Productivity Commission says Australian businesses need to improve how they “absorb” existing innovations
Australia’s Productivity Commission has said that efforts to increase innovation should shift from original work to “diffusion” of existing ideas.
In its third interim report—Innovation for the 98 Per Cent—released in late September, the commission, a government body that has been carrying out an inquiry into national productivity, suggests that more in-house expertise would boost research translation.
The report also takes aim at the cost of accessing academic research, and it suggests a rejig of the R&D tax incentive to clarify covering the cost of employing researchers.
“Australia has neglected to stimulate the uptake of new ideas and should reconsider its use of regulation, skilled migration and education to help businesses change,” it says.
“Governments typically stimulate novel innovation through business tax concessions, grants and procurement policies, and via funding of public sector research institutions and universities…While policies that support novel innovation aid diffusion because the innovators can more readily absorb others’ ideas, in general, the policy approaches to diffusion and incremental new-to-the-firm innovation are different.”
It continues: “There are worrying signs that some of the principal vehicles for acquiring and transferring knowledge are dormant or slowing.” These include labour mobility and the creation and loss of new firms.
“The solutions to these problems are different from the incentives, grants, venture capital funds and public research institutes typically used to stimulate novel innovation.”
Sluggish and patchy
The report says there is a need to stimulate “information flows” between businesses and to encourage wider adoption of new ideas: “Innovation and the uptake of best practice is often sluggish, patchy and inconsistent across jurisdictions.”
It also recommends a review of how innovation is encouraged by different governments, in order “to achieve coordination of the activities that are best managed by each level of government”.
Financial costs to access Australian standards documentation, and “the charging arrangements for the academic literature arising from publicly funded research, should be reformed”, it says.
On the R&D tax incentive, the commission says that while the incentive currently allows “almost any type of expense that is directly relevant to an eligible R&D activity except interest payments and the purchase of capital assets…focusing eligibility criteria on personnel costs could stimulate additional absorptive capacity by bringing additional researchers into firms”. The commission defines “absorptive capacity” as the ability to “assimilate and successfully utilise innovative ideas and practices”.
The report examines the federal government’s A$296 million National Industry PhD programme, announced earlier this year. It says that “increasing innovative outcomes and diffusion by better leveraging highly skilled researchers in industry likely requires more than supply-side measures—business demand for and capacity to use researchers’ skills also matters. Moreover, the programme may be of insufficient scale to make a significant difference to industry.”
“There is substantial scope to increase the industry-readiness of researchers by ensuring that people with postgraduate qualifications are provided with pathways to engage with industry,” the report says.
It found that smaller firms were relatively more likely to collaborate with universities than larger firms, and “there is a widely held view that Australian business collaboration with universities is poor”.
Red tape is likely to reduce the chances of academics consulting with industry, the report says, citing complex procedures at a number of leading universities.
On research commercialisation, the report says that “although the number of university-industry research collaborations have been increasing…there is still scope to create more linkages between early career researchers and industry”.
Submissions on the inquiry’s interim reports are open until 21 October.