Jeremy Byrne’s AussieInnovation weblog

Part I: Context

While some level of review might seem judicious for a party returning to office after an eleven-year absence, the Rudd government’s 80-plus reviews^[1] do seem to invite comment; but when Tony Abbott quipped recently on Lateline that Kevin Rudd had “hit the ground reviewing”,^[2] he inadvertently echoed a phrase first used by UK MP Austin Mitchell to characterise his own now very long-lived New Labour government.^[3] New Labour’s 1997 General Election Manifesto^[4] had copiously referenced “innovation”, but hadn’t encompassed the idea of reviewing the country’s “innovation system”. A decade and a generation or two of political jargon later in April 2007, the then-opposition’s ALP’s New Directions for Innovation, Competitiveness and Productivity document^[5] did promise such a thing, and the Cutler committee’s Review of the National Innovation System^[6] was the result.

Labor can legitimately claim to have initiated government involvement in business innovation, with the first public venture capital and R&D concession schemes coming directly out of a 1984 visit to Sweden by John Button, the Hawke government’s Minister for Industry and Commerce.^[7] Button died of pancreatic cancer in April, before the Cutler review concluded, but his trademark centrist post-protectionism is well reflected in the Venturous Australia document the review produced. Likewise, the new Labor government’s agenda is well served by the report’s conclusions.

The tone of those conclusions was summed up by Button’s parliamentary and ministerial successor, Innovation, Industry, Science and Research Minister Kim Carr, when told The Committee for Melbourne on 09-September^[8] that “[m]uch of the great work done by John Button and his colleagues in the reforming Hawke and Keating governments has been undone over the past twelve years.” “During that time,” Carr explained, “Australia became the only OECD nation to reduce public funding for higher education. Business investment in R&D fell for the first time on record. Growth in research degree commencements stalled.” “According to the ABS,” he’d claimed earlier in the day,^[9] “two-thirds of firms do not spend any money on R&D or innovation.”

The review’s chair was both more specific and more damning in his own commentary. Dr. Terry Cutler opened proceedings on the second and concluding day of Melbourne’s InnoFuture 2008 conference—the morning after the report’s release—with a presentation that pulled few punches in its assessment of Australia’s current position.^[10] We are “underperforming massively,” Cutler told attendees, compounding our “structural handicaps” and slipping alarmingly in most relevant metrics.

At 0.2, Australia’s “trade intensity” (a ratio of external to internal trade) is one of the lowest in the world. Other than BHP Billiton, our top eight firms are purely domestic, and only half of our top 90 innovators earn more than 50% of their income offshore. Our “IP deficit” is $2.5bn annually and rising, our researcher numbers are declining as a proportion of the total workforce, and our measurement science is “massively underfunded”. Both informal and formal social networking is largely ignored by business and government, our digital media regulation is outdated, and we’re 24th in the OECD 28 for firms having their own website. Australian business investment in R&D is half the OECD average. We rank last in the OECD for employer investment in vocational education and training; we rank last for firms with foreign cooperation in R&D; and in a 2007 international business survey, less than 3% of respondents selected Australia amongst the “most attractive foreign R&D locations”.

Continuing the theme, Cutler quoted some even more esoteric statistics to the ICT-oriented audience for his Pearcey Oration speech of 11-September entitled “Not waving, but drowning”.^[11] While some 4.8% of Centenary Medals were awarded for sporting achievement, he told them, Innovation accounted for a mere 0.03%. Similarly, the Order of Australia has found Sport 54 times more worthy of recognition than Innovation. “Reviewing our recent innovation performance,” Culter said, “does not inspire confidence in Australia’s future. […] As a share of GDP we are investing less in education, talent development, and R&D than we were more than a decade ago.”

“We’ve had, I think, a misguided focus over the last ten years or so,” Cutler told Deloitte Australia’s Gerhard Vorster in a 10-September interview.^[12] “We’ve lost clarity about our core roles.” His report card summary comment for Australian innovation? “Doing very poorly.”

end of part one

[1] Tim Colebatch, “Rudd under pressure to earn venture capital”, The Age, 10 September, 2008

[2] “Abbott attacks Rudd’s ‘inaction’ ahead of speech”, ABC News, 27 August, 2008

[3] Poppy Brech, “FOCUS: UK LOBBYING - Getting ready for a flurry of activity. With the new Government keen to involve industry in its policy making process, the time is ripe for businesses to raise their voices in Parliament.”, PR Week UK, 13 February, 1998

[4] Tony Blair, “New Labour: because Britain deserves better”, 01 May, 1997

[5] Kevin Rudd and Kim Carr, “New Directions for innovation, competitiveness and productivity”, April, 2007

[6] Various, Review of the National Innovation System, Wikipedia

[7] Kim Carr, “John Button and his Artful Australian Industrial Revolution”, 09 April, 2008

[8] Kim Carr, “Review of the National Innovation System Report - venturous Australia”, Speech to the Committee for Melbourne, 09 September, 2008

[9] Kim Carr et al, Media Conference To Release The Review Of The National Innovation System Report, 09 September, 2008

[10] Terry Cutler, Innofuture 2008 Conference Presentation, 10 September, 2008

[11] Terry Cutler, “Not Waving, but Drowning”, The Pearcey Oration, 11 September, 2008

[12] Gerhard Vorster and Terry Cutler, “Venturous Australia - building strength in innovation”, Deloitte Australia Insights podcast, 10 September, 2008