Key to securing Australia’s high standard of living is in diversifying our economy from one that is skewed toward commodity export and focus more to value-adding. It will mean harnessing our national competitive advantage, which like innovation, is a multidimensional construct.
Comprising our natural resources, stable democracy, skilled workforce and multiculturalism – among other things – every element will be needed if we are to climb up the economic complexity rankings from our current position of 93rd out of 133 countries, which ahs us sandwiched between Uganda and Pakistan.
When we look only at the rich countries, Australia ranks dead last among OECD peers for sovereign manufacturing capability. This is a threat to our standard of living and to our national security in a fraying world.
For the first time ever, a federal government has articulated where we want to invest in. Rather than picking winners, the government instead have picked markets.
These are areas where we have a competitive edge, including in low emissions technology, defence, AgTech, critical minerals, transport, and enabling capabilities like quantum technology, artificial intelligence and medical science.
Arguably, medical science is the sleeping giant for Australia. It is an area where we are primed for success.
In medical research excellence, we are ranked 8th internationally by the Nature Index. Our health system – underpinned by Medicare, which we are strengthening – is ranked first globally (2024) by the Commonwealth Fund.
According to the 2024 Global Innovation Index, we outrank the UK in human capital and research (7th vs 8th) only to trail it overall (4th vs 24th) in innovation. And there lies the paradox.
Despite punching well above our weight for health service delivery, knowledge output and human capital, we have not turned ideas into companies.
We have an ecosystem of 1200 BioTech companies, 55 medical research institutes and are one of 10 countries that boast at least three significant medical science and technology clusters (Melbourne, Sydney, Brisbane).
These precincts enable highfliers to cluster with other highfliers, sparking ideas that could become dollars.
Despite this, medical manufacturing in Australia only accounts for 0.3 per cent of GDP. We have a great many small companies, a small handful of behemoths like CSL, ResMed, Cochlear. But we have a missing middle.
Declining business investment in research and development over the past 15 years is partly to blame. It peaked at 1.37 per cent GDP in 2009 falling to 0.88 per cent in 2022.
As a result, our government has taken a more muscular approach by backing priority areas with investment vehicles like the $15 billion National Reconstruction Fund and the $400 million Industry Growth Program for early-stage companies.
If business won’t do it, then we will, just as previous governments were active in support for CSL.
But government funding isn’t enough. Recognising that innovation occurs adjacent to knowledge discovery is the start. Taking ideas to market demands a different skill set from those found in laboratories or clinics. These skills are best found outside universities.
It also means identifying and supporting talent. In 2023, one year after our government mandated 50 per cent gender representation by the NHMRC, women beat men in overall funding, after getting a staggering $73 million on average less each year in the first four years of the investigator grants scheme.
If only a stroke of the pen could so easily close the gender funding gap in investment. In 2024, Australian female founder startups attracted a pitiful 2 per cent of investment capital.
The leap from researcher to founder is far too hard but assisted with better scaffolding. Like affordable childcare, flexibility at work, challenging gendered stereotypes of breadwinner vs homemaker and secure pay – noting that our early- and mid-career researchers have all the job security of gig workers.
Plugging these holes in the female tech pipeline will give women a chance to sit rather than serve at the founder table.
Also, ensuring we don’t pass over talent with funny surnames means checking our unconscious biases.
A study from Harvard University examined scientific output when a collaborator died prematurely (before 60). Intriguingly, the death of an immigrant colleague reduced the number of patents from the surviving scientists by nearly twice as much (17 per cent vs 9 per cent).
The authors concluded that immigrant inventors are more likely to rely on foreign technologies, foster international collaborations and be cited in foreign markets, disproportionately contributing to the diffusion of ideas across borders.
Tiresome attacks on diversity risks blinding us to the economic potential of this diversity in the health sector.
Consider the trillion-dollar clinical trials industry. Generalisability of findings sits next to efficacy and safety. If a drug works in a diverse population of a few thousand it is likely to work across millions, even billions of people.
And our multiculturalism puts us in the box seat in this regard.
Harnessing this underappreciated element of our national power will be the $18.8 million National Clinical Trials One Stop Shop. Designed to cut red tape and end the post code lottery it will only succeed if we also build health workforce capability in clinical trials.
Our early-stage biotech companies desperately need capital to launch, but Australia’s VC markets are thin.
How we mobilise burgeoning family trusts, angel investors, super and public funds are all part of the first major R&D review in a generation led by Robyn Denholm.
Submissions are welcome. You can help to shape that future you want.
Dr Michelle Ananda-Rajah is the current Federal Member for Higgins, a former doctor and medical researcher. Michelle is running for the Senate at the upcoming federal election.
Do you know more? Contact James Riley via Email.
Well said, Australia is dangerously narrowly focused on its primary exports and we need to diversify especially in the value add industries like the life sciences. The government has a key place to ensure a coordinated approach to help these areas achieve critical mass.