After falling behind, it's urgent that we get back into the innovation race.
Yesterday, I announced the details of a key plank in Labor's productivity platform - a major review of the coherence and effectiveness of the national innovation system.
Australia has a long and fine record in science and innovation. Not only do we boast more Nobel Prize winners per capita than any other country, but Australian inventions have made us world leaders in developing technology. Early European settlers had to be inventive to survive - the stump-jump plough is just one example. More recently, the plastic bank note, first circulated in 1988, was a world first, developed by the Reserve Bank and the CSIRO.
A robust innovation system is a public good. Innovation invokes more than just economic policy or industry policy. It is also about creating a good society and a healthy community.
In recent years Australia has fallen behind on innovation. Australian government support for science and innovation as a percentage of gross domestic product dropped from 0.75% in 1993-94 to 0.59% in 2006-07. Many experts believe this failure to invest in innovation contributed to the dramatic slowdown in productivity growth under the Howard government.
The new Federal Government will encourage innovation and raise productivity. Boosting productivity growth is vital if we are to keep inflation in check and put downward pressure on interest rates. The review will work with stakeholders in all parts of the economy to identify gaps and weaknesses, and to make proposals to tackle them sensibly and effectively.
Chairing the review will be the highly regarded expert Dr Terry Cutler. Its terms of reference include development of a set of national innovation priorities. The review will assess the complex mix of current innovation support programs and identify regulatory barriers. It will identify weaknesses in the capacity of the economy to absorb new ideas and new technologies - problems such as the Howard government's legacy of skills shortages, infrastructure bottlenecks and slow broadband.
Australia's research capacity will be a major focus. The capabilities of universities and public research agencies will be examined, and ways to strengthen their relationships with business proposed. The review team will consider the role of the research and development (R&D) tax concession in promoting innovation and recommend improvements. It will also find ways to promote innovation to take on social and environmental challenges.
Also under the microscope will be the Co-operative Research Centres (CRC) program. Initially established by the Hawke Government, this program has now strayed from its original path. The Government will restore public benefit as a key criterion in the establishment and operation of CRCs.
The Rudd Government regards this innovation review as a matter of urgency because our global competitors are already powering ahead. In the past 15 years, Britain has lifted itself from being the "sick man of Europe" to enjoying living standards surpassing those of the US. A focus on innovation and the creation of a vibrant business environment have driven this resurgence.
Australia is also a competitor in the global "race to the top". This Government aims to foster a culture of innovation in business, government and the education sector to create sustainable, high-skill, high-wage jobs that deliver national economic growth and prosperity.
To transform the Australian economy into one based on innovation, we must build a highly skilled workforce. We need a stronger public research sector and greater investment in R&D. This must include an articulated role for the arts and humanities: a broader definition of "science", in line with the European approach.
The Government already has plans to keep our best and brightest researchers in Australia through the new Future Fellowships scheme for mid-career researchers and increased numbers of Australian postgraduate awards. We will seek to strengthen international partnerships in research and innovation, and provide a high-speed national broadband network to facilitate collaboration and communication.
The Rudd Labor Government is determined to follow a path that leads to a prosperous, secure and socially just future for all Australians - the pathway of innovation.
[This article first appeared in The Age, Business section, 23 January 2008, p. 10]