Setting the scene
Australia’s future depends on investing wisely today
in the foundations of economic competitiveness. Increasingly that competitiveness
rests on the ability to develop and utilise new ideas and technology. To be
successful we will need a world class research base, easy pathways for the
commercialisation of new ideas and good access to the latest ideas and
technology. Equally importantly we need a culture where innovation is actively
pursued and encouraged in all businesses and in every research establishment.
Australia has a solid base upon which to build. It has
a track record in developing leading-edge products and services and has in
place some of the necessary research infrastructure and innovation support
mechanisms needed to generate and act on ideas. However, we can not be
complacent. There are areas in which we lag behind when it comes to innovation.
When we benchmark our performance against international standards, it is
obvious that we do not yet have a winning score card. Further other countries
are boosting their efforts. It is clear that we need to act now if we are not
to be left behind.
Innovation—Unlocking the future is based upon the recommendations of the National
Innovation Summit. It presents recommendations in three critical areas:
creating an ideas culture; generating ideas; and acting on ideas. Together,
these recommendations form an integrated and comprehensive package which will
strengthen Australia’s research and development capability and enable us to
shine as a truly innovative nation. They require a significant investment by
Government and business.
We recognise that many recommendations will take time
to implement fully, but believe that all the key recommendations need to be
addressed quickly and decisively.
Creating an ideas culture
Innovation thrives in a culture that is not afraid of
risk-taking, promotes the value of experimenting, and rewards enterprise. We
need to create the right culture to support us in our efforts to become better
innovators. For example, improving our vision, attitude and strategic approach
to innovation, the entrepreneurial expertise of our managers, and our graduates’
skills in creativity, oral business communications and problem solving.
To build a solid appreciation of the importance of
innovation to our economic prosperity, the Group recommends a National
Innovation Awareness Program. It would be based on a call-to-action across all
sectors and include a national awards and recognition system to provide
incentives for our innovators to pursue their ideas through commercialisation
and to promote innovation ‘champions’. The program would require involvement of
leaders at the highest level in business, government and the education sector.
To capture young people’s interest in and enthusiasm
for innovation, we recommend that the Commonwealth Government and business
support a program for young entrepreneurs. The program would strengthen
networks for young entrepreneurs, and recognise excellence. An enhanced program
for graduates to take part in industry placements would complement this.
To enhance teacher capability, the Group recommends
that business and government work together to support a new program of
Enterprise and Innovation Scholarships for teachers. This program would
encourage teachers to take up learning opportunities with innovative
businesses, and provide them with direct experience so they are better positioned
to transfer this knowledge to students.
The Group recommends a suite of related initiatives,
including a national review of teacher education, development of online
curriculum, additional structured courses on innovation and commercialisation
for students, enhancing data collection on innovation performance, and the
development of appropriate ways to measure the significance of intellectual
property and intangibles.
Generating ideas
New ideas are fundamental to a dynamic and growing
economy. A high quality and well-resourced research capacity is critical to
Australia’s ability to compete. However, studies show that Australia’s
investment in research and development (R&D) has been declining for several
years. This is particularly marked in relation to business R&D. When
compared to 24 other nations, we ranked seventh lowest in terms of business
investment in R&D. Australian businesses invest less than one per cent of
our Gross Domestic Product (GDP) in R&D. By contrast, business in many other
Organisation for Economic Co-operation and Development (OECD) countries is
investing more and more in R&D.
To turn the tide, the Group recommends restructuring
the Commonwealth Government’s R&D Tax Concession to encourage more R&D
by business. The Group recommends that the R&D Tax Concession base rate be
increased to 130 per cent; that a cash-out option be created for small to
medium sized enterprises; and that an incremental R&D Tax Concession rate
of between 170 per cent and 200 per cent for R&D over and above a company’s
current level of expenditure on R&D be made available.
Australia’s current level of public research funding
will not be enough to keep us internationally competitive in the future. The situation
is changing rapidly as other OECD countries announce major R&D initiatives
involving significant outlays of funds. To strengthen Australia’s research
base, the Group also recommends an increase in research funding, including
doubling the Australian Research Council’s funding and increasing funding for
infrastructure in universities.
Again, the Group recommends a suite of related
initiatives, including more effective promotion and stimulus for philanthropy
for science and research, more streamlined access to available innovation
support programs through a one-stop access point and an advisory service for
businesses.
Acting on ideas
Australia has a patchy track record of acting on good
ideas. We sometimes struggle for a number of reasons, including:
• many small firms are less able to compete in export
markets;
• lack of sufficient skills to take new ideas to
market;
• a relatively new and immature venture capital
market, especially at the seed end;
and
• difficulty in accessing research and technologies
developed outside Australia.
The Group believes that Australia needs to strengthen
its understanding, management and commercialisation of intellectual property.
While the availability of seed capital in Australia has quadrupled in the past
year, and other early-stage technology markets are also growing, this component
of our capital market is quite small when compared to those of our trading
partners.
To increase the growth and competitiveness of new
technology firms, the Group recommends doubling funding now for the
Commonwealth Government’s Commercialising Emerging Technologies (COMET) Program
which supports early growth firms to maximise their potential to trade in new
services and products.
Successful commercialisation depends not only on the
individual performance of players, but also on how they interact with each
other. Knowledge flow in Australian innovation is vital, including
relationships amongst business, government, research agencies, non-government
organisations and universities. To better coordinate and foster links between
research organisations and business, the Group recommends that the Commonwealth
Government develops a national technology incubator program. International
R&D and other collaboration should be boosted to better tap into the 98 per
cent of the world’s research that is taking place outside of Australia.
The Group recommends support for increased technology
diffusion, international business R&D collaboration including through
Cooperative Research Centres (CRCs), and more widespread business and
researcher mobility and exchange. We
need to maximise commercialisation of research conducted by Australian
universities and other public research institutions by having the right incentives
in place. Establishment of a pre-seed fund, access to appropriate
commercialisation advisory services and appropriate research staff incentives
would be major steps forward.
Under this heading the Group also recommends a suite
of related initiatives, including a stock take of world best practice in
innovation for Australian small businesses, strengthening Australia’s
intellectual property protection system, minimising the regulatory burden for
innovative start-up firms, ensuring that venture capital and start-up firms are
not constrained by entity taxation in Australia, and ensuring that we take full
advantage of the opportunities available for new businesses to develop through
government purchasing.