The Australian Academy of Technological Sciences and Engineering (ATSE) is concerned that not enough of the proceeds of the current commodities boom is being invested in the research, innovation and skills development required to sustain Australia’s growth once the commodities demand cycle turns down.

ATSE regards the support of innovation as an investment in the nation’s survival as a developed country and warns of the dangers of complacency about our research and innovation effort undercutting our international competitiveness.

These are key points in ATSE’s submission to the Productivity Commission in response to its Draft Research Report Public Support for Science and Innovation.

“While there is a commodity boom we prosper,” Academy President Professor Robin Batterham said today.

“But when the cycle turns, we may find ourselves desperately uncompetitive. Whether in commodities, manufacturing or service industries, Australia faces increasing global competition (particularly from low-wage countries such as China). We must develop new methods and different approaches to address the challenges it faces.

“This presents challenges for both large companies and small companies and policy initiatives are needed for both areas.”

Professor Batterham said ATSE was impressed by the Report’s analysis of the Australian Science and Innovation system and agreed with the conclusion that Australia was well served by the public funding support currently provided.

But the Academy shared some of the Productivity Commission’s concern about the trend to shift public funding of research towards commercialisation objectives, at the expense of basic strategic science and innovation.

“Public funding needs to support additional research, not to subsidise commercially oriented work that would probably have been done in any case, funded by the potential beneficiaries,” he said.

“However this does not rule out public support for high-quality, high-impact, pre-competitive or industry-wide commercial research, even though it would be better categorised as applied, rather than basic.”

ATSE was “strongly opposed” to the Report’s Draft Finding 8.1, which states that 'there is no evidence that the overall quantum or mix of public support for science and innovation in Australia is currently inappropriate for Australia’s needs and aspirations',” Professor Batterham said. “This implies that Australia does not need to shift its expenditure on R&D (as a percentage of GDP). We think that more R&D is needed as it is not possible to gain a competitive edge through using technology widely available to our competitors.

“The Academy is concerned that a finding that the overall quantum mix is satisfactory betrays a degree of complacency about Australia’s position in a world where international competitiveness is increasingly grounded in innovation capabilities rather than the costs of inputs.

“The Report demonstrates the very high marginal rates of return from investment in science and innovation. It is surprising that the Productivity Commission would not at least accept that the returns from increased public funding should be compared with returns from other targets for discretionary public expenditure,” he added.

“Australia will face further increased competition from overseas for R&D and innovation.

“Industries experiencing the fastest growth and carrying the greatest productivity and employment benefits are concentrated in the high-technology, innovative and knowledge-intensive sectors.”

Professor Batterham said the Academy strongly recommended that Australia develop a suite of polices which encouraged:

An increased level of business expenditure on R&D (BERD),
A high level of collaboration between industry and universities and publicly funded research agencies (PFRAs), and
Innovation and practical outcomes in PFRAs, should the Federal Government be intent on introducing a Research Quality Framework (RQF) to allocate public research funding.