What are the right incentives for innovation?

6 March 2013

Smarter resources could help Australia develop an economy that will thrive long after its mineral riches have diminished

Australia has long prided itself on being a clever country that encourages innovation. Think the bionic ear, the black box flight recorder and the cervical cancer vaccine, to name but a few inventions.

However, with the resources boom showing signs of another spike, some critics fear the nation is becoming little more than a mining quarry. What will it take to become a truly innovative country?

The Gillard government hopes the National Broadband Network can spark a digital revolution, while Shadow Minister for Communications Malcolm Turnbull has flagged tax and workplace-relations reforms while calling on start-ups to better promote their own successes and engage in more capital-raising initiatives.

Traditional levers such as tax breaks and market development grants remain valid ways of fostering innovation, but CSIRO chairman Simon McKeon has warned against a recent big business push to slash research and development tax incentives to fund broader corporate tax reductions.

As Australia seeks to compete in the Asian Century, a change in mindset is required to avoid the risk of becoming a peripheral player, according to the preliminary findings of the Australian Competitiveness Survey undertaken by University of Hong Kong’s Professor Michael Enright on behalf of CPA Australia. Creating an innovative country has arguably never been more important.

In the Black canvasses the views of three experts on the vexing issue of appropriate incentives for innovation. All the incentives in the world count for little unless great ideas become genuine solutions.

Professor Veena Sahajwalla believes strong partnerships between science and industry are the key to success. “The best ideas can only remain in the lab if you don’t put that next level of effort into making them into real-world ideas,” Sahajwalla says.

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Photo courtesy In the Black