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Science & Technology in the Boardroom forum, Canberra, 2nd August: [address]



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Science & Technology in the Boardroom forum, Canberra 2nd August 2000

Ladies and gentlemen 

It's a pleasure to be here today to launch this Science and Technology in the Boardroom forum. 

May I congratulate FASTS on arranging today's event, which puts the spotlight on an issue critical to our nation's economic future.

Strengthening the relationship between our corporate boards and the science community has never been more important.  

On becoming Minister for Industry, Science and Resources I had the privilege of becoming the Deputy Chairman of the Government's equivalent of Science and the Boardroom:- the Prime Minister's Science, Innovation and Engineering Council. 

The Council provides the Prime Minister and nearly half the Cabinet with the opportunity to discuss the consequences and opportunities for the country arising from developments in Innovation and Science. 

Since I joined the Council, topics have included from the scientific foundations of new industries in Australia, and the rejuvenation of existing ones like the Wine Industry; the better management of our environment; and Australia's Dryland Salinity crisis. 

These discussions have without question improved the quality of subsequent Cabinet level discussions. 

Our deliberations within Government are also enriched by the fact that over 10% of members in the Government Parties have qualifications and professional experience in medicine, engineering, science and technology - not bad for parties thought to consist only of lawyers, farmers and small business proprietors. 

Our government is better placed to consider the innovation system as a whole through the input of scientists and technologists on PMSEIC and within the Government. 

The same must be true in the Corporate Boardroom. 

One of the early items on the PMSIEC agenda was the commercialisation of Australian R&D, based on a commercialisation conference well attended by business and researchers. 

The shortage of venture capital was a priority and capital gains tax reform was seen as part of the solution. 

Consideration of these issues at the PMSEIC "Board" has led to real change. 

There have been major Government decisions to improve the Venture Capital market in Australia, including reform of capital gains tax. 

And, of course, the Government's Innovation Investment Fund Program is making a significant contribution to the development of the market in this area.  

I recently received a report undertaken for my Department by PriceWaterhouseCoopers which confirms that there was a phenomenal surge in the amount invested in Australia in seed, start-up and early expansion capital in 1999. The amount invested increased by a staggering 148% to $236 million. 

Contrary to what a lot of people expected, the study also shows that institutional investors are less reluctant to invest in the venture capital market than might have been thought. 

56% of all venture capital raised in 1999 came from institutional investors, with 90.6% of that amount provided by the superannuation funds. So superannuation funds provided just over 50% of all venture capital. 

I am pleased to release this report at today's Forum. 

There is no doubt that the discussions in PMSEIC have a big on policy directions in the venture capital area. 

More recently, our PMSIEC discussions have focused on the need to improve the innovation system overall. 

Innovation and technological change are now almost universally considered as being among the most important drivers of economic growth. 

Technology is playing an increasing role in the balance of payments of OECD countries and a growing share of exports originates from medium to high technology industries. 

More than ever before, innovation is now at the core of economic activity.  

This means that it is imperative for all sectors of the economy to embrace innovation in response to sophisticated consumer and business demands and stay ahead of global competition. 

And for its part, Australia still needs to improve its performance in a number of areas. 

Despite industry receiving over $500 million pa through the R&D tax concession and over $150m pa through R&D start grants, there is serious under investment in innovation and R&D by firms in

Australia (recent ABS BERD figures drove that home).  

But there is much more to an effective innovation system than simply the level of R&D investment by business.  

It is just as important to build linkages between R&D and the wider community.  

We also need to harness the experience and knowledge of other countries by establishing links with researchers overseas.  

While venture funding has grown over recent years, Australia still has relatively poor rates of commercial uptake of our R&D. 

Maintaining a solid research base is essential. But we must put that research base to good use and can only do so through effective linkage between all players in the innovation system. 

The need for stronger linkages is why the Government has supported this Forum and why we have provided significant funding to FASTS, to assist in the organisation of today's event.  

Our private sector draws heavily on publicly funded R&D to create commercially viable products. 

However, these links are much weaker in the new and emerging technologies that will be key drivers of future growth. 

We need to champion our innovative entrepreneurs - and engender an entrepreneurial culture in our schools and universities. 

The Government has a range of initiatives to address these areas 

AMWIN's investment in LookSmart, the Internet search engine, which was supported through the Government's Innovation Investment Fund, stands as one of the most successful venture-capital investments in Australian history. 

Start-up and spin-off companies, the drivers of new industries, are benefiting from several Government initiatives - not just the IIF program. 

The Co-operative Research Centres are a successful collaborative model bringing together researchers and research users who undertake R&D ventures. 

The new COMET program - which improves the quality of investee companies - and the Pooled Development Fund - which increases the supply of venture capital finance - along with capital gains tax reforms will increase the attractiveness of venture capital investment. 

However, no amount of Government commitment alone will ensure the success of our national innovation system without a reciprocal involvement from business. 

The National Innovation Summit held earlier this yearbrought together business, science and Government to analyse our innovation system.  

The Innovation Summit Implementation Group is now assessing and refining the Summit Recommendations for reporting to theGovernment in four weeks time.  

Simultaneously, our Chief Scientist Robin Batterham is undertaking a comprehensive review of Australia's scientific capability. 

Both ISIG and the Australian Science Capability Review have identified three interlinked themes for enhancing innovation:  Culture (education and awareness) - the 'people' elements of innovation;

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Ideas (research and associated infrastructure); and ●   Commercialisation (use of ideas, including technology

diffusion and new business) - the 'product' elements of innovation. 

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I would like to take the opportunity today, with both David and Robin here at this Forum, to thank them for the work they have done to date.  

The Government will develop an Innovation Action Agenda based on the work of ISIG and the Chief Scientist and this will be announced by the end of the year.  

But the Agenda will not be one for Government alone. 

The Government has a vital role to play, but we must accept that the change in culture we need will require strong commitments from all those involved the innovation system - Government, industry and the research community. 

This Science in the Boardroom initiative will help create the climate in which business and Government-and the research community can together improve the innovation system  

This initiative can help Boards as they adapt to increasing competitive pressures    

These pressures mean company boards must build innovation into every aspect of their businesses. 

While the Government should provide the appropriate incentives, our companies must understand that their long-term future depends on a strong commitment to investment in R&D. 

To quote from Sue Serjeantson herself, "company boards need a

judicious injection of scientists and technologists so they can take advantage of the opportunities offered by a technology driven world." 

Our government is committed to the greater integration of our science, technology, innovation and entrepreneurial capabilities. 

We are among the most entrepreneurial and inventive peoples on Earth. 

The closer together we can bring our entrepreneurs and our scientists, the more successful we will be as a community and a nation. 

Again my congratulations to FASTS on its organisation of today's forum and its contribution to making Australia a nation of innovation. 

Thank you.

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