Alan Finkel backs Metrics Review changes adopted by the ABS

Joseph Brookes
Senior Reporter

While the former government kept a landmark Innovation Metrics Review secret for years, the Australian Bureau of Statistics quietly implemented one of its key recommendations to better understand how Australian businesses are innovating.

The relatively inexpensive change finally brought Australian innovation data collection in line with global practices and lays some of the groundwork for more sweeping changes.

The architect of the Innovation Metrics Review, former chief scientist Dr Alan Finkel, has welcomed the new approach – the only major recommendation to be adopted from the review – and urged the government to adopt the other proposals to better understand its innovation investment.

“There’s a lot of merit in what was recommended. All the recommendations were based on wide consultation internationally and domestically,” Dr Finkel told

“The reality is, to the extent that the Australian Government is investing money in the innovation system – and it does – it needs to know how effective that investment is.”

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The ABS overhauled how it collects business innovation data in response to a review the former government never released.

In 2019, the former Coalition government was handed a detailed review of how innovation is being measured in Australia. The hope was to use the findings to develop a better approach that would then lead to better policy decisions.

The report was only released last week by the new Labor government after repeated requests by the media and the experts involved in the year-long project, who were keen to finally have a more useful debate on innovation policy.

The key recommendations are to improve the way innovation is data is collected and analysed, with regular reporting through a new innovation scorecard and entity to drive change.

One of the critical information gaps the review recommended be filled was the collection of business innovation data through mandatory Australian Bureau of Statistics surveys.

The metrics review recommended an overhaul of the long running ABS Business Characteristics Survey (BCS), the key national survey used for innovation measurement. The survey has traditionally been run annually to collect information from businesses about the broad types and status of innovation being undertaken.

The review found the single financial year reference period of the BCS was a limitation because other OECD countries typically use at least two years, while the questions the ABS was asking were limiting the utility of the resulting data.

Just who was responding to the survey had also become a limitation. Respondents were typically chief financial officers not as well placed to answer questions on their business’s innovation efforts as a chief information officer or similar.

“Questions on innovation are in many cases estimates,” Dr Finkel said.

“When you’re asking the company, ‘have they been innovation active?’, you need somebody who understands what that means, and whether it’s true,” he said.

“So, we recommended that to be more aligned to European countries, the BCS should be split and that there should be a separate business innovation survey administered every two years.”

The ABS, which had been involved throughout the Innovation Metrics Review, quietly obliged despite the review never being released publicly by the former government. It is understood the agency was able to make the changes within its existing budget.

The agency separated the Business Characteristics Survey into two separate modules for innovation and business use of information technology, and moved them to alternating two-year reference periods.

The innovation module content was also redeveloped with 18 new questions. It was introduced for the first time for the two-year period that ended June 30 2021.

“The ABS has implemented what it could of the report in the interim, given the limitation of no additional funding from government,” said Christine Williams, who was general manager of the Innovation Metrics Review and now works in the private sector.

“There is more the ABS could do, but it can’t do it without additional funding. It has already optimised as much as it can with its existing budget,” she told

The ABS released the results to the redeveloped survey in August, showing over half of all businesses (52 per cent) reported being innovation-active, a slight increase on the previous single year, but still a worrying sign many Australian businesses are not innovating.

The ABS’s new approach will make international comparisons better and lays some of the groundwork for the other key recommendation, an ‘Innovation Metrics Scorecard’.

The scorecard would report annually on 19 key measures of Australia’s innovation performance and trend over several years, along with a comparison to OECD leaders.

The single page document was recommended to “cut through the complexity” of innovation and underpin public discussions on where policy makers could intervene.

“The scorecard and the recommendations in the Innovation Metric Review will help the government appreciate where its return on investment resides,” Dr Finkel said.

Do you know more? Contact James Riley via Email.

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