A call to action – working together on innovation-led growth

Here is an idea for a conversation with the next Australian government:

Let’s get our act together and do something concrete between government and business. We can start by picking a few initiatives from emerging and promising Australian innovations. Let’s set ambitious and explicit goals for our collaboration, and together create a support system – from taxation to procurement, training and knowledge sharing – aimed at fueling innovation-led growth for the future of Australia.

Why is that important?

We are almost through the 2019 election campaign in Australia – and so far there has been little to nothing on innovation. 

Despite the anti-government rhetoric that has found its way from the USA to Australia, what Government does or doesn’t do actually matters. Innovation thrives when it is surrounded by the right ecosystems, funding and regulatory frameworks. The best ideas do not get off the ground without this. There is a well-publicised myth of entrepreneurs quietly inventing away in their garages. However, as Marian Mazzucato points out in her book “The Entrepreneurial State”  the reality is that many of the big technological break-throughs – the internet, microprocessors, personal computers etc. – were the result of government funded research.

It is also important because Australia needs to reinvent itself. As the OECD points out in its 2016 G20 Innovation Report, Australia’s economy still relies heavily on primary and resource based industries. It clearly states that in order to “maintain growth in incomes and conserving its established position in terms of international competitiveness will require further efforts”.

Very true – even more so as the globally connected economy is changing as a result of technology. While the growth of the service sector changed supply chains and labour markets over a timeframe of almost 50 year, the next industrial revolution is coming at us with great speed. Data analytics, advanced robotics, 3D printing, the industrial internet and artificial intelligence all lead to new production methods, supply chains and industries in much shorter timeframes.

I wrote recently that it all starts with investment in research and development, where we have seen disturbing funding cuts which resulted in Australia’s spending slipping below that of the OECD average. There are many other factors that create a supportive environment for entrepreneurs and innovation, including funding, tax regimes, nurturing talent early and supporting business innovation with public funds. While we are doing alright on some of these, Australia is performing poorly on the latter. In fact, according to OECD data, we score second lowest of 29 countries in terms of business (large and small) receiving public support for innovation.

Is it any wonder then that this election campaign was almost silent on this important issue which is essential for future economic growth? We heard nothing and saw very little commitment to innovation and technology on all sides of the political debate. Labour’s appointment of a Shadow Minister for the Digital Economy was the closest to acknowledging that the world is changing. Explicit government leadership at ministerial level is important at a time when we are forced to again review the relationship between technology and work. There is no doubt that we are facing significant restructures of labour markets with many people needing to be retrained in coming years. It’s government – in collaboration with business – that will need to find a systemic approach to dealing with this. Labour also promised to increase research and development investment to 3% of GDP from the current woefully low 1.9%. This would be great were it not for the proposed timeframe in which to achieve this target – 10 years - which is far too slow when compared to what other countries are investing between now and 2030.

Beyond this there were very few ideas and concrete goals that will help to create new value and economic growth from emerging industries.

The reality is that we will need to experiment and explore with different ways of doing things. New companies and industries need be supported in their infancy. That requires close engagement with business, entrepreneurs and innovators. And it requires direction and policy frameworks that facilitate this.

The election campaign was an opportunity to create a national conversation that builds momentum and forward drive. That did not happen. 

It is now incumbent upon business to reach out to our next government with the aim of positioning Australia in the global innovation economy. Neither government nor business can do it alone. There is a great need to work together on purposeful innovation and making a conscious decision about how to position Australia in a technology driven world economy. We have a lot of the skills, the curiosity and the can-do attitude to be an innovation hub for the rest of the world. Let’s do it.