Rudd: 100 Not Out!

The Prime Minister's office has released a report on the first 100 days of the Rudd Government (pdf here).

Although Amanda Gome observes at Smartcompany:

Unfortunately there is no use looking for chapters called Developing
Enterpreneurial [sic] Australia or Vision for an Innovative Nation. They don’t exist.

Her point on the Vision for an Innovative Nation is important: as part of the journey to 2020 the government acknowledges that:

Globalisation, new technologies, demographic change, climate change and changes in the global power balance mean that what has made Australia successful in the past cannot be relied upon to deliver success in the future. If we don’t prepare for Australia’s long term challenges in an orderly and strategic way, we risk missing out on our best opportunities, and being unprepared for future challenges.

And although the report identifies the commitment made by the Rudd Government to the Review of the National Innovation System in the following terms:

Australia’s innovation system is weakened by a cultural divide between
public research and private business, and a lack of national policy coordination. A Rudd Government will build a truly national innovation system. The Government will work with the States and Territories to review the bewildering agglomeration of innovation programs to ensure that support for innovation is well targeted and easy to access, with the aim of reducing the fragmentation and duplication.

what is missing is the way these two things will be integrated and reconciled with each other. There is a need not only to simplify the innovation programs, but to support the massive investments needed beyond our current position in the economic cycle. As the markets gyrate and the mining boom runs from boom (and bust) we still need to protect our current economic prosperity.

And adding the sustainability requirement as a dimension only makes this harder. So, how do you reconcile these competing positions?

Innovation (Policy) is Industry Policy

After being nameless since December, this blog now has a name. Inspired by a quote in the press release announcing the Review of the National Innovation System, we have decided to name this blog:

Innovation Is Industry Policy.

Senator Carr's quote was that "Innovation policy is industry policy", but the signal we have taken from this position is that the industry policy for Australia, from now until 2020 at least, is that Innovation must be the byword.

This shows a dramatic change in the attitude of the government, as investment in creativity and innovation (unlike traditional industry investments) can deliver disproportionate economic rewards when successful. It also demonstrates the recognition of Australia's changed economy and the role industry policy should play.

It also means that we will need to agree exactly what we mean by "innovation". Is it innovation in a resource-based economy (as CEDA examined), or is this going to be an innovation future for Australia across the creative and technological sectors? At some point early on we must address the issue Barry Jones raised in his Sleepers, Wake!, namely that:

'Innovation' in much of Australian industry has a special and limited meaning: marginal improvements in processes for materials used in very long-term product cycles-wool, timber, coal, steel, aluminium, paper, glass. We have eschewed the development of new products with a limited life cycle-electronics, machine tools, pharmaceuticals-where planning for the next model begins as soon as the latest one hits the market...

And yet, we now have companies like Atlassian (also members of the Hargraves Institute with MJA), with over 10,000 customers. This sort of enterprise can really change, challenge and shape the debate, but we must acknowledge the rich innovation history and capability of our traditional sectors.

The discussion needs to be one of AND rather than OR.

MJA will actively participate in, and contribute to, the debate as we move to shape Australia's Innovation Future.

How many companies are missing out on tax offsets?

Smartcompany has written a post on the thousands of companies eligible for the R&D tax offset, but that don't currently use the program. This will be one of the big issues for the government as its Review of the National Innovation System gathers steam.

But, with 169 programs addressing "innovation" at some level in the Australian economy, the only surprise is that it's a program that's as big as the R&D tax offset that's unknown to companies.

Then again, maybe it's not.

Last August we spent considerable time travelling around the country with leading tax firm Hayes Knight as part of their Knowledgeshop Professional Network speaking with accountant members about exactly this issue. The fact is that many accountants are aware of the R&D tax offset program, it's just that many of them don't actually have any experience of it.

In a spectacularly unscientific study, what we've seen is that the breakdowns between clients and advisers fall into two categories:

1. Accountants who don't know how to talk to their clients about R&D; and
2. Companies who don't know how to talk to their accountants about their future plans.

Taken together these issues nearly always mean that companies miss out on the funding to which they are entitled...and accountants who are grateful that clients in Australia don't tend to sue if they find out that they should have been entitled to a cash benefit in one year but never did the paperwork.

I'm sure there will be many other insights that come out, but lack of program awareness has to be a big one...I'll write more on each of the failings in the coming weeks.