Towards 3% R&D - A national strategy to reverse innovation slide by Dr John Howard

A National Business Research and Development Strategy and Action Plan is the logical conclusion of our editorial series – Towards 3% R&D – Turbocharging Australia’s Innovation Effort. In this edited excerpt, Dr John Howard lays out the elements of the strategy. The full paper can be downloaded below.

Australian business investment in R&D collapsed during the Global Financial crisis and has not recovered.

This calls for a strong government policy response and a full-bodied commitment from the business sector.

This paper advocates a National Business Research and Development Strategy and Action Plan with five policy initiatives, embedded in a National Business R&D Action Plan.

An integrated strategy of targeted public support for business R&D

This strategy would cover cross-portfolio government action targeting business investment, a modified R&D Tax Incentive, a Public-Private Partnership (PPP) for infrastructure and facilities, a Research Facilities Access Program and a National Technology and Knowledge Transfer programme.

Elements of these programmes are in play in Australia by the Commonwealth and the States acting individually, but they are disconnected and often lack scale and critical mass. They do not add up to an integrated national R&D strategy.

The Future Made in Australia Act is potentially an important vehicle to address this.

A massive lift in public R&D investment

Government investment in public research is essential for building business-government collaborations in areas of applied research and experimental development and providing businesses with access to sophisticated R&D equipment.

There is little doubt that Australian public research has been substantially defunded over the last 15 years. This trend must be reversed.

This initiative would cover existing public research organisations (CSIRO, ASNSTO, DST, and State Agriculture Departments) and, where required, new national research institutes/laboratories established to focus on the specific technologies required to grow the industries of the future.

An active and coordinated foreign direct investment (FDI) programme

Having regard to the intense competition among countries and regions to attract global business R&D investment, an active and coordinated foreign direct investment (FDI) programme is essential involving:

A policy framework that provides clarity and stability—including guidelines on intellectual property rights, taxation incentives and obligations, regulatory requirements, grants, research funding, and principles for customised support services
Target identification—analysis of global R&D investment trends and target sectors and investors
A compelling value proposition—highlighting the benefits of investing in Australia, including access to talent, infrastructure, research institutions, and supportive regulatory frameworks and how it would deliver strong investor ROIs
Direct engagement with target investors—through a comprehensive programme of targeted outreach efforts
Promoting knowledge exchange and technology transfer and support for public-private partnerships—to co-fund and co-implement initiatives that support the objectives of the FDI programme.

@AuManufacturing is publishing contributions from readers for our series – Towards 3% R&D – turbocharging our national innovation effort – over a, month and will shortly publish contributions in an e-Book. Information: Peter Roberts, 0419 140679 or write to [email protected].

Education and skills development to support the industries of the future

Investment in education and skills is fundamental to building and sustaining the industries of the future.

Universities and TAFE/VET institutions still face challenges in keeping pace with the sheer speed of technological advances. They can sometimes be slow to update their curriculums, leading to a skills gap in which graduates may not have the latest knowledge required by employers.

Moreover, there is a growing requirement for interdisciplinary programmes that combine technical skills with domain-specific knowledge, preparing students for the complexities of modern R&D projects.

Many universities have made significant strides in integrating digital technologies into their curricula. They partner with industry leaders to ensure that programmes remain relevant and that students gain exposure to real-world applications.

The newly established Tech Council acknowledges this problem, but there is a lot of catching up to do.

A New Industries R&D Skills Development and Talent Retention Program is required to ensure that Australia’s industries of the future will have the people with the required knowledge, skills and capabilities they need.

Business engagement in innovation districts, precincts, and hubs

At the present time, innovation districts do not receive targeted financial support from the Commonwealth Government, although districts may tap into a range of urban and regional development funding programmes.

Moreover, State Government and private sector investments mix the R&D objectives of participating higher education and public research organisations with the business models of property developers, urban renewal objectives of State and local governments, and the rhetorical technology visions of business and financial elites.

In the US, the Biden administration has commenced an initiative to designate selected communities across the country as Regional Innovation and Technology Hubs (Tech Hubs) to catalyse investment in technologies critical to economic growth, national security, and job creation.

The Australian Government must designate and financially support the development of innovation districts and hubs to support the development of industries in the future – Tonsley Park in South Australia is often held out as an exemplary case example, but there are other examples of good practice. (See separate story today Towards 3% R&D – Factory of the future by Philipp Dautel here.)

A rigorous approach for adoption and implementation

It almost goes without saying that Australia requires a National Business Research and Development Strategy and Action Plan.

This should be orchestrated by the Prime Minister and the Minister for Industry and Science through the Australian National Science and Technology Council. It should not be outsourced to an independent Review.

The development of the Strategy and Action Plan must involve rigorous analysis and testing of propositions not only in terms of their desirability but also in terms of their practicality and feasibility.

Many previous reports on lifting business investment have tended to use the ‘wisdom of the crowd’ through extended consultations and relied less on the knowledge contained in previous reports, understanding why they have not had an impact and the input of national and business development experts.

Very few recent reports have seriously addressed the FDI or global R&D sourcing issues. Recent studies of business R&D investment and industry policy do not mention foreign direct investment at all.

A team of officials and key stakeholders should support the formulation of the Strategy and Action Plan rather than outsourcing it to consultants.

Dr John J Howard is an experienced policy analyst focused on science, technology, innovation (STI) policy and practice, industrial policy, management strategy, university-industry engagement, and regional innovation ecosystems. Dr Howard is Executive Director, Acton Institute for Policy Research and Innovation and Visiting Professor, UTS Institute for Public Policy and Governance.

Download Dr Howard’s full paper here:
Innovation – how to Reverse Our Slideby Dr John Howard

This series is brought to you through the support of our principal sponsor, public accounting, tax, consulting and business advisory BDO, and R&D tax incentive consultancy Michael Johnson Associates.