Innovation-intensive companies are a focus for economic policymakers because they make an outsized contribution to productivity growth and economic well-being.
This is well recognised by governments around the world. It is the reason behind the growing competition among governments to put in place policies that attract entrepreneurs and give these companies the best possible chance of thriving.
The New South Wales Innovation Blueprint 2035 is a ten-year strategic plan that, for the first time, sets out clear goals and areas for action that are based on significant quantitative research.
Rebecca McPhee, Investment NSW deputy secretary at the Premier’s Department, said the review of the state’s innovation ecosystem conducted by former Tech Council of Australia CEO Kate Pounder gave the Blueprint a solid evidentiary foundation.
The Pounder Review – shorthand for the NSW Innovation System Assessment – was conducted from June 2024 to understand and quantify what was already working in NSW, and what wasn’t, Ms McPhee said.
The findings underpin policy design and decision-making that more effectively attract and support innovation-intensive companies in NSW and aligns this effort with broader government goals for economic development – in areas like housing, net zero and the energy transition, as well as bolstering local manufacturing.
“For the New South Wales innovation ecosystem, the Blueprint provides something that they have been asking for quite a long time, which is a long-term vision,” Ms McPhee said.
“And what will come with that is more stable policy, providing the kind of certainty that companies need to invest and collaborate in New South Wales.
“The Blueprint is important because it is grounded in a sound understanding of what’s already working. And there is a lot to celebrate, including the high proportion of venture capital that is invested here in New South Wales, and the excellent research and development being performed here.
“And there are a huge number of great, successful unicorns.”
The Innovation Blueprint is closely aligned to the government’s industry policy, specifically calling out the three missions of housing, net zero and energy transition and local manufacturing.
This means that, rather than developing innovation policies that target areas of existing strengths in NSW (like B2B software as a service apps, FinTech or CleanTech), the Blueprint outlines where innovation-intensive companies can play a role in economic and social priorities like housing or manufacturing output.
“It’s important for the state that the innovation sector plays a core role in not just bolstering economic productivity and diversification, but also in those areas identified as mission priorities, which aren’t always areas of strength in our innovation ecosystem,” Ms McPhee said.
“So, while we have got a lot of startups and VCs in GreenTech or in FinTech, there are fewer looking at housing and modern methods of construction, and certainly fewer in manufacturing,” she said.
“We have set some ambitious targets for ourselves over the next decade in this Blueprint. It gives us an opportunity to monitor and hold ourselves to account against those targets over that period.”
With the Blueprint now in place, the government has a clear roadmap to build innovation policy over the next decade.
That policy development process is now underway, and all eyes are now focused on NSW Treasurer Daniel Mookhey’s state Budget, to be delivered in June.
The prize on offer for successful policy is well understood. The NSW Government recognises that innovation-driven growth can enhance prosperity in the state.
“The most innovation-intensive businesses in NSW contribute 3.5 times more than comparable businesses to the state’s economic output, the Blueprint says.
“These businesses grow faster and create more full-time equivalent jobs. They offer salaries that are 9 per cent to 30 per cent higher than non-innovation intensive businesses in the same industries.”
The Blueprint sets out four goals:
- Secure the state’s future by growing jobs and commercialisation through innovation-intensive businesses and industries
- Scale and retain globally competitive, innovation-intensive businesses and industries in NSW
- Increase diversity in NSW’s innovation ecosystem
- Leverage innovation to address NSW challenges and advance missions
The Blueprint outlines five action areas across Strategy, Funding, Places, People and Engagement.
The ecosystem will be watching Daniel Mookhey’s Budget with interest. The government has already said it will retain the programs that are clearly working – the MVP (Minimum Viable Product) Ventures is one – but will be looking to improve underperforming areas.
“Increasingly, other strategically important industries and research areas, such as advanced manufacturing, deep tech and health tech, receive a far lower share of VC funding in NSW compared to global allocations,” the Pounder Review found.
“This means that companies involved in areas of innovation critical to the state’s priorities, such as innovative manufacturing and deep tech, may face investment shortfalls if they remain headquartered in NSW.
“Relatedly, while NSW has world-class research concentrations in areas such as health, materials science and clean energy, the NSW innovation ecosystem is not commercialising and translating these strengths into jobs to the degree NSW’s research strength would suggest is possible.”
And that’s the call to action for government as it seeks to encourage innovation-intensive companies across all industries to build and scale across New South Wales.
You can read more about the NSW Innovation Blueprint 2035 here. Or you can find the NSW Innovation System Assessment here (also known as The Pounder Review) .
This article was produced by InnovationAus.com in partnership with Investment NSW and published as part of its sponsorship of the InnovationAus Awards for Excellence 2024
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