tag:theconversation.com,2011:/uk/topics/innovation-statement-22876/articlesInnovation Statement – The Conversation2016-06-15T02:50:05Ztag:theconversation.com,2011:article/603822016-06-15T02:50:05Z2016-06-15T02:50:05ZReducing bankruptcy to 12 months ignores realities of insolvency<figure><img src="https://images.theconversation.com/files/126641/original/image-20160615-22380-p2vfki.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Reform to Australia's bankruptcy period seeks to wipe its stigma. </span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>The proposed federal government changes to insolvency that reduce the bankruptcy period from three years to 12 months need to be questioned. </p>
<p>It has <a href="http://www.treasury.gov.au/ConsultationsandReviews/Consultations/2016/Improving-bankruptcy-and-insolvency-laws">been argued</a> the shortened default period will have the desired impact on encouraging entrepreneurial activity and reducing the associated stigma of being a bankrupt.</p>
<p>While this may indeed allow a bankrupt a “fresh start”, it ignores the reality of what typically causes personal insolvency in Australia. Research indicates alternative reform measures are more effective tools in reducing the stigma of bankruptcy.</p>
<p>The proposal to shorten the bankruptcy period are amid a suite of <a href="http://www.innovation.gov.au/page/agenda">insolvency law reforms</a> proposed by the <a href="http://www.pc.gov.au/inquiries/completed/business#report">Productivity Commission</a>, that were released in April at the same time as the government’s National Innovation and Science Agenda. </p>
<p>These included: </p>
<ul>
<li><p>Retaining the bankruptcy trustee’s ability to object to discharge and to extend the bankruptcy period to eight years</p></li>
<li><p>Retaining the permanent record of bankruptcy in the National Personal Insolvency Index</p></li>
<li><p>Consultation with relevant industry and licensing associations, to align licencing and industry restrictions with the reduced one year default bankruptcy period</p></li>
<li><p>Reducing current restrictions on a bankrupt obtaining credit or undertaking overseas travel to one year, subject to any extension for misconduct</p></li>
<li><p>Imposing a continuing obligation on the bankrupt to assist in the proper administration of their bankruptcy, even after discharge</p></li>
<li><p>Retaining the bankrupt’s obligation to pay income contributions for three years, regardless of the one year discharge, with the possibility of income contributions to be extended to five or eight years.</p></li>
</ul>
<p>There are a number of compelling arguments against the proposal.</p>
<p>First, shortening the discharge period will have no effect on the numerous restrictions which currently exist under Australian Law and professional association rules. These restrictions add to the stigma of bankruptcy in employment and business. </p>
<p>Researchers <a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/journals/UNSWLawJl/2015/58.html?stem=0&synonyms=0&query=title(Howell%20and%20Mason%20and%20University%20of%20New%20South%20Wales%20Law%20Journal%20">Nicola Howell and Rosalind Mason</a> suggest alternative reform measures are more effective tools in reducing the stigma of bankruptcy. </p>
<p>These measures include a review of the continuing need for entry barriers to occupations or professions based on bankruptcy; or changes to the accessibility or public record permanency of the National Personal Insolvency Index (NPII). </p>
<p>For example, a registered chartered accountant loses their registration on becoming bankrupt based on the premise that the restriction is imposed to protect consumers from those involved in the mismanagement of business. However, registration is lost, regardless of whether their bankruptcy arose as a result of consumer debts as opposed to business debts. </p>
<p>Suggested changes to the NPII include the NPII no longer providing a permanent public record of a person’s bankruptcy, or alternatively, imposing restrictions on those who can access the NPII. </p>
<p>Second, a shorter discharge period to improve entrepreneurial activity ignores the reality of what typically causes personal insolvency in Australia. </p>
<p>Statistics consistently show that the majority of bankruptcy cases are caused by factors such as unemployment and excessive use of credit, rather than carrying on a business. </p>
<p>Figures from the <a href="https://www.afsa.gov.au/resources/statistics/provisional-business-and-non-business-personal-insolvency-statistics">Australian Financial Security Authority</a> show that since 2007-2008, consumer debt has accounted for 75% (lowest: 2012-13) to 85% (highest: 2008-09) of debtors entering bankruptcy. The latest available figures in 2014-15 was 78%.</p>
<p>Third, justifying a reduced default bankruptcy period by comparing it to countries such as United Kingdom, New Zealand and Ireland, is flawed. For instance, when the United Kingdom made a decision to reduce its discharge period to a similar period in 1998-99, its level of consumer-related debt was 35%. Australia experiences a much higher percentage of this type of bankruptcy, so a comparison in terms of entrepreneurial activity may have little relevance. </p>
<p>The Federal Government’s <a href="http://www.innovation.gov.au/page/insolvency-laws-reform">insolvency law reforms</a> are aimed at “striking a better balance between encouraging entrepreneurship and protecting creditors”. A better way to achieve this balance is to categorise bankrupts according to their level of indebtedness to income, ownership of property and number of bankruptcies. </p>
<p>Using these thresholds as a means of determining their level of culpability means that bankrupts could be classified as “reckless”, “unfortunate” and “able”. </p>
<p>Relying on the repealed s149T Bankruptcy Act 1966 (Cth), (which previously provided for a shortened bankruptcy discharge period from 1992-2003) eligibility of a 12 month default bankruptcy period would then be restricted to “<a href="http://www.austlii.edu.au/cgi-bin/sinodisp/au/journals/MelbULawRw/2004/22.html?stem=0&synonyms=0&query=title(Melbourne%20University%20Law%20Review%20">unfortunate bankrupts</a>”. Unfortunate bankrupts being those bankrupts who are unable to pay their creditors at all, or who are unable to pay the trustee’s remuneration and expenses in full.</p>
<p>Reckless bankrupts are those whose bankruptcy arises from their own disregard or carelessness in accumulating debt, without the ability to repay that debt. Previously, a bankrupt was ineligible to apply for early discharge if he or she satisfied the criteria in s149Y Bankruptcy Act 1966 (Cth), such as their debts exceeded 150% of his or her income. </p>
<p>Able bankrupts are those bankrupts who neither fall into the “reckless” or “unfortunate” categories and thus have some measure of ability to repay their debts. </p>
<p>Specific education measures, such as mandatory financial literacy education, may also be more productive in reducing the incidence of bankruptcy long term. In a <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2660712">recent study</a> by Melbourne Law School, several participants of an online survey specifically attributed their clients’ ongoing financial problems to a lack of financial literacy. One advocate reported that “some clients view bankruptcy as a way of financial management to be considered more than once”. </p>
<p>The advantage of imposing financial education on undischarged bankrupts is that it reduces the possible risk of repeat bankruptcies that might result if the default bankruptcy period is reduced.</p>
<p>Insolvency laws invariably must balance the competing interests of creditors, debtors and the general community. Australia’s present laws regarding bankruptcy discharge periods and associated restrictions on debtors during those periods reflects the current balance, which may be considered “creditor protective”. </p>
<p>Reducing the bankruptcy discharge period and its associated restrictions to one year will re-balance these interests in favour of the debtor. However, such changes will not achieve the Federal Government’s stated purpose as outlined in the Innovation Statement.</p><img src="https://counter.theconversation.com/content/60382/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The majority of bankruptcies occur due to unemployment and excessive credit, rather than business failure.Jennifer Dickfos, Lecturer in Business Law and Corporations Law, Griffith UniversityCatherine Brown, Lecturer, Business Law, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/538262016-02-15T19:18:14Z2016-02-15T19:18:14ZTen rules for successful research collaboration<figure><img src="https://images.theconversation.com/files/111440/original/image-20160215-22560-1m2vgbt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Don’t be lured into collaboration just because it’s what everyone else seems to be doing.</span> <span class="attribution"><span class="source">from www.shutterstock.com</span></span></figcaption></figure><p>The federal government <a href="http://www.innovation.gov.au/page/agenda">announced</a> last year that it wants to see more collaboration between academia and industry. The government believes this will help “find solutions to real world problems and create jobs and growth”.</p>
<p>But collaboration is not easy to achieve or sustain. Between 50% and 75% of all interorganisational collaborations fail. And failure is expensive.</p>
<p>So how do you know when it’s appropriate to collaborate and how to make the relationship work? </p>
<p>Here, according to <a href="http://www.networksandcollaborations.com.au">research</a>, are ten rules you should follow:</p>
<h2>Setting up</h2>
<p><strong>1. Make sure you actually need to collaborate</strong>. Don’t be lured into collaboration just because it’s what everyone else seems to be doing. It’s not a way of getting what you want done more easily or cheaply – it can often be the opposite. So think whether your goal could be achieved another way – ie, by building in-house expertise, hiring new staff with the skills you need, or by contracting another party, such as a consultant, to do the job.</p>
<p><strong>2. Understand that collaboration is risky</strong>. Collaboration is not business as usual. It is risky and represents a different way of working. It’s not always well supported within the organisation and not all people have the skills or appetite for it. Take time to review the proposed collaboration and determine the costs/benefits: what might you lose and what are you willing to hand over? Is the time and effort likely to pay dividends?</p>
<p><strong>3. Find the right partners</strong>. This might seem like a no-brainer, but so many collaborations are doomed from the start because of mismatched expectations and goals, or working with parties that don’t have the right skills and resources to make the project work. The right partners don’t necessarily have to be like you, but you need to be sure that the other parties respect your way of thinking. There’s no point in collaborating with partners who don’t bring additional expertise and resources to the table.</p>
<p><strong>4. Leverage your existing relationships</strong>. Collaborations often work best when you work with people you know well and trust, and where time has been invested in building relational capital. But the project might require new ways of thinking, different skill-sets and different resources. So previous collaborators or partners might become the connectors who can match you with the right sort of partners, even if they’re not entirely a good fit for the intended collaboration.</p>
<p><strong>5. Find common ground with the other parties</strong>. When you’ve got a fair idea of your ideal collaborators, negotiate your terms of agreement up front, particularly about how you will work together, how conflicts with be handled, who will do what, and what will be contributed. This doesn’t mean reaching for the rule book each time problems arise, but it is important for parties to fully understand everyone’s interests and responsibilities. Time spent setting the rules of the game can also reduce the costs of ongoing monitoring.</p>
<h2>Making it work</h2>
<p><strong>6. Invest in relationships</strong>. Collaboration is based on relationships, not programs or organisations. It’s not simply a transactional arrangement. If you only want that, hire a consultant. For collaborations to work, you need to establish face-to-face relationships initially to build relational strength. Face-to-face meetings every so often between collaboration partners also help to ensure that things run smoothly. Simply put, time is a big part of the investment.</p>
<p><strong>7. Identify and support champions and sponsors</strong>. Collaborative projects work best when there is a champion (usually from industry) who knows exactly how the research is going to benefit his/her organisation, industry or sector. If this person leaves the organisation, someone similar needs to be found. If not, the project will drift, the researchers will reduce their engagement, and the outcomes won’t be applied. This is the worst of all possible outcomes. By contrast, sponsors provide high-level endorsement for the project and help to secure legitimacy, funding and access to resources. Give sponsors good news stories to help them act as brokers for your work/projects.</p>
<p><strong>8. Close down the ineffectual or toxic</strong>. Some collaborative projects end up carrying a partner or two, which puts considerable strain on everyone else – and can affect relationships that would otherwise be productive. Call out these behaviours, but give work-shy parties a chance to redeem themselves, or look for alternative ways of getting their input. If that doesn’t work, revise previous agreements, particularly when it comes to co-authorship, and don’t reward shirking behaviours.</p>
<p><strong>9. Protect the fortress.</strong> Work hard to keep a successful collaboration going. Add parties as the need arises, but take care when doing so. New parties need to understand the culture of the collaboration and fit in with its values, norms and behaviours. Understand how your partners work, their strengths and weaknesses, appreciate their value-add and constantly find ways of keeping the magic alive.</p>
<p><strong>10. Measure, monitor and communicate success.</strong> You need to establish a clear way to measure how you’re tracking against previously agreed objectives. Make sure you plan for some early wins and be sure you can verify when you’ve got there. Being able to measure and communicate success is essential to keeping a collaboration going and – more importantly – working out whether it’s on the right path, or needs work. You also need to be able to demonstrate clearly and unambiguously whether the project was a success, or whether it fell short in some areas.</p><img src="https://counter.theconversation.com/content/53826/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robyn Keast received program funding from Department of Education and Training - Collaborative Research Networks Section. </span></em></p><p class="fine-print"><em><span>Michael B. Charles does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Between 50-75% of all collaborations fail. Here are some tips on how to set up a successful collaboration between academia and industry.Robyn Keast, Research professor, Southern Cross UniversityMichael B. Charles, Associate Professor, Southern Cross Business School, Southern Cross UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/531692016-01-17T19:17:22Z2016-01-17T19:17:22ZBattle of ideas is on as election-year innovation debate starts to make up for lost time<p>We’re now in a race to the top on innovation. Better late than never.</p>
<p>Liberating ideas could reboot Australia’s economy, as we <a href="https://theconversation.com/prosperity-or-decline-liberating-ideas-can-reboot-our-economy-36644">argued</a> a year ago.</p>
<p>Now it seems there are more ideas about how to generate ideas than ever before in Australian policymaking. Both the Liberal-National government (“<a href="http://www.innovation.gov.au/">Welcome to the Ideas Boom</a>” and the <a href="http://www.innovation.gov.au/page/agenda">National Innovation and Science Agenda</a>) and Labor opposition (“<a href="http://www.alp.org.au/poweringinnovation">Powering Innovation</a>” and “<a href="http://www.alp.org.au/startupyear">Getting Australia Started</a>”) have put down markers around innovation in the lead-up to this year’s federal election. </p>
<p>The Coalition and Labor pronouncements have much in common:</p>
<ul>
<li><p>growing awareness that our innovation future lies beyond national boundaries – for example, “launching” and “<a href="http://www.austrade.gov.au/local-sites/united-kingdom/news/national-innovation-and-science-agenda-launched">landing pads</a>” linked to innovation hubs abroad, connecting the Aussie diaspora overseas, and new visas for entrepreneurs;</p></li>
<li><p>support for science, technology, engineering and mathematics (STEM) studies, which includes reducing gender disparities;</p></li>
<li><p>facilitating access to finance for start-ups and innovative enterprises through tax breaks and the like;</p></li>
<li><p>enhancing digital capabilities, which includes teaching kids to code;</p></li>
<li><p>fostering greater collaboration, especially between industry and research bodies;</p></li>
<li><p>new bodies to oversee innovation, science and technology: Innovate Australia (Labor) and Innovation and Science Australia (Coalition); and</p></li>
<li><p>action on government procurement.</p></li>
</ul>
<h2>A common goal, but key policy differences</h2>
<p>Yet within this apparent new spirit of bipartisanship are some key differences. Some are subtle, others are not so. That is before one starts haggling over whose purse is bigger than the other’s.</p>
<p>The Turnbull government’s package is pitched further down the value chain, notwithstanding measures to promote STEM studies. It presumes a core capability in the economy: the assumption is that what’s missing is the key to unlock and leverage this capability. Coalition policy includes, for example, reforming Australian Research Council <a href="http://www.arc.gov.au/linkage-projects">linkage projects</a> and connecting industry to innovation infrastructure.</p>
<p>Labor seeks to build foundational capabilities from the ground up. It puts more emphasis on teaching computer coding in schools, preparing small to medium-sized enterprises to access government procurement, developing a national digital workforce plan and incentives for graduates to start businesses.</p>
<p>Interestingly, in a political role reversal, the Coalition’s plan has more of a selective orientation by technology and institution. This is reflected in the <a href="http://www.innovation.gov.au/factsheets/biomedical-translation-fund">Biomedical Translation Fund</a>, the <a href="http://www.innovation.gov.au/page/cyber-security-growth-centre">Cyber-security Growth Centre</a> and the <a href="http://www.innovation.gov.au/page/csiro-innovation-fund">CSIRO Innovation Fund</a>.</p>
<p>Labor is more about generic capabilities across the board. This distinction, however, is not black and white.</p>
<p>Labor emphasises the innovation ecosystems view of the world. It plans to create <a href="http://billshorten.com.au/labors-plan-to-accelerate-regional-innovation">regional hubs</a>, with university-based accelerators at the core of this approach, and a national entrepreneurship support network. It speaks of an <a href="http://billshorten.com.au/federal-opposition-launches-innovation-investment-partnership-to-support-australian-startups">Innovation Investment Partnership</a> to bring together venture capital, superannuation funds and start-up stakeholders to promote new business.</p>
<p>A distinguishing feature of the government’s package is its emphasis on an innovation culture. <a href="https://theconversation.com/reforming-bankruptcy-laws-is-the-first-step-next-remove-the-stigma-52821">Reforming insolvency laws</a> to reduce the stigma of failure is its centrepiece. </p>
<p>Also noteworthy is a revised approach to measuring research impact. That includes engagement with industry metrics. This is in the spirit of breaking out of research silos.</p>
<p>Both parties have a “challenges program”. </p>
<p>The Coalition has nominated five national policy and service delivery challenges. Businesses are invited to submit proposals to address them, with winning ideas to receive grants. The most successful could be accelerated to prototype or proof of concept.</p>
<p>Labor’s approach is more grassroots-oriented, like in the US. It proposes a portal for government agencies to propose challenges for the public to respond to.</p>
<h2>What more can be done?</h2>
<p>There is strength in diversity and much to commend in both plans. Yet more could be done in the following areas:</p>
<ul>
<li><p>explicitly linking domestic challenges to corresponding global problems, thereby positioning Australia as a “solutions hub” and a leader in scaleable open-source projects and the internationalisation of ideas;</p></li>
<li><p>promoting community-driven innovation – greater intergovernmental co-ordination could scale up local solutions to local problems to a regional or national level where appropriate;</p></li>
<li><p>stronger emphasis on spreading knowledge through the economy, with university “impact” measurement expanded beyond excessive reliance on books and journals, or even commercialisation;</p></li>
<li><p>a “beyond STEM” approach to innovation, recognising the interdependencies of scientific research and non-research forms of innovation such as design and organisational systems, together with the social sciences’ pivotal role in driving prosperity within innovation ecosystems;</p></li>
<li><p>defining a stronger role for particular agents and locations – not least cities, women and girls – in the process and outcomes of innovation; and</p></li>
<li><p>a stronger “lifecycle” view of innovation and entrepreneurship, going beyond the traditional emphasis on start-ups to include later growth stages in a seamless approach to innovation and wealth creation.</p></li>
</ul>
<h2>We need a transforming, global vision</h2>
<p>Finally, to be credible, innovation policymaking must be located within a long-term vision of the structure of the Australian economy we should aspire to. It also demands honesty about the scale of the transformation required.</p>
<p>So the glass is half-full and rising. There are international precedents more like pints than pots. </p>
<p>China’s innovation hub, Chengdu, has <a href="http://www.telegraph.co.uk/sponsored/china-watch/business/12055699/innovation-and-entrepreneurship-in-Chengdu.html">partnered</a> with European Union companies and organisations to share innovations among small and medium businesses and universities. The US has <a href="http://edition.cnn.com/2016/01/12/politics/state-of-the-union-2016-transcript-full-text/">launched</a> next-generation manufacturing hubs. Even one of the world’s oldest universities, Oxford, <a href="http://www.ox.ac.uk/news/2016-01-12-vice-chancellors-admission-address">wants to be more agile</a> in developing and translating ideas conceived in the dreaming spires.</p>
<p>Ideas have started to travel the world over. Australia has barely reached base camp in the race to the top.</p>
<p>Still, it’s encouraging to see Australian policy proposals breaking free of archaic and stifling debates about protectionism and picking winners. The world of ideas knows no boundaries.</p><img src="https://counter.theconversation.com/content/53169/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This article represents the opinions of the authors and does not necessarily represent the views of RMIT and the University of Melbourne. Anand Kulkarni is a Fellow of the Centre for Policy Development, an independent and non-partisan policy institute.</span></em></p><p class="fine-print"><em><span>Travers McLeod is CEO of the Centre for Policy Development.</span></em></p>Politicians and policymakers are at last grappling with the urgent need to generate new ideas and fresh ways of doing things. But in the race to the top, Australia has barely reached base camp.Anand Kulkarni, Senior Manager, Planning & Research, RMIT UniversityTravers McLeod, Honorary Fellow in the School of Social and Political Sciences, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/528212016-01-12T19:34:19Z2016-01-12T19:34:19ZReforming bankruptcy laws is the first step - next, remove the stigma<figure><img src="https://images.theconversation.com/files/107876/original/image-20160112-6996-1nvtvhv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Changes to Australian bankruptcy laws have led to fear that people will be let off easily - but is that warranted?</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>In Australia, there is a lingering belief that bankruptcy should not be “too easy”.</p>
<p>The federal government’s plan to reduce the period of bankruptcy from a minimum of three years to one year, announced in December’s <a href="https://theconversation.com/innovation-statements-significant-insolvency-changes-are-well-overdue-51908">Innovation Statement</a>, has been criticised for allowing debtors to avoid the consequences of their misconduct.</p>
<p>But this view misunderstands the role of bankruptcy law in a modern economy and arguably conflates the role of bankruptcy and criminal law. In fact, what is needed in addition to legal changes is a shift in the way Australians think about bankruptcy.</p>
<p>Modern personal bankruptcy law attempts to balance competing public interests of rehabilitating debtors and allowing them a fresh start, with the need to discourage reckless borrowing and spending and abuse of the credit and insolvency system.</p>
<p>But bankruptcy as a crime has had a long history, arising out of an early need to allay the violence and mayhem occurring through Roman debtors not paying their creditors, by imposing some order and authority on the warring parties. </p>
<p>This authority sought to divide up the debtor’s assets among the creditors; but the idea of protection of the unfortunate debtor did not arise until later. The first modern bankruptcy laws developed in the 16th century in England and sought to provide administrative order to commercial debt recovery. </p>
<p>Non-business bankruptcy was treated as a crime, with debtor’s prisons existing until the late 19th century. The growth of middle classes after the industrial revolution and the drive to encourage and broaden entrepreneurial risk taking helped change society’s treatment of all bankrupts (both business and non-business) and the goal of protection and rehabilitation became more important. </p>
<p>At the same time, bankruptcy continues to involve the bankrupt losing most of their property, including the family home, and any cash, shares or other property, including their passport, and anything other than household furniture and a cheap car. </p>
<p>There are requirements to repay creditors through contributions from income, above a certain level; restrictions imposed on obtaining credit and with credit agencies reporting the bankruptcy; and restrictions on being a company director and on retaining licenses to work in certain trades and professions. </p>
<p>A failure of a bankrupt to comply with their obligations can result in the extension of their bankruptcy to five or even eight years. Failure to file a list of their assets and liabilities can result in the bankruptcy continuing indefinitely, at least until the bankrupt complies.</p>
<p>Most of these impacts are expected to remain whether bankruptcy is one year or longer. </p>
<p>Our 21st century laws even connect bankruptcy with serious crime, and treason, and impose criminal sanctions, including imprisonment, for breaches by bankrupts of many of these obligations. And there is still the stigma of bankruptcy, of being labelled as someone who could not manage their finances and left their creditors unpaid, and who otherwise might be seen as morally suspect. </p>
<p>The government doesn’t propose to lessen these rules. Those who suggest that bankruptcy is an easy option are ignoring the range of penalties and limitations that apply to bankrupts. Given the fact that bankruptcy can release a debtor from debts of $20,000, or $20 million, the law - and society - acknowledges that some accountability and consequence be imposed. It is a matter of degree and of balance.</p>
<p>But the government has opted for a fresh approach to unpaid debt in personal insolvency, given it is a more emotive area than the relative anonymity of corporate losses.</p>
<p>Australia is seen internationally as having a rather harsh view of unpaid debt. But punishment and deterrence can only achieve so much when it comes to discouraging reckless borrowing or profligate spending. </p>
<p>A person might well not pursue their innovative business idea if the consequence of it not working were jail, or at a less extreme outcome, a long period of bankruptcy and the loss of most if not all of their property. Creditors also need a predictable, transparent and fair system for collecting their debts. </p>
<p>For that reason, many other countries are refocusing their insolvency laws more on rehabilitation and a constructive approach to business rescue. </p>
<p>The government is trying to shift the balance in favour of risk and innovation, with its potential for promoting economic growth, and to move the language away from retribution and failure, an important aspect of cultural change. But merely reducing the period of bankruptcy won’t be enough. </p>
<p>The public narrative and perception around financial failure and insolvency, both personal and corporate, need to change if we are to embrace an entrepreneurial and innovative business culture. </p>
<p>Changing the law is perhaps the easier part, with initial public support needed, followed by a shift in public perception in order to allow the law to be fully effective.</p><img src="https://counter.theconversation.com/content/52821/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australians still have lingering beliefs about bankruptcy as a crime. This has to change if we want to foster business innovation.Jason Harris, Associate Professor in corporate, commercial and insolvency law, University of Technology SydneyMichael Murray, Visiting Fellow, QUT, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/522092015-12-20T19:55:02Z2015-12-20T19:55:02Z2015, the year that was: Science + Technology<figure><img src="https://images.theconversation.com/files/105373/original/image-20151211-8335-1tq3brf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">2015 saw us complete our exploration of all nine planets (including dwarf planet Pluto) in our solar system.</span> <span class="attribution"><span class="source">NASA</span></span></figcaption></figure><p>This year came and went almost as fast as NASA’s <a href="https://theconversation.com/au/topics/new-horizons">New Horizons</a> probe zipped past the distant dwarf planet, Pluto. Yet New Horizons managed to pack a lot into its <a href="https://theconversation.com/beyond-pluto-new-horizons-mission-is-not-over-yet-44520">flyby</a>, revealing <a href="https://theconversation.com/stunning-crystal-clear-images-of-pluto-but-what-do-they-mean-47517">astounding images</a> of Pluto that show it to be far from a static icy world. </p>
<p>And its mission isn’t over yet; New Horizons will now venture deep into the outer <a href="https://theconversation.com/beyond-pluto-new-horizons-mission-is-not-over-yet-44520">reaches of the solar system</a>, probing the expanse of the Kuiper belt and shedding light on this ancient and hitherto unexplored region of space.</p>
<p>Fuelling planet fever (dwarf or otherwise) was also one of the most scientifically accurate – and science-celebrating – films to emerge from Hollywood in recent times: <a href="https://theconversation.com/the-martian-review-science-fiction-that-respects-science-fact-48373">The Martian</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105374/original/image-20151211-8297-166ktng.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Being suck on Mars has never been so fun.</span>
<span class="attribution"><span class="source">20th Century Fox</span></span>
</figcaption>
</figure>
<h2>Eye in the sky</h2>
<p>Speaking of space, this year was the 25th anniversary of the Hubble Space Telescope, which has proven to be one of the most enduringly popular and <a href="https://theconversation.com/why-the-hubble-space-telescope-has-been-such-a-stellar-success-40312">most successful</a> scientific projects in history. </p>
<p>Besides its triumphs of discovery, Hubble has also generated a startling array of wonderous images of our universe. Best of all is when those images are both <a href="https://theconversation.com/hubble-in-pictures-astronomers-top-picks-40435">beautiful and richly informative</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=500&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=500&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105375/original/image-20151211-8329-183atk1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=500&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Happy 25th Hubble!</span>
<span class="attribution"><span class="source">NASA</span></span>
</figcaption>
</figure>
<p>And speaking of anniversaries, it was one hundred years ago that Albert Einstein altered the face of physics by publishing his <a href="https://theconversation.com/au/topics/general-relativity-centenary">general theory of relativity</a>. It’s hard to overstate the significance of this revelation about the nature of space and time. </p>
<p>It’s also difficult to fathom how <a href="https://theconversation.com/without-einstein-it-would-have-taken-decades-longer-to-understand-gravity-50517">just one man</a> was able to come up with a theory of such breathtaking accuracy, and such <a href="https://theconversation.com/the-art-and-beauty-of-general-relativity-51042">profound beauty</a>.</p>
<h2>Smart batteries, smart houses</h2>
<p>More down to earth were significant developments in battery technology. While we might not think of batteries as the glamorous vanguard of technology, they underpin the mobile technology we’ve become accustomed to, and they can also potentially transform the way we <a href="https://theconversation.com/tomorrows-battery-technologies-that-could-power-your-home-41614">generate, store and consume energy</a>.</p>
<p>At least, that’s what Tesla Motors CEO Elon Musk is banking on with the announcement of the company’s home battery offering, <a href="https://theconversation.com/the-winners-and-losers-in-teslas-battery-plan-for-the-home-41151">Powerwall</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=200&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=200&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=200&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=251&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=251&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105376/original/image-20151211-8291-19mdkci.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=251&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Tesla Powerwall could make solar power work all day and all night.</span>
<span class="attribution"><span class="source">Tesla Motors</span></span>
</figcaption>
</figure>
<p>Another technology that promises (or threatens, depending on your perspective) to transform the world is <a href="https://theconversation.com/your-questions-answered-on-artificial-intelligence-49645">artificial intelligence, robotics and automation</a> more generally.</p>
<p>The first wave is likely to be in the form of <a href="https://theconversation.com/where-we-are-on-the-road-to-driverless-cars-50079">driverless cars</a>, which will not only be safer and more efficient than those driven by hairless primates, but also could change the way we think of things like <a href="https://theconversation.com/driverless-cars-will-change-the-way-we-think-of-car-ownership-50125">car ownership</a>. </p>
<p>But then, what will happen to all those people who currently make a living from driving? Like many, they may <a href="https://theconversation.com/could-a-robot-do-your-job-short-answer-yes-39569">lose their jobs</a> to increasing automation. We may need to <a href="https://theconversation.com/we-need-new-jobs-as-the-machines-do-more-of-our-work-38600">create new jobs</a> in the wake of the robot invasion, but even that might not be enough.</p>
<p>More menacing is the prospect of lethal autonomous weapon systems, colloquially called “killer robots”. There are already defensive weapon systems that can operate autonomously, but this year saw a call by many of the leading AI and robotics researchers to <a href="https://theconversation.com/open-letter-we-must-stop-killer-robots-before-they-are-built-44577">ban offensive autonomous weapons</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=283&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=283&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=283&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=356&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=356&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105378/original/image-20151211-31729-6ee31w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=356&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The robots are coming, although they probably won’t look like this.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Digital scapes</h2>
<p>This is not to say we don’t already have challenges to face in the digital world. Cybercrime is still a scourge, with it become more <a href="https://theconversation.com/how-cybercrime-has-changed-over-the-past-5-years-it-hasnt-got-any-better-47027">professional and businesslike</a> over the year.</p>
<p>Hackers have a growing <a href="https://theconversation.com/hackers-kit-bag-the-tools-that-terrorise-the-internet-37715">range of tools</a> at their disposal to steal your identity, extort you, pilfer your information or even penetrate business or <a href="https://theconversation.com/cyber-breach-at-the-bureau-of-meteorology-the-who-what-and-how-of-the-hack-51670">government</a>. They can even remain hidden in the “<a href="https://theconversation.com/explainer-what-is-the-dark-web-46070">dark web</a>”.</p>
<p>Ultimately, there may be no simple technological panacea, except for us each to <a href="https://theconversation.com/we-need-to-take-responsibility-for-our-own-safety-online-38368">maintain vigilance</a>. Although would be little solace to those exposed in the hack of dating website <a href="https://theconversation.com/what-if-the-ashley-madison-hack-was-an-inside-job-46404">Ashley Madison</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105379/original/image-20151211-8291-1x1t3wj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">They’re getting better at their business.</span>
<span class="attribution"><span class="source">Brian Klug/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<h2>True or false?</h2>
<p>But you can’t believe everything you hear. This is especially if it sounds too good to be true, such as that <a href="https://theconversation.com/trolling-our-confirmation-bias-one-bite-and-were-easily-sucked-in-42621">eating chocolate helps you lose weight</a>. Or that <a href="https://theconversation.com/overcoming-the-social-barriers-to-climate-consensus-36889">climate change</a> is not real.</p>
<p>But there are things you can do to protect yourself – or <a href="https://theconversation.com/inoculating-against-science-denial-40465">inoculate yourself</a>, if you will – from anti-science and quackery. There are a few techniques you can use to help <a href="https://theconversation.com/busting-myths-a-practical-guide-to-countering-science-denial-42618">debunk science denial</a> when you see it.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=487&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=487&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105380/original/image-20151211-8314-15lblrr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=487&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Got to defend against the bad vibes.</span>
<span class="attribution"><span class="source">Bryan Rosengrant/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The Abbott government itself hit some bumps when it came to its support for science, particularly when it threatened to cut funding to the National Collaborative Research Infrastructure Strategy, or <a href="https://theconversation.com/explainer-the-national-collaborative-research-infrastructure-strategy-ncris-38837">NCRIS</a>. </p>
<p>Then Education Minister Christopher Pyne was hoping to hold NCRIS ransom to encourage researchers to back his proposed higher education reforms, but the scientific community was as one in its opposition to the cuts, arguing they’d hurt <a href="https://theconversation.com/research-infrastructure-cuts-harm-science-the-economy-and-the-nation-38478">science, the economy and the nation</a> at large.</p>
<p>The government eventually got the message and <a href="https://theconversation.com/pyne-backflips-on-research-infrastructure-funding-cut-38849">capitulated</a>, with Minister Pyne continuing funding in the short term, then solidifying that funding following the change of Prime Minister to Malcolm Turnbull – at which point Christopher Pyne switched to the Innovation, Industry and Science portfolio and changed his tune on research considerably.</p>
<p>In fact, the Turnbull government’s gushing appreciation of science and optimistic spirit when it comes to innovation – backed by <a href="https://theconversation.com/au/topics/innovation-statement">over A$1 billion in funding</a> for science and commercialisation – changed the way <a href="https://theconversation.com/expert-panel-what-the-national-innovation-statement-means-for-science-51902">many scientists felt</a> about the government.</p>
<p>2015 has been a year of milestones and triumphs for science and technology, although laced with a few cautionary messages. We’re now half way through the second decade of the 21st century, and it’s starting to feel like we’re genuinely living in the future – albeit not the future as envisaged by many in the 20th century.</p>
<p>With a new drive for innovation, greater appreciation of the role of science and the emergence of (dare we say) paradigm shifting technologies, such as automation and artificial intelligence, we may feel the lingering traces of the 20th century fall further into the past as 2016 takes over.</p>
<p><strong>Top ten Science + Technology stories by readership in 2015:</strong></p>
<ol>
<li><a href="https://theconversation.com/explainer-what-is-the-dark-web-46070">Explainer: what is the dark web?</a> by <a href="https://theconversation.com/profiles/david-glance-148">David Glance</a></li>
<li><a href="https://theconversation.com/four-easy-tips-to-make-your-batteries-last-longer-41172">Four easy tips to make your batteries last longer</a> by <a href="https://theconversation.com/profiles/valentin-muenzel-130702">Valentin Muenzel</a></li>
<li><a href="https://theconversation.com/its-often-the-puzzles-that-baffle-that-go-viral-40216">It’s often the puzzles that baffle that go viral</a> by <a href="https://theconversation.com/profiles/jonathan-borwein-jon-101">Jon Borwein</a></li>
<li><a href="https://theconversation.com/inskip-beach-collapse-just-dont-call-it-a-sinkhole-48241">Inskip beach collapse: just don’t call it a ‘sinkhole’</a> by <a href="https://theconversation.com/profiles/stephen-fityus-194631">Stephen Fityus</a></li>
<li><a href="https://theconversation.com/the-other-red-meat-on-the-real-palaeodiet-41272">The ‘other’ red meat on the ‘real’ palaeodiet</a> by <a href="https://theconversation.com/profiles/darren-curnoe-2101">Darren Curnoe</a></li>
<li><a href="https://theconversation.com/seven-myths-about-scientists-debunked-37148">Seven myths about scientists debunked</a> by <a href="https://theconversation.com/profiles/marguerite-evans-galea-5223">Marguerite Evans-Galea</a>, <a href="https://theconversation.com/profiles/jeffrey-craig-99410">Jeffrey Craig</a></li>
<li><a href="https://theconversation.com/european-invasion-dna-reveals-the-origins-of-modern-europeans-38096">European invasion: DNA reveals the origins of modern Europeans</a> by <a href="https://theconversation.com/profiles/alan-cooper-18427">Alan Cooper</a>, <a href="https://theconversation.com/profiles/wolfgang-haak-156711">Wolfgang Haak</a></li>
<li><a href="https://theconversation.com/the-verdict-is-in-feel-good-exercise-hormone-irisin-is-real-46082">The verdict is in: feel-good exercise hormone irisin is real</a> by Eliza Berlage</li>
<li><a href="https://theconversation.com/brain-to-brain-interfaces-the-science-of-telepathy-37926">Brain-to-brain interfaces: the science of telepathy</a> by <a href="https://theconversation.com/profiles/kristyn-bates-5106">Kristyn Bates</a></li>
<li><a href="https://theconversation.com/the-smell-of-rain-how-csiro-invented-a-new-word-39231">The smell of rain: how CSIRO invented a new word</a> by <a href="https://theconversation.com/profiles/howard-poynton-157622">Howard Poynton</a></li>
</ol><img src="https://counter.theconversation.com/content/52209/count.gif" alt="The Conversation" width="1" height="1" />
2015 was a year where we expanded our view of the universe, embraced new technologies and got a hint of the profound changes to come.Tim Dean, EditorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/521512015-12-10T19:13:12Z2015-12-10T19:13:12ZGrattan on Friday: Two sets of numbers a headache for Malcolm Turnbull<p>Having landed the innovation statement on a cloud of optimism, the Turnbull government faces some character-forming days in the coming week, as the Ian Macfarlane saga plays out and the budget update is released. We are talking about vastly different issues but each is a big deal.</p>
<p>The pocket version of the Macfarlane story is that the former industry minister, dumped by Malcolm Turnbull, proposes to switch from the Liberals to the Nationals, which would enable the latter to demand an extra cabinet spot and Macfarlane, barring hitches, to stage an extraordinary return.</p>
<p>Macfarlane probably didn’t anticipate the trouble he would cause and the backlash against him. Many Liberals are furious, accusing him of trying to game the system. Some Nationals are doubtful, seeing him as a queue jumper.</p>
<p>Deputy Prime Minister Warren Truss, expected to step down from the Nationals’ leadership early next year, has been caught between his responsibility to his party and his obligations to the prime minister, whom he did not forewarn.</p>
<p>Turnbull faces a very difficult situation if the plan goes ahead, and bitterness from the Nationals if it is aborted.</p>
<p>On Saturday Macfarlane’s local electorate organisation will consider his move. Unless a lot of feet become cold it is expected to approve it.</p>
<p>Assuming that happens, the crunch comes on Monday when the executive of the Queensland Liberal National Party meets. Sources say the numbers are tight, and that’s before last minute arm-twisting. Turnbull will be represented at the meeting by Immigration Minister Peter Dutton.</p>
<p>If the vote goes against Macfarlane he will be humiliated personally, and the Nationals will be open to the charge of engaging in a hicks’ plot that they could not even bring off. How could Macfarlane walk back into the Liberal partyroom in Canberra? There is speculation that in those circumstances he might quit, causing a byelection.</p>
<p>If Macfarlane has the numbers on the executive, Turnbull has a serious management problem. The Nationals have indicated they will push for their extra cabinet place – which actually they are already entitled to on existing numbers. However Turnbull wouldn’t want a quick reshuffle, unless he decided to rid himself of the embattled Mal Brough, also a Queenslander. But hanging onto Brough this long and then, before the police report, axing him just to address another matter might look a touch too expedient.</p>
<p>A reshuffle could be delayed until Truss goes from the leadership, assuming he does. But would Turnbull seek to veto the Nationals nominating Macfarlane, accepting only some other National?</p>
<p>A potential upheaval in Coalition relations is a worry for a prime minister, but the poor state of the budget is obviously a greater one. The books will be opened on Tuesday (unusually in Perth, because Finance Minister Mathias Cormann is about to become a father for the second time).</p>
<p>The mid-year economic and fiscal outlook (MYEFO) will be grim. The May budget forecast of a A$35 billion 2015-16 deficit is set to worsen. Chris Richardson of Deloitte Access Economics estimates the updated forecast is likely to be more than $40 billion, with budget deficits in the four years to 2018-19 totalling $38 billion more than expected in May.</p>
<p>There will be further revenue write-downs, driven substantially by China’s slowing growth, with low iron ore prices, and record low rates of wage growth in Australia.</p>
<p>The government promises to cover new spending with savings, so there will be cuts. The innovation statement spends $1.1 billion over four years – the trade-offs will not be itemised but will be spread across government. There could be savings due to underspends but some cuts are likely to bring squeals.</p>
<p>MYEFO will shine a light very specifically on the prospects for revenue, and the credibility of the government’s rhetoric about containing spending, one measure of this being whether outlays are being reduced as a proportion of GDP.</p>
<p>Budgets and their updates always have to be watched for their fiddles – such as what “savings” that haven’t been legislated by a difficult Senate, or indeed will never be legislated, are kept in the numbers.</p>
<p>The prospect of a surplus has disappeared over the horizon. A government that came in only a couple of years ago talking debt and deficit and proclaiming a budget emergency (the existence of which many disputed) displays little will these days for a very robust approach. The slogan was discarded after serving its political purpose.</p>
<p>It’s unsurprising the government doesn’t want to be tied to a timetable for returning to surplus. Labor treasurer Wayne Swan provided a lesson in the risks of that. But without the discipline of a date, the temptation is for ministers to get rather lax. The psychology is that the marginal extra “spend” can actually face less resistance when there is a big deficit, according to sources familiar with budget processes. But the “saves” are becoming harder to find. Economic observers will want to see at least a pathway towards surplus.</p>
<p>MYEFO shows us some of the foundations for next year’s budget. It is presented by Treasurer Scott Morrison – his first test in this area – and Cormann but it will focus attention on the economic strategy of the government and thus of Turnbull.</p>
<p>Accepting Turnbull’s word that the election will be around the due time – which is September – his government will have to bring down a 2016 budget in testing circumstances. It has minimal money for giveaways, yet it will need some inducements for the voters.</p>
<p>Around Christmas, Turnbull celebrates his 100 days in office. The messages from next week will be that the next 200 are almost certainly going to be a lot tougher.</p>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/hubnq-5ac92e?from=yiiadmin" data-link="http://www.podbean.com/media/player/hubnq-5ac92e?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/w2g4j-5a9ba1?from=yiiadmin" data-link="http://www.podbean.com/media/player/w2g4j-5a9ba1?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/52151/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Having landed the innovation statement on a cloud of optimism, the Turnbull government faces some character-forming days in the coming week.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/516562015-12-10T19:09:15Z2015-12-10T19:09:15ZWhy it is time for a ‘no BS’ pledge when it comes to MYEFO forecasts<p>With the Turnbull government’s innovation package now out of the way, we will soon get the official update on the government’s budget position, the so-called Mid-year Economic and Fiscal Outlook (MYEFO).</p>
<p>And it is unlikely to be pretty.</p>
<p>The budget numbers that then-Treasurer Joe Hockey laid down in May were, at that time, rather ugly. The budget deficit in 2015-16 was estimated to be $35.1 billion, or 2.0% of GDP.</p>
<p>Since then, however, GDP growth has been below the 2.75% real rate used to generate the figures (despite a ray of sunshine, or at least the absence of torrential rain last quarter). The iron ore price - a key figure for tax receipts from Australia’s largest export - has fallen to US$40 per tonne. Remarkably, it has fallen fully 30% since mid October.</p>
<p>I could go on, but you get the point. The deficit is going to be way more than $35 billion.</p>
<p>Treasurer Scott Morrison isn’t personally responsible for this, of course. And he does have the opportunity to come clean with the Australian public and tell us just how bad the situation is, without reflecting poorly on his, or his new prime minister’s economic credentials.</p>
<p>That would be brave, but it would set the stage for the tax reform discussion that is almost surely awaiting us at some point. It would also allow Morrison to create his own narrative about the budgetary situation.</p>
<p>Hockey told us that Australia was suffering a “debt crisis”. Many people (including <a href="https://theconversation.com/australia-does-not-have-a-debt-crisis-so-just-say-no-joe-26148">yours truly in this outlet</a>) pointed out that Australia had the third lowest net debt to GDP ratio in the OECD and that debt levels were historically low. These wise commentators also observed that what we did have was a structural deficit problem. </p>
<p>Tax revenues were growing at 3% or so, while the major categories of expenditure (like health and aged pensions) were growing at 6-7%. That was unsustainable in the long term, despite there being no imminent crisis.</p>
<p>Nobody really bought Hockey’s message - and for good reason. Indeed, then prime minister Tony Abbott reversed course and called 60% debt to GDP <a href="https://theconversation.com/from-debt-disaster-to-good-result-a-budget-message-lost-39299">“a pretty good outcome”</a>.</p>
<p>Yet, sadly, the important point about structural deficits and the need for reform got lost with debt scaremongering. MYEFO is an opportunity for Morrison to get the narrative right and lay out the case for GST reform.</p>
<p>The really bad news, however, comes in the years beyond the current one. The estimates for 2016-17 and 2017-18 are for deficits of $25.8 billion and $14.4 billion respectively. The bizarrely titled “projection” for 2018-19 has the deficit at just $6.9 billion (or 0.4% of GDP).</p>
<p>Even in May those numbers were laughably optimistic. I’m tempted to call them a “fantasy”, but that’s unfair to movies like <em>The Princess Bride</em> that contain important life lessons.</p>
<p>For starters, those forward numbers use implausible assumptions about GDP growth (3.25%, 3.5% and 3.5%, respectively). Second, they assume wage growth that is well above recent history–and hence they likely overstate personal income tax receipts. Finally, they build in a hefty dose of bracket creep, where the tax thresholds for the various marginal rates stay unchanged in nominal dollars and hence the average tax rate paid goes up for many Australians. Indeed, it is estimated that those on average weekly earnings will be in the second top bracket during these years.</p>
<p>Morrison could announce a change to the way these “forward estimates” are reported in the future. He could mandate that bracket creep be backed out of the figures and he could insist that future GDP growth and other assumptions are at the present level, not some giant Hockey stick (pun sort of intended).</p>
<p>A “no BS” forecast pledge along these lines would play well with many of the taxpayers who don’t get to make such unrealistic assumptions about their own finances.</p>
<p>But whatever the sea of numbers MYEFO contains, and however depressing they may be, the treasurer needs to connect the current state of the Australian economy with the need for tax reform. And it should go something like this.</p>
<p>We have a structural budget deficit problem with revenue growth at 2-3% and expenditures growing at 6-7%. The days of 4% GDP growth are gone. GDP growth around 2% is the new normal because of <a href="https://theconversation.com/forget-about-a-currency-war-well-have-bigger-worries-off-a-weaker-yuan-46072">secular stagnation</a> - just as former US Treasury Secretary Larry Summers has been saying for a couple of years now, and as RBA governor Glenn Stevens has seemingly accepted since the middle of 2015.</p>
<p>Worse, our tax system is hopelessly dependent on personal and corporate income taxes at a time when labour and capital are more mobile than ever. That’s a giant risk that can only be addressed by raising the GST to 15% and broadening the base to include everything - along with compensation for low income earners. We also have to lower marginal income tax rates to reduce the disincentives for working and investing.</p>
<p>And the superannuation system has to be reformed so that it is no longer an estate planning vehicle for the wealthy, but nor is it an optional top up to the aged pension (which a shocking 80% of retired Australians receive in full or in part).</p>
<p>That’s a whole lot of truth for one little budgetary update. But it would make for a pleasant change.</p><img src="https://counter.theconversation.com/content/51656/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden is an ARC Future Fellow.</span></em></p>The MYEFO numbers aren’t going to be pretty - but the projected future budget deficits are a fantasy.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519982015-12-09T03:21:55Z2015-12-09T03:21:55Z‘Fail early, fail often’ mantra forgets entrepreneurs fail to learn<figure><img src="https://images.theconversation.com/files/104969/original/image-20151209-3285-1gwk495.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Not everyone gets to go to startup school.</span> <span class="attribution"><span class="source">Robert Scoble/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The government wants entrepreneurial Australians to fail. The <a href="http://www.innovation.gov.au/page/agenda">innovation package</a> it released this week is a set of policy measures designed to pep up the Australian economy through encouraging entrepreneurial failure in the hope that such failure will eventually lead to success. </p>
<p>The package includes additional funding for research, tax breaks for early stage investment and more lenient bankruptcy laws. The hope is this will all foster an “innovation ecosystem” which will help to pivot Australia from a resources-dependent economy to one which generates fast growing startups in sectors like IT and bio-tech.</p>
<p>At the heart of the innovation package is a <a href="https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/138/fallingfwd.pdf">fashionable idea</a> – entrepreneurship relies on failure. </p>
<p>Business people and policy wonks around the world are fond of the idea that failure is actually a good thing. They claim that by failing, entrepreneurs are able to learn from the “school of hard knocks” and improve next time. If you want to encourage entrepreneurial success, we are told, you also have to allow for entrepreneurial failure. </p>
<p>The shining example of this idea of “failing forward” is supposed to be the US – a place where you can crash out of business one day and then move onto something new fairly quickly. In some entrepreneurship circles, the mantra has become <a href="http://www.theguardian.com/technology/2014/jun/28/silicon-valley-startup-failure-culture-success-myth">“fail early, fail often”</a>. </p>
<p>According to some, venture capitalists in Silicon Valley actually look for entrepreneurs who have failed multiple times. Having a number of ventures which have gone belly up on your CV is seen as a badge of honour, not a mark of shame. Failure has become something to shout about, not something to hide away.</p>
<p>Clearly the Turnbull government has drunk the kool-aid. A central part of the government’s policies to build an innovation ecosystem is to make it easier for companies to fail. The reformed bankruptcy laws means that someone who has bombed out in a big way can start up a new business within 1 year (rather than 3 years). </p>
<p>On the surface this seems to be fine. Banning would-be entrepreneurs from starting a new business for three years seems to be a big disincentive for trying out new things. The hope is that by allowing people to fail and then try again, they can learn in the process.</p>
<p>The big problem with this otherwise fine sounding plan is that often entrepreneurial failure is not as great as it is being painted. For years people studying entrepreneurship have known that starting a new business is an insane idea. Although there is lots of talk about how great entrepreneurship is, <a href="http://yalepress.yale.edu/book.asp?isbn=9780300113310">the reality is much grimmer</a>. </p>
<p>The great majority of entrepreneurs (between 75 and 90%) fail. This rate is slightly lower for people who are older, who have significant experience in the industry they are starting a business in and who have outside sources of financial support (such as a rich spouse or parents).</p>
<p>We also tend to think that entrepreneurship is a great thing for the economy as a whole. The idea is that entrepreneurs are people who create whole new sectors and drive economy growth. </p>
<p>This is certainly the case sometimes. But in the great majority of cases, entrepreneurs are actually what <a href="http://icc.oxfordjournals.org/content/23/1/113.abstract">Paul Nightingale has called MUPPETs</a> – marginal, undersized, poorly performing enterprises. They often are just trying to keep their head above water. As a result they rarely have the resources or skills which are required to actually create much of the core innovations in the economy. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/104964/original/image-20151209-3285-nvw7kg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Australia is not the first country to seek more entrepreneurs.</span>
<span class="attribution"><span class="source">British High Commission/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Where does innovation really come from?</h2>
<p>A cold look at much innovation in the last fifty years shows the great majority was actually supported by the state and created by large corporations who have the patience and capacity to see through long term processes needed to develop new drugs, create new software and build new technologies.</p>
<p>The real problem for Turnbull’s plan is that entrepreneurs generally don’t learn from failure. There is now <a href="http://www.researchgate.net/profile/Deniz_Ucbasaran/publication/222817552_The_nature_of_entrepreneurial_experience_business_failure_and_comparative_optimism/links/004635357d4bbb0329000000.pdf">mounting evidence</a> that when an entrepreneur fails, they don’t go back, revise what they did and try something new. </p>
<p>Instead, they often completely ignore their past lessons and often do exactly the same things. The main reason for this is that when things go wrong entrepreneurs do not ask themselves what they might have done wrong. Instead, they try to blame others. </p>
<p>A common get-out clause is “I was ahead of my time” or “my vision was too big”. This tendency to externalise blame has its uses – it helps to keep an entrepreneurs sense (or delusion) that they are special alive. But, it can also be profoundly damaging. It often means headstrong entrepreneurs keep on failing and learn absolutely nothing from it. And as they continue to fail, they burn through their own – and others’ – money and time with very little to show for it.</p>
<p>There are some big dangers lurking in the background of the innovation agenda. It may place undue emphasis on entrepreneurs, which will set up the conditions for many individuals to fail. What’s more it is could have the effect of focusing attention on smaller firms while ignoring the fact that innovation is actually often driven by larger firms and state supported institutions. </p>
<p>But perhaps the greatest danger is that it could encourage entrepreneurial failure without doing anything to force entrepreneurs to actually learn from their mistakes. To avoid these risks, the government needs to consider some important tweaks. </p>
<p>First, they should try to be more selective in targeting of individuals to become entrepreneurs. For instance, it makes more sense to target middle aged people with significant experience in an industry rather than young people with no experience. </p>
<p>Second, they need to match measures aimed to encourage innovation in smaller businesses with similar measures designed to support innovation in larger firms. </p>
<p>It is likely that supporting larger firms with the ability to scale will have greater payoff. Finally, they need to provide mechanisms which allow failed entrepreneurs to learn from their mistakes rather than just sending them back on the streets to do the same stupid things all over again.</p><img src="https://counter.theconversation.com/content/51998/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andre Spicer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government wants more Australian entrepreneurs to fail - which would be fine if they learned from their mistakes.Andre Spicer, Professor of Organisational Behaviour, Cass Business School, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/520032015-12-08T22:10:37Z2015-12-08T22:10:37ZAustralia’s innovation agenda: embracing risk or gambling with public health?<figure><img src="https://images.theconversation.com/files/104822/original/image-20151208-32408-b6eyco.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Managing the risks of industry-researcher collaboration: Coca-Cola got caught for funding scientists who shifted blame for obesity away from bad diets.</span> <span class="attribution"><span class="source">from www.shutterstock.com</span></span></figcaption></figure><p>The just-released <a href="http://www.innovation.gov.au/page/agenda">Innovation Statement</a> aims to be a catalyst for a <a href="https://theconversation.com/ideas-boom-to-drive-the-australian-economy-turnbull-51909">cultural shift “where we embrace risk”</a> in the name of innovation. </p>
<p>Turnbull’s stated aim of an “agile” society brings to mind a trapeze artist. But while all eyes are fixed on the acrobat soaring at death-defying heights, the safety net lies below, ensuring no one breaks their neck.</p>
<p>To realise the promise of innovation, we need to equally embrace the need for comprehensive and adept measures to assess and manage the risks of industry-researcher collaboration.</p>
<h2>The risks of collaboration</h2>
<p>The innovation report nowhere mentions the risks of collaborating with industry: risks of bias and conflict of interest. </p>
<p>These can divert the entire research agenda so that it privileges certain interests, distort the true effects of research and break the public’s trust in science.</p>
<p>Commercial and public interests are not always aligned. This is particularly the case in industries whose products may be harmful to health such as food, drugs, medical devices and chemicals.</p>
<p>The tobacco industry is <a href="http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1497700/pdf/15842123.pdf">a classic example</a> of research partnerships that were used to undermine tobacco control policy and to generate scientific doubt about the harms of smoking.</p>
<p>In the medical industry, <a href="http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001561">relationships with clinicians</a> have made marketing a routine part of health care. This drives up costs and puts patients at risk through the promotion of drugs and devices with limited track records for safety.</p>
<h2>Industry sponsorship and risk of bias</h2>
<p>The quality, credibility and cutting-edge nature of research depends on managing risks of bias. </p>
<p>Risks of bias are systematic errors in research that may lead to an underestimate or overestimate of the true result. Risks of bias are different from what we commonly understand as bias in the prejudicial sense – they are independent of a researcher’s beliefs or ideologies.</p>
<p>Industry sponsorship of research is a known risk of bias. <a href="http://www.ncbi.nlm.nih.gov/pubmed/23235689">Studies</a> show that when drug or device manufacturers sponsor research to test their product’s efficacy or safety, the results and conclusions are more likely to be favourable than for studies with other sources of funding. This is true even when the studies’ methods and quality are identical.</p>
<p>This means that industry can fund and conduct high-quality research, but that the results may still be distorted, exaggerating either the benefits or minimising the harms.</p>
<p>The innovation report proposes rewarding researchers who engage with industry, but will measure this in terms of research income from industry. This kind of funding arrangement poses a high risk of bias to research endeavours.</p>
<p>If we are to be sure that an innovative medical device, software application, industrial chemical or new agricultural practice is effective and safe, those who stand to gain financially from its commercialisation and those who evaluate its benefits and harms need to be independent.</p>
<p>Bias can enter the research process at any stage, but it also has an amplifying effect – bias that shapes the kinds of research question that even get asked (or funded) is magnified at the level of public policy.</p>
<p>For example, at the Charles Perkins Centre, <a href="http://sydney.edu.au/perkins/research/current-research/bias-in-research.shtml">researchers</a> are examining the association between funding source and the focus of nutrition research. If the research agenda is biased, down the line, dietary guidelines may in fact misguide the public.</p>
<h2>Innovation and conflicts of interest</h2>
<p>Researcher conflicts of interest not only threaten research integrity, but public trust in the credibility and legitimacy of science itself. It should be that researchers can proudly collaborate with industry for public benefit.</p>
<p>But researcher conflicts of interest – including the wrong kinds of partnerships, failure to disclose personal financial ties and failure to maintain independence – can put an entire field’s work into question.</p>
<p>For example, the recent disclosure of the millions of dollars that <a href="http://well.blogs.nytimes.com/2015/08/09/coca-cola-funds-scientists-who-shift-blame-for-obesity-away-from-bad-diets/?_r=0">Coca-Cola paid researchers</a> calls into question public health research that focuses on a lack of physical activity as the main culprit for obesity, while ignoring sugar-sweetened beverages.</p>
<h2>Moving forward</h2>
<p>Increasing the impact of Australia’s world-class research in communities at home and overseas is a goal researchers, industry and governments share. </p>
<p>In partnering, it is essential that researchers maintain their independence and that innovations are evaluated objectively. </p>
<p>This means that freedom to publish, disclosure of financial ties and management of conflicts of interest need to be part of the innovation strategy going forward.</p><img src="https://counter.theconversation.com/content/52003/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Quinn Grundy has received funding from the Canadian Institutes of Health Research and the Agency for Healthcare Research and Quality (United States). </span></em></p>The innovation report fails to mention the risk of bias for researchers collaborating with industry. We must ensure that researchers maintain their independence.Quinn Grundy, Postdoctoral Fellow, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519792015-12-08T19:14:17Z2015-12-08T19:14:17ZWhy Turnbull’s ‘Ideas Boom’ will not bridge the gap between research and business<p>Malcolm Turnbull’s first “signature” policy statement is clever politics, not least because many of the initiatives have been previously announced. Whether the ensemble of measures gets any closer to the heart of the Australian innovation issue is another matter. </p>
<p>The <a href="http://www.innovation.gov.au">agenda</a> is remarkably thin on detail, and even thinner on supporting evidence or argument.</p>
<p>For the universities there has been some simplification of research block grants, and a reiteration of the intention to align funding more strongly with the impacts of research (if the players can ever agree on what constitutes an “impact”). The Innovation Connections scheme provides small businesses with facilitators to help them assess their research needs, and to enable university-based researchers to work in business and vice versa.</p>
<p>None of this is likely to help very much in bridging the gap between university-based research and the business sector. While both sectors are investing more in research, their collaborative activities (as measured by higher education research and development that is financed by industry) have grown much less strongly.</p>
<p>Overall, innovation-active businesses are collaborating no more with universities in 2012 than they were in 1995 (see Tables A4 and A7 of the <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/Australian-Innovation-System/Australian-Innovation-System-Report-2015.pdf">2015 Australian Innovation System Report</a>).</p>
<p>These figures tell us a good deal about innovation in Australia. If the system were working well, we would expect to see (as is the case in other OECD economies) a much greater proportion of business-related R&D being done in universities. The reason for this level of interaction in more successful national systems is that over the years, business and universities work together because it is in the interests of both to do so. </p>
<p>Business can identify promising research in universities (a good deal of which, because of previous iterations of the cycle) will already be aligned with the priorities of business, can nurture it, and if it proves successful, take it further.</p>
<p>Australia is not in this position. In part, this is because of a relative lack of lead or nodal firms. These are medium-sized to large firms that have the financial capacity and market reach to invest in early-stage research, and the experience and incentive to form collaborative links en route to commercialisation. But the situation also reflects the way research priorities in government and in the universities have changed in response to often mistaken ideas about the most effective research role of public sector institutions. </p>
<p>Increasingly, over the past 20 years, universities have themselves taken on the mantle of innovators. Many have produced “spin-off” companies. But few of these have been able to prosper independently. While university incentives to researchers who publish in international journals may be good for the prestige of the university, they are not so good for potential collaboration.</p>
<p>Some of the new(ish) initiatives in the Innovation and Science Agenda (such as Research Connections) may help in small ways. But in coming up with policies, we should remember that innovation is a means to an end, not an end in itself, and that it is a business-based phenomenon. Innovation refers to new products and processes that increase competitiveness, or that are themselves the basis of competitiveness.</p>
<p>Governments help best when they nurture businesses beyond the startup stage, through procurement policies, by working with industries (not necessarily high-technology ones) that would benefit from small-scale subsidies, and by making sure tax policies are supportive.</p><img src="https://counter.theconversation.com/content/51979/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jenny Stewart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some of the new(ish) initiatives in the Innovation and Science Agenda may help in small ways, but it doesn’t provide the answer what happens after the innovation.Jenny Stewart, Professor of Public Policy, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519952015-12-08T07:19:25Z2015-12-08T07:19:25ZSome risks in Turnbull’s benign view of business failure<p>Malcolm Turnbull spruiks his lines like one of those optimistic entrepreneurs that he urges Australians to become. The positive tone of the message is the first step to eliciting a favourable response for the content.</p>
<p>Thus it was with Monday’s innovation statement and Turnbull’s news conference launching it.</p>
<p>Turnbull’s exhortation – that Australians should be more willing to take business risks and less fearful of failure – is an attempt to promote a major cultural change in the community. This drive to transform thinking is arguably of greater significance than the particular measures that were announced.</p>
<p>But the often-compelling nature of Turnbull’s presentation can discourage forensic examination of what he’s actually saying, and its implications.</p>
<p>He is a man who doesn’t blush at his own hyperbole – as in this Monday observation:</p>
<blockquote>
<p>If you start a new venture, a new business and it goes well for a while and then, for whatever reason, it doesn’t succeed, you may have lost some money, your investors may have lost some money, but the overall economy massively benefits because you are wiser, your employees are wiser, your investors are wiser, everyone’s learnt something and the ecosystem benefits. That’s why cultural change is so important. </p>
</blockquote>
<p>This cheery view of the benign nature of failure surely represents a very specific perspective.</p>
<p>It’s one appropriate to the deft person who can muster the resources and has the skills to bounce back – and good on those people. We do need more of them.</p>
<p>But to claim that a business failure is just a glitch replete with upsides and never mind the downsides ignores a whole lot of things.</p>
<p>While the “ecosystem” might be benefiting, the family who mortgaged the house to launch a business that has now gone kaput could be devastated. Some investors who put money into a start-up that could not live up to its big idea may have lost part of their retirement nest egg. The now “wiser” employees may be having trouble getting other jobs.</p>
<p>None of this is to deny that it’s vital for Australia to become more innovative, or that start-ups deserve fostering. Rather, it is to argue that the statement in the innovation policy that “we need to leave behind the fear of failure” overhypes and oversimplifies something that requires a more sophisticated approach.</p>
<p>The old adage “nothing ventured, nothing gained” is all about the need to take risks. But in start-ups and the like, it is also a matter of the nature and degree of risk, who is taking them, and what the consequences of failure will be. If the risk-taker is going to be financially or personally destroyed by a venture going wrong, it’s a risk better avoided. Only some will be able to endure the several failures now being extolled as a reasonable pathway to success.</p>
<p>A balanced view is required, but Turnbull’s rhetoric often has a balance bypass.</p>
<p>In his quest against the fear of failure, he has been influenced not just by his own experience of the business world, but apparently by talks he had recently with Israel’s chief scientist. The refrain is also a mantra of Bill Ferris, who will head the new Innovation and Science Australia that is replacing Innovation Australia.</p>
<p>The innovation statement has specific measures, involving reform of the insolvency laws, that are designed, if you like, to somewhat reduce for entrepreneurs the risk of taking risks.</p>
<p>The default bankruptcy period will be shortened from three years to one. A “safe harbour” will be brought in to protect directors from personal liability for insolvency trading, if they appoint a professional restructuring adviser to develop a plan to rescue a company in trouble. And, if a company is restructuring, there will be a ban on “ipso facto” contractual clauses that allow an agreement to be ended solely due to an insolvency event.</p>
<p>These changes might bring their own risks in a laxer attitude by directors, but Turnbull stresses that other obligations on directors would remain so protections would continue to be there.</p>
<p>Helped by the sheer force of his personality and messaging, Turnbull has pulled off his innovation policy, leaving Labor lamely pointing to the fact that it had plans out first in some of these areas.</p>
<p>It’s not just a matter of the government stealing ideas worth having. What else would an agile and innovative administration do? And it’s only partly that most attention inevitably focuses on what a government does, especially one with a new leader, rather than what an opposition says.</p>
<p>The real lesson is that Turnbull can bring together a policy and enthuse it with a special life that makes it attractive (even when it raises questions) while Shorten’s announcements are piecemeal, often sludgy and lack a narrative or a spruiker who can radiate confidence.</p>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/hubnq-5ac92e?from=yiiadmin" data-link="http://www.podbean.com/media/player/hubnq-5ac92e?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/w2g4j-5a9ba1?from=yiiadmin" data-link="http://www.podbean.com/media/player/w2g4j-5a9ba1?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/51995/count.gif" alt="The Conversation" width="1" height="1" />
Malcolm Turnbull spruiks his lines like one of those optimistic entrepreneurs that he urges Australians to become.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519082015-12-08T04:37:09Z2015-12-08T04:37:09ZInnovation statement’s significant insolvency changes are well overdue<p>Those looking for the detail on insolvency changes announced in the Federal Government’s long awaited innovation statement won’t find it on the government website. </p>
<p>But the Productivity Commission’s report, <a href="http://www.pc.gov.au/inquiries/completed/business#report">Business set-up, Transfer and Closure</a>, also released yesterday, acts as a companion piece to explain the Federal Government’s intention to introduce significant changes to Australia’s insolvency and restructuring laws.</p>
<p>The reports released today recognise that our restructuring laws have fallen behind world best practice. We need to ensure that our laws provide appropriately flexible mechanisms to achieve good commercial outcomes from restructuring efforts. </p>
<h2>Current laws</h2>
<p>Australia’s laws provide both formal insolvency processes (such as company liquidation and personal bankruptcy) as well as regimes to help individuals and businesses avoid insolvency and restructure their affairs. Individuals have the option of Debt Agreements and Personal Insolvency Agreements, while companies have voluntary administration and schemes of arrangement.</p>
<p>Restructuring laws help individuals and businesses to maximise their asset values and thereby increase returns to creditors, minimise job losses of employees and downstream effects on suppliers, customers and other creditors. </p>
<p>Australia’s corporate restructuring laws have been in place since the early 1990s (based on a report by the Australian Law Reform Commission in 1988). Since that time many other countries, including England, Hong Kong, Singapore and the United States have undertaken major reform projects to improve restructuring laws.
Recent official inquiries, including by the Senate and the Financial System Inquiry have recommended further reviews to encourage flexibility and efficiency in restructuring. </p>
<h2>Proposed changes</h2>
<p>The Productivity Commission’s report provides 15 recommendations for reform of insolvency law, although the Innovation Statement only mentions three of these. </p>
<p><em>Reducing personal bankruptcy to one year</em></p>
<p>Personal bankruptcy currently lasts for a minimum of three years. Both reports note that this may be a disincentive for entrepreneurs whose businesses fail. The clear theme is that if Australia is to encourage a vibrant start-up economy we need to refrain from blaming entrepreneurs as failures and punishing them through lengthy and rigid insolvency regimes. </p>
<p>This reform will help to reduce the stigma attached to personal bankruptcy and assist with facilitating a “can do” ethos for business entrepreneurs.</p>
<p>For too long insolvency laws have treated business failure as a personal failing of the businessperson. Certainly there is sometimes fraud and misconduct in business failure, just as there is in many sectors of the community, but insolvency law should facilitate rescue and rehabilitation to help businesspeople to start again.</p>
<p>The reforms proposed are a move in the right direction and they provide a process for longer periods of bankruptcy where fraud or misconduct is involved. </p>
<p><em>Introducing a safe harbor for directors during restructuring</em></p>
<p>There has been a lot of discussion about reducing liability risks for company directors with the AICD proposing a broad-based defence for director across a range corporate law rules. </p>
<p>Both reports recommend a defence for directors who seek to restructure their business. At present directors of companies in distress who seek to restructure in the hope of a turnaround run the risk that they will be sued for insolvent trading, which could involve personal liability for all of the companies unsecured debts. This may cause them to shut down the business rather than take the risk, or to resign from the business. </p>
<p>The proposed defence would protect directors from insolvent trading liability, but would require them to engage a suitably qualified restructuring advisor who (following the Productivity Commission’s report) would need to be registered by the Australian Securities and Investment Commission (ASIC). The directors would need to act according to the advice of the restructuring professional and the safe harbour would only continue for so long as there were reasonable prospects of saving the business. </p>
<p>This proposal should also address some of the concerns that have been expressed about “pre-insolvency advisors” who are currently unregistered and largely unregulated. But the proposal could have gone even further and required the advisers to be a member of a professional body with a code of professional ethics and a disciplinary regime. </p>
<p><em>Nullifying ipso facto contract clauses</em></p>
<p>Finally, the federal government will remove the ability of contractual parties to cancel or modify their contracts purely on the basis that voluntary administration or a scheme of arrangement (that is, a formal restructuring process) has been entered into. </p>
<p>This was recommended in the 1988 Law Reform Commission report into insolvency and has existed in personal bankruptcy law since the 1960s, but has not yet been incorporated into corporate insolvency laws. This move will bring our law closer to the US Chapter 11 bankruptcy procedure which prohibits such clauses.</p>
<p>This is a welcome move that will help companies trying to restructure keep their business going rather than having key contracts terminated at a time when they need them the most.</p><img src="https://counter.theconversation.com/content/51908/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Murray works for ARITA, Ferrier Hodgson, and QUT.
He writes for Thomson Reuters, Wolters Kluwer, LexisNexis and Edward Elgar
He is a Fellow of the Australian Academy of Law. </span></em></p><p class="fine-print"><em><span>Jason Harris does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s insolvency laws are behind world best practice and need reform.Jason Harris, Senior Lecturer in corporate, commercial and insolvency law, University of Technology SydneyMichael Murray, Visiting Fellow, QUT, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519802015-12-08T01:11:11Z2015-12-08T01:11:11ZTurnbull’s ‘ideas boom’ overlooks our largest group of potential entrepreneurs<p>It is refreshing, encouraging and even exciting to see the $1.1 billion package of innovation initiatives announced by the Turnbull government. Almost anything that is proactive would have been a great improvement over the past few governments’ relatively lame efforts. </p>
<p>But there is one glaring omission that surrounds the human capability and talent factor of the present statements. </p>
<p>Firstly, let’s mention what is good in the package. The main positive is the courage and innovative attitude and culture that it promotes overall. Prime Minister Malcolm Turnbull knows the issues and the opportunities, and has the right approach to leading and explaining risk-taking, even as it applies to government itself. </p>
<p>This package is relatively predictable in tackling university-business relationships and collaboration where we are well behind the rest of the developed world, and in focusing on digital economy aspects of innovation: if anything, parts of it are too focused on innovation in the digital economy and could do more to unleash innovation in other sectors. </p>
<p>But while there is money and initiatives for schools and initiatives for CSIRO and university–industry collaborations, it ignores the fact that there is a regular product of universities (and TAFEs) that can be highly leveraged to contribute well to our national innovation - the graduates themselves, if they were equipped to do so. </p>
<p>We have about 1.4 million higher education students in Australia, three quarters of whom are domestic, studying business, law, engineering, arts, medicine. Most of them, even in business, science and engineering, get little or no education, knowledge or capability about how to “do” innovation and how to be entrepreneurial, whether it is in a startup or as an employee. </p>
<p>In most universities, there are only a small number of elective subjects at best, taken by only a minority of students. We have great potential to do much more and better. There are a set of skills, attitudes and behaviours, plus the business acumen that can be learned and developed, that in a perfect world would be part of the skill set of every graduate, and indeed every member of the workforce. Our research has shown that many students would find such courses attractive.</p>
<p>The innovation skills and capabilities involve knowing how to think laterally and creatively, knowing how to evaluate ideas in terms of their potential business value and practical ability to be scaled up to succeed in markets, knowing how to participate in innovation project teams, how to manage change and risk, how to finance, lead and strategise innovation and entrepreneurial activities. Our <a href="https://global.oup.com/academic/product/innovation-and-entrepreneurship-creating-new-value-9780190300630?cc=au&lang=en&">deep research</a> has shown that these characteristics are core to sustainable innovation capability. They can be taught and experientially practised.</p>
<p>It is great to hear that the present innovation measures are only the first steps, so please consider, Mr Turnbull, ramping up the investment in the capability of our few hundred thousand graduates who enter the workforce every year. The return on developing an excellent innovation and entrepreneurship curriculum and funding its widespread implementation would be high. With it, we will achieve the culture and behavioural change that has been so well articulated by the government. </p>
<p>Without it, science, accounting, law, medicine, architecture and even applied disciplines such as engineering and management will remain narrow and technical, and graduates will mostly not deliver their innovation potential. Let’s widely and thoroughly unleash the innovation potential of our graduates.</p><img src="https://counter.theconversation.com/content/51980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danny Samson receives funding from ARC. </span></em></p>Graduates should be taught entrepreneurship skills.Danny Samson, Professor of Management (Operations Management), The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519152015-12-07T22:42:58Z2015-12-07T22:42:58ZInnovation package just gets us back to square one<p>The headline $1 billion figure of Malcolm Turnbull’s <a href="http://innovation.gov.au/page/national-innovation-and-science-agenda-report">Innovation and Science Agenda</a> is to be warmly welcomed. But we need to get real about how far we’ve fallen behind the rest of the world in this area, and how fast other countries are accelerating their investments. $1 billion is what Samsung spends on R&D every three weeks.</p>
<p>We’ve talked the innovation talk many times before. John Howard’s <a href="http://australianpolitics.com/2001/01/29/howard-launches-backing-australias-ability-policy.html">“Backing Australia’s Ability” statement</a> in 2001 referred to:</p>
<blockquote>
<p>“a commitment to pursue excellence in research, science and technology, to build an even more highly skilled workforce and increase opportunities for the commercialisation of new ideas”. </p>
</blockquote>
<p>Going back even further, nearly 30 years ago Senator John Button argued passionately about the need to increase collaboration and grow high-tech firms.</p>
<p>So the questions are: is the package enough to begin to undo the neglect of recent years, and will we begin to see some serious action on a subject we’ve talked about ad nauseum, but done little about? I’m cautiously optimistic, but we shouldn’t get carried away just because things are so much brighter and exciting than they were a few months ago.</p>
<p>We’re coming from a long way behind. We wasted the resource boom by not making the investments necessary to encourage an innovative culture. Commonwealth spending on science and innovation has declined by 20% as a share of GDP over the past 20 years. Our flagship institutions and programs such as the CSIRO and Cooperative Research Centres have endured recent 20% cuts to their budgets. The restoration of some of the cuts to CSIRO is good, but organisations are like organisms and suffer irreparably from savage cuts: lop a limb off and it doesn’t grow back.</p>
<h2>Falling rapidly behind</h2>
<p>Business commitment to R&D as a proportion of Gross Domestic Product is declining. Our connections between business and research are shamefully the weakest in the OECD. This neglect has occurred when other advanced nations have put their foot on the accelerator and are increasing their investments in innovation and the linkages and networks that underpin a modern knowledge-based economy. Not only are we very small on the international stage, but in contrast to leading countries, as the recent <a href="http://www.acola.org.au/index.php/about-us/reports-library">Australian Council of Learned Academies report</a> shows, our policies have been piecemeal, opportunistic and short-term.</p>
<p>There are 28 action areas in the Innovation Agenda, most very necessary and welcome. De-risking startups is crucial, having an overall advisory body chaired by the prime minister is an important step, investing in STEM skills is fundamental, attracting and keeping overseas entrepreneurs is a no-brainer. We have to be smarter in our use of digital technology and build better connections between researchers and business. However, there is a danger of yet another scattergun approach, spreading money thinly over too many areas. Only in Australia could we announce something called a “Global Innovation Strategy” and only assign $7 million a year for it.</p>
<p>We still await news of any changes to the R&D tax concession, the largest single support policy for innovation. Boards of directors of large companies, stacked with accountants and lawyers who have a short-term focus and often know nothing about science and innovation, argue they need government money to encourage them to invest in innovation. But incentives like this are only justifiable if they change behaviour. Declining business investments in R&D suggest the innovation antibodies are still hard at work in Australian business. The Innovation Agenda’s position on insolvency laws and tax investments in startups will begin to help, but unless large firms, particularly overseas multinationals, seriously and consistently invest in innovation here, a key piece of the puzzle is missing.</p>
<p>As a keen observer of innovation policy in Australia for nearly 30 years, my optimism during certain periods has continually been dashed, wrecked on the reefs of institutional inertia, political myopia, management gaming and bureaucratic incompetence. The prime minister has placed a great deal of political capital in promoting the innovation agenda and this should be applauded. Success in this area will require his continued and forceful leadership if we are not to repeat the mistakes of the past, and lose the momentum he has created. </p>
<p>We need a change in culture and this does not happen overnight. We have to put in place strategic, systemic and long-term policies to help us produce the innovation needed to maintain and improve our quality of life and standard of living. Today’s statement is the beginning of the end of a very bleak period, but it is only a start.</p><img src="https://counter.theconversation.com/content/51915/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Dodgson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia is being rapidly outpaced by its innovative international competitors.Mark Dodgson, Director, Technology and Innovation Management Centre, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/518922015-12-07T19:19:25Z2015-12-07T19:19:25ZTurnbull seeks ‘ideas boom’ with innovation agenda: experts react<p>Tax incentives to help startups, funding for CSIRO unit Data61, and a new entrepreneur visa are all part of the Turnbull government’s <a href="http://www.innovation.gov.au/page/agenda">National Innovation and Science Agenda</a> released on Monday.</p>
<p>The agenda, which includes 24 measures, but little in the way of new big ticket items, aims to grow private sector investment in research commercialisation and increase the flow of venture capital to high potential startups.</p>
<p>“We’re not actually looking for big spending items, we’re looking for the change to the culture in our economy,” said Industry, Innovation and Science Minister Christopher Pyne.</p>
<p>One of the largest investments (A$106 million) will go towards tax breaks for early stage investors in startups. There will also be a new entrepreneur visa which will be introduced in November 2016.</p>
<p>Prime Minister Malcolm Turnbull said: “Entrepreneurs create jobs, this is why we’re doing so much to encourage new businesses.” </p>
<p>Insolvency laws will also be changed in 2017 to encourage calculated risk taking, and the current default bankruptcy period reduced from three years to one.</p>
<p>“We’ve got to be prepared to have a go and be more prepared to embrace risk and experimentation,” Turnbull said.</p>
<p>Our experts respond below to some of the agenda’s major initiatives.</p>
<hr>
<h2>Tax breaks for angel investors</h2>
<p><em>The government will offer tax incentives for investors in startups including a 20% tax offset based on the amount of their investment capped at A$200,000 per investor, per year. There will also be a 10 year capital gains tax exemption for investments held for three years. This will apply to businesses have expenditure less than $1 million and income less than $200,000 in the previous income year.</em></p>
<p><strong>Helen Hodgson, Associate Professor, Curtin Law School, Curtin Business School, Curtin University</strong></p>
<p>Being non-refundable, the tax offset for startup investors is limited to the amount of tax payable by the investor. The 20% write-off is consistent with existing <a href="http://www5.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s40.880.html">tax provisions</a> that allow the startup cost of a business to be deducted over five years. </p>
<p>The key differences are that this is a tax offset instead of a deduction, and it is allowed to the investor rather than the company. Accordingly the tax benefit is available even if the company does not make a profit. A similar offset, at 10%, will be available where an investment is in a venture capital limited partnership.</p>
<p>The three year minimum holding period for the capital gains tax (CGT) concession should limit “churn” - where investors withdraw funds before the company has had time to become established. But it is not clear how the 10 year exemption will operate. Does it exempt investments sold within 10 years, or is it an ongoing exemption based on the value of the shares after 10 years? It is also not clear whether the value of the investment will be adjusted to allow for the 20% offset, or whether the two concessions will interact to allow double dipping.</p>
<p>Further changes will allow companies making losses to adopt new business models by relaxing the “same business test” that restricts the ability to deduct losses; and changes to employee share scheme disclosure requirements to protect commercial confidentiality will complement the ESS startup <a href="http://www5.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s83a.33.html">tax concessions </a>that were introduced earlier this year. </p>
<hr>
<p><em>The government has not moved to amend the sometimes controversial <a href="http://www.business.gov.au/grants-and-assistance/innovation-rd/RD_-TaxIncentive/Pages/default.aspx">R&D tax incentive</a> that costs taxpayers $2.9 billion each year.</em></p>
<p><strong>Roy Green, Dean of UTS Business School</strong></p>
<p>While tax incentives for investors in startups are welcome, the broader debate about tax concessions versus targeted spending is not resolved in this report. This is perhaps understandable given the limited time in which the Government’s innovation and science agenda has been prepared. However, we’ve now got to have a <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Innovation_System/Report">serious debate</a> as a country about the relative impact of tax incentives and targeted spending. There’s evidence running both ways internationally, but there’s no reliable domestic evidence as a proper assessment has not yet been attempted. </p>
<p>Currently the R&D tax incentive accounts for $2.9 billion, or about a third of the $9.7 billion spent annually on research and innovation, up from 15% in 2008. However, no-one at the moment can say on the basis of statistical evidence whether there is any “additionality” in this incentive, or any cause and effect relationship. The currently available evidence, albeit compelling in some cases, is anecdotal. So it’s very welcome that the PM’s statement encompasses the prospect of a rigorous analysis to ensure that future policy is evidence-based, including addressing weaknesses in industry-university collaboration. </p>
<hr>
<h2>Insolvency laws relaxed</h2>
<p><strong>Helen Anderson, Associate Dean Undergraduate, Melbourne Law School, University of Melbourne</strong></p>
<p>The three insolvency measures outlined in today’s National Innovation and Science Agenda release aim to help those involved in financial failure. The promised legislation will reduce the current default bankruptcy from three years to one year, introduce a “safe harbour” against insolvent trading liability for those who seek to restructure with the help of an advisor, and, in certain circumstances, remove “ipso facto” clauses which terminate contracts upon insolvency, if a company is undertaking a restructure.</p>
<p>The first and third are uncontroversial, as they include relevant safeguards against abuse. Reducing the default bankruptcy period will allow innocent entrepreneurs to re-enter the business arena. Ipso facto clauses unnecessarily impede legitimate business restructures. The safe harbour recommendation, on the other hand, may unwittingly shield those involved in illegal phoenix activity where the restructuring advisor assists the directors to remove assets from creditors’ reach.</p>
<p>Interestingly, the measures come on the same day the Productivity Commission has released its final report into <a href="http://www.pc.gov.au/inquiries/completed/business#report">business set-up, transfer and closure</a>. Assistant Treasurer Kelly O’Dwyer last Thursday also released the latest version of the Insolvency Law Reform Bill 2015. The insolvency-related detail missing from the agenda release can be found in the Productivity Commission’s report. </p>
<hr>
<h2>Collaboration and commercialisation of research</h2>
<p><em>To promote international collaboration the government will spend $11 million establishing five “landing-pads” in Silicon Valley, Tel Aviv and three other locations to support entrepreneurial Australians. It will also provide $22 million in seed funding for international research-industry clusters.</em></p>
<p><em>Around $200 million will be allocated to CSIRO to help fund start-ups generated by researchers.</em></p>
<p><strong>Roy Green, Dean of UTS Business School</strong></p>
<p>The framework is possibly more important for the signals it sends than the individual measures it contains, which is quite a list. Some of the measures restore funding to something like where it was and where it should be in key areas such as research infrastructure. Some expenditures that are new and not particularly different from other countries are simply catch-up to where <a href="https://theconversation.com/five-things-about-innovation-australia-can-learn-from-other-countries-50966">other countries</a> have got to, but at least we are seeing a clear commitment to the future of Australia’s post-mining boom economy. </p>
<p>There’s very much a sense that this is the first instalment in a longer term strategy, as it must be. If it was just a one-off it wouldn’t amount to very much, but given the personal interest of the PM in the research and innovation space, I think we can take him at his word that he’s genuinely wanting to foster an “ideas boom”. Simply by saying so and putting a number of measures in place to facilitate it, he starts to change the mindset of the country. It is also encouraging as well to see considerable overlap with the policy of the Federal Opposition. The impact of leadership on behavioural change is not to be underestimated. </p>
<hr>
<h2>Entrepreneur visa</h2>
<p><em>A new provisional entrepreneur visa will be offered for entrepreneurs with “innovative ideas and financial backing”. The government will also enhance its pathway to permanent residence for postgraduate researchers with STEM qualifications.</em></p>
<p><strong>Jock Collins, Professor of Social Economics, UTS Business School</strong></p>
<p>We’ve had a long history of business migration pathways to Australia and they’ve been refined over time. For example the government recently introduced an investor visa, but the Productivity Commission recommended it be axed. </p>
<p>The question is whether there’s an argument for a new visa type and in what way it would be different from existing business migration pathways.</p>
<p>Targeting immigrants with entrepreneurial skills is a good thing as we’re in competition with Canada, the US and Europe for these people. It’s a competitive race so any changes that make us more effective in drawing on that international pool is a good thing.</p>
<p>But at the same time the government should focus on helping immigrants who are already here make the transition to entrepreneurship and innovation. A lot of the <a href="https://theconversation.com/asylum-seekers-could-be-our-next-wave-of-entrepreneurs-49591">research</a> I’ve done suggests while there’s a great will and ability among immigrants, there’s a big gap in terms of support to help them establish a business in the first instance.</p>
<hr>
<h2>Equity crowdfunding</h2>
<p><em>The government will introduce new laws to enable crowdsourced equity funding of public companies with a turnover and gross assets of less than A$5 million. Investments will be limited to a maximum amount of $10,000 per company, per year.</em></p>
<p><strong>Jason Zein, Associate Professor, UNSW Australia</strong></p>
<p>It is certainly a positive development that the government has removed the barriers startups face in accessing seed capital through crowdfunding. However, startups will still be forced to become public companies and it is unclear whether the benefits of crowdsourced equity will outweigh any potential compliance costs - albeit they will be initially exempt from the normal reporting and disclosure requirements.</p>
<p>I think the sustainability of the market for crowdfunding is going to be a critical issue. From the investors perspective, the harsh reality of startup investing is that most ventures will never deliver sufficient returns to justify the risks. Its only the “unicorns” or the home run investments which pay for all the failures and make the whole process worthwhile. </p>
<p>The bottom line is that to be sustainable, the crowdfunding market will need to deliver some flagship successes stories. Professional venture capitalists have about a 1 in 10 success rate (at best) at picking winners. So the question is can mum and dad investors do any better? Without such winners investors may shy away from future participation. The precedent for this is the ASX. Through time Australian investors have become averse to young, risky tech stocks (this is one on the reasons Atlassian listed overseas). In contrast they appear to be enamoured with large, more predictable, high dividend paying stocks. </p>
<p>For these reasons I think its important to place limits on investment size, as limiting size encourage diversification which maximises the chances of gaining exposure to a “winner”. </p>
<p>Its not all doom and gloom for crowd sourced equity investors. On the flip side, most of the massive returns that startups make happen before they go public. So giving mums and dads the opportunity to participate in this is great. They just need to understand the risks, and not put all their eggs in one basket.</p>
<hr><img src="https://counter.theconversation.com/content/51892/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Hodgson was a member of the WA Legislative Council from 1997 to 2001, elected as an Australian Democrat. She has no current affiliation with any political party.</span></em></p><p class="fine-print"><em><span>Helen Anderson receives funding from the Australian Research Council</span></em></p><p class="fine-print"><em><span>Jock Collins receives research funding from The Australian Research Council, the Rural Industries Research and Development Council and Settlement Services International. </span></em></p><p class="fine-print"><em><span>Roy Green was expert adviser to the Senate Innovation System inquiry, which reported last week.</span></em></p><p class="fine-print"><em><span>Jason Zein does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government’s innovation agenda is heavy on incentives for startups and entrepreneurs.Helen Hodgson, Associate Professor, Curtin Law School. Curtin Business School, Curtin UniversityHelen Anderson, Associate Professor, The University of MelbourneJason Zein, Associate Professor, UNSW SydneyJock Collins, Professor of Social Economics, UTS Business School, University of Technology SydneyRoy Green, Dean of UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/519022015-12-07T05:57:50Z2015-12-07T05:57:50ZExpert panel: what the national innovation statement means for science<p><em>After talking up innovation since his appointment as Prime Minister, Malcolm Turnbull today announced his much anticipated National Innovation and Science Agenda (<a href="http://www.innovation.gov.au/page/agenda">NISA</a>), along with Minister for Industry, Innovation and Science, Christopher Pyne.</em></p>
<p><em>The funding is spread across multiple initiatives and programs, including:</em></p>
<ul>
<li><p>A$200 million to the CSIRO for an innovation fund to help commercialise research</p></li>
<li><p>A$75m to Data 61, CSIRO’s data research branch </p></li>
<li><p>A$250 million for an independent Biomedical Translation Fund to assist the commercialisation of biomedical research</p></li>
<li><p>A$2.3 billion over 10 years for the National Collaborative Research Infrastructure Strategy (<a href="https://theconversation.com/au/topics/ncris">NCRIS</a>), the <a href="https://theconversation.com/au/topics/synchrotron">Australian Synchrotron</a> and the <a href="https://theconversation.com/au/topics/square-kilometre-array">Square Kilometre Array</a></p></li>
<li><p>A$127 million for research block grants with greater emphasis on research-industry collaboration</p></li>
<li><p>A$30 million for a Cyber Security Growth Centre to bring together researchers, industry and government to develop a national cyber security strategy</p></li>
<li><p>A$13 million to promote women in science, including the Science in Australia Gender Equity pilot (<a href="https://theconversation.com/what-its-like-to-be-a-woman-working-in-science-and-how-to-make-it-better-47631">SAGE</a>)</p></li>
<li><p>A$26 million investment in quantum computing research</p></li>
<li><p>A$48 million to promote science and STEM to all Australians</p></li>
<li><p>A new way of measuring industry and public impact of university research</p></li>
<li><p>The creation of a new body, Innovation and Science Australia, to advise the government on science and technology</p></li>
</ul>
<p><em>We invited several experts to offer their thoughts on the significance and the impact the NISA will have.</em></p>
<hr>
<p><strong>TJ Higgins, Vice-President of the Australian Academy of Science</strong></p>
<p>The Australian Academy of Science welcomes today’s announcement as an excellent move towards long-term cooperative engagement between science, government and industry.</p>
<p>We especially welcome the expansion of the <a href="http://www.chiefscientist.gov.au/tag/pmseic/">Innovation Council’s</a> role to become Innovation and Science Australia to more effectively coordinate expenditure across government. </p>
<p>This, as well as the establishment of the Innovation and Science Committee of Cabinet chaired by the Prime Minister, is the clearest signal yet that the Turnbull Government is holding science and research in high esteem and recognises the importance of a strategic approach to science to underpin a strong and innovative economy.</p>
<p>There is a lot to like in this announcement. Tax incentives for industry research and development, support for CSIRO, funds to translate fundamental research, support for international collaboration and connections, support for improving gender equity in science, science education and a public data strategy; the national innovation and science agenda is a breath of fresh air.</p>
<hr>
<p><strong>Caroline McMillen, Vice-Chancellor and President University of Newcastle</strong></p>
<p>Today’s National Innovation and Science Agenda (NISA) has to pass a number of “tests” if it is to provide the stimulus and resilience for Australia to withstand the current global economic headwinds and allow Australians across urban and regional Australia to participate in a knowledge-based economy.</p>
<p>As stated by Lord Sainsbury in his 2007 review of the UK Government’s Science and Innovation Policies, <a href="http://www.rsc.org/images/sainsbury_review051007_tcm18-103118.pdf">The Race to the Top</a>: </p>
<blockquote>
<p>[…] the paradox is that while innovation is a global phenomenon, the role of regions as the critical nexus for innovation-based economic growth has increased. </p>
</blockquote>
<p>So how does NISA look at first pass from the perspective of the regions in NSW, which are bearing the brunt of those economic headwinds? From the vantage point of the University of Newcastle (UON), we welcome the initiatives in NISA, which we have been calling for to ensure that this excellence drives world class innovation across our regions. </p>
<p>While the details have to be fleshed out, we strongly support those initiatives that will build better connections between researchers and businesses, including the changes to the <a href="http://www.arc.gov.au/linkage-projects">Linkage Projects</a> scheme and the development of <a href="http://www.business.act.gov.au/grants-and-assistance/grants/innovation-connect">Innovation Connect</a> and innovation in regional areas. </p>
<p>We also support the intent of the global innovation strategy. As UON has highlighted, there is a clear need to develop the measurement of engagement between universities and their business partners, and the approach to measuring the economic, social and environmental impact of the work of universities across Australia. </p>
<p>We have championed aligning university research funding arrangements with the imperative to provide incentives for collaboration with industry and business, and we look forward to contributing to the discussion on the optimal arrangements to achieve this. </p>
<hr>
<p><strong>Nalini Joshi, Professor of Mathematics, University of Sydney</strong></p>
<p>Diversity underlies innovation. It is wonderful to see the Australian government recognise this by committing A$13 million over five years to expand opportunities for women in STEM (Science, Technology, Engineering and Mathematics).</p>
<p>Studies show that full participation by women in the workforce will increase Australia’s GDP by 11%. Companies with more diverse boards generate a better financial performance than those with less diverse boards. Increasing diversity improves the workplace culture for all employees, including men.</p>
<p>There are parallel conclusions to be drawn for Australia’s future as a progressive, agile, innovative society. The sky is the limit, if we could attract and retain talented women in the pipeline.</p>
<p>But there has been very little change in diversity at the senior levels of the STEM workforce over the past two decades. While the proportion of women studying the sciences at postgraduate level has increased since 2001, the proportion at the senior level has barely moved. It is clear that women leave the scientific workforce in droves.</p>
<p>The <a href="https://www.science.org.au/sage">SAGE</a> (Science in Australia Gender Equity) initiative aims to retain talented women by encouraging local reflection, nuanced analysis of the factors and effective action. The support by the government will ensure that SAGE can extend to all organisations employing workers in STEM.</p>
<hr>
<p><strong>Jeffrey Rosenfeld, Neurosurgeon and Director Monash Institute of Medical Engineering</strong></p>
<p>This is not just a simple cash injection to the universities, scientific institutes and CSIRO with attractive tax breaks for business. Nor is it a long-term solution to driving innovation and entrepreneurialism in our economy. </p>
<p>It is a “kick start” and pulls the right levers to drive links between universities and industry, and encourages more risk to be taken in the process of driving applied research to commercial end-points. </p>
<p>Many great Australian ideas are developed to a proof-of-concept stage but either flounder through lack of funding or are rapidly acquired by businesses overseas. </p>
<p>Although Australian industry develops many of its own products, the university sector has much to offer in terms of assisting industry. But also in generating new technologies and drugs, and then partnering with industry to commercialise these. </p>
<p>The Monash <a href="http://www.monash.edu.au/bioniceye/">Bionic Vision Project</a> to develop a direct-to-brain wireless electrical implant to restore partial vision to blind people is a great example of what can be achieved with university-industry collaboration and government support. </p>
<p>This model will follow in many locations as a result of the Turnbull-Pyne announcement. This will no doubt help many people with sickness and disability and at the same time build Australia’s economic future.</p><img src="https://counter.theconversation.com/content/51902/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>TJ Higgins is an Honorary Fellow at CSIRO and a Professor at Queensland University of Technology.</span></em></p><p class="fine-print"><em><span>Caroline McMillen previously received funding from a range of organisations including the ARC and NHMRC. She is also Director of the Business Higher Education and Training Board, on the Science Australia and Gender Equity Steering Committee, the LH Martin Institute Board and the NSW Vice Chancellors Committee.</span></em></p><p class="fine-print"><em><span>Jeffrey Rosenfeld is a Professor at Monash University and a neurosurgeon at the Alfred Hospital, Melbourne. He receives funding from NHMRC, ARC. He is an advisor to NextOmics Pty Ltd. He has no shares or ownership of this company. </span></em></p><p class="fine-print"><em><span>Nalini Joshi receives funding from the Australian Research Council and is a fellow of the Australian Academy of Science and a member of the Commonwealth Science Council.</span></em></p>Prime Minister Malcolm Turnbull today announced the National Innovation and Science Agenda (NISA). Here’s what it means for science, commercialisation and industry in Australia.TJ Higgins, Honorary Research Fellow, CSIROCaroline McMillen, Vice-Chancellor, University of NewcastleJeffrey Rosenfeld, Neurosurgeon and Director Monash Institute of Medical Engineering, Monash UniversityNalini Joshi, Professor of Mathematics, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/518112015-12-06T19:15:49Z2015-12-06T19:15:49ZFive ways to kickstart the STEM economy in Australia<figure><img src="https://images.theconversation.com/files/104387/original/image-20151204-29706-al2cme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Bright ideas need help to come to fruition.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The word “<a href="https://theconversation.com/au/topics/innovation">innovation</a>” has taken on a new currency in the Australian research sector. Prime Minister Malcolm Turnbull has announced major plans to revitalise the research sector, deliver a STEM (science, technology, engineering and mathematics) focused economy and promote a highly skilled labour market. </p>
<p>New federal minister for industry, innovation and science, Christopher Pyne, has announced a number of new policies to ramp up Australian innovation. Locally, a A$60 million Victorian initiative, <a href="http://www.cio.com.au/article/589803/vic-government-unveils-startup-launch-pad/">LaunchVic</a>, was announced this week to accelerate startup development and create jobs. </p>
<p>And later today the government will be releasing its <a href="https://theconversation.com/au/topics/innovation-statement">Innovation Statement</a>, outlining its plans for the future.</p>
<p>In these exciting times, Australian researchers and businesses are being asked to embrace volatility, to disrupt and – most of all – to innovate.</p>
<h2>Playing catch up</h2>
<p>But if Australia is to become a world leader in research innovation, we need to pay closer attention to the ways in which we can promote, foster and capitalise on the work of Australian researchers, today and into the future. </p>
<p>Australia ranks very respectably for research output, being among the <a href="http://www.scimagojr.com/countryrank.php?area=0&category=0&region=all&year=all&order=h&min=0&min_type=itp">top ten</a> despite our population size lying outside the top 50. Unfortunately, in terms of innovation capacity, we are currently falling far behind our overseas competitors. </p>
<p>For example:</p>
<ul>
<li><p>According to the Chief Scientist’s report, <a href="http://www.chiefscientist.gov.au/wp-content/uploads/STEM_AustraliasFuture_Sept2014_Web.pdf">Science, Technology, Engineering And Mathematics: Australia’s Future</a>, Australia ranks 81st as a converter of raw innovation capability into outputs such as products, wealth and new knowledge </p></li>
<li><p>In an OECD analysis, Australia is <a href="http://www.chiefscientist.gov.au/wp-content/uploads/STEM_AustraliasFuture_Sept2014_Web.pdf">last among 33 countries</a> in terms of large business-to-research collaboration </p></li>
<li><p>Unlike all other OECD countries, Australia does not yet have a national strategy beyond 2015 for science, technology and/or innovation</p></li>
<li><p>Only 30% of Australian researchers are employed in business, half the OECD average, and young Australian scientists are leaving the field <a href="http://www.abc.net.au/science/articles/2014/01/16/3926579.htm">in droves</a>.</p></li>
</ul>
<p>So, if we are serious about realising Australia’s innovation capacity and catching up to our international competitors, a range of strategic approaches is necessary. Here are five key areas where we can build on our capacities for research innovation:</p>
<h3>Promote STEM education and training</h3>
<p>Participation in science subjects in Australian schools is at the <a href="http://www.chiefscientist.gov.au/wp-content/uploads/STEM_AustraliasFuture_Sept2014_Web.pdf">lowest level</a> in 20 years and our ranking in school-level scientific literacy has dropped from 2006 to 2012. </p>
<p>And at the pointy end of science training, most PhD programs do not contain any business or industry component. Federally supported Cooperative Research Centres (<a href="http://www.business.gov.au/grants-and-assistance/Collaboration/CRC/Pages/default.aspx">CRCs</a>) are an important exception to this and have delivered industry-experienced graduates and strong commercial outcomes in a wide range of sectors.</p>
<h3>Value business collaborations when funding research grants</h3>
<p>The vast majority of Australian researchers work for universities, meaning professional promotion and funding outcomes are closely aligned to the number of scientific articles they publish and where their name sits amon the list of authors. </p>
<p>Such a system is not conducive to impactful research and working with business, nor is it an indicator of innovation. Publication quantity has no bearing on, for example, the number of patients successfully treated or how efficient a new solar panel may function. </p>
<p>Rather than enforcing the demoralising “publish or perish” culture within academia, markers of innovation and industry collaboration (such as patents and commercial investment) should also be valued.</p>
<h3>A culture of risk</h3>
<p>Just as mining and resource exploration are high risk pursuits, Australia must become more comfortable with risk in the STEM and innovation sector. Rather than research teams having to tick all the boxes in terms of “proposal feasibility”, the assessing, managing and taking of risk is critical for Australia to join the ranks of other high performing countries that are characterised by openness to new ideas and bold “blue-sky” research pursuits.</p>
<h3>Motivate Australian-generated intellectual property to stay within Australia</h3>
<p>European IP hubs that provide tax benefits for profits derived from the exploitation of IP are a threat to Australian innovation. Known as a “patent box” regime, they have quickly spread throughout Europe and are currently under review in the US. </p>
<p>For example, in the UK the general corporate tax rate is 20-21%. Yet the tax on profits derived from the exploitation of IP it is only 10%. Australia’s lack of concessional tax treatment for IP was cited by Melbourne based biopharmaceutical CSL, as a primary reason for its decision to locate its new A$500 million manufacturing facility <a href="http://www.smh.com.au/business/apathy-sends-biotech-jobs-offshore-says-csl-20140817-10533e.html">offshore in Switzerland</a>.</p>
<h3>Foster women in STEM</h3>
<p>As well as the gender pay gap in science there is a “leaky pipeline” of women in STEM careers. In the US 52% of biology PhD graduates are women, while they make up only 36% of assistant professors and 18% of <a href="http://www.pnas.org/content/111/28/10107.full.pdf">full professors</a>. </p>
<p>Similar drop-offs in women in senior positions in STEM are seen in Australia. The new Science in Australia Gender Equity (<a href="https://www.science.org.au/sage">SAGE</a>) pilot is aimed at tackling this gender imbalance and promoting more female academics to senior positions. UK and US initiatives lead the way in this area and Australia must ensure its measures are up to the mark.</p>
<p>Only a collaborative, multifaceted approach will ensure Australia leads, and is not left out of, economic transformation in the global STEM race.</p><img src="https://counter.theconversation.com/content/51811/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nadine Brew does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Innovation is all the rage, but it require real reform to promote. Here are five things we could do to improve innovation in Australia.Nadine Brew, Business Development, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/513982015-12-03T18:51:08Z2015-12-03T18:51:08ZFocus on STEM risks sidelining social science innovation<figure><img src="https://images.theconversation.com/files/104192/original/image-20151203-22470-bkm62g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Of course, science, technology, engineering and mathematics research are important, but social sciences research creates huge benefits to society in multiple ways.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/leo-gruebler/6702338803/">Leo Grübler/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>The best innovations make life better. They may be life-saving technologies, health innovations or energy efficiency, all of which have a broad impact. But it’s important to remember that they can also be simple things that help improve everyday life. </p>
<p>So while the Turnbull government’s enthusiasm for innovation and research commercialisation is a very positive development, we need to be mindful of where real value lies. </p>
<p>It’s not just in impressive gadgets, new pills, or profits. The greatest return on society’s research investment lies in ideas that result in better lives.</p>
<p>This means the government should not forget about the humanities, arts and social sciences in its innovation statement. </p>
<p>Of course, science, technology, engineering and mathematics (STEM) research are important. Although social sciences research produces less money, it creates huge savings to society in multiple ways.</p>
<h2>Social innovation vs frontier discoveries</h2>
<p>STEM research often requires large industries to take up its innovations. But few of these industries are located in Australia; we have no big pharmaceutical companies to make vaccines, for instance, or technology companies to manufacture new machines. </p>
<p>STEM breakthroughs tend to be few and far between. And the process of innovation through this kind of research will only become more challenging as China and India continue to rise, providing the industrial base and size to generate demand and the financial backing for commercialisation.</p>
<p>Australia, by contrast, is a services economy, so we regularly innovate in health, management, social programs, education and finance – and we have the industries eager to take up these innovations. These will be the products of social science research. They are less tangible, but no less impactful and economically valuable, with inherent translation mechanisms.</p>
<p>Discussions about the commercial value of research are based on broad generalisations that obscure the subtle, cumulative, iterative and diffuse impact of research in the social sciences. </p>
<p>This kind of research rarely generates massive breakthroughs; it’s usually the result of a collaborative effort and isn’t easily tracked back to a single genius who can claim intellectual property.</p>
<h2>Undervalued impact</h2>
<p>Research in the humanities, arts and social sciences is often driven by philosophies of social justice and public benefit, which don’t always sit comfortably with commercialisation. It thrives on an impressive degree of unpaid knowledge transfer and engagement that’s uncosted and often undervalued.</p>
<p>A case in point is health services research, an interdisciplinary area that focuses on the way in which technology, treatments and services are delivered to all Australians, including the most vulnerable. Health services researchers have an entirely different focus to “frontier” scientists, but both are critical.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=551&fit=crop&dpr=1 754w, https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=551&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/104193/original/image-20151203-27413-18heaar.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=551&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Health services research focuses on the way in which technology, treatments and services are delivered.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/katerha/4481575790/in/photolist-7Q2fm7-dnd4f9-7EAia8-6zgUXA-6fU6UU-bxDhoE-4xi4x8-5HjVUr-97iuVu-9PKymD-6DoEYz-Pm4Qy-9bybv7-MkVFh-6YZyNH-cqt58E-rhxX59-h9svWi-r6tiRW-8qZGRx-q35Pn8-8rMtNd-pKEhkM-dLxjv5-e4CcRp-sq4csB-9XhXLn-d9soWC-7Zfsv7-ptoyWg-5wYpxA-6ZfzxN-9LBN2U-6FULZ7-4ptDiZ-d2TmHm-7Jx7sx-pRYhnx-bf5epr-6YNutS-ecbyFp-9rji9c-42CKni-aMeTu4-88gAcM-4uYW7E-qAemCY-8rJop6-8rJogv-8rJoc2">Kate Ter Haar/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>A number of programs now embedded in our health and community service system started life as a research project in the humanities, arts and social sciences.</p>
<p>The <a href="https://www.health.qld.gov.au/abios/steps/">Skills To Enable People and Communities</a> program (STEPS), for instance, delivers a network of trained local community members who help Queenslanders with brain injuries to live full lives in their local communities. </p>
<p>Starting with a government grant, the project has gradually built into a broader institutional partnership between the Queensland Health Metro South Division of Rehabilitation and Griffith University. This ensures timely, relevant research with inherent translation. </p>
<p>Partnerships like this return no funds to the researchers through commercialisation, but they contribute to the wellbeing of the most vulnerable in our country. </p>
<h2>Innovation is demand-driven</h2>
<p>Indeed, innovations like this deliver significant uncosted benefit to Australian communities in terms of prevention, better services, more effective delivery systems, better outcomes and savings. But the cost of this type of research is minimal. </p>
<p><a href="http://www.researchaustralia.org/documents/item/125">In 2009</a>, for instance, just A$23 million was spent on health services research compared to A$336 million on basic science. </p>
<p>Research in the humanities, arts and social sciences requires the cooperation of all stakeholders and relies on an inherently translational and collaborative process. </p>
<p>Findings are often put into practice (“commercialised”) as they emerge. And the products are often intangible, taking the form of new procedures and processes, improved teaching or supervision practices, shifting attitudes, reflection and reform, informed policy and active consumers.</p>
<p>The government’s starting place should be to recognise that innovation is largely demand-driven, so to innovate universities have to be locally focused and responsive to the needs of industry or community. And the way to ensure success is to have businesses and governments include their local university in their strategic planning. They need to see their local campus as the first port of call for well-grounded, evidence-based solutions to their challenges. </p>
<p>This demand will drive implementation of research into practice and policy and will deliver outcomes even more valuable than commercialisation.</p>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. Look out for more articles on the topic in the coming days.</em></p><img src="https://counter.theconversation.com/content/51398/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Kendall received the ARC grant that initiated the Skills To Enable People and Communities program (STEPS) program. She holds numerous ARC grants in health services research.</span></em></p>Research in the humanities, arts and social sciences is often driven by philosophies of social justice and public benefit, which don’t always sit comfortably with commercialisation.Elizabeth Kendall, Professor, School of Human Services and Social Work, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/511892015-12-02T19:31:24Z2015-12-02T19:31:24ZProfiting from the innovation of others? Why governments must manage the spoils of new ideas<figure><img src="https://images.theconversation.com/files/103415/original/image-20151127-28263-195gbjt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">While small and medium companies, public research institutions and universities assume the risks of innovation, large corporations capture the profits that flow from it.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/nyoin/2751494190/">hyoin min/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The Turnbull government’s imminent innovation statement should acknowledge an element often missing in discussion of innovation policy – the role of government in balancing who pays for and who profits from innovation. </p>
<p>Some large multinational firms have been very successful in positioning themselves at strategic points in global markets that enable them to capture the profits from the innovation of others. If governments, small technology and engineering-intensive firms and the broader workforce are unable to capture a greater share of the profits from innovating, it’ll become increasingly difficult to fund innovation. </p>
<h2>Towards risk-free</h2>
<p>Large publicly listed firms are <a href="http://www.tandfonline.com/doi/abs/10.1080/030851400360541#.Vl5dkN8rKX0">investing less in innovation</a> as a proportion of their revenues than they did 30 or 40 years ago. They’re too busy competing with each other to attract major investors and professional fund managers to sustain share value.</p>
<p>Unfortunately, investors favour short-term returns. They are very suspicious of high-risk research and technology development, which offers only the <em>possibility</em> of returns – and only in the long term. </p>
<p>Consider, for instance, a recent statement by BHP chief executive Andrew Mackenzie that protecting BHP’s dividend was “<a href="http://www.smh.com.au/business/mining-and-resources/bhp-billitons-jac-nasser-dismisses-call-for-bigger-returns-20141023-11ayvz.html">almost my most important job</a>”. This is bad news for the engineering and technology firms hoping that one of Australia’s largest companies might support the development of the nation’s technology and engineering capabilities. </p>
<p>The commitment from BHP, like other large companies, to return value to stockholders has meant such companies have less revenue to invest in their workforces and in developing new technologies and engineering capabilities. These investments are all essential for innovation. </p>
<p>Indeed, the focus of the world’s largest and most profitable firms on distributing profits to shareholders has meant citizens and small technology-intensive firms have to bear an increasing share of the cost of innovation. </p>
<h2>Outsourcing risk</h2>
<p>For decades, shareholders have strongly discouraged potentially high-growth yielding investments in risky innovation in favour of divestitures and share buy-backs. That means <a href="http://www.brookings.edu/%7E/media/research/files/papers/2015/04/17-stock-buybacks-lazonick/lazonick.pdf">profits are being used</a> to increase the wealth and income of shareholders and chief executive officers rather than invest in skills and technology that support growth.</p>
<p>Large publicly listed firms are now less significant contributors to innovation than the large multinational firms of several decades ago. And much <a href="http://marianamazzucato.com/">high-growth innovation originates</a> in publicly funded research institutes and high-growth small- and medium-sized firms supplying to large firms. </p>
<p>We see a good example of this in Australia. The publicly funded research institutions and the engineering and technology firms that supply major miners have generated a <a href="http://www.ipaustralia.gov.au/pdfs/The_Australian_Mining_Industry_Report.pdf">significant share of patents</a> in the mining sector. </p>
<p>Indeed, many large firms now <a href="http://icc.oxfordjournals.org/content/22/4/981.abstract">outsource high-risk innovation</a> to public institutions and small and medium (SME) players in global value chains. These SMEs – and government research institutions and universities – assume the risk of technology development. But what is their share of the rewards? </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/103605/original/image-20151130-10251-e2nanf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">By positioning themselves at strategic points in global markets, large multinational firms can capture profits from the innovation of others.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/john/2252140144/">John Watson/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Here’s an example: around 1,000 games are uploaded to the Apple site daily, where over a million titles are available. Many games development firms receive little revenue from their investment and are struggling to survive. Apple assumes none of the cost of high-risk development, but is <a href="http://epn.sagepub.com/content/46/1/168.abstract?id=a45663">guaranteed 30% return</a> on every sale.</p>
<h2>Greedy behemoths</h2>
<p>Unfortunately, the global economy is characterised by more and <a href="http://eprints.qut.edu.au/48165/">more of these “bottlenecks”</a> whereby lead firms capture much of the rewards from innovation because of their incredibly strong bargaining power or strategic position in global markets. </p>
<p>The other way large firms capture the benefits generated by technology-based small firms – and public research institutes that often generate the fundamental knowledge sitting behind inventions – is by buying them out. They do so once the research institutions and smaller firms have taken on the risk and demonstrated market viability for their product or service and their success has become fairly certain. </p>
<p>This occurs <a href="http://www.getransportation.com/news/ge-closes-industrea-deal-australia-expand-mining-offering-globally">when large multinationals buy out</a> our successful engineering and technology firms. And it ensures capture a high share of the profits from innovation without assuming the risk, because they don’t have to pay for unsuccessful research and innovation. </p>
<p>And this has led to a small number of firms capturing a substantial share of the gains from innovation and growth. The top 200 US firms <a href="http://monthlyreview.org/2011/04/01/monopoly-and-competition-in-twenty-first-century-capitalism/">doubled their share</a> of total business profits between 1950 and 2000. </p>
<h2>Any solutions?</h2>
<p>What, then, can governments do to manage who pays for and who profits from innovation? First, they need to support the scale-up of Australian firms that commercialise the technology and engineering capabilities funded and developed by Australian citizens. </p>
<p>The government needs to support these firms to diversify across industry sectors and to participate in international markets so they grow big enough to have sufficient bargaining power in these markets to capture returns on Australia-funded innovation. </p>
<p>This will help ensure such scaled-up firms’ share of profits from innovation better reflects the extent of their high-risk contribution. And this will mean more of the gains from innovation are captured by Australian citizens who bear a substantial share of the risks and costs of innovation.</p>
<p>Second, governments need to ensure global multinationals that capture profits from innovation also contribute to the costs of innovation, including unsuccessful innovation. Given the general reluctance of these corporations to invest in high-risk technology development, the most effective mechanism to secure their contribution to the cost of innovation is taxation. </p>
<p>Much attention has been given recently to the taxation of multinationals. Yet rarely has it been framed in terms of the need for these companies to “pay back” some of the profits they’ve generated from the high risks being undertaken by small engineer and technology firms, research institutes and the broader workforce. </p>
<p>The role of government is not just to fund innovation, it is also to ensure that the economic actors who profit from innovation – large multinational firms, their shareholders and chief executive officers – pay for innovation. How else will we fund future innovations?</p>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. Look out for more articles on the topic in the coming days.</em></p><img src="https://counter.theconversation.com/content/51189/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Parker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some large multinational firms have been very successful in positioning themselves at strategic points in global markets that enable them to capture the profits from the innovation of others.Rachel Parker, Professor of Business and Management & Assistant Dean, Research, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/508562015-12-02T19:25:37Z2015-12-02T19:25:37ZThere is no easy way to measure the impact of university research on society<figure><img src="https://images.theconversation.com/files/102942/original/image-20151124-18261-lw9how.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The iPhone is a good example of an entire industry built on the back of publicly funded research outcomes. The 'iPhone fish' is designed to teach people healthy eating through portion size control.</span> <span class="attribution"><a class="source" href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&VBID=2C0BXZJPXACK2&SMLS=1&RW=1871&RH=1265#/SearchResult&VBID=2C0BXZJPXACK2&SMLS=1&RW=1871&RH=1265&POPUPPN=2&POPUPIID=2C0FQECOSD3P">Lucy Nicholson/Reuters</a></span></figcaption></figure><p>Prime Minister Malcolm Turnbull <a href="http://www.theage.com.au/federal-politics/political-news/academic-publications-to-become-less-important-when-funding-university-research-20151112-gkxkgl.html">is rumoured</a> to announce major changes to the way academic research is funded in his forthcoming innovation statement this month. </p>
<p>Media reports suggest the government wants academics to spend less time writing for journals and more time working with industry to ensure research has a commercial and community impact. It is suggested the aim is to strengthen and build ties between universities and industry and make sure all publicly funded research is contributing to society in some way.</p>
<p>Discussions about how to measure university research have been around for a long time. </p>
<p>Back in 2005, the then minister for education, Brendan Nelson, announced the Research Quality Framework (RQF) aimed at improving the assessment, quality and social impact of university research. </p>
<p>In 2007, the Labor government abandoned the RQF – which was based on using case studies – and focused on evaluating research quality under the banner of Excellence in Research for Australia (ERA). </p>
<p>While case studies have valid uses – such as showcasing real-world benefits of research – an independent body found that there are <a href="http://trove.nla.gov.au/work/27396497?selectedversion=NBD41572224">significant issues</a> in using case studies to measure the social and economic benefits across the research system.</p>
<p>Case studies can demonstrate impact, but <a href="https://www.escholar.manchester.ac.uk/uk-ac-man-scw:23935">can’t be used to measure impact</a> for these reasons:</p>
<ul>
<li><strong>Timing</strong> – research often has impacts long after the research is completed.</li>
<li><strong>Attribution</strong> – innovation is a team sport involving multiple projects, actors and inputs, often in isolation from each other.</li>
<li><strong>Appropriability</strong> – it can be difficult to know who benefits from research and account for the diverse impacts that can arise.</li>
<li><strong>Inequality</strong> – it is difficult to compare across different types of impacts. For example, how do you compare the <a href="https://en.wikipedia.org/wiki/Gardasil">development of Gardasil</a> with research on the effects of climate change in the <a href="http://csiropedia.csiro.au/display/CSIROpedia/Murray-Darling+Basin+Sustainable+Yields+Project">Murray-Darling Basin</a>?</li>
</ul>
<p>Without a broad sample of case studies from all universities it’s also difficult to use these as evidence of who should get funding, especially if the research we are talking about can <a href="http://jrs.sagepub.com/content/104/12/510.full">go back 10 or 20 years</a>. </p>
<p>Last year in the UK, almost 7,000 case studies were used in the latest round of the Research Excellence Framework (REF). REF 2014 included an impact assessment <a href="http://www.ref.ac.uk/panels/assessmentcriteriaandleveldefinitions/">worth 20% of the final rating</a>. </p>
<p>A <a href="http://www.hefce.ac.uk/pubs/rereports/Year/2015/analysisREFimpact/">recent report</a> has found that while case studies can show the benefits of research, based on the UK experience, it is unlikely that we will be able to develop specific metrics of impact. After all, like research itself, impact is a complex beast. </p>
<p>And so here we are, a decade on, still grappling with questions of why and how we should measure publicly funded research.</p>
<p>The government is now urging researchers to work more closely with the users of research – across the public, private and not-for-profit sectors. The idea is to help them innovate and so improve their competitiveness and enhance their products, processes and services. </p>
<p>At the same time, it is hoped that publicly funded research will stimulate innovative industries – and jobs – for the future. </p>
<p>The iPhone is one <a href="http://marianamazzucato.com/the-entrepreneurial-state/">example</a> of product built almost entirely on the back of publicly funded research. </p>
<h2>A good idea for Australian higher education?</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/102946/original/image-20151124-18233-1i5q39h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The government wants academics to balance their effort writing for journals with time spent on research activities that deliver economic and societal impacts.</span>
<span class="attribution"><span class="source">www.shutterstock.com</span></span>
</figcaption>
</figure>
<p>At the moment, researchers are measured and recognised for the number of journal articles they have published and where they have published them. This has led to Australia being among the best research nations in the world. </p>
<p>But it does mean that while our universities are <a href="https://www.comlaw.gov.au/Details/C2013C00029/Html/Text#_Toc345666977">supposed to be doing a range of valuable tasks</a> – like educating and training students, creating and advancing knowledge and applying knowledge to solve the most pressing issues of our times – academic practices and institutional incentives support them for only one activity: getting grants to undertake research that can be published in journals, to get more grants, and so on.</p>
<p>If we want our universities to work with the community, governments and businesses to deliver greater prosperity and wellbeing, then measuring their research by publications alone is unlikely to fit the bill.</p>
<p>Something like the <a href="https://www.atse.org.au/atse/content/publications/reports/industry-innovation/research-engagement-for-australia.aspx">plan</a> by the Academy of Technological Science and Engineering (ATSE) is a good addition. What this does is measure where academics are working on research with groups outside the university sector based on their sources of research income. </p>
<h2>The main challenges</h2>
<p>But if such a plan is put in place, it’s important to be aware of a few things:</p>
<ol>
<li><p>We don’t want to focus all our university research on having an impact. We still need to do “basic research” – that is research that pushes knowledge forward for its own sake. This generates the insights that later get applied to specific problems. </p></li>
<li><p>Research and innovation involve multiple actors, often working in isolation from each other and across long time frames. It involves a lot of chance and trial and error; it is almost never a linear processes. There are <a href="http://www.csiro.au/en/About/Strategy-structure/Our-impact-framework/Ensuring-CSIRO-delivers-impact">activities that improve the likelihood of impact</a> occurring – such as engaging the public and making research widely available. Understanding the context that a researcher wants to deliver impact in (and how it is changing over time) is key to delivering profound and lasting impacts. </p></li>
<li><p>There is no silver bullet when it comes to measuring research, only partial measures and proxies. Done well, proxy measures relate directly to the underlying processes they are measuring – for example, on average, researchers who get more of their income from industry sources are doing research that is most relevant to those industries, and so income can be a proxy for industry relevance.
But a range of activities will be missed, such as research training or in-kind support. And so <a href="http://www.theaustralian.com.au/higher-education/atse-proposes-expert-panels-to-measure-research-impact/story-e6frgcjx-1227630202210">academic judgement is also needed</a> to make sense of the numbers.
As long as we understand the limits of proxy measures, we can anticipate and <a href="http://www.researchgate.net/publication/222687327_Explaining_Australia's_Increased_Share_of_ISI_PublicationsThe_Effects_of_a_Funding_Formula_Based_on_Publication_Counts">minimise perverse outcomes</a>. </p></li>
</ol>
<h2>How should we measure research?</h2>
<p>Given all of this, what we should be looking for is a multi-dimensional set of measures.</p>
<p>This means a robust measure of research excellence (such as ERA); measures of activities that increase the chances of research impact such as engagement with the public; and more than likely some measure of research training.</p>
<p>Missing any one of these means that we are missing out on the important benefits of university research:</p>
<ul>
<li>Research excellence without engaging with the public, industry and government means that we will not apply our world-class research to improving the prosperity of the public that funds it; </li>
<li>Engagement in the absence of excellence means that we would not be delivering the best outcomes; </li>
<li>Research training builds a pool of qualified researchers who can work within the public and private sectors, and who can receive and apply the lessons of research to maximise its benefits. </li>
</ul>
<p>It is our investment in research as a society that will give us the best chance of solving the pressing issues of our times – inequality, climate change, food security, global conflict – so there is a lot at stake. </p>
<p>A narrow focus on academic publishing has helped to create a world-leading university sector. </p>
<p>The pressing issue now is how to develop a system that can apply this research to improve the lives of the public.</p>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. Look out for more articles on the topic in the coming days.</em></p><img src="https://counter.theconversation.com/content/50856/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Cahill consults for the Academy of Technological Sciences and Engineering on the Research Engagement for Australia project. He is currently consulting to The Conversation on research engagement metrics.</span></em></p><p class="fine-print"><em><span>Mark Bazzacco is affiliated with CSIRO. </span></em></p>Publicly-funded research should contribute to society in some way. But we need to think carefully about how we create a system that allows us to measure the impact of research.Tim Cahill, Adjunct research fellow, Swinburne University of TechnologyMark Bazzacco, Executive Manager, Planning & Performance, CSIROLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/513882015-12-02T01:47:55Z2015-12-02T01:47:55ZInnovation statement must reinvent the wheel – or throw it away<figure><img src="https://images.theconversation.com/files/103639/original/image-20151130-10281-za8wh4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Transport innovation needs to move with the times. </span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>When the public thinks of innovation, it’s usually in the realm of blue-sky thinking and new inventions. In the world of transport, innovation evokes images of 600 kilometre per hour trains in Japan, or two-person aerial transit pods in Israel; driverless - or maybe even flying - cars.</p>
<p>When he unveils his innovation statement, will Prime Minister Malcolm Turnbull be seduced by these notions - or will his innovation statement focus on more pressing needs for innovation in the transport system?</p>
<p>The Commonwealth spends at around $6 billion a year on transport - yet Australia’s transport system today is not all that different to what it was 50 - 100 years ago. Many of the roads, rail lines and ports are the same; vehicles may be different, but the underlying technologies have not changed much. </p>
<p>And the job of our transport network is the same as it’s always been, too: getting people to work reliably and within reasonable times, keeping the costs of freight down, and fostering enjoyable places to live and travel.</p>
<p>Yet one innovation that would make a difference would be to start now on the regulation for widespread use of drones and driverless cars. These technologies are developing quickly, and regulators need to keep up. Drones offer great potential for delivery of goods and conveying information remotely, but also risks to safety of other airborne vehicles, the potential for privacy breaches, and security risks. </p>
<p>Where today individual motorists work out as best they can how to respond to hazards, driverless cars are going to have this baked into their operating instructions, and governments are going to have to regulate this. The scramble for governments to catch up with Uber illustrates that regulation must move quickly to keep up with the new “disruptors”.</p>
<p>A second transport innovation that the Commonwealth could make would be to tighten vehicle emissions standards. Light vehicles produce 10% of Australia’s emissions, and tightening standards on them could prevent 59 million tonnes of emissions between now and 2030. Tighter emissions standards would also improve air quality by reducing particulate matter. A side benefit of having the latest car technology is that it would allow Australia to participate in automotive industry innovation.</p>
<p>Another worthwhile innovation would be for the Commonwealth to establish which Australian port, if any, will be developed to receive the massive 18,000 container mega-ships. Transport infrastructure lasts a long time, and it can be efficient for governments to agree to avoid duplication. To see how hard it is to change path, we need only look at the history of rail in this country. Different rail gauges were identified as a problem at Federation in 1901. It took 94 years before the mainland state capitals were finally joined by one gauge. </p>
<p>A further worthwhile innovation would be for Commonwealth money to fund signalling upgrades for urban rail in the major capitals. On some Sydney lines, the number of trains per hour is only 20 instead of up to 35, due to the ancient signalling system. In Melbourne, signal failures are one of the biggest sources of delays on the system, and some signals with a design life of 35 years are more than a century old. Signalling upgrades would allow much better use of existing infrastructure in networks that are only as effective as their weakest link.</p>
<p>Of course, the Commonwealth does not have direct control over all of this. Railways and ports are largely the responsibility of state governments, and roads are shared with local governments as well. The Commonwealth isn’t even the major funder: its contribution of only around 17% of transport spending - roughly equivalent to local government’s share - is dwarfed by the states’ contribution of nearly two thirds.</p>
<p>But transport innovation is important to the nation as a whole and for anything with a national focus, it is the Commonwealth’s role to lead. So a great use of the innovation statement would be to put the Commonwealth’s $6 billion to work on future-oriented regulation, national coordination of national efforts, and improving the functionality of the infrastructure networks that already exist.
It may not sound as much fun as a flying car, but getting the settings right for efficient transport systems can be genuinely innovative.</p><img src="https://counter.theconversation.com/content/51388/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marion Terrill does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Driverless cars and the use of drones are just two things the Innovation Statement should address.Marion Terrill, Transport Program Director, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/509662015-12-01T19:13:04Z2015-12-01T19:13:04ZFive things about innovation Australia can learn from other countries<figure><img src="https://images.theconversation.com/files/103622/original/image-20151130-10246-19ls4vg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">International experience highlights five areas that present profitable lessons for Australia.
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/marfis75/5780056202/">Martin Fisch/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>With the release of Prime Minister Malcolm Turnbull’s science and innovation statement expected in just under a week, expectations are running high, perhaps too high. Assistant Innovation Minister Wyatt Roy promises “a complete game-changer”, and nothing less is now anticipated.</p>
<p>By contrast, the government’s latest <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Australian-Innovation-System.aspx">Australian Innovation Systems Report 2015</a> provides sobering reading. Despite evidence showing innovative firms are 60% more likely to report increased sales and profitability, only 16% have a “high-performance innovation culture”. </p>
<p>This is no revelation. Over two decades ago, the <a href="http://www.industry.gov.au/innovation/reportsandstudies/Documents/1993-94-Science-Technology-Budget-Statement.pdf">Science & Technology Budget Statement 1993-94</a> observed:</p>
<blockquote>
<p>… our most urgent task is to build an innovative culture in industry … Above all, we need a cultural change – among business leaders, decision-makers and the community generally – which recognises the major significance innovation has for building national competitiveness.</p>
</blockquote>
<p>In a now-familiar refrain, that statement noted “a weakness in the ability to exploit our R&D in many fields” and attached “a high priority to establishing Australia’s place in Asia”. And like the more than 60 Australian government reports that followed, it concluded that “a clear sense of direction, planning and leadership are needed to achieve our goals”.</p>
<h2>Headless policy</h2>
<p>So why has this not happened? One problem is that preparing for the future means learning from the past, which includes uncritical reliance on the commodity cycle for our growth and prosperity. Former treasury secretary Ken Henry <a href="https://www.quarterlyessay.com/">referred recently</a> to the collective amnesia among policy-makers: </p>
<blockquote>
<p>Many departments have lost the capacity to develop policy; but not just that, they have lost their memory.</p>
</blockquote>
<p>Yet the sophistication and diversity of the Australian economy may give us another chance to get the policy settings right. In 2015-16, the Commonwealth government will invest A$9.7 billion in support of science, research and innovation, compared with A$3 billion in 1993-94. </p>
<p>The question isn’t just whether this amount is enough, but whether it’s allocated as coherently and effectively as it could be. This was the very question posed by the current <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Innovation_System">Senate Innovation System Inquiry</a>. The inquiry has published an <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Innovation_System/Interim_Report">interim report</a> and <a>issues paper</a>, and is about to release its final report this week. </p>
<p>The inquiry received 182 submissions and conducted hearings around the country. Significantly, many of the submissions pointed to the lack of an evidence base in Australia for the development of sound and credible policy.</p>
<p>Despite a fierce debate about the efficacy of the research and development tax credit – as against targeted spending measures, for instance – there’s little other than anecdotal evidence for the various positions. Given that this tax incentive absorbs a <a href="https://theconversation.com/national-reform-summit-how-can-we-ensure-australia-remains-an-innovative-nation-46630">third of the available research and innovation budget</a>, up from 15% in 2008, it is surely reasonable to expect reliable data to assess causality and impact.</p>
<h2>Agencies, coordination and integration</h2>
<p>It’s not surprising, then, that current policy discussion looks to international research and experience in innovation policy. And there’s much to learn from exemplars abroad, provided we are circumspect about their relevance and potential for adaptation to the Australian context. </p>
<p>There are five main areas where such exemplars might inform our discussion. </p>
<p>First, many countries have national coordination bodies and “knowledge foresight” exercises to guide policy priorities and strategic direction. These include the US <a href="https://www.whitehouse.gov/administration/eop/ostp/pcast/about">President’s Council of Advisers on Science and Technology</a>, the Canadian <a href="http://www.stic-csti.ca/eic/site/stic-csti.nsf/eng/home">Science, Technology and Innovation Council</a>, <a href="http://www.vinnova.se/en/About-VINNOVA/">Vinnova</a> in Sweden, the <a href="http://www.nrf.gov.sg/about-nrf/governance/research-innovation-and-enterprise-council-(riec)">Research, Innovation and Enterprise Council</a> in Singapore and the <a href="http://pacst.pa.go.kr/en/index.jsp">Presidential Advisory Council on Science & Technology</a> in South Korea. </p>
<p>Such organisations have a major role in identifying target areas for science and innovation investment. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/103623/original/image-20151130-10285-hpz52m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The question isn’t just whether the money the government allocates in support of science, research and innovation is enough, but whether it’s allocated as coherently and effectively as it could be.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/cimexus/739083662/">Cimexus/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Second, many countries have national agencies with a clear remit for enterprise capability building and industry transformation. These include Britain’s <a href="https://www.gov.uk/government/organisations/innovate-uk">InnovateUK</a>, Finland’s <a href="https://www.tekes.fi/en/">Tekes</a>, Netherlands <a href="https://www.tno.nl/en/?gclid=COq3-_I_UsskCFQuCvQodg78PNg">TNO</a> and <a href="http://www.enterprise-ireland.com/en/">Enterprise Ireland</a>. These agencies variously combine initiatives in business innovation, research and development funding, research commercialisation, knowledge transfer, trade facilitation and foreign direct investment.</p>
<p>While no one single model can be picked up and embedded in Australia, there’s obvious advantage to drawing on better practices from elsewhere, bearing in mind issues of scope and scalability. </p>
<p>A compelling example is the US Small Business Innovation Research Program (<a href="https://www.sbir.gov/">SBIR</a>). This has had remarkable success with public procurement policy, as has a UK variant. </p>
<p>Third, most countries have well-funded, integrated frameworks for research and innovation, striking a balance between basic and applied research, with an emphasis on research translation and collaboration. These include the US <a href="http://www.nsf.gov/about/glance.jsp">National Science Foundation</a>, German <a href="https://www.fraunhofer.de/en.html">Fraunhofer Institutes</a>, <a href="http://www.sfi.ie/">Science Foundation Ireland</a> and the UK <a href="http://www.rcuk.ac.uk/">research councils</a>, <a href="http://www.hefce.ac.uk/kess/heif/">Higher Education Innovation Fund</a> and <a href="https://www.catapult.org.uk/">Catapult Centres</a>.</p>
<p>The UK is considering further integration as a <a href="https://www.gov.uk/government/publications/nurse-review-of-research-councils-recommendations">result of a just-released review</a>. It proposes that InnovateUK become a single umbrella body for the nation’s research councils. In contrast, Australia’s Commonwealth research and innovation spending is dispersed across 13 portfolio areas and 150 budget line items.</p>
<h2>Hubs and people</h2>
<p>Fourth, countries, cities and regions increasingly recognise the significance of local innovation ecosystems in accessing global markets and value chains. They support the clustering of technological and creative talent through incubators, accelerators and co-working spaces, entrepreneurship training and connections with research organisations and venture capital. </p>
<p>Silicon Valley <a href="http://blog.startupcompass.co/the-2015-global-startup-ecosystem-ranking-is-live">dominates</a> as an innovation ecosystem, but cities and regions as diverse as Boston (US), Chicago (US), Austin (US), Tel Aviv (Israel), London (UK), Amsterdam (Netherlands), Berlin (Germany), Sao Paulo (Brazil) and Bangalore (India) are growing rapidly. Locally, Sydney is emerging as a contender for inclusion in this global map, with a vibrant entrepreneurial <a href="https://piivot.sydney/">start-up community</a>.</p>
<p>Finally, many countries are investing heavily in measures to prepare their workforces for jobs and skills of the future. Here <a href="https://theconversation.com/german-apprenticeships-are-built-on-a-cohesive-national-plan-not-ad-hoc-partnerships-23210">Germany</a> is the exemplar, with its commitment to a structured relationship between academic learning through universities and occupational learning through the vocational education system and in the workplace. </p>
<p>The challenge is to prepare not just for the jobs that currently exist, but for <a href="http://www.ceda.com.au/research-and-policy/policy-priorities/workforce">those that don’t</a>. </p>
<p>These are the five areas where Australia has most to learn – and to gain – from international experience. They must also be accompanied by framework conditions covering tax and infrastructure, including high-speed broadband. Norway is an instructive example of a resources-based economy that used a resource rent tax and sovereign wealth fund to build its research and innovation infrastructure.</p>
<p>Australia’s next federal election is shaping up to be something of an innovation policy auction. If so, the nation will be the winner, provided the debate is about more than competing visions of the future. As former US president Bill Clinton’s adviser and Yale business dean Jeffrey Garten once put it, “Vision without execution is hallucination.” </p>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. Look out for more articles on the topic in the coming days.</em></p><img src="https://counter.theconversation.com/content/50966/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Roy Green is currently expert adviser to the Senate Innovation System inquiry.</span></em></p><p class="fine-print"><em><span>John Hamilton Howard does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>More than 60 Australian government reports have identified direction, planning and leadership as keys to creating an innovative nation. Here’s five things other countries have done to lead the way.Roy Green, Dean of UTS Business School, University of Technology SydneyJohn Hamilton Howard, Adjunct Professor, UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/505862015-12-01T19:12:56Z2015-12-01T19:12:56ZAustralia’s innovative future could get a boost from China’s Five-Year Plan<p>Technology-enabled innovation is set to become a <a href="http://english.cntv.cn/2015/10/29/ARTI1446128651230195.shtmlz">core goal</a> of China’s 13th Five-Year Plan (due to be <a href="http://epi.yale.edu/the-metric/timeline-chinas-13th-five-year-plan">released in 2016</a>). This comes as Australian Prime Minister Malcolm Turnbull increases the rhetoric promoting an innovation policy agenda.</p>
<p>Quality growth that lends itself to long-term sustainability is the aim of both China and Australia. But can this be achieved?</p>
<p>China’s performance under its <a href="http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Publicationseries/5-years-plan/Documents/China-12th-Five-Year-Plan-Overview-201104.pdf">current</a> plan encourages a sense of optimism. Its annual <a href="https://www.project-syndicate.org/commentary/china-innovation-research-and-development-leader-by-martin-neil-baily-and-jonathan-woetzel-2015-10">R&D spend</a> of US$200 billion has grown four times in just two decades to 2.1% of GDP. This provides hope for the next plan’s success, and should generate interest from an Australian government set on technologically creative development.</p>
<h2>Is China’s trajectory Australia’s opportunity?</h2>
<p>In the first nine months of 2015, 3.16 million companies were <a href="http://www.chinadaily.com.cn/china/2015-10/29/content_22312620.htm">established</a> in China – an <a href="http://news.xinhuanet.com/english/2015-10/15/c_134714185.htm">increase</a> of about 20% from last year. The result of progress of this calibre is that China’s technology-centred innovation is embracing new business models. </p>
<p>However, one of China’s innovation aspirations is to see itself strategically placed across the globe – look at President Xi Jinping’s <a href="https://www.chathamhouse.org/publication/twt/what-exactly-one-belt-one-road">One Belt, One Road</a> initiative. Beyond the geopolitics of this approach, China is aiming to achieve networks of interconnectivity and co-operation through trade, investment and people flow. </p>
<p>So where does Australia find itself in the developments that continue to emerge from China?</p>
<p>For one, Australia is still caught up in selling its wares to China – whether <a href="http://www.dsd.wa.gov.au/docs/default-source/default-document-library/wa-china-trade-and-investment-relationship-0915?sfvrsn=10">iron ore</a>, <a href="http://www.abc.net.au/news/2015-03-25/growing-trade-in-australian-farm-products-to-china/6343874">agricultural products</a> or <a href="http://www.afr.com/news/policy/education/china-beckons-as-a-rich-market-for-australian-schools-20150319-1m39px">education services</a>. This approach may be useful, but it can no longer sustain long-term growth.</p>
<p>Turnbull <a href="http://www.malcolmturnbull.com.au/media/China-Business-Week">noted</a> during the recent <a href="http://www.eventfinda.com.au/2015/australia-china-businessweek-2015/sydney">Australia-China Business Week</a> that China’s upcoming Five-Year Plan would challenge Australia’s innovation policy. Improvements to China’s development approach would cause Australia to adjust the nation’s <a href="https://theconversation.com/australias-china-dependence-do-we-need-a-plan-b-34976">dependency</a> on commodities trade. An increasing focus on innovation will require Australia to transform the partnership with China.</p>
<p>China has transformed itself to not only consume but to have an appetite for designing and producing new and innovative products, services and technologies. Australia must construct policy around innovation to fit these changes – it has always had the capability to design, deliver and service new markets. However, its age-old sales and marketing approach needs to be refreshed.</p>
<p>Australia needs to approach its innovation mantra differently when working with China. Not only must it innovate its services for China, but it must also work with China to tackle alternative markets. </p>
<p>At the political level, the Turnbull government needs to work towards developing a bipartisan innovation statement – one that isn’t hostage to election cycles. Australia needs a steady trajectory for the foreseeable future, and political leadership is paramount to making this journey.</p>
<p>Using the same old approaches and expecting a different result is a mark of Australia’s complacency. The federal government must embrace different forms of engagement from the outset. By doing so, it will create its niche as an integral partner to China, while becoming far more aggressive where competition is concerned.</p>
<p>It is uncertain whether the results of such an approach are guaranteed – but it’s a step in the right direction. </p>
<h2>Enablers of innovation</h2>
<p>Australia does not have to emulate the <a href="http://www.haaretz.com/israel-news/chutzpah-contributes-to-innovation-1.287438">“chutzpah”</a> of Israel, or India’s <a href="http://www.forbes.com/sites/ashoka/2014/03/23/jugaad-the-art-of-converting-adversity-into-opportunity/">“jugaad”</a> – these nations needed a powerful catch-cry to embrace risk-taking and change. But the <a href="http://www.makeinindia.com/home">“Make in India”</a> campaign has encouraged companies to manufacture in India. Such characteristics must become the backbone of Australia’s innovation. </p>
<p>The good news is that this doesn’t need to be achieved single-handedly. Turnbull has an opportunity to create a collaborative partnership with new players, such as China, and jointly shape the future. </p>
<p>The role of Australia’s government in an innovative future is the enabler. Mobilisation towards a different and better future is needed. While the rhetoric around innovation and growth has received a much-needed boost, the proof of change is always in action. The pace at which the public service can walk the talk will be interesting to watch – we are already starting to hear about <a href="http://www.canberratimes.com.au/national/public-service/australian-public-servants-put-in-skunkworks-while-john-lloyd-refers-to-practice-known-as-rank-and-yank-20151106-gkslm5.html">“skunkworks”</a> to generate fresh thinking in the public service.</p>
<p>The Turnbull government has to change the policy settings. Risk-takers need incentives, and the creators of new jobs should be rewarded. Singapore’s <a href="https://www.iras.gov.sg/irashome/Schemes/Businesses/Productivity-and-Innovation-Credit-Scheme/">Productivity and Innovation Credit</a> scheme is a setting Australia can draw upon.</p>
<p>But will Turnbull’s rhetoric become stale words or active change? We will only know it is the latter if we see an open and creative partnership develop between two countries with innovation-led ambitions.</p>
<hr>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. You can read more articles on the topic <a href="https://theconversation.com/au/topics/why-innovation-matters">here</a>.</em></p><img src="https://counter.theconversation.com/content/50586/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christopher Vas has received research funding in the past from the Australian Government and the Singapore Manufacturing Federation. </span></em></p>Innovation is a core objective of China’s next Five-Year Plan, so will Australia follow suit and put innovation rhetoric into innovative action?Christopher Vas, Academic Director, Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/506012015-11-30T19:20:23Z2015-11-30T19:20:23ZWhat is innovation anyway, and why should you care about it?<figure><img src="https://images.theconversation.com/files/103136/original/image-20151125-18271-1ksp4rw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Without innovation in the agricultural sector, we'd only be able to feed, say, one billion people out of the current seven. ProFlowers/Flickr</span> <span class="attribution"><a class="source" href="https://www.proflowers.com/">proflowers.com</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Innovation means changing the way you do things. If you’re in business, it might mean producing a new product or service; introducing a new technology or operational process; instigating a new business model; or just changing the way you market your products. It’s a sustainable way to raise productivity and enjoy a higher standard of living. </p>
<p>To understand why innovation is important, it’s helpful to think of a world without it. Imagine we’re back in 18th-century Europe and someone’s decided to stop all new inventions, or ban the conversion of ideas into goods and services. We’d have no electricity, no water piped to houses, and no antibiotics. </p>
<p>Without the discovery of superphosphate and new seed varieties, we’d only be able to feed, say, one billion people out of the current seven. Half our children would die before the age of five. And travel would still mean hopping onto a small wooden boat with dubious navigation.</p>
<h2>A barren future</h2>
<p>Looking back, it’s easy to see what impact innovation – the creation and deployment of new ideas – has had on our standard of living. But it requires a more philosophical frame of mind to see what we’d miss out on if we become complacent about innovation now. </p>
<p>Childhood cancers and other intractable diseases, including mental illnesses, that currently blight our lives might not be cured. Poor learning outcomes for boys, family violence and intractable social ills arising from intergenerational disadvantage might never disappear. The creeping loss of fertile farmlands and the salination of low-lying lands due to climate change might escalate.</p>
<p>These are just a few of the 21st-century ills that today’s research and development could ameliorate. </p>
<p>But how can we do it? There’s clear evidence that some countries – in some sectors and at some times – are more successful innovators than others. And it’s probably fair to say the default position of most people is to resist change. </p>
<p>Much innovation springs from an attitude of openness to external experiences and people, but it also requires care to capture a reasonable share of the rewards. It takes an amalgam of policies for a country to push ahead where others languish.</p>
<h2>Lessons from abroad</h2>
<p>Policies aimed at fostering innovation in the United States, Germany, Sweden and Switzerland – to name just a few nations that do innovation well – have been strategic and focused. In the US, for instance, government policies since World War II have pushed and pulled businesses and universities, often with a heavy hand, to interact with each other. </p>
<p>Programs via the defence, energy and health departments have created networks that identify and absorb external information; interpret its meaning; and then support the actions of its members by providing specialised intermediate services. This environment has substantially lowered the risks associated with innovation. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/103399/original/image-20151127-28284-1f0lkf9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Innovation is a sustainable way of enjoying a higher standard of living.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/cnbattson/3451888392/">SF Brit/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>To become countries that successfully develop and commercialise ideas, these nations have used intellectual property laws and other ways to capture profits to ensure innovating is worthwhile. </p>
<p>And they don’t just rely on home-grown brains. All these countries are active in buying research and development services from other countries. Many of them aggressively recruit the best tertiary students from anywhere in the world and keep them after graduation.</p>
<p>But they do so in a way that ensures they control the distribution of created wealth. In particular, they ensure that they own any resulting patent from research and development programs. This wealth helps these countries buy in and benefit from frontier innovations elsewhere in the world. It’s a virtuous circle; a good national “business” model.</p>
<h2>Back home</h2>
<p>That’s all good and well for them, but should we care if Australia is innovative or not? Can’t we just “ride on the sheep’s back” or hope that the world will continue to want our minerals? Possibly, but relying on a narrow range of volatile commodities is a risky growth strategy, as recent falls in iron ore and coal prices have illustrated. </p>
<p>Australia has the depth of skills – in research, development, finance, marketing and intellectual property – to be more innovative. But mere exhortation or the small, temporary programs that come and go with each government won’t create an environment that mitigates the risks of innovation and allows it to flourish. </p>
<p>The government’s forthcoming innovation statement should at least include measures that create environments to nurture personal connections and bonds of trust between frontier technology companies. The confidence these networks give an individual business cuts through procrastination born from uncertainty.</p>
<p>We know that just funding public sector science isn’t enough. We know the effect of research and development tax concessions is modest and biased towards a few areas of the economy. We know that merely exhorting the financial sector to invest more in high-tech ventures has a negligible effect.</p>
<p>Let’s hope we get more than this from the innovation statement.</p>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. Look out for more articles on the topic in the coming days.</em></p><img src="https://counter.theconversation.com/content/50601/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Webster receives funding from the ARC and various Victorian and Australian government departments for research purposes. </span></em></p>Since becoming prime minister, Malcolm Turnbull has been talking about the importance of innovation. This is what he’s referring to.Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/508382015-11-30T19:18:50Z2015-11-30T19:18:50ZFive ways science can lead the innovation debate<figure><img src="https://images.theconversation.com/files/102746/original/image-20151123-389-16ns8yd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Science is key to creating a more innovative nation. </span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>You can’t have an innovative nation without investing in science. </p>
<p>This is the <a href="http://www.theaustralian.com.au/business/companies/stem-to-drive-nations-future-says-westpacs-dave-curran/story-fn91v9q3-1227610024928">message being trumpeted</a> by business leaders in Australia ahead of the prime minister’s forthcoming innovation report, due out this month.</p>
<p>They say that science, technology, engineering and mathematics (STEM) must be at the forefront of the innovation debate if the government wants Australia to remain competitive in a global marketplace. </p>
<p>Australia is one of the countries that <a href="http://www.abc.net.au/news/2014-10-07/adam-bandt-research-development-spending-claim-checks-out/5789134">spends the least</a> on research and training. It is also recognised as having one of the <a href="https://theconversation.com/why-a-national-science-strategy-is-good-for-australia-40254">worst levels of engagement</a> in the world between science research and industry.</p>
<p>And following the <a href="https://theconversation.com/au/topics/federal-budget-2015">2015 federal budget</a>, it <a href="https://theconversation.com/australian-science-is-no-better-off-after-the-2015-budget-41827">doesn’t look like</a> science will be much better off. </p>
<p>But there’s no denying that science has an impact on driving economic growth and innovation. </p>
<p>Australia is world-leading in its research into contact lens design, crop development and solar energy. Its researchers invented WiFi and developed the Gardasil cervical cancer vaccine.</p>
<p>Australian work on weather and climate predication systems is highly advanced and is essential for protecting communities and to agricultural planning. This is to name but a few examples.</p>
<p>If this is what Australia can do on little funding, then think how much it could achieve if the government was demonstrably committed to science.</p>
<p>Our neighbours in <a href="https://www.universitiesaustralia.edu.au/news/policy-papers/Keep-it-Clever--Policy-Statement-2016#.VlEp7SutGSp">Singapore, South Korea and China</a> are in no doubt that strategic investment in scientific excellence is the way to boost innovation. </p>
<p>Their investments extend from primary schools to universities and into major national research institutions. The idea is to create a culture of innovation, rather than a series of quick fixes.</p>
<p>So how can Australia use STEM to lead the innovation debate? Here are five suggestions:</p>
<h2>1. Create future entrepreneurs</h2>
<p>Innovation is reliant on core scientific knowledge, curiosity and critical thinking, and a stably resourced research sector that can spin out and support nascent industries.</p>
<p>Discovery leads nowhere unless the right culture and infrastructure are in place.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=526&fit=crop&dpr=1 754w, https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=526&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/102744/original/image-20151123-3617-1mcj4ax.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=526&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A sample of the original penicillin mould cultivated by scientific pioneer Alexander Fleming.</span>
<span class="attribution"><a class="source" href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&VBID=2C0BXZJUOZ8VK&SMLS=1&RW=1898&RH=1193&POPUPPN=1&POPUPIID=2C0BF1DDP5OK">STR New / Reuters</a></span>
</figcaption>
</figure>
<p>Penicillin mould had been growing on oranges for centuries but only when a spore wafted into Alexander Fleming’s laboratory was the infrastructure and mindset ready to capitalise on the discovery. It took another decade for Australian Howard Florey and his colleague Ernst Chain to produce usable penicillin.</p>
<p>Strong education systems that encourage curiosity and analysis where Australians are exposed to STEM and techniques like data analysis, together with stable infrastructure, are essential for fostering a generation of 21st-century entrepreneurs.</p>
<h2>2. Implement change</h2>
<p>New discoveries trigger questioning and open people’s eyes to new possibilities, inventions and applications. A scientific mindset can challenge our preconceptions and attract people to the very idea of progress. </p>
<p>Australian Nobel Prize winners Barry Marshall and Robin Warren worked within a confident medical research community but by constantly questioning the status quo they identified the true cause of stomach ulcers - the infectious bacteria <em>Helicobacter pylori</em> - that had remained hidden under the false premise that stress rather than microbes caused ulceration.</p>
<p>Of course, entrenched thinking is hard to overturn. But debates about gun control, irrigation, climate change, water recycling and mad cow disease all benefit from respecting science.</p>
<p>Sometimes we seem to be heading in the wrong direction, but science can get us back on track. Could anything other than the power of scientific data have stood in the way of the growing tobacco empires, or have prompted us to remove lead from petrol or ozone-depleting substances from the atmosphere?</p>
<h2>3. Improve quality of life</h2>
<p>Knowledge is power but ignorance is limiting and dangerous. Appreciating the basic principles of science and how rigorously it is conducted should allow us to better answer simple but important questions, such as should my children be vaccinated? Is drinking fluoridated water and eating iodised salt safe and beneficial? </p>
<p>Anyone familiar with science will tell you the answer to all these questions is yes.</p>
<p><a href="http://aihw.gov.au/deaths/life-expectancy/#trends">Life expectancy in Australia has improved dramatically.</a> One hundred years ago one might have expected to live to around 50, but now lifespans have increased by more than 30 years. Science has underpinned this improvement.</p>
<h2>4. Increase global collaboration</h2>
<p>In a globally connected world, being good at science increases opportunities for connections.</p>
<p>The recent <a href="http://unesdoc.unesco.org/images/0023/002354/235406e.pdf?utm_medium=email&utm_source=sendpress&utm_campaign">UNESCO report</a> paints an alarming picture of a 40% decline in the number of Australian patents, while at the same time showing how neighbouring countries are investing heavily in research. </p>
<p><a href="https://www.universitiesaustralia.edu.au/news/policy-papers/Keep-it-Clever--Policy-Statement-2016#.VlEp7SutGSp">Singapore</a> increased its spending on research by 20% in the last five years; South Korea aims to invest 5% of GDP by 2020; and China is on track to become the global leader in research investment. The US invests nearly 3% of its GDP in research, while Australia, at 2%, has been below the OECD average for the last 15 years.</p>
<p>STEM provides us with the opportunity to join in and capitalise on advances in knowledge. We must not let Australia fall behind. </p>
<h2>5. Boosting wealth production and jobs</h2>
<p><a href="https://www.universitiesaustralia.edu.au/news/policy-papers/Keep-it-Clever--Policy-Statement-2016#.VlEp7SutGSp">Universities</a> contribute about 10% to the Australian economy. And <a href="http://www.chiefscientist.gov.au/wp-content/uploads/PrintedLeaflet_infographic.pdf">it’s estimated</a> that 11% of Australia’s economic output is underpinned by advanced physical and mathematical sciences. </p>
<p>Basic skills such as data analysis, critical thinking and mathematical literacy will most likely increase in importance, highlighting the importance of good STEM education. </p>
<p>We stand at a crossroads. A new vision for science is being articulated in Australia. One needs only modest critical thinking skills to see that the evidence for sustained investment is compelling.</p>
<p><em>This article is part of our series <strong><a href="https://theconversation.com/au/topics/why-innovation-matters">Why innovation matters</a></strong>. Look out for more articles on the topic in the coming days.</em></p><img src="https://counter.theconversation.com/content/50838/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merlin Crossley works for the University of New South Wales. He receives funding from the Australian Research Council and the National Health and Medical Research Council. He is a Trustee of the Australian Museum, and a Board Member of the Sydney Institute of Marine Science, the Australian Science Media Centre, UNSW Innovations, and a Council Member of EMBO Australia.</span></em></p>Through creating entrepreneurs and boosting global collaboration, science has the potential to drive economic growth and innovation – if only the government would properly fund it.Merlin Crossley, Dean of Science and Professor of Molecular Biology, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.