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National Innovation Summit, 11 February 2000: closing address.



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Senator Nick Minchin, Minister for Industry, Science and Resources

Closing Address to National Innovation Summit 11 February 2000

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It has been a great pleasure to be part of this Summit.

This Summit would not have been possible without a great deal of lead up effort.

I would like to thank the Business Council of Australia and Campbell Anderson in convening this Summit with the Federal Government, and the industry sponsors and the Victorian Government for their generous support.

Much of the detailed work was undertaken by the Steering Committee and the various Working Groups and I would like to thank them for their efforts.

In particular, I would like to thank Bob Savage for his leadership of the Steering Committee and his coordinating effort in the lead-up to the Summit.

May I also acknowledge the contribution of my Department in bringing the idea for this Summit into reality.

Some clear messages have emerged from the Summit.

Innovation is crucial in securing Australia's economic prosperity - knowledge and the way we use it is a key driver of economic growth.

Innovation will deliver better jobs and opportunities and a better quality of life for all Australians.

Globalisation is driving innovation as much as innovation is driving globalisation. Freer trade and information flows ensure that the best products and ideas are taken up at an ever-increasing rate.

Our system has to be seen as part of the global system.

Competitiveness and market opportunities are the main drivers of innovation. Government-sponsored incentives are an important but secondary factor.

Innovation is much broader than R&D, it encompasses virtually everything that raises productivity.

Our innovation system can serve our needs better.

We have an education and research base that gives us the capacity to be world-class innovators, but we need to better take advantage of it.

We need to more effectively use our people and the ideas they generate.

We need to create a culture that encourages new ideas and rewards those who succeed.

Since coming to office, this Government has consistently worked to reduce barriers to innovation and entrepreneurship.

We saw problems with firms gaining access to start-up capital, so we introduced the Innovation Investment Fund Program that will see over $300 million in venture capital being made available to innovative Australian firms and train a new generation of early-stage venture capital providers.

One of the most strident complaints we heard from business related to the impact of Capital Gains Tax.

We commissioned the Ralph Review of Business Taxation and implemented its recommendations, made our Capital Gains Tax regime world-competitive and removed the barriers that effectively prevented access to the huge pool of investment from international pension and superannuation funds.

We effectively halved the rate of CGT paid by individuals.

We overhauled the industrial relations system so that employers and employees can construct the most productive work environment, one where innovation and productivity are recognised and rewarded.

To develop and sustain innovation our education system has to be world class. The Government has made it more responsive and quality focussed.

In our approach, we are driven by a long-term commitment to a prosperous future for Australia and by clear policy principles.

We consider that It is not the role of government to be the risk-taker in driving the ideas-based economy. Research institutions, firms and individuals are much better placed to identify and exploit new opportunities;

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Subsidies are innovation destroying as they shield people from market realities ● Government intervention should occur only when there is clear evidence of market failure. ●

Regulation should be kept to a minimum and market returns should drive the innovation process. ●

We firmly believe in the spirit of mutual obligation.

When business receives support it should not only deliver higher profits and employment but also contribute to the health of the innovation system by sharing what it has learnt, or promoting innovation generally.

For the research community this means developing and supporting a climate where economic benefit is lauded alongside academic excellence.

Community support for the innovation system should come directly - through philanthropy as well as indirectly through the taxation system.

We have a long way to go to match the philanthropic performance of the US.

George Lewin's proposed foundation, dedicated to supporting innovative ideas and created from his own resources without any government assistance, should not be a lone effort.

Nevertheless, we support a clear role for Government in the innovation system.

As the Prime Minister said last night, there is a role for Government in supporting the innovation system.

Governments must provide adequate support for basic research.

Governments have a role in ensuring that ideas are disseminated and that we have access to the best research from overseas.

Government needs to ensure private research is not discouraged - we need to ensure that researchers are fairly compensated for wider benefits they cannot capture.

Governments need to ensure that incentive structures are efficient, effective and fair.

Some would also see a greater role for government in identifying future winners.

Generally, we prefer to ensure incentives are properly aligned and let the system respond.

As Professor de Meyer noted, a key part of the system has to be the customer. The customer needs to drive the system.

There are, however, occasions when there is a national benefit from directing resources to a particular area.

IT and Biotechnology are current examples.

I see the Prime Minister's Science, Innovation and Engineering Council as an ideal vehicle to identify new priority areas in the future.

The Government also has a role in championing innovation and entrepreneurship.

To recognise the contribution of science to Australia we have established the Prime Minister's Prize for Science and two special awards for young scientists in the Physical and Life Sciences.

To honour the contribution made by Dr Malcolm McIntosh, it gives me great pleasure to announce that the Annual Youth Prize for Physical Science will in future be called the Malcolm McIntosh Prize.

This Summit itself is important in raising awareness.

As will be the activities that flow from this event.

However, there are constraints on how quickly we can reform the innovation system.

For one, there are Budget constraints on what additional Commonwealth resources could be allocated to innovation. So in the short term we have to ask, "How can we do better with what we have got?" We need to be innovative with our innovation investment.

After all, innovation is about 'doing more with less'.

We should all support initiatives to make the Commonwealth debt free - for as the Prime Minister said, 'that would facilitate responsible additional public investment from future surpluses in important aspects of our national infrastructure'.

There are some things we can do now.

We should promote our successes more and have greater confidence in our innovative abilities.

We should value the economic benefits of research as a complement to academic excellence.

I would also like to initiate a scheme to support young entrepreneurs establish their own

businesses, along the lines of the MIT Entrepreneurs Scheme. I will be looking for the support of the business and research communities for this initiative.

Initially, a small group of the best young entrepreneurs would win $50,000 each, plus mentoring support to start a business.

We should all adopt language which is pro innovation.

We should refer to investment in R&D, rather than expenditure on R&D and fast growth companies not small companies.

We should not ask simply whether the education system is providing the skills employers want, but ask whether it is producing the employers of tomorrow.

We should promote our capabilities internationally.

We should aim to attract R & D activities to Australia. ● I have asked Fergus Ryan, the newly appointed Investment Coordinator, to give prominence in his role in investment attraction to this task. ●

Next month I will be attending the world's largest technology fair - Hanover Messe - to support those Australian companies displaying their capabilities. ●

When my Department works with industry in developing action agendas, we will ensure they also contain an analysis of how well our innovation system supports that industry.

I am keen to ensure that existing Government programs maximise their support for Innovation. My Department, through AusIndustry, will be adopting a new style of service delivery using a client manager model to guide business to the programs which best meet their needs.

Through the existing Technology Diffusion Program we will also be seeking joint proposals from business and the research community to bring to Australia the best researchers and innovators, to pass on their knowledge and experience to Australians. Up to $5.0 million could be used for this purpose over the next few years.

And we need to optimise Federal-State cooperation to remove barriers to greater innovative activity. And I am pleased to say that we have recently improved coordination arrangements to this end.

Last week, at a meeting of all Industry Ministers, we established the Commonwealth, States and Territories Advisory Council on Innovation.

This Summit is only one step in the process of optimising our National Innovation System.

We need to maintain the momentum.

To that end, I am happy to announce that David Miles has agreed chair a Summit Implementation Group made up of representatives of business, government, education and the research community to consider the issues identified here, synthesise them and prepare a consolidated package of concrete proposals.

This group will prepare a report within six months, with the aim that all relevant parties would agree on an Innovation Action Agenda by the end of the year.

I am pleased at the commitment shown by participants to progress our recommendations.

Tony Cutliffe from the Institution of Engineers has agreed to work with the key parties to carry forward the ideas and proposals of the Education and Skills Base Working Group to develop and implement an action plan.

The Strategic Industry Research Foundation will take the lead in working with all relevant bodies to recommend approaches and techniques to convert ideas to the seed fund ready

stage. This will include education, interaction between the players and possible sources of finance.

I also look forward to receiving the report of the Chief Scientist on Australia's science base towards the middle of this year.

Working through the Prime Minister's Science, Innovation and Engineering Council, these reports will provide a foundation for creating the responsive and flexible innovation system we need.

The real challenge lies before us in acting upon the issues raised here.

This Summit has seen the exchange of ideas that challenge all of us in the way we undertake our business and interact with one another.

I would like to commend you all on your efforts and thank you for your input in the lead-up to and during the Summit.

I look forward to working with you to make Australia the nation of Innovation.

Thank you.