It is one year since the government issued its formal response to the 30 recommendations contained in Innovation and Science Australia’s report, Australia 2030: Prosperity through Innovation.
It is also a little over three years since the launch of Malcolm Turnbull’s signature National Innovation and Science Agenda (NISA) in December 2015.
And it is a little over two-and half years since the 2016 federal election, a campaign in which ‘innovation’ featured prominently, but which was never to be spoken of again after the Turnbull Government was returned by the barest of margins – a single seat being the difference between government and the opposition benches.
Timing is everything in politics, and it is fair to say that the ISA 2030 report was released into the Australian political mainstream at a very unfortunate moment in time. No-one wanted to talk about it, not then or now.
As we move on to an election footing – and the industry sets itself a foreshortened set of agenda priorities – it is worth taking a closer look at the ISA’s 30 recommendations, and the government’s response to them.
Professor Roy Green is a special advisor and chair of the UTS Innovation Council at the University of Technology Sydney. He is also the author of the authoritative report delivered to the Senate inquiry into Australia’s Innovation System on which much of the thinking behind the NISA statement was based.
Prof Green says the goals of the ISA 2030 were wildly ambitious; nothing less than the urgent transition of post-mining boom Australia to a more knowledge-based economy.
But the actual recommendations were modest, he said, a pragmatic attempt to encourage action in a difficult political climate on innovation issues.
“The proposals were deliberately tailored for a government that has lost interest in the area, that doesn’t want to take risks, and doesn’t want to spend money,” Prof Green told InnovationAus.com.
Of the 30 recommendations, the government supported just 17. It gave in-principle support for 10 recommendations and ‘noted’ three recommendations.
Only slightly more than half of the ISA proposals, in other words, were accepted.
And the “in principle” support for 10 recommendations has been exactly that in most cases. As in,nice idea but no action.
Consider Recommendation 10 to open up new avenues for accessing overseas talent through targeted updates to the skilled migration program – and to have Austrade start marketing to the world to attract specific skills.
This recommendation was supported by government, and yet has fallen so radically short of what was needed that access to skills is considered a Top Three crisis by all parts of the technology sector.
The only reason it isn’t number one is because the massive fails around R&D changes and the encryption bill are even more urgent disasters.
But it has been what has happened to the recommendations in the year since that tells the story,and it’s bleak.
Look at the in principal support for Recommendation 7, whereby the Export Market Development Grant would be bolstered through a funding boost, partly from redirected R&D funding. This has been lost in translation.
Or Recommendation 14 which was to set a target of 33 per cent of contracts by dollar value to be awarded to small and medium sized businesses, whereby the Industry department would report on progress annually. Even the in-principle support has gone AWOL.
Or Recommendation 15 which sought the expansion of programs like the successful SBIR (Small Business Innovation Research) program in the United States, which has been glacial and produced zero impact.
The sweeping changes to the R&D incentive program that was a cornerstone of Bill Ferris’ thinking was “noted” – in other words rejected – as was the recommendation that industry-research collaboration attract a ‘premium’ tax relief.
Prof Green says the key objective that was set out in the ISA 2030 strategy was this transition to an economy in which knowledge-based industries played a significantly bigger role. And to get there meant significantly increasing the nation’s investment in R&D.
That means encouraging an increase in both business expenditure on R&D as well as publicly funded R&D.
Australia presently spends a total of about 1.88 per cent of GDP on research and development. Five years ago that was 2.11 per cent, Prof Green told InnovationAus.com, “so we’re going backwards.”
“The countries that take an innovation approach that [Australia] might aspire to spend about 3 percent of GDP on R&D – so we are seriously, seriously lagging.”
“The ISA report projected that that if all of its measures were introduced, [we] might have boosted that [R&D spending] to 2.7 per cent. But of course the measures have not been introduced.
“And so we have a very big challenge ahead of us.”
“This will be the first year in 15 years where the mining industry will no longer contribute to net GDP growth in Australia,” Prof Green said. “Some mining is growing and some is not – but the net aggregate effect of that is that mining will not contribute to growth this year.”
“And that means we have to find other sources of growth. And that growth, as Bill Ferris and his [ISA] board pointed out, will need to be in knowledge-intensive products and services.
“This is especially the case for a high-cost economy like Australia, which needs to compete in knowledge and ingenuity, not on labour costs,” he said.
“We need to find new sources of income. In particular we need new sources of growth in exports to make up for the diminishing returns from revenue we see for unprocessed materials.”