The Government’s White Paper, “Australia in the Asian Century”, places significant focus on education and innovation as key pillars of productivity, which is to be commended in concept.

On education, the White Paper frames the current education reforms in an Asian context and supplements them with an additional focus on Asian language, Asian studies and engagement with Asia. On innovation, the White Paper establishes the 2025 objective of Australia having “an innovation system, in the top 10 globally that supports excellence and dynamism in business with a creative problem solving culture that enhances our evolving areas of strength and attracts top researchers, companies and global partnerships”. In support of that objective, the White Paper describes five broad pathways. Unfortunately, at this stage, the details underpinning those pathways are either yet to be specified or are just summaries of existing programs.

Our view

An Innovation Plan foreshadowed

The primary vehicle for articulating the first pathway of “an ambitious industry and innovation policy agenda for Australian business to create new jobs and seize new market opportunities” will be the Industry and Innovation Statement to be presented by the Government later this year. That statement will respond to the “Smarter Manufacturing for a Smarter Australia Todayreport published by the Prime Minister’s Manufacturing Task Force in mid August 2012. That impressive report contained more than 40 recommendations designed to strengthen local manufacturing firms, most of which the Government supports in principle. The recommendations include the creation of innovation hubs, more dialogue between industry and the research/education sector and incentives for the research community to engage in industry collaboration.

The Industry and Innovation Statement will be the key policy document to assess the Government’s strategy for creating a more innovative and productive Australia. As the White Paper recognises, “getting the link between research and innovation right will be critical for Australia’s success in the Asian Century”.

More focussed research

The second pathway is based on the proposed National Research Investment Plan. That plan is intended to provide a framework for investment in Australia’s scientific capabilities, including our research infrastructure, Australia’s workforce and fostering globalisation, to sustain our ability to help address the global challenges which we and the region face. The plan is being prepared by the Australian Research Committee and it was to be released in September. The Australian Research Committee is comprised of representatives from a large number of government departments and the research sector, together with an expert advisory group.

The White Paper refers to the unfocussed nature of our current measures to encourage innovation, which are spread across a number of programs, organisations and levels of government. There are said to be more than 200 initiatives to support business innovation. This obviously makes it harder to respond to change and to build the scale and flexibility needed to ensure innovation efforts focus on areas of comparative advantage. The Government is working with States and Territory to improve the consistency and improve the overall accessibility and efficiency of innovation programs across Australia.

Either through the National Research Investment Plan or through other means, the research and innovation efforts in Australia must be better co-ordinated, focused on our areas of comparative advantage and have critical mass so that we get the maximum impact and not maximum bureaucracy. While organisations like CSIRO works towards scientific objectives which are designed to enhance Australian industry and meet strategic goals, most of the other research across Australia is not as focussed. In many ways, there is a “let all the flowers bloom” mentality and no plan. For example, the recent report commissioned by ANZ - “Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand” by Port Jackson Partners states that our agricultural R&D has lacked sufficient focus on enabling long term growth and calls for more focus and coordination of our agricultural R&D programs.

As part of the efforts to improve the impact of our research funding programs, there is also an opportunity for significant improvement in the Government’s approach to funding agreements. The Government should consider starting with “a blank piece of paper” and look again at its approach to funding research to ensure that its agreements focus on the core principles of accountability and compliance with the program objectives, without unnecessary impediments on intellectual property and on project implementation. Given that many funding agreements are with regular participants in the research sector such as Universities and research institutes, they should be much easier documents to negotiate and to agree more efficiently.

The innovation finance gap

The third pathway is to improve financing options for Australia’s innovation system, to make it easier to attract private investment, encourage entrepreneurship, build on government investment in science technology and commercialise our ideas. However, the White Paper only describes the current support provided by Commercialisation Australia and the support provided for clean energy technologies, without foreshadowing the consideration of any additional measures.

There is a well recognised gap in the development of technology in Australia which forces many of our best technologies to move overseas to attract the funding to move from the pilot and start-up phase to the manufacturing phase. If we are to truly commercialise our own innovations in Australia, this funding gap must be further addressed. The government needs to engage with the investment community to understand what would incentivise them to invest further in venture capital opportunities.

More collaboration (if the Defence department approves it)

The fourth and fifth pathways are to promote more innovation collaboration between business, the research sector and Government within Australia and more research collaboration between Australia and Asia. Indeed, the White Paper generally places a significant emphasis on collaboration across education, research, business, the arts and Government.

Effective collaboration takes opportunities, time, trust and the right environment. There are already many practical and cultural barriers to achieving true collaboration. Unfortunately, with Parliament passing the Defence Trade Controls Bill last week, there is now a new significant barrier for collaboration with Asia in science and technology.

The Defence Trade Controls Bill implements the Australia-US Defence Trade Co-Operation Treaty 2007. The Treaty is focused on improving two way trade between Australia and the US in defence goods, services and technology. In addition, the Bill introduces export control measures which place restrictions on the supply and publication of technology or software which is contained on the Defence and Strategic Goods List (“DSGL”). The DSGL contains restrictions in relation to munitions as well as restrictions in relation to “dual use goods”. Those goods include technologies across materials science, chemicals, microorganisms, medical research, electronics, computers, telecommunications and engineering (which technologies are largely used for “good” purposes but also have “evil” applications). The technologies are listed over 200 pages in the DSGL and cross over a significant amount of the science, research and development which is conducted by Australian research and technology focussed organisations.

If you are engaging in research or commercialisation of technologies on the DSGL, and you either publish that technology in Australia or you supply that technology from a place in Australia to a place outside of Australia, then you will be committing a criminal offence unless you have previously obtained a permit from the Defence Department. Supplies are intended to extend beyond licence and other technology transfer agreements, and include informal communication via emails, telephone, conferences and meetings. Accordingly, the Defence Department will need to first approve formal and informal collaborations between Australia and Asia involving the many technologies on the DSGL. They will assess the risk posed by the technology supply and grant a permit in circumstances where there is an acceptable level of risk.

The full implications of the Bill are acknowledged to not be understood by the Government. Accordingly, the Bill includes a two year period under which the offences will not be in effect and a steering group will review its proposed operation. There is a debate as to whether the Bill is more restrictive than the equivalent US laws, which lead to an exclusion designed to protect fundamental research and educational activities first being promoted by the Coalition in the Senate and then opposed 24 hours later by the Coalition in the House ofRepresentatives.

This restrictive regime stands in stark contrast with the open and extensive collaboration planned by the White Paper. Hopefully the steering group will recognise this and design a more sensible regime. Anecdotally, the US export control laws are currently regarded as reducing opportunities for US scientists to collaborate in Asia and feedback given to Australian scientists last week in China is that they will now also be effected. Even the prospect of our Defence Department having to first review a confidential research project will discourage collaboration with us.

Conclusion

While the White Paper focus on innovation and education is right, the main plan is to be articulated later this year. That plan will hopefully accept many of the innovation recommendations in the “Smarter Manufacturing for a Smarter Australia Today” report and be a catalyst for a new innovation era in Australia. That plan should be complemented with a clearer research focus on our areas of comparative advantage, delivered more efficiently. However, more work needs to be conducted on the financing gap and the new Defence Department barrier to collaboration must be addressed.

Lastly, the White Paper recognises that intellectual property laws underpin many innovations but does not provide a related pathway. Our US and European competitors use intellectual property laws aggressively and strategically to protect and create their innovations. To compete with these strategies, Australian innovators across science and business will need to be better educated from at least University on using IP laws more proactively.

What are your views about the innovtion pathways in the White Paper? We encourage you to provide feedback and participate in the conversation at the Asian Century website.