From the invention of the boomerang to the medical application of penicillin and the invention of the cochlear bionic ear, Australians have shown themselves to be an inventive lot.
If necessity is the mother of invention, the impacts of the COVID-19 pandemic should produce a resurgent wave of Australian innovation across industry, government and the wider community.
A sustainable future will demand collaborative partnerships and a national drive for scalable innovation in health care and critical growth sectors, with coherent public policy providing necessary cohesion. However, several obstacles lie in the path of the required collaboration.
Alignment of partner needs
Australia’s scientific researchers are among the world’s best, with the OECD ranking the country sixth for research publications per capita. Yet, the nation is ranked last when it comes to vital cross-sector (industry, tertiary education, government and public research institutions) collaboration for scalable innovation.
Current policy settings promote transactional, end-user type R&D relationships, however, longer-term, co-creative partnerships provide greater opportunities for scalable innovation and its economic benefits.
The growing international trend towards co-creative partnerships reflects the benefits of greater science-industry knowledge transfer and two-way mobility of researchers.
Such scalable partnerships are vital to the national interest as commercialisation is a collectivised and cumulative value-creating process, with economic benefits peaking at the 15-year mark.
A recent example is the CSIRO venture with Meat & Livestock Australia and James Cook University that produced a breakthrough innovation in a near-zero methane emission feed additive for cattle. The spin-off entity that will commercialise the invention, holds the global rights, exclusively to the patents of the IP partners.
Industry innovation performance gaps
According to a study by the Australian Institute of Company Directors, Australian boards lag behind their international counterparts in prioritising innovation.
More precisely, there is a considerable lack of technical skills within boardrooms. The focus on short-term shareholder value, increasing venture risk aversion and a general decline in reinvestment, incline corporate strategy towards M&As and industry consolidation rather than innovation.
The investment hurdle
A country’s ability to commercialise innovation is a key factor in attracting venture capital. According to the Australian Investment Council, Australia’s share of Asia– Pacific private equity and venture capital has declined to 3% and is ranked six out of eight for total assets under management (AUM).
Furthermore, a lack of partnerships to scale innovation and a significant decline in local private investment since the mid-2000s remain barriers to foreign investor appetite.
The COVID-19 crisis provides an imperative case to address the conceptual, policy and funding gaps that too often stifle innovation. The national mission for economic resilience should broaden the traditional focus on end-user R&D relationships towards strategically aligned, scalable partnerships. A logical starting point would be establishment of those partnerships that address the nation’s diminished manufacturing base, across critical national security industries.
So what can be done to improve performance towards scalable cross-sector partnerships?
- The immediate addition of a tertiary education Industry Growth Centre (IGC) as a conduit to policy development and a knowledge/human capital transfer hub that interlaces the other six IGCs. Key outputs should include a 10-year education sector growth plan to ensure international competitivity.
- A national and state focus on scalable innovation in critical sectors such as healthcare, agriculture and cybersecurity to mitigate future crisis, leveraging sector strengths to produce value-added exports
- The R&D tax concessions under review could be better aligned to encourage critical sectors and be later broadened to stimulate scalable innovations in other sectors. Competitive bidding between applicants for public funding of Business Enterprise R&D (BERD), financed by the lowest interest rates in modern history, would provide fairness and fiscal efficiency
- Company boards and academic councils should ensure innovation partner representation to fill technical skills gaps. Management needs to be made accountable for the establishment of an innovation road map that includes partnerships. Specialist skills in partnership management can be brought in, acknowledging that innovation partnerships do require resourcing
The spur to US innovation was the Soviet threat, Israel the hostility of its surrounding states, while Singapore responded to the limitations of a resource-poor island state dependent on its neighbours. Australia’s leaders across sectors cannot waste the opportunity the COVID-19 crisis provides for the emergence of an innovative nation and the futureproofing of the economy.
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