Innovation capability is increasingly critical for sustaining competitiveness and for developing new options for economic growth. But a low level of research-industry collaboration has been a perennial problem for Australian innovation policy. 

Using the US innovation policy experience as a guide, a new report from the United States Studies Centre suggests governments can play a major role in facilitating knowledge transfer and value creation from university and public-sector research. Its publication comes just a day after the Australian government revealed research funding cuts of A$328 million over the next four years in its mid-year budget update.

"Although Australia’s research system is strong, its performance in innovation and commercialisation is not. Nor has innovation policy been effective in driving sustained improvement," says report author Don Scott-Kemmis.

“As much as the United States touts its free market ideals, the US experience suggests that governments need to play supporting roles when markets are not effective institutions for supporting innovation and entrepreneurship in emerging technologies and industries.

“The US experience also suggests that analysing international experience and national challenges are better guides to innovation policy than frameworks based on economic theory."

Key points

  • The US government has been active since the early 1980s in establishing policies and programs to improve the transfer and economic exploitation of the results of federally funded R&D. It has recently turned the spotlight on this area with a cross-agency ‘Lab-to-Market’ and ‘Return on Investment’ initiative.
  • Australia should increase direct and selective funding of R&D. The R&D Tax Incentive cannot be the central mechanism of innovation policy where most business R&D is incremental and focused on adaptation of technology.
  • Australia should also develop ambitious national missions, rather than vague and inclusive “priorities”, to focus investments on innovation and capability-building rather than research.

View or download report

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