Asia-Pacific Symposium on Entrepreneurship and Innovation: National Innovation System Perspectives How Australia Keeps Failing the Innovation Test Professor Ron Johnston Australian Centre for Innovation April 2009

Evidence? Historical track record – Stump-jump plough, Victa lawnmower, Hills Hoist… Current track record – Cochlear, Resmed, Bishop Engineering, CSL, Barry Marshall, Ian Frazer … So, name Australia’s leading systematically innovative industrial sectors?

More Evidence “Other cities have to strive; Sydney is a global city” (former NSW Minister) “ Enough about technology-based competitiveness: we’ve got the minerals” (senior Treasury official) “ If innovation mattered so much, where is your constituency?” (DIISR official)

Even More Evidence

The Cutler Starting Points The architecture of Australia’s innovation system is a generation old The nature of innovation is changing fast Australian Government investment in research and innovation declined by 25% as a % of GDP from 1994 to 2008 Productivity growth has declined from twice the OECD average in the mid-1990s to half of it in the mid-2000s

Cutler’s Central Findings The supply-driven model of innovation has limited application Most effective innovation occurs in the context of application Innovation is everyone’s business, and responsibility Governments should be leaders and supporters of innovation, not its primary blockers

Likely Outcomes? No transformation of the architecture of Australia’s innovation system Addressing one important component (research funding) but probably our greatest strength* Enterprise Connect to carry the major burden of change No seizing of the time for renewal to prepare for the next business cycle

Why? a passive, market-failure and supply-side view of policy roles – the economic hierarchy thinks equilibrium, not dynamism; an over-reliance on capability development through investment in public sector R&D; a narrow focus in public sector policy on science and innovation in one or two portfolios; an underestimation of the implications for capabilities and policy of the rising importance of innovation; an underinvestment in the knowledge to inform policy; a misplaced confidence in the existing institutions to coordinate capability development a profound stance of risk aversion in government bureaucracies.

Where to From Here? Keep the pressure on to reform the architecture of the Australian innovation system Explore the opportunities for maximising the contribution of Enterprise Connect to innovation in Australia Build linkages between the universities, research organisations and business