In this episode, I had the opportunity to reflect on the 2024 National Innovation Policy Forum with Jane O’Dwyer, CEO of Cooperative Research Australia.
Firstly, we reflect on the opportunity before the Australian innovation community to influence policy and bring innovation to the centre of economic policy, and not merely as an afterthought. We then hear some highlights from the remarks of Minister Ed Husic and Shadow Minister Paul Fletcher at NIPF24. These are important scene setters as they bring out issues of local innovation culture, the need for customers and investors, and to find the unique Australian business model that allows innovation to drive economic growth and productivity.
We took the opportunity to reflect on each of the three discussion sessions from NIPF24. Each of the sessions had recurring themes touching on culture, customers, investment and risk. In discussing risk, Anne-Marie Perret raised the challenges that boards face with director liabilities, pushing risk taking to the background and, in turn, missing opportunities for new ways to create value while serving customers. Glen Keys challenged the participants around leadership behaviours, consequences and the need for a national conversation around how we talk about risk. Lauren Stafford further reflected on risk, introducing the Linda Evangelista Paradox!
In the next session (2), the missing middle was discussed – a topic that emerged from NIPF23 – and explored the idea of government procurement as a market maker. Annette Schmiede exemplified the impact of procurement policy with examples from the health care sector. Elanor Huntington brought forward the notion that the economy should serve people, not people serving the economy, and highlighted the need for Humanities and Social Sciences (HASS) to have its place alongside STEM in innovation and technology transfer. David Forman shared his recent experiences of reviewing federal government procurement policies and the misaligned incentives that exist favouring procurement from abroad, rather than domestic service providers.
The third and final session focused on the notion of a New Australian Business Model. Sally-Ann Williams described government procurement as bridging market uncertainty, addressing social challenges and stimulating demand. Sophia Hamblin Wang explained the canyon of death that faces organisations delivering profitability and emissions reduction through scaling production. Roy Green reflected on the ‘burning platform’ we are on nationally, highlighting that innovation drives productivity but the private sector needs the capabilities and capacity, commonly called absorptive capacity, to take up and scale innovation into profitable products.
Jane and I conclude our reflections on the need for elaborately transformed manufacturing to reassert itself, aligning with sovereign interests and contemporary geopolitical risks. Tying in the prequel remarks from Catherine Livingstone and David Thodey (from episode 40), and, on the day, from Kerstin Oberprieler, Jane poignantly points out that the current cost of living crisis and the long-term living standards of Australians cannot be resolved without innovation at the core of economic policy.
Transcript
CB: Hello, everyone. Welcome to Tech Transfer Talk. My name is Cameron Begley, Managing Director of Spiegare. And joining me today is Jane O’Dwyer, CEO of Cooperative Research Australia. But, more importantly, in the context of today’s discussion, the catalyst for the National Innovation Policy Forum, which was held last November and, indeed, is held every November for the last few years. Jane, welcome.
JO: Thank you. Cameron, it’s wonderful to be here. As an avid listener of Tech Transfer Talk, I’m delighted to be a guest today.
CB: Well, thank you, Jane. I’m delighted you’re an avid listener and it’s great to have you on. And, particularly as we reflect on last November, there’s a lot of concepts and a lot of ideas that were in the room at the National Press Club in November. And it’s terrific to have you on, just to reflect after what happened in Canberra. But in anticipation of what’s happening in the states over the next few months, with rolling the Innovation Policy Forum out to some of the capital cities around the country.
JO: Yes, absolutely. Look, I think these issues that the Innovation Policy Forum tries to address and tries to come to actionable policy ideas for government from the innovation community, are really important. Because we’re in an election year this year, our economy is not at the best it’s ever been, and innovation policy really matters. And so, there’s a real opportunity, I think, for us to have impact. The government announced its strategic examination of R&D just before Christmas. That means there’s a mechanism for engaging, and there’s an election. So, we have a lot to contribute with this community.
CB: Absolutely we do, Jane, and I think a point you made there, which was done in made in the prequel that Catherine Livingstone and David Thodey recorded with us back prior to the Innovation Policy Forum, was around innovation moving to the centre of policy rather than just being bolted on at the end. And, if I recall the remarks of Catherine and or David on the day, it was about innovation as the engine to drive productivity and the engine to drive growth, not the afterthought, ‘Oh, yes, we better think about that.’
JO: Yeah, absolutely. And look, I mean, I want to acknowledge Catherine and David’s leadership of this because they’re such experienced and committed members of the Australian community. And they’ve been participants in this policy process and in the innovation system for many decades. And that they give their energy so generously, is fantastic. But they keep reminding us, you know, this is really critical. And they’re right. And we see it come through in the conversations each year. And I think what’s been interesting as the Innovation Policy Forum has evolved, is that we have seen a sharpening of the policy ideas that emerge from it. From the first year, really, us all talking about ‘We really want this to matter, this should matter’, to ‘Here’s how government can actually act in a way that has real impact for Australian society, for Australians quality of life, for the career opportunities, the health of our society and our economy’. So, what has emerged really strongly, I think, particularly over the last two years, is this idea that we really need to communicate. Innovation policy is not an afterthought; it is central economic policy.
CB: Yeah, absolutely. So, given your earlier comment about, you know, we’re in an election year and the timing to influence policy is upon us, let’s quickly hear a couple of thoughts that Ed Husic, the Minister for Industry, and his counterparty, Paul Fletcher, who’s the shadow minister, shared with us at the Policy Forum last November.
EH: We won’t be able to achieve that simply by undertaking or replicating carbon copies of what’s being done in other countries. And, in fact, I think the challenge for us is to find new, smarter ways to get things done and to build up national capability. Higher education does very well relative to the OECD in investment in R&D. But governments, businesses, can do more. What we need to do is work out the answers. I’m not interested in finger pointing between business, academia and government. I think we accept we can all do better.
PF: The first thing I’d highlight is that we think it’s important to celebrate innovation, to celebrate the digital economy and the progress of science. Second priority, getting research out of the labs and into the marketplace. If we look at Covid, which, of course, was an extraordinary triumph of science, it’s important to recognise that as well as the incredible work of the scientists, without which none of those breakthroughs would have occurred, we wouldn’t have had the new vaccines. Big Pharma had an important role to play: AstraZeneca, Pfizer or other big pharma companies. It was their manufacturing capacity, marketing capacity, distribution capacity, capacity to work with regulators. So, how we get the innovation into the marketplace needs a lot of focus. And, it is also critically, the way that the innovation actually benefits the end user. if that’s your preferred jargon term. I come out of the telco sector; end user is the preferred jargon term. Of course, in the health and medical sector you say ‘patient’; in business, more generally, you say ‘customer’. We know who we’re talking about, the people we need to get these innovations to so they can benefit. And commercialisation is key to that process. The third issue that I want to highlight in my brief time is a related but not identical issue, which is how to attract and stimulate private sector investment in the commercialisation of scientific and technical research. I do want to highlight the importance of the private sector, we think is central.
CB: So that was Ed Husic and Paul Fletcher sharing a few of their thoughts coming into what is an election year. But I thought we should talk a little bit about the sessions that unfolded at the Policy Forum. And there were, in fact, three sessions of conversation. And a nice summary of those has been made on the CRA website. But I thought we might start with discussing a little bit about the risk sharing side of things and the themes that emerged from that, were around culture and risk. They seem to be the dominant themes. I’d be interested in your reflections on what Anne-Marie, Glenn and Lauren Stafford shared with us through that session.
JO: This is a really interesting session and great and very different perspectives, I thought, but a lot of experience there, of the challenges in our culture around risk. I think it’s no secret that Australia is a bit at risk averse. We’ve been comfortable in our economy for a long time, which has allowed us to not take risks where perhaps we need to, and I thought that some of that call-to-action from the panel was that we really need to shift this culture. We need to shift to a national narrative that really celebrates risk taking and celebrates what the outcomes of risk taking can be, and having flexibility in our policies, which is hard in our political system. I mean, if we think of estimates committees, for instance, a lot of what estimates committees is focused on, so it should be in holding government to account, but often it will focus in on where something’s failed. And, you know, there’s always that question with failure; is it a failure or is it a lesson learned? And what if…
CB: It could be both.
JO: But also, what you do next is what’s there. And I think Glenn raised a good point around our policy mechanisms, not having the flexibility for failure in them and not accepting that we need to have that capacity for risk. And I think, too, that we need to actually be comfortable in lowering some of the barriers for our SMEs. We heard that from the panel, particularly around early-stage innovation. So, getting some flexibility in our system, and this partly goes to, I think, how we have a national conversation about innovation, innovation policy and why it is central to the day-to-day experience of Australians, of their career opportunities, their quality of life, etc. because that ability to take risk is pretty core to what’s been able to have a vibrant and a healthy and a robust innovation system. And I just thought this panel really nailed it but brought their experience and good examples to the table.
CB: They certainly did. I agree with you, Jane. And now we might hear a little bit of what Anne- Marie and Glenn and Lauren had to say on the day.
AMP: I think I’d start by acknowledging that as a director on a board of Skykraft and other innovative companies, that innovation and risk taking is our business as usual. And, for me, in terms of risk sharing and in terms of growing innovation, my focus is more on how do we help companies and organisations whose business, for whom risk sharing and innovation is not their business as usual. So, how do we more broadly engage them? The first thing that I have to say, and maybe this is a bit self-serving, but I think it’s a real inhibitor to resharing and innovation in this country, is the propensity to deal with every issue that comes out of industry by piling more liabilities and responsibilities on directors. Now, that’s not to say there haven’t been some horrific failures in industry and some really distressing stories about director’s failures. And, I’m not saying for one moment that directors shouldn’t be accountable. However, if you continually approach a problem like that with saying that director’s responsibilities and liabilities should be increased, more governance should be imposed upon them. you take away what directors are really there to do.
And I’d like to use as an example of what I’m talking about-the aged care industry. Clearly, horrific failures in the aged care industry led to a situation where director’s liabilities were just through the roof. And even companies that had a great record of terrific care and a great record of navigating through the Royal Commission, found it was next to impossible to get good and competent directors, no matter how much they were prepared to pay. So, is that really resolving the problem? Is that really helping us create an innovative mindset? I would be very surprised if many boards in aged care really want to adopt anything innovative or risky. When if you look at it and going to the minister’s point about AI, there is a hugely judicious use of AI in aged care there. With the use of technologies like wearables and sensors, you could provide so much support in aged care, and couple that with AI, and you’d be able to not only sense when someone had a fall, but predict the likelihood of a fall, allowing for attention to come in sooner and faster and create a situation where we’re dealing with preventative medicine, which I’m sure all of you understand is less expensive than curative medicine. So, that brings me back to the fact that those kinds of organisations are not currently incentivised and encouraged to share risk or to take on innovation. There’s a lot of wonderful innovators in this country who could be paired with those sorts of organisations to help them navigate that pathway.
GK: Industry, though, has to stand up as well. All right. You know, I think, why do we become more rules based? Well, because there’s a lot of businesses that behave badly. And we need to take responsibility for that and we need to hold ourselves accountable for that. You know, I know it’s Chatham House rules, but I won’t mention companies. But there is some very, very poor leadership in companies going on at the moment with shareholders saying ‘No, no, no, they should stay because they contribute to shareholder value’ rather than saying ‘That personal behavior is wrong’. Warren Buffett says mistakes in business are acceptable mistakes; in personal misbehavior; the tolerance is zero. And I think we need to do far more of that if we want government to do less rules-based, and more principles-based. I think we need to have a national discussion about how we talk about risk, and the medium must be at that table when we have that discussion, because when we do it, we say, you know, and there are other ministers, perhaps, who will say ‘We need to fail fast We need to fail often’, right? We need to try and move on. We give no grounds for that. There is none. The bar for any error is almost zero. We’ve got to be willing to set a new bar on what is acceptable. So, I think we’ve got to have that national discussion, and we’ve got to look at ourselves and ask, ‘Why do we do that? Why is it that we won’t accept any bar of failure?’ If we want to live on the coat tails of everybody else, then that’s the model we need to take forward. But we cannot just say ‘We all need to be more innovative’ if we’re not prepared to talk about, what have we got to do to get there? Because it will drive down our living standards and it will drive down the things that make this a great country to live in.
LS: I’d like to talk a little bit about risk tolerance, and the key message that I have today is that risk is relative. So, before we talk about risk sharing and risk allocation, that’s a question that needs to be addressed, once it has been established that there is an opportunity or a or a reward that multiple organisations are interested in going after. And logically, the size of the prize needs to be greater than the consequence of failure in order for that to be a decision that needs to be pursued. And so, and here in Australia, we’ve historically had quite a challenge because we have, historically, had such an excellent quality of life. And where we have such a high bar to pass in terms of the size of the opportunity, in order for us to determine that we need to take a risk. We’ve got a bit of a Linda Evangelista paradox, the kind of supermodel who, you know, famously said that she wouldn’t get out of bed for less than $20 million.
CB: That was Anne-Marie Perrett, Glenn Keyes and Lauren Stafford. And I was quite fascinated by Lauren’s introduction of the Linda Evangelista paradox. I’m not one that personally suffers from not getting out of bed for $20 million. Perhaps there are a small group of people in the world that do. But it was interesting in the context of risk and wanting to take risk. Are we getting out of bed for the right reasons, or are we actually getting on with things and got our mind around the risk appetite?
JO: I think you’re right. I also had never contemplated linking a supermodel to innovation, so I thought it was a really interesting and memorable comment. But I think it goes to that question too, around risk and scale and the investment that we need to make in order to make it possible for our companies to grow and for new ideas to grow. And it’s something sometimes I think we assume we can spread things as thinly as we like, and it will have an impact. And it’s an odd way of thinking about risk.
CB: It is. And Kathy Foley, now the former chief scientist, most recent chief scientist, talked about ‘Vegemite-ing’, I believe, at the 2023 National Innovation Policy Forum, which I quite liked. And, of course, the Australian audience understand what Vegemite is and translated for our British friends; it’s ‘Marmite-ing’. But it’s this idea of if we spread everything thin enough it doesn’t really work, I think in terms of a strategic innovation and policy narrative that aligns with sovereign interest.
JO: Exactly. I agree with you, and I thought that concept is a really interesting one. I mean, is there a, there’s a question for all of us who work in this system, is, you know, in our risk avoidance, are we creating new risk? ‘Spreading things too thinly like Vegemite, as Cathy would say.
CB: Yeah, indeed. And one could argue that avoiding risk does absolutely introduce its own risks in some ways. This conversation of risk brings us a little bit to the ‘missing middle’, because it’s the ‘missing middle’ that certainly, when one looks at other national systems, you know, we think predominantly of Europe in this moment. But I think North America equally, that ‘missing middle’ does have the capacity and the capability to take on these sorts of innovation investments and the risks that come with those investments. And this is where session two rolled along. The focus here moved a little bit from risk to customers, and the need to bring government along as a buyer or as a customer, and the procurement systems that sit within government. And a little bit of the culture and a touch of risk that comes alongside that. Jane, your thoughts about what came out of the ‘missing middle’.
JO: Look, this is a really critical discussion in terms of our innovation system and of doing it better. We can’t ignore the ‘missing middle’, and we do see government making attempts to deal with it. But as often is the case, we have to overcome the kind of fragmented landscape of our federal and state policies that create this uncertainty and make it very difficult for that middle to, for us to grow that middle and for that middle, then to sort of scale substantially. And I think this panel is a really interesting discussion of it and a really interesting discussion, both of the problems we face, but some of the obvious solutions that can make that are actually not that hard. They just require our leaders, our political leaders, and our policy leaders in the public service, as well. I think we always have to be conscious, we need both parts of our government system to think about this, to actually make the commitment to solving that low hanging fruit, to picking the low hanging fruit, I guess, of getting some consistency. Addressing the fragmentation that’s full of smart people. They’re definitely capable of that. But the payback for the Australian people would be substantial. And this panel really goes into that.
CB: And perhaps now will take the chance to listen to a few of those examples of solutions that might be at hand.
Annette Schmeide: Healthcare, a very major sector of the economy and growing, 10.6% of GDP, $250 billion spent every year, and we employ over 2.4 million people across the health and medical research health sector in Australia, which includes health and medical research. But the interesting thing is, and not many people appreciate this, the Commonwealth and States fund over 70% of all health and aged care in this country, right? What a powerful position to leverage procurement decisions to support Australian innovation and access markets for Australian SMEs. But today the Commonwealth and State experience in supporting procuring from Australian digital health SMEs, has been disappointing. Despite billions of dollars in investments being made at both the State and Commonwealth levels in digital technology infrastructure in the last few years, several budgets. They’ve all had incredible amounts directed to digital health infrastructure. Not all of it’s been spent. So, I’m hoping this is a call to action that some of that money gets shared around, not just to seeing those big global tech giants win those contracts. And there’s nothing wrong with that. But we just have to think about how do we actually bring Australian industry into those contracts. Right. So, what does the data tell us. Right. Well, in ‘22, ‘23, Australian government procurement expenditure of 75 billion, only 8 billion of that went to local SMEs, 11%. So, the outcomes of the policy is not finding its mark. Inside Economics report over the last couple of weeks indicated that Australian tech procurement policies have fallen out of step with global best practice in governments around the world. We’re not being seen as best practice. So, we need governments around the world are becoming much more active in using their significant purchasing power to support local capability. It’s good policy. Just an example, Monash Health, which is one of the largest health services in the country, public sector, less than 5% of its medtech procurement budget went on local content. And they’re right in the local community. So, at every level you can see that the procurement policy is not playing out to the extent that we’d like to. So, we are missing out on economic growth through job creation and productivity improvement. As you said, Cameron, it’s not all about commercialisation; it’s about improving efficiency and effectiveness. That is as big a contribution to productivity as as the commercialisation side of things.
Elanor Huntington: Pull us back to why we’re having a conversation about the ‘missing middle’. And there is a thesis out there that suggests that those countries that have not had conflict on their shores or threatened on their shores for the last 80 odd years, are all going through a fairly turbulent period at the moment. And, that turbulent period could potentially be attributed to people feeling disconnected and left behind, and being uncomfortable with the idea that they are there to serve the economy rather than the economy being there to serve them. And so, when we’re talking about the ‘missing middle’, the question is ‘Why? Why do we care?’ And to the point of some of the speakers earlier this morning, we’ve got all of the statistics around lowering productivity and economic growth. And the point there is that what that means is that the generations that come behind us are not going to experience the same improvements in quality of life that we have enjoyed and our parents have enjoyed. And so, if you go looking across the economies in the world, then the reason the ‘missing middle’ becomes important is because in most other economies, it’s the mid-sized firms that are the most significant contributors to a research-intensive part of the economy, which is where productivity growth comes from. You can also look at industry sectors, and Australia is a little bit thin on some of the more research-intensive industry sectors, as well. Solow’s paradox, if you haven’t heard of it, go look it up. Solow’s paradox speaks to generally the idea that people keep thinking that digital technologies are going to massively improve productivity, particularly in services sectors, which, given that that’s such a significant fraction of Australia’s economy, is an important thing. So far, that has not happened. Subsets of the economy can improve productivity, but on average, the productivity in the services sector does not improve. And so, the question is ‘Why?’ So, the reason I’m raising that is because I don’t think that STEM (Science, Technology, Engineering and Mathematics) and HASS (Humanities, Arts and Social Sciences) are complements of each other. I think actually we need to be putting Hass and, particularly the social sciences, on their own footing and on an equal footing, because it is not going to be a bunch of lapsed quantum physicists who figure out the solution to Solow’s paradox. Likewise, Australia has a long and proud history of social innovation. We have done so since well before we became a Federation and again, lapsed. Quantum physicists are not going to be the people who come up with that social innovation. I think if we’re going to unlock, as you said, ‘What got us to where we are’ is not unlikely to be what gets us there next. I think the next thing that’s going to have to come is actually to encourage our much more inclusive conversations involving humanities and social sciences experts, because the innovation is actually going to come from the people who understand people.
David Forman: Can I start by apologising and seeking your indulgence, while I start by giving you a story about something very, very boring: the Commonwealth Procurement Rules. It’s hard to talk about…
CB: The excitement’s raising in the room…
AS: Everybody’s woken up…
CB: They’re alive to the possibilities…
DF: It’s hard to talk about government as a customer without talking about the CPRs. Among the CPRs that are most honoured in the breach is a requirement that procuring officers look at the broader economic benefits of choosing one vendor over another- which is fantastic in theory but if you were sitting as a procurement officer presented with that, what would you do? And often people resolve down to, ‘Oh, how many jobs will this create?’ And that kind of sort of simple metric. There’s a set of guidance behind the CPRs that is intended to assist people in determining how they make a judgement about that. That included, as I dug into it, one piece of guidance about intellectual property. Which said that a procuring officer should value a commercial offer that led to the licensing to Australia of overseas into intellectual property. That’s great. But it was silent on valuing domestically created and owned intellectual property. So, if you think about that from the point of view of a company such as Technology One, and I hasten to add that we have been very, very successful over a long period of time. And we are successful in this town and in governments throughout the region. So, I don’t want to pretend that we’re a victim banging on the door and unable to sell. But what is the market signal that that gives us? It’s quite literally saying to us that we gain all the advantages of selling to the Australian government and more if we were to move our domicile to overseas, and also be in a better position to sell to that government of that nation, whichever it might be that we were being drawn to, that was actually doing its best to move technology companies to its jurisdiction. Its initials might be US.
CB: So, we just heard from Elanor Huntington, Annette Schmiede and David Forman, on the panel on the day. But I think you made a comment there, Jane, as we were just about to hear from the panelists, and that was the notion that some of these things aren’t too hard. And, you know, you’re absolutely right, because the overwhelming majority of the challenges, I think, that were discussed in session two, are human problems. No one is trying to change the laws of physics here. We’re just dealing with human behaviours and human systems: culture, risk, appetite, processes, compliance, all these sorts of things. So, I do, on the one hand, completely agree with you that they’re not hard. And yet on the other hand, look at them despairingly and go, ‘Oh my goodness, they’re just so hard because there’s just such entrenched positions’. And I think what might be a useful way of framing this is to actually start unwinding people’s positions and actually trying to get everyone’s interests aligned.
JO: It’s such an interesting discussion, and I’m just so fascinated how in every single NIPF this issue of needing to get over this fragmentation and over this kind of siloed thing that we have. And I think Catherine actually captured it very well in her opening piece around our need for principles-based policy rather than rules and regulation based. And I think, in this space, it’s the same issue. It’s to develop a consistent bipartisan framework. So, a framework, an agreement, that we all agree, this is core to, to the benefit of the Australian population, to our economy and to our future. Then it should be a priority of governments to do it. And I think this issue comes up to, it’s not just the federal government, though. It has extraordinary convening power and can drive these things, but we need that link with our state governments as well. But we are capable of this. And we have seen at various times when a national crisis has hit us, that Australia can find glimmers of being able to come together around something and break down some barriers. And so, it really should be an easy thing to do. And I think when you look at the strategic examination of R&D, the terms of reference to that, it invites us to think about how government can do it. So, we know the door is open in government. The question is, will there be the political push from our political leaders, and will there be the bravery and the willingness from our bureaucracy to really, really grab that? And I think, looking at our economic headwinds, they have to, they have to, and we have to keep reminding them of this.
CB: Yeah. And I think you’ve hit on the economic headwinds and I’d even extend a touch further on the geopolitical circumstances that the crisis, perhaps not a crisis, but the door is now open to tackle these things, to be prepared for some of the unintended or foreseeable scenarios with the economics and the geopolitics playing out as they are. So, I also sense the door is open. I thought Glenn Keyes, in session one actually, touched on this around communicating risk. Because this is about communicating risk, but also about leadership behaviour and consequence. And if we don’t get the leadership, where’s the consequence? And if we do get the leadership, the consequence can be positive. And then communicating that positive consequence, which is something actually, Paul Fletcher touched on, where he said, we don’t communicate the winds that well. Yeah, there’s lots of them.
JO: Yeah. Absolutely, absolutely. And I think, you know, this panel really, really kind of laid out there is a real benefit for us in…
CB: Yeah, I think the examples they cited were really strong examples of how benefits can flow.
JO: Yeah, absolutely.
CB: And as those benefits flow, a new business model will hopefully emerge. Which brings us to session three with Kate Pounder, Sally-Ann Williams, Roy Greene, and Sophia Hamblin Wang, starting to explore the new Australian business model and, I think what they were trying to do is bring together a lot of themes in this session, which of course is a mountain to climb in and of itself. What were your thoughts as that discussion unfolded Jane?
JO: Oh, look what a group of extraordinary people on the stage there. And you’ve got everyone from Roy, who’s been a voice in this discussion for more than 30 years, to Sophia, who’s leading a company that’s an example of what the potential is for Australia. So, it was a really extraordinary panel. I think the listeners will hear too from Sally-Ann has certainly got her ‘We can do better boots’ on for this discussion and laid it down on the line for us, that this really is important. But I think, you do start seeing this, and it’s been emerging over the last few NIPs, but this idea that actually, while what got us here has been good and gives us the privileges of being a wealthy, well-educated country with a really fantastic research system and the capability of carving out a better future for us, we have seen our economy narrow. We have it within our hands to broaden that. The impact of that will be profound. We can imagine a business model that is not the one we currently have. We can imagine it because in the past we have had different business models too. This is about shaping the conversation about what that could look like, and what are the policy interventions that can help us to develop that new business model of a much more diverse Australian economy, that offers a lot more opportunity long term for our population?
CB: Absolutely. And with that, let’s hear a little bit from the panelists on the day.
Sally-Ann Williams: Government procurement. We talk about it. It’s big, it’s gnarly. It’s hard. If you go talk to either the federal government, anybody in procurement place there, or if you talk to the states, they don’t know where to start because it’s complex, it’s rigorous, and it should be. However, what we do need to understand and talk about, is the Why. And there’s a couple of things here that I think, there’s many reasons why government procurement is the first customer. And a government becoming a first customer is good for a thriving economy and for innovation, and for that ‘missing middle’, for SMEs to be able to grow in scale. But I think it’s really important to focus in on that demand side pull because it stimulates innovation in areas where private sector demand is uncertain or insufficient. So, when we say, ‘Why should government do this?’ It’s because the markets may be a little uncertain, a little scared, or it’s just not at the size and scale that it needs to be yet. So, government can bridge a gap in that in the early instance and help pull that demand through. So, that’s one of the things I think we need to talk about. The other thing I think is really important for us, and we learnt this through Covid and we’re rapidly forgetting it, it helps address societal challenges. So, it’s really important that government procurement is strategically used. Not all procurement, but it’s strategically used to drive innovation in areas of national importance: health care, clean energy, defence, other things like that. Setting very clear targets about what we’re trying to achieve, how we’re trying to achieve it, and where we’re going to see that grow.
Sophia Hamblin Wang: We have to tell that story often. We have to repeat it often, and that’s understandable. We talk to governments and we talk to customers and investors and employees and communities, around what the potential for the technology is. But obviously the narrative has to change depending on who you’re talking to. Now, in clean technology, if you have a profit motive, there’s always the ‘valley of death’ that we talk about often in building companies. But when you have also an emissions reduction outcome as well as a profit motive, it’s actually been referred to as the ‘canyon of death’. The valley is extra wide and large and very hard to emerge out of. And we all intellectually know what that means, right? We know ‘Oh, look, the valley of death is before you become profitable’, but actually that canyon is a risk chasm that is very difficult for investors to quantify. It’s hard for them to measure and understand, and that is why it exists. It’s not that they’re afraid of it, necessarily, but they don’t have the confidence around the measurement of it.
Roy Green: So, we’re no longer at the point of tinkering with our system. If you ever wanted to find a burning platform, this one’s got to be it. And the question is, ‘How do we come back from here?’ I think a lot of what’s going on in this room is an important part of that answer. But we’ve got to scale it. We’ve got to generalise it. We’ve got to get it embedded in core policy, not as someone was referring to earlier innovation as an add-on; research and innovation is what drives productivity, at its core. We can, you know, change planning regulations. We can do national competition policy, which is no doubt important as well in ensuring that concentration doesn’t stifle innovation. But the core to all of this, is to develop our research and innovation system. And the Tech Council of Australia the other day made an important contribution to that with a paper showing the important component of this being tech adoption, because we’re not going to produce all the new knowledge here. We’re only going to produce 2% of it in fact 2% of the world’s R&D is here. A lot of it is going to be about tech adoption. And that means building up our enterprise absorption capability. Building up the demand that we have. And tech absorption largely occurs around the world in manufacturing.
CB: So, there were a few thoughts from the session three panel, a little bit from Roy and a little bit from Sally-Ann, a little bit from Sophia. Really just excerpts of their remarks from the day, which were all quite insightful, and they brought a lot of thought to what this business model might look like. And, I think, you know, one of the points that struck me that Roy highlighted, ‘Yes, we are slipping down the rankings in terms of export complexity’. And I think it’s important to emphasise export complexity. But the key point that really resonated with me from Roy was around absorptive capacity and innovation is classically, I use that word a bit loosely here, but classically, the domain of the manufacturing sector. And manufacturing has been as a percentage of the economy, in decline for probably the last 10 to 15 years. So, there’s the opportunity and the challenge is how do we get elaborately transformed manufacturing, which is a bit of an old term, but a term that perhaps resonates with you and I, Jane, having been around a while.
JO: I think bring, bring back, bring it back, I say.
CB: Yeah. How do we get elaborately transformed manufacturing back into the economy in a meaningful way? And this is not to say it doesn’t happen at all. That is not what is being said here. We know it happens. We need more of it. And maybe some of the future Made in Australia policy catalyses that with batteries and solar. And, you know, my own personal hobbyhorse is renewable fuels, as you know, Jane, but I have to put it in there. But there’s lots of elaborately transformed manufacturing we can bring into this country, which aligns with the sovereign interests that we have, deals with the geopolitical and economic challenges, and supports the notion of a new Australian business model, which is kind of an old Australian business model.
JO: Yeah, I mean, that’s true. And look, I think the panel discussion was just so interesting, but I think it sort of brings us back full loop, we need to align our policies with our long-term economic goals, emphasise our sovereignty and our global competitiveness. We operate in a global environment and developing those mechanisms to implement broader policy frameworks really well, and incentivising that collaboration across to build resilient ecosystems, etc. I think, you know, there was some pretty key policy prescriptions in that discussion. And when you bring it all together, you can see what we’re gifting on to government from this IP is to say, ‘Look, here are some things that we all agree. We all agree. These people drawn from across the innovation system. We all agree that you can do, you should do. None of them are actually overly difficult’. We see hints of government, you know, it’s not that government doesn’t try. I think we have to be really clear about that. We see them try and we see the Future Made in Australia. We see the strategic examination. When you boil it down, the messages we hear, both from the government and the opposition, do have a commitment to Australia having a better innovation system, but we really need to make that central and loud and well-coordinated. We need a national approach.
CB: We do. We do.
JO: That’s coming through very, very strongly there.
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CB: And in bringing that national approach together, you touched on the timing of all of this this year, perhaps more than previous years, because we do have an election right in front of us. It’s January of 2025, and in the next four months we’re going to have an election. It has to be, as you, as we embarked on the Policy Forum last year, the objectives were to be discussing themes of sharing risk, attracting investment and government is demanding customer. How do you feel we’ve gone in, I wouldn’t say addressing, but further exploring and advancing those conversations?
JO: Look, I think the Forum‘s been really valuable in drawing out some really clear and actionable policy prescriptions for government and ones that we can go to government as we go into this election period. We should not miss this opportunity. When we go to an election, the broader community starts focusing on the economy. They focus on the things that matter, and this is our opportunity to really shout from the rooftops ‘Australia is a good country. We are capable of this’. We need bipartisan support to make innovation central to who we are and what we do. I think probably our self-image is that we are quite innovative. We just need to actually translate that into policy settings that facilitate it. And, you know, this idea that we’re going to, we’re planning to take the final discussion, this one around what is a future Australian business model around to the states over February and March, as a way of bringing in an even broader community into that discussion and drawing out even more policy ideas, but keeping that conversation going and alive and central because it is really important, it’s really important to all of our futures.
CB: Yeah, I think it’s terrific that there’s a state based, I’ll call it satellite approach, because at the end of the day, you know, we both live in Canberra. Canberra was told to me when I moved here, it was described as 250 square kilometres surrounded by reality. So, we need to get out where industry is, because it’s, you know, it’s a very important conversation in Canberra. And I would contend, seven or eight of every $10 that goes into the innovation system comes out of the Australian Capital Territory through the federal government budget. So, it is absolutely pivotal that the conversation is held here in Canberra. But, with that said, it is industry-they are the organisations, they’re the companies that face customers that consume innovation. So, we need to get to those people and make sure they’re part of the conversation. So, I think it’s terrific that that’s happening over the coming months. And it will be a very interesting 3 or 4 months as we take those ideas, mesh them into the conversation and see what government we get sort of by the end of May.
JO: Yeah, absolutely. I mean, by 17 of May, we should know. that’s about the latest, we should know what our future government looks like. But I think regardless of what the shape of the government is, where we want to land is that there is agreement across political parties, across the spectrum, that this matters. We know cost of living is going to be a central issue in the campaign, which it goes to people’s standard of living. We cannot address the long-term, standard of living for Australians without addressing our innovation system.
CB: I think that is a terrific thought on which to finish. I think terrific, terrific summary of the importance of innovation and why it is central not only to the election and the cost of living, but why it matters to everyone listening to this podcast and indeed, hopefully those that are ultimately affected by the work we do in the innovation system.
JO: Fantastic. Thanks for having me on today, Cameron. It’s been great.
CB: Great. Jane, thanks so much for joining us.