the time. Energy is one of the key synthesis points of all of this. What an economy does with energy sources relates to how it participates in global warming mitigation strategy.”
Specifically, Nettleton is interested in how new forms of energy – through such things as desalination plants – will ease Australia’s water constraints. This, he argues, can herald an expansion of Australia’s small population.
“We live in a world where we have 3 billion people in China and Asia, and we are just at the moment nearly 23 million people sitting on a very rich island, surrounded by waterfront. This raises the question: ‘Is Australia, within a world context, managing its endowment of our continent appropriately within a world which is getting very populated?’
“We need to become very deeply focussed on the really big issue – the elephant in the corner of the room – which is how big a population can we have in Australia if our water restraints are released?
“My calculations show we can have an 11-fold increase in our population to up to 260 million. I feel that will actually start to play out over the next 20 to 30 years because Australia won’t be able to sustain being an elitist country with a tiny population and immense resources.
“We have a huge land mass but we’re approaching the point where we may be inadequately managing the endowment we have in terms of a crowded world. That’s my interest in energy policy.”
Nettleton says he enjoys working in an area where he can make a difference to how the world operates. He acknowledges that change rarely happens by revolution, but rather by evolution, and that this evolution process occurs via a slow diffusion of knowledge. Although, he remains confident that Australia is already playing a mediating role in world geo-politics.
“We’re at the very cutting edge of policy research. This new method of networked production modelling opens up new ways of understanding the adjustments in our economy due to globalisation, and to new global security policies such as global warming mitigation. It stands on its own in analysing these things.”
Marketing and Communication Unit
Photographer: Joanne Saad