Innovation in The Age

I had an opinion piece in The Age today about the National Innovation Review. It is reproduced over the fold.

An Ideas Nation needs some encouragement

Joshua Gans, The Age, 11th September 2008

NEW governments undertake reviews and the Federal Government is no exception. Among these, the Review of the National Innovation System, headed by Terry Cutler, stands out. The review received more than 700 submissions. While this is a large number, what is more extraordinary is the diversity of respondents.

From big business and industry groups, to entrepreneurial start-ups, academics and many from the public, there appears a latent supply of ideas to reinvigorate our innovation system. The review brought them all forward.

Not surprisingly, the review chose to absorb rather than cite the submissions. The review was only 200 pages. (Compare this with the 700-page omnibus from the Australian Competition and Consumer Commission into the grocery sector.) In short snippets, it covers the range of issues in the innovation system. Its basic message is that the task of generating innovations is hard but that, in the Australian case, our performance has stalled. While it shouldn’t surprise us that a new government might point to neglect from the previous one, the data in this case speaks for itself.

The drivers of our future innovative performance — research and development expenditure, investments in people, our intellectual property system and the share of university research — have all fallen by the wayside since 1996. The end result is that, while Australia has enjoyed economic growth in that period, the things that will sustain it have petered out. It should send alarm bells ringing.

The problem faced by the Cutler review, of course, is that what is needed is a macro change in these variables. We need to bring our education and funding levels up to those of our peer economies, and we need to do it soon. That task is easier said than done. The review says: “From an economic perspective, no country can aspire to technological leadership in all areas, and fortunately, thanks to global integration, we do not have to do so. Instead, we must make a choice as to how to apply our limited resources to impact on the direction and the efficiency of our contribution to the global knowledge pool.” For the most part, the review argues for a better innovation policy.

The review gets into specifics here. For instance, it recognises that by simply being a significant economic player, the level of innovation within government is important. It suggests that the Government prioritise innovation in key policy areas under its control (for example, climate change mitigation). But it goes on to suggest that the Government look for ways to constantly improve the way it operates.

The review also considers the Government as a designer of markets. It can set the “rules of the game” so innovation can flourish. An example is to unlock public information ( for example, petrol price data) to be used by entrepreneurs for the benefit of consumers. Another is to build up our national collection to allow researchers to build more effectively on past research. This is not industry assistance but a move towards market assistance.

While the review is sporadic in its message (for example, the role of business innovation is recognised but no clear role for government is articulated), there are bits that will grab the attention of many. For my part, it is the overall philosophy that is encouraging.

Perhaps in a swipe at our attention on reaching Organisation for Economic Co-operation and Development averages as being “good enough”, the review says: “To take piecemeal approaches is to accept mediocrity.” While piecemeal approaches can get us to the middle of the pack, it is something more special, more systematic and more committed that could get us to the fore. As a nation, we can become a solid contributor and a valued competitor for ideas. Isn’t that what we should really be aiming for?

Joshua Gans is a professor of economics at the Melbourne Business School. He was an external adviser to the Cutler review.

One thought on “Innovation in The Age”

  1. Nice piece but I thought the post headline as shall we say had a touch of the “military intelligence” thing about it!

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