Australia is at an important crossroads when it comes to our status as an
innovation nation.
The impact of the global COVID-19 pandemic across every sector of our
economy has clearly been significant. And while there is no question that
every business has been impacted in some way as a result of the pandemic,
there is right now a unique opportunity for Australia to reimagine and
reshape the national economy for the future – a future where our economy is
recognised for being more innovative and more dynamic then we ever have
been before.
Expanding the investment pipeline and continuing to support the
transformative power of innovation and technology, must form the central
pillars of a more dynamic and agile Australian economy over the years and
decades ahead of us.
Australian jobs and industries rely on a steady flow of domestic and
offshore capital to support investment into businesses across all sectors
of the economy. Australia’s demand for capital continues to be greater than
domestic supply, and as a result, the nation continues to be a net importer
of capital. Private capital firms play a vitally important role in
attracting both domestic and offshore investment capital into Australia,
which ultimately flows into job-creating Australian businesses.
The private sector, working in partnership with the government, can be a
powerful driver for new innovation and technology-based transformation
across the economy. To achieve that outcome, we must use innovation policy
to support early-stage businesses in realising their potential across all
of the key sectors of our economy.
When we look at the latest available rankings of economic complexity,
developed by Harvard University’s Center for International Development,
they show that despite Australia’s high standard of living we still have
much work to do to transition into a more knowledge-based, high
value-adding economy. The Center’s Atlas of Economic Complexity [1]
ranked Australia 87th globally – the lowest of all developed economies and
lower than many developing countries. Since 1996, when Australia was ranked
57th globally for economic complexity, it has dropped 30 places. In their
analysis, Harvard University concludes that “compared to a decade prior,
Australia’s economy has become less complex, driven by a lack of
diversification of exports.”
It is therefore important that the economic challenges that Australia faces
are recognised and tackled through leadership in long-term and visionary
policy reforms. Industry as a whole has a role to play in informing and
engaging with all sides of politics on these challenges.
There is much work to be done to transition and advance our economy,
because quite simply, we haven’t kept pace with the development in
complexity and technological transformation of other countries. The Harvard
data confirms that.
We must lift our economic productivity and competitiveness, and invest more
in skills and talent. These long-term policy shifts will position Australia
to capitalise on the next wave of economic growth that it within our grasp.
Australia’s geographic position within Asia provides with a unique
advantage and opportunity that other countries around the world would love
to have.
Australia's other comparative advantages must be exploited to the greatest
extent possible.
Key policy recommendations that we believe support the case for broader
economic reforms are outlined in the Australian Investment Council’s
Roadmap to Recovery
policy paper, released in June 2020. In our view, the three pillars of
Australia’s future economic prosperity must be:
1. maximising the penetration and utilisation of technology as an enabler
of economy-wide productivity growth and job creation;
2. going ‘narrow and deep’ in developing industries where Australia is, or
could be, a world leader; and
3. supporting Australia’s entrepreneurs and fast-growth businesses to
create Australia’s next generation of world leading businesses.
To realise the economic gains from the scaling-up phase of early stage
businesses, it is imperative that initiatives are put into place now to
support the ongoing investment needed to sustain and grow our innovation
ecosystem.
Core policy solutions that will help grow the pool of capital available to
support investment into Australian businesses and create employment
opportunities for the future include:
1. Introducing a new public and private sector co-investment funds to
support Australian entrepreneurs and Australian fast-growth businesses.
2. Filling skills and talent gaps in the short-term and building a training
and education pipeline that will support Australia’s growth industries over
the long-run.
3. Implementing meaningful reforms to lift the competitiveness of our
taxation system and our capacity to attract inbound investment from
offshore.
4. Investing in hard and soft infrastructure to support the growth profile
of the economy over the next two decades – utilising technology as a core
enabler for the future.
5. Fast-tracking the reduction of red tape and introducing greater
efficiency to our regulatory environment.
The COVID-19 global pandemic has been catastrophic for communities and
economies all over the world. But in the words of Churchill, ‘never let a
good crisis go to waste’ – Australia must be brave in the face of adversity
and prepare ourselves now for a future where knowledge and innovation are
the new currencies of leadership.