Advances in technology are transforming just about every part of our lives, from the way we work to the way we communicate and access services.
Innovation and science are critical for Australia to deliver new sources of growth, maintain high-wage jobs and seize the next wave of economic prosperity.
Innovation is about new and existing businesses creating new products, processes and business models.
It is also about creating a culture that backs good ideas and learns from taking risks and making mistakes.
Innovation is important to every sector of the report—from ICT to healthcare, education to agriculture, and defence to transport.
It is about tech entrepreneurs working on the latest product but, equally, about farmers using sensor technology to improve yields, or a business bringing new products to market.
Innovation keeps us competitive. It keeps us at the cutting edge. It creates jobs. And it will keep our standard of living high.
Australia is well-placed to take advantage of the opportunities presented by these exciting times. But to succeed, there are areas where we need to improve.
The National Innovation and Science Agenda will focus on four key pillars:
Together these pillars provide a framework for Australian innovation policy. The initiatives are worth $1.1 billion over four years.
The National Innovation and Science Agenda will drive smart ideas that create business growth, local jobs and global success.
Australia has strong building blocks for success…
…but there are obstacles we need to overcome
|Strong economic fundamentals and a stable investment climate||Insufficient access to early stage capital for many startups|
|Direct access to markets in Asia – the world’s economic engine room||The lowest level of industry-research collaboration in the OECD|
|Global reputation as a trusted source of goods and services||School students’ maths skills are falling|
|Home to some of the highest quality scientific research organisations in the world||Government following on innovation, not leading|
The pace of change, supercharged by new and emerging technologies, has never been so great, nor so disruptive.
It is being driven by rapid advances in computer processing power and data storage capacity, with an average smartphone more powerful than the combined computing power of NASA in 1969.
The Internet is also disrupting traditional jobs, businesses and industries in a manner that would have been unimaginable just a few decades ago. Uber, the world’s largest ridesharing company, has disrupted the taxi industry, Airbnb the holiday rental market, Facebook the advertising industry and iTunes CD sales. The pace of change is more remarkable than the scale — Uber and Airbnb were both founded less than a decade ago.
The Internet is breaking down barriers to entry and presenting an enormous platform for innovation. Although the Internet exposes more local businesses to new sources of competition, it also means that a larger and far wealthier global market has become accessible to Australia.
At the same time, economic convergence means countries that had, until recently, competed for low cost, low skill jobs are now competing for the most skilled and producing the most advanced products. For Australia this is both a threat and opportunity. Competition for market share is fiercer than at any point in history but it also means that more consumers have burst into the middle class.
Much of this growth has been and will be in our region — in the next 15 years China and India together will be home to over 2.3 billion middle class consumers.
Australia is in its 25th year of economic growth but faces new challenges as the mining investment boom comes to an end.
Innovation is critical to improving Australia’s competitiveness, standard of living, high wages and generous social welfare net, but it is not the silver bullet. We must also build on the successful economic reforms of the 1980s and 1990s, lift government efficiency and improve competition, as proposed by the Government’s response to the Harper Review.
While historically high commodity prices have driven the growth in our living standards over the last decade, fostering innovation and commercialising ideas will be a key driver of future jobs and growth.
Innovative firms are more competitive, more able to capture increased market share and more likely to increase employment than their competitors. Over the period 2006-2011, 1.4 million new jobs were created by firms aged less than three years old. Employment in mature businesses, in contrast, fell 400,000.
Government supports innovation by investing in enablers such as education, science and research, and infrastructure; incentivising business investment; and removing regulatory obstacles such as restrictions around employee share ownership or access to crowd-sourced equity funding.
The Government is investing around $9.7 billion in research and development in 2015-16. Around $3.2 billion directly supports business sector R&D and much of the rest funds research in universities and research agencies such as CSIRO.
Government also enables innovation by investing in traditional infrastructure such as research laboratories, roads and rail and digital infrastructure such as the nbn, which currently passes 1.5 million premises, with construction to begin in areas covering almost 7.5 million premises over the next three years.
Australians are renowned for their smart ideas, but we often fail to back them and turn them into commercial realities.
Only 9% of Australian small to medium sized businesses brought a new idea to market in 2012-13, compared to 19% in the top five OECD countries.
Our vision is for Australians to be confident, embrace risk, pursue ideas and learn from mistakes, and for investors to back these ideas at an early stage.
We will provide new tax breaks to remove the bias against businesses that take risks and innovate, and we will support greater private sector investment by co-investing to commercialise promising ideas through a CSIRO Innovation Fund and a Biomedical Translation Fund.
Australia’s rate of collaboration between research and industry sectors is the lowest in the OECD. We need to encourage Australia’s world-class researchers and businesses to collaborate to shape our future industries and generate wealth.
We will change funding incentives so that more university funding is allocated to research that is done in partnership with industry; and invest over the long term in critical, world-leading research infrastructureto ensure our researchers have access to the infrastructure they need.
Too few Australian students are studying science, maths and computing in schools – skills that are critical to prepare our students for the jobs of the future. We also need to create an environment that attracts the world’s best talent to our shores.
We will support all Australian students to embrace the digital age by promoting coding and computing in schools to ensure our students have the problem solving and critical reasoning skills for high wage jobs. We will also link Australia to other innovative economies and change the visa system to attract more entrepreneurial and research talent from overseas.
Government has consistently lagged behind the private sector in innovation. We must back new ways of ‘doing business’ and learn from mistakes.
We will lead by example by becoming more innovative in how we deliver services and make data openly available to the public and make it easier for startups and innovative small businesses to sell technology services to government.
We will place innovation and science at the centre of the Government with a new sub-committee of Cabinet, and will establish Innovation and Science Australia as an independent advisory board.
The Government has a key role to play in setting a vision for the future of the nation and putting in place the policies that allow Australians to succeed and prosper.
This Agenda is an important step on the path to a more innovative and entrepreneurial economy.
It builds on key measures we have already put in place, including:
This package of measures is not the end of the Government’s commitment to nurturing a healthy innovation system.
We will make innovation central to all our major policies going forward. This will include a focus on innovation in the Defence White Paper and the Tax White Paper, and build on our responses to the Harper Competition Policy Review and the Murray Financial System Inquiry.
Part of being a Government committed to innovation is to lead by example and respond to changing circumstances.
We believe the measures in the Agenda put us on the right track to becoming a leading innovator. But we will also be open to adapting and changing course if things don’t work. This is what an agile government should do.
A more innovative Australia will improve the quality of life of Australians across the country, from our cities and our regions, to our rural and remote communities.
Every Australian will benefit from an agenda that puts innovation and science at the heart of government.
Australians have great ideas – both from our world class research and from traditional Australian ingenuity. We don’t always make the most of those ideas, missing the opportunity to transform them into new businesses and new jobs.
We need a greater emphasis on celebrating success rather than penalising failure. This takes a cultural shift to encourage more Australians and businesses to take a risk on a smart idea. We need to leave behind the fear of failure, and challenge each other to be more ambitious.
We need to improve the availability of finance for our innovative startups. The period between initial funding to when a startup begins generating revenue is known as the ‘valley of death’. During this time additional financing is usually scarce, leaving the business vulnerable to cash flow requirements.
Around 4,500 startups miss out on equity finance each year and access to additional finance is one of the main barriers to growth that startups face. Innovative businesses that don’t have a track record and that are not following a proven methodology can find it particularly difficult to raise finance from traditional sources. Early stage investors, whether individuals or companies, can play a key role, both in providing direct investments and in contributing their business experience.
The venture capital industry is gaining momentum in Australia, with over $600 million raised or planned since 30 June 2015. Confidence in early stage startup activity is strong, but this is primarily concentrated in the technology sector. It’s important that we build on this momentum, improving funding for promising projects right across the economy.
The measures in this package will address this funding gap and help ensure a steady flow of investment opportunities through to later stage venture capital investors.
Over the decade from 2001 to 2011, SMEs aged less than five years employed only around 15% of the Australian workforce, but made the highest contribution (40%) to net job creation in Australia.
The Government has a strong track record in promoting an entrepreneurial culture and supporting businesses.
We have introduced generous tax concessions for startups who reward their staff through employee share schemes, allowing them to compete with established companies and to attract the best talent from overseas.
We have also introduced legislation to allow new companies to attract financing through crowd-sourced equity. The scheme allows companies to raise up to $5 million per annum through this mechanism, which compares favourably to other countries such as the United States (US$1 million p.a.) and New Zealand (NZ$2 million p.a.).
We need to support new businesses that disrupt and challenge the status quo – creating new opportunities and new jobs like SEEK and Atlassian.
For example, the jobseeking website SEEK was founded as a startup in 1997. SEEK is now one of Australia’s top 100 companies with market capitalisation of over $4 billion and over 500 employees in Australia and New Zealand alone.
In 2001, Mike Cannon-Brookes and Scott Farquhar founded Atlassian on a $10,000 credit card. Today the enterprise software company is a multinational valued at over US$3 billion and employs over 750 people.
Text description: Emma’s startup journey to market. Emma has a new idea to produce on-demand 3D printed parts for farm machinery. Emma sets up her new business, 3DPrintSmart Pty Ltd. Explore: Emma accesses the expanded Innovation Connections programme to fund a scientist that helps co-design her prototype printer. Emma spends $500k on designing software for her new 3D printer. She receives a refundable tax off set through the R&D Tax Incentive. Validate: Alex, a savvy early stage (angel) investor, invests a further $1 million in 3DPrintSmart and claims a 20% tax off set under the Tax Incentive for Startup Investors. Demonstrate: Emma needs a further $10 million to produce and market her 3D printing services to farmers. A-OK Ventures invests $10 million in Emma’s business using funds from a range of investors who are eligible to claim a 10% tax off set under new reforms to ESVCLPs. Emma starts selling her service to the market. Launch: Emma’s business becomes profitable and grows, creating local jobs. As a result, 3DPrintSmart will have greater access to deductions for previous tax losses through the new Predominantly Similar Business Test.
Collaboration is about our brightest minds in research and business working together to create novel solutions and job-creating enterprises. Businesses that collaborate on innovation with research organisations are three times more likely to experience productivity growth.
Despite these benefits, Australia’s rate of collaboration between industry and researchers (at 2-3%) is currently the lowest in the OECD. Australian businesses do not have as much internal research expertise as key comparator countries either. At 43%, Australia’s proportion of researchers employed in business is significantly lower than countries such as Germany (56%), South Korea (79%) and Israel (84%).
That’s why this Agenda includes a package of measures to translate our world leading science and research into growth opportunities.
The $20 billion Medical Research Future Fund has been established to provide a new, sustained increase in funding available for medical research and innovation.
Our five Industry Growth Centres will lift innovation, competitiveness and productivity to drive industry growth in areas of national competitive strength.
We have set Science and Research Priorities to help build capability and ensure that our worldclass science and research efforts align to our needs.
We have developed an Intellectual Property Toolkit, with model contracts and case studies, to facilitate collaboration between research and industry.
We reformed the long-standing Cooperative Research Centres programme to enhance their focus on industry and growth sectors.
The ATN represents five of Australia’s technology focussed universities. At these universities, 70% of research income has come from industry and other end users since 2010, and 92% of ATN research is rated at or above world standard (2015).
The ATN is also partnering with business to engage doctoral students in solving-real world problems, through its Industry Doctoral Training Centre in Mathematics and Statistics.
The talent and skills of our people is the engine behind Australia’s innovative capacity. We are focussed on equipping Australians with the skills needed for high wage, high productivity jobs. We will also attract the best and brightest to Australia and do more to leverage our extensive diaspora and their networks by working with organisations such as Advance.
We need to expose more students to coding and computational thinking to equip our students with the problem solving and critical reasoning skills for the jobs of the future. Over the coming decades some jobs will be lost to automation but many other new jobs will be created in both new and existing industries.
The Foundation for Young Australians predicts that today’s young people will hold as many as 17 different jobs, in five different careers, over the course of their working lives. Our education system, therefore, must equip students to be successful entrepreneurs, hold a diverse number of jobs or work across a number of industries.
Women hold around a quarter of STEM and ICT related jobs and are significantly underrepresented in high level research positions. We need to engage more girls in STEM and computing, and provide pathways to progress their interest across the education system and into careers.
To ensure that our young people have the skills they need for the future, the Government has been leading nationally by calling for and working with the States and Territories on a national STEM School Education Strategy.
In September 2015, the Australian Curriculum was endorsed by the COAG Education Council. The Curriculum includes a digital technologies element – and the Government has reinforced this with $3.5 million for teaching coding, as part of the $12 million restoring the focus on STEM in schools in 2014.
To get the skills that businesses need now, the Government has been refining its visa settings – including by improving 457s for startups so that they can access the workers they need right now.
As part of an Australian Government funded initiative, 54 school girls will be brought to Canberra in December for the first national all-girls Curious Minds STEM extension learning and mentoring programme.
School girls from diverse backgrounds will spend four days learning science, informatics and mathematics, mentored by inspiring women in science, including Professor Angela Moles (2013 Life Scientist of the Year), and young innovators such as Microsoft’s Esther Mosad.
To help Australians prepare for the jobs of the future, we are investing $51 million in:
We will bring entrepreneurs and other innovative talent to Australia by:
To inspire the next generation in STEM, right from the beginning and throughout their schooling, we are investing $48 million in:
We are committed to changing the way government delivers to Australians by trialling good ideas, sharing information, looking for innovative suppliers and changing our policies when they are not working.
It has often been easier for government to continue with the ways things have been done rather than embrace new technological opportunities. We are making government digital by default and opening up procurement and data to encourage innovation in Australian business. Digital technologies provide huge opportunities for government to deliver better services for less money.
The Government is actively leading the cultural and technological change required to ensure innovation is central to the way government operates. We are setting up a new independent board – Innovation and Science Australia– to act as a strategic coordinator of science, research and innovation policy across government and the economy.
We established the Digital Transformation Office to help government deliver simpler, faster and easier to use digital services to the public. It works across government agencies using agile techniques to fast track digital projects.
We are partnering with Pollenizer, an established Australian incubator, to find, incubate and accelerate innovative business ideas that leverage openly available data from the Australian Government.
InnovationXchange has been established within the Department of Foreign Affairs and Trade to catalyse and support innovation across the Australian aid programme.
The Australian Taxation Office has made tax and super help easily accessible through a new app.
In 2015, the ATO was recognised for being the first Commonwealth agency to deploy such a mobile app on all three major app stores after undergoing a major internal cultural transformation.
The ATO’s mobile apps team designed, built and delivered the app in less than 10 weeks by engaging with key stakeholders and business partners.
|Tax incentives for early stage investors||$0m||$3m||$51m||$51m||$106m|
|New arrangements for venture capital investment||$0m||$0m||*||*||*|
|Access to company losses||$0m||*||*||*||*|
|Intangible asset depreciation||$0m||$0m||$20m||$60m||$80m|
|CSIRO Innovation Fund**||$0m||$5m||$5m||$5m||$15m|
|Biomedical Translation Fund**||$2m||$6m||$1m||$1m||$10m|
|Incubator Support Programme||$0m||$3m||$3m||$3m||$8m|
|Improve bankruptcy and insolvency laws||$0m||$0m||$0m||$0m||$0m|
|Employee Share Schemes||$0m||$0m||$0m||$0m||$0m|
|Critical research infrastructure||$0m||$15m||$198m||$245m||$459m|
|Sharper incentives for engagement||$0m||$25m||$51m||$52m||$127m|
|Global Innovation Strategy||$0m||$7m||$9m||$10m||$26m|
|Cyber Security Growth Centre||$0m||$4m||$7m||$11m||$22m|
|Measuring impact and engagement in university research||$2m||$3m||$2m||$2m||$9m|
|ARC Linkage Projects Scheme||$0m||$0m||$0m||$0m||$0m|
|Inspiring all Australians in digital literacy and STEM||$0m||$26m||$25m||$33m||$84m|
|Support for innovation through visas||$1m||$1m||$0m||$0m||$1m|
|Business Research and Innovation Initiative||$0m||$4m||$10m||$5m||$19m|
|Innovation and Science Australia||$1m||$2m||$3m||$2m||$8m|
|Public data strategy||$0m||$0m||$0m||$0m||$0m|
|National Innovation and Science Agenda||$9m||$143m||$424m||$521m||$1,097m|
** The $70m investment component of the CSIRO Innovation Fund and the $250m investment in the Biomedical Translation Fund do not directly impact on the underlying cash balance.
Note: Totals may not add due to rounding. The funding in the table covers the forward estimates only but most measures have funding implications beyond the forward estimates, such as Critical research infrastructure (totalling $2.3b over the next decade), Inspiring all Australians in digital literacy and STEM (totalling $112m to 2019-20), Cyber Security Growth Centre (totalling $30m to 2019-20), Quantum computing (totalling $26m in funding to 2021-22) and Global Innovation Strategy (totalling $36m to 2019-20).
© Commonwealth of Australia 2015
|ISBN number||Publication format|
|ISBN 978-1-925238-17-4||National Innovation and Science Agenda (Hardcopy)|
|ISBN 978-1-925238-18-1||National Innovation and Science Agenda (PDF)|
|ISBN 978-1-925238-19-8||National Innovation and Science Agenda (HTML)|
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