The Office of the Chief Economist has released the 2014 Australian Innovation System Report, identifying Australia as a relatively mediocre innovator compared to the other OECD countries. Experts say this lack of innovation is leaving Australia vulnerable to economic shocks as resources play a less dominant role in the economy.
According to the report, levels of new to market innovation have dropped in the last ten years. Despite this, Australian rates of business creation are in the top five by world standards. Through a survey it was established that Australian businesses nominated a lack of funding as the main barrier to innovation, which is also reflected in the lack of investment into innovation in Australia. A worrying statistic found in the report explained that of the 2 million businesses in Australia, only 9,000 undertake R&D. Australia spends 1.23% of GDP on R&D, most of which is concentrated in primary and mining industries, which places it in 15th place out of the 34 OECD countries. Australia’s R&D investment in high tech manufacturing, however, is well below average, shown in the figure below.
This poor performance innovation is due to:
A common measure of innovative performance is investment in intangibles including R&D, brand equity and intellectual property. The Innovation System report highlights similarities between R&D, innovation, international competitiveness and business performance, however, only one sector (mining) has a labour productivity (competitiveness) that is well above the median. All other sectors were at or below the median.
From an international perspective, the number of locally originating patent, trade mark and design fillings places us in the lower middle range. Worse still, the report established the percentage of innovation-active businesses in Australia has decreased since 2011.
This report references various other reports establishing innovation as a vital component for Australia’s performance and competitiveness in the business world. As the mining investment boom recedes, the role of innovation becomes more crucial. There is a strong need for Australian businesses to begin prioritising innovation and actively promoting an innovative culture. The Australian Government also has a responsibility to facilitate and encourage innovation.
Source: Lexology
