The annual report released today by the Chief Economist into the Australian Innovation System reveals an embarrassing story of failure for the Turnbull Government.
That’s why the release of this report had been delayed for several days without explanation and has now been made public on a day that will ensure their failings go unnoticed.
Under this government business investment in research and development has, as the report describes, “declined sharply” falling by 12 per cent – or $2.2 billion – since 2013-14.
The report makes it clear that this government’s mismanagement of Australian manufacturing is damaging the innovation system with “recent large declines in R&D expenditures in manufacturing”. Despite this, over 58 per cent of manufacturing firms identify as innovation-active, the highest of all industry sectors.
Importantly, the report reveals that access to finance remains a key issue for Australian SMEs:
“At the SME end of the business size spectrum, access to risk capital appears to be a major hurdle for innovative Australian businesses. In 2015–16, between 21 and 27 per cent of innovation-active SMEs reported lack of additional funds as a barrier to innovation” (p. 92)
This is why Bill Shorten announced Labor’s Australian Manufacturing Future Fund, which will provide much needed access to finance for innovative Australian SMEs.
This should be a measure that has bi-partisan support.
The report also reveals that:
- There is no evidence that the government’s innovation agenda is working.
- Business dynamism in the Australian economy is failing.
- Australian businesses are lagging behind in digitalisation with low business research and development, and low investment in management capability.
- Businesses consider access to high speed broadband very important, a clear indictment of Turnbull’s NBN failure.
- Venture capital investment in Australia is still lagging.
- Australia only accounts for 0.5 per cent of high R&D growth firms worldwide, compared to the US and China who together represent 67 per cent.
- Australia continues to languish at the bottom of OECD rankings when it comes to collaboration; R&D active firms as a proportion of innovation-active businesses; the proportion of firms engaging in new-to-market product innovation and GERD/BERD as a proportion of GDP.
- Australia’s investment in ICT as a percentage of GDP in 2015 was just over 2 per cent, below the OECD average” and more than 70 per cent of Australian businesses indicated that they had not implemented any management practices for the use of ICT and or the internet.
The report is yet another reminder of the Turnbull Government’s failure to enhance the role of our digital economy and to encourage a greater level of digital engagement by businesses large and small.
The government has shown itself to be completely incapable of improving Australia’s innovative capacity. Businesses are still waiting on the government to respond to the FFF Review into the R&D Tax incentive; the release of the 2030 Strategic Plan for the Australian Innovation, Science and Research System; and for an announcement on NISA 2, which was flagged by then Minister for Industry in the March Estimates.
If Turnbull spent as much time helping Australian businesses innovate as he does on saving his own job, then maybe this report would have told a more positive story.