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Elizabeth Webster
Director, Centre for Transformative Innovation, Swinburne University of Technology
Australia has many successful, innovative industries, such as wheat, wool, beef, lamb and
cotton. And Australians are not averse to taking risks. Our shrewd investments in chancy
mining tenements have paid handsomely.
But we do not invest in areas in which we lack familiarity. And neither should we. We do not
expect anyone to invest where they do not understand these four things: the customer; where
the market is moving; the nuances of the technology and its applications; and what
competitors are up to.
Similarly, no one would want to place their money or their superannuation funds in companies
that introduce new work practices, technologies or product lines without a high degree of
knowledge and information about the market, what works and has not worked in the past.
To acquire this knowledge we need a considerable degree of connectedness into world
markets. We know that businesses that fail to change will eventually ossify and die. But we
also know that innovation and change are risky investments for any business. Invest at the
wrong time or misinterpret the market and you can lose massively.
Nonetheless, our experience over the last 50 years has shown that new-to-the-world
innovation risk can be managed. That is, the business environment can be de-risked to some
extent by triangulating (that is, verifying through multiple sources) relevant information and by
pooling risk.
We can learn a lot from the successful Australian primary industries in this regard.
Each major agricultural product group has an R&D corporation, jointly funded by farmers and
government. It identifies common industry problems, appoints experts to research these
problems, translates their findings into practical solutions and then delivers the message to
the farmer. The individual farmer does not have to bear the full risk of the innovation this is
shared by peers with joint problems. By the time a proposed innovation reaches the farmer,
much of the risk has been removed.
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These problems are not all technological. They can be about consumer preferences, or what
competitor countries are doing. The characteristic that binds these businesses together is that
they all target the same global production chain.
It is not reasonable to mechanically apply this rural R&D corporation model to other Australian
industries wishing to break into global production chains or to upscale their presence
(potential candidates being processed food, medical devices and advanced manufacturing
materials among others).
However, they have several salient features that other industries can learn from. The model
recognises that the export success of one business has positive spillover effects on their local
competitors. Either because of an effect on reputation, a demonstration effect or just the
sharing of information, when your neighbour does well internationally, you also benefit.
The R&D corporation model is constituted under acts of parliament. This means their
members can think long term with the (near) certainty that their plans will not be scuppered by
a change of government or minister.
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This lack of scale and stability appears to be a curious feature of Australian industry policy.
Few programs and policies are objectively and independently evaluated. What evaluations
exist are not made public. Often programs are evaluated by commissioning external
consultants to collate a few case studies and make guesstimates of the economic value of a
program.
These are not credible evaluations. Anecdotally, I understand most are not taken seriously by
the central government agencies that hand out the serious money. The result is that industry
programs remain in the miscellaneous parts of the budget.
Rather than cut corporate tax, a better solution would be to earmark a portion to return directly
to industry through programs that meet their designated needs.
Innovation
Australian economy
Ideas for Australia
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2016/4/11 12:29