Aussie Innovation – Not All Good News

While Australia has always been a land of innovation a recent report has indicated that there remain gaps in Australian methods of innovating.

The report–The 2016 Australian Innovation System–has described a country that is good at employing innovative techniques but poor at producing the big value breakthroughs.

Produced the Office of Mark Cully, the Chief Economist inside the Department of Industry, Innovation and Science, the document seeks to measure the pulse of our innovation-active businesses. The report says Australia ranks relatively well on general entrepreneurship and innovation measures, but poorly on new-to-market innovation. At the same time, it found that Australian private sector companies have slightly decreased active innovation between 2013-14  and 2014-15.

More alarmingly, Australia’s new-to-market innovation is poor compared to other OECD countries. The report states that the data suggests Australia is not an innovation leader but and innovation follower.

“Compared to 31 other OECD countries, Australia, at nine per cent, ranked 23rd for the year 2012–13. This ranking largely reflects the activity of SMEs at nine per cent. Large businesses, also at 9 per cent, rank even lower at 29th out of 30 OECD countries.”

Part of the problem may be the comparatively low level of economic complexity in the Australian economy, a problem also mentioned by the Innovation System Report. Australia is ranked last of 35 OECD+ countries on economic complexity, the measure of how well an economy can hold and combine knowledge.

While the report says Australia ranks high on product or process innovation, with large businesses ranked 3rd in the OECD and SMEs ranked 8th, performance is low when it comes to innovation in marketing and organisational methods only.

The Innovation System report lists the three main barriers to innovation for all sorts of businesses:

  1. Investment (access to additional funding topped the list of innovation barriers for 18% of firms)
  2. Skilled staff (16%)
  3. Associated costs of innovation (13%)

However, the report also found that, on average, every dollar invested in innovation returned two dollars in sales, and that innovation-active businesses outperform non-innovation-active businesses by large margins.

Innovation-active businesses make up 45 per cent of all employing businesses but contribute to over 60 per cent of sales and employment. They are 40 per cent more likely to grow income and profitability and twice as likely to build export ability.

Innovation-centric firms were twice as likely to report productivity increases, three times more likely to report higher employment and three times more likely higher to have structured training for employees. They were five times more likely to make social contributions to our economy.

The report is available, here.

Photo credit: Material used in the preparation of this article has been drawn from


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