BUDGET RESPONSE: PREPARE FOR THE RECOVERY THROUGH BUSINESS INNOVATION

“The Australian Business Foundation welcomes the announcements of new innovation measures. The R&D Tax Credit is a significant initiative that will help small business through the crucial early stages of product development. The proposed Commonwealth Commercialisation Institute promises to help bring new ideas and research to market in a collaborative fashion, and we await the promised stakeholder consultation processes,” Mr Mills said.

“These initiatives are a vital and important part of Australia driving its innovation capabilities in the coming decade. However, the Government must act now and do more if it is committed to a 25 per cent increase in the proportion of businesses engaging in innovation by 2020.

“The Government’s response to the Cutler review panel’s Venturous Australia report identifies as a ‘future focus’ the building of innovation capacity and performance at the enterprise level.

“All of the research conducted by the Foundation over the last decade points to enterprise-level innovation as a major driver of productivity growth in the economy. In a modern, globalised knowledge economy, most businesses innovate by the smart application of their knowledge and skills to meet the needs of customers better than their competitors.

“Unfortunately, this reality of business innovation gets little immediate support in this Budget.

“The focus of the current Budget has been on the need to ‘prepare for the recovery’, but if Australia is to be a strong force on the road to recovery, then the Government must boost this untapped  business innovation which is a crucial driver of ‘next-generation’ productivity growth.

“In a study last year for the Australian Business Foundation, Cambridge Professor and Director of the UK National Innovation Centre, Professor Alan Hughes, found that the sectors contributing most to Australia’s productivity gains from 1980 to 2004 were not the high–tech producers but the high-tech users.

“Productivity growth arises where businesses innovate by converting ideas, knowledge and technology into competitive goods and services. In this sense, the heart of innovation beats as strongly in the firm as in the laboratory or university.

The productivity contributions came from business transformations achieved through application of enabling technologies, strong management capabilities and leveraging the benefits of regulatory reform.

 “There is no better time than the current crisis to unlock the productivity benefits of customer-led innovation in Australian firms and workplaces.

 

“Innovative managers and workplaces create productivity by transforming the capabilities of their businesses: finding imaginative new ways of problem-solving; collaborating with customers, suppliers and even competitors; adapting existing technologies and processes to new uses; and devising fresh solutions to meet the needs of demanding customers.

 

“Australia cannot afford to fall behind because its innovation policy owes more to the 20th Century, than to the 21st Century. “We need to foster the innovation capabilities showcased in all businesses every day, as this is the pathway to innovation-led prosperity for all Australians,” Mr Mills concluded.