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Are Aussies Really Lagging in Innovation as Report Suggests?

mdp Team | February 16th, 2017

A recent report released by Innovation and Science Australia (ISA) found that Australians scored poorly in key areas of innovation compared to other countries. At best, Australians are only incrementally innovative and fail to transfer, apply and commercialise the knowledge they have.

This comes as part of the Turnbull Government's National Innovation and Science Agenda to review the country's current performance in the innovation and commercialisation space. ISA has been tasked to raise Australia's efforts to that of top nations' by 2030. This report is a benchmarking exercise, which will be used by consultants to assist ISA to deliver a strategic plan by the end of 2017. It is worth watching this space as the plan may influence future Government funding and reform.

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Accuracy of Innovation Review

The review, however, appears to have little original content or analysis from ISA. Instead, it draws some findings from other reports and existing data, such as the Global Innovation Index, other Australian Government reports and statistics from the ABS and OECD.

Due to a limited time frame for such a large task, the insights appear to be contractions from other reports, some of which have evolved since release. There is a lack of original interpretation of the evidence and discussions are necessarily superficial due to length constraints.

For example, the ISA view of intellectual property resembles some conclusions from the Productivity Commission inquiry. This is problematic as the Productivity Commission did not deal with all intellectual property rights, and some proposals from the Productivity Commission were deeply flawed with a requirement for further consultation following the release.

However, the ISA review acknowledges its limitations and indicates its role will be to complement other activities. The concern from professionals working in the innovation and commercialisation sectors is that a narrow view of Australian innovative activity will skew the criteria determining future resource allocation.

Brief Recap of Innovation Review

The report uses three pillars to analyse part of the innovation system: knowledge creation, transfer and application:


Overall Findings

Strengths Identified

Weaknesses Identified

Knowledge Creation

In the origination of new ideas, building on prior knowledge and driven by an aim to solve a problem

Above average
  • Australia has higher levels of funding for R&D activities in higher education and non-profit organisations compared to other nations
  • Australia has world-class research infrastructure assets
  • Australia's research workforce is world class in many fields
  • Australia has good levels of collaboration among researchers
  • No Australian university is ranked in the top 20 globally 
  • Australia’s research infrastructure lacks governance and ongoing funding
  • Australia’s future skills in  STEM (Science, Technology, Engineering and Maths) education are a cause of concern
  • The current supply of ICT graduates are not meeting industry needs  

Knowledge Transfer

Identification and selection of knowledge for application, and passage of knowledge

Needs to be improved

Australians do not identify and select knowledge for application well


  • Data sharing is improving and there is an increase in availability of government data
  • Australians have sufficient levels of basic skills
  •  There are too few mechanisms in Australia to support knowledge transfer
  • Australia under utilises vocational education and training to develop skills for innovation
  • Collaboration between research institutes and businesses still appears to be limited

Knowledge Application 

Development, trialing, testing, refining and iterating of ideas to address a specific problem or need

Does not match its strength in knowledge creation
  •  Australia has strong regulatory framework and sound banking, legal and corporate sectors
  • Financial markets generally function well
  • Skilled migration contributes significantly to Australia's skills base
  • Vibrant start-up ecosystems have been flourishing around the country
  • Government procurement can do more to foster innovation like other countries
  • Australian business expenditure on R&D is low compared to other countries
  • Access to risk capital is constrained
  • There are gaps in ongoing businesses, management and leadership skills
  • Australian businesses rank poorly on international collaboration


Handpicked related article: Productivity Commission’s Draft Report on Australia’s IP System

Are Australians Lagging Behind?

To rank Australia “above average” in knowledge creation appears to be too generous based on the report’s internal metrics.

With ongoing reports of Australia's falling education standards, the ISA might have concluded that knowledge creation is above average due to the tertiary sector’s success in marketing internationally and drawing in skills from overseas.

Our universities might not be in the top 20 but the sector is growing. This indicates that Australians seeking international opportunities for low novelty innovation commercialisation can still be very worthwhile and lucrative.

It also indicates that Australia might not be able to grow world-class innovation on its own.

While the review has its limitations, it is clear that Australia has some highly innovative sectors. However, the place to start is for all businesses to accurately capture their intangible knowledge through patent registration and other forms of intellectual property protection. This is a larger problem than conveyed in the report.

Our experience is that the perceived lack of novelty results from a lack of identifying and protecting innovation. This means that it cannot be strategically ranked for commercialisation activities, which might reduce chances of lateral application opportunities being discovered.

Given that the focus on investment in R&D is estimated at $40 billion, this is the best time for businesses to perform an audit and look for opportunities that are becoming available.

Need advice on identifying, protecting and commercialising your innovation? Get in touch with one of our IP specialists.

mdp Team

We are more than a law firm – we work closely with our clients to bring their vision to life. We get our clients' businesses investment-ready, through risk and tax structuring so they maximise their IP beyond protection. Your ambition is our passion.