Go back

Innovation funding ‘must move beyond traditional R&D’

Image: Rawpixel Ltd [CC BY 2.0], via Flickr

Federal grants for organisation and marketing practices would boost business investment in innovation, says report

Australia must expand its innovation investment “beyond traditional R&D” and fund research that develops improved business models, services and marketing practices, according to a federal science report.

The report also calls for the government to reduce reliance on R&D tax incentives as a primary support mechanism for innovation and to create grants that will make “non-R&D innovation” a high priority.

It says investing in non-R&D innovation is essential for Australian businesses to create skilled jobs and remain globally competitive.

The Innovation and Science Australia report was commissioned in February 2019 by federal industry, science and technology minister Karen Andrews. It involved more than 180 companies in a national analysis of R&D investment.

The agency advises the government on science and research and was asked to recommend measures to increase business investment in innovation. Its board members include Australia’s chief scientist Alan Finkel and Bronwyn Harch, deputy vice-chancellor of research at the University of Queensland.

“We are defining non-R&D innovation as innovation activities that do not stem from a scientific method or involve R&D. Examples include the development of new and improved business models, as well as organisation and marketing practices,” the report says.

“While business investment in R&D remains important, data shows that Australian businesses, like their international competitors, are investing in innovation activities beyond R&D. This has implications for the way government should frame its policy mix.”

The report makes four strategic recommendations: a rebalanced federal policy mix that introduces support for non-R&D innovation for a defined period of between 5 and 10 years; prioritising investment in areas such as advanced manufacturing and agribusiness; political leadership across portfolios to encourage non-R&D investment; and attracting skilled business innovators to Australia.

“The government could encourage and accelerate a shift towards a more balanced approach, rather than focusing predominantly on the supply of R&D activities. This can be achieved by increasing the use of more direct measures—such as innovation grants to high-potential firms,” the report says.

“Australian businesses are increasingly recognising the importance of non-R&D innovation in addition to more traditional R&D activities. The shift to non-R&D innovation broadens the opportunity for a wider set of firms and industries to grow through innovation.”