A review of the Industry Growth Centres found the long running scheme was helping key Australian industries to innovate and grow before its funding was cut by the federal government.
The review was quietly released by the Industry department on Tuesday, nearly two years after it was handed to the Morrison Government with a warning that the planned transition to self-sufficiency was “unlikely” to work.
The review, conducted by outside consultants ACIL Allen in 2020, found “ample evidence to suggest that the [Industry Growth Centre Initiative] is supporting Australian industries to become more competitive, resilient and sustainable” and touted potential for a bigger impact with more funding and time.
Complementary analysis by the Industry department also found the growth centres had positive impacts on turnover, wages and employment growth for small-to-medium businesses, while the impact of the centres on export sales appeared to be mixed.
The review made recommendations to address issues identified in the initiative’s governance, reporting requirements and performance measures, but a recommendation on the initiative’s future was beyond its scope.
The six Growth Centres (GC’s) – representing Advanced Manufacturing; Cybersecurity; Food and Agribusiness; Medical Tech and Pharmaceuticals; Mining Equipment, Technology and Services (METS); and Oil, Gas and Energy Resources – are now transitioning to self sufficiency after their funding ran out in June.
In 2019, the Industry department commissioned ACIL Allen at a cost of nearly $500,000 to evaluate the Industry Growth Centres Initiative (IGCI) for the Industry minister’s consideration of its longer-term future beyond the deadline.
The review was completed in late 2020, but never released by several Coalition Industry ministers, who fought Senate orders to produce it.
ACIL Allen found the program was consistent with other top performing OECD nations, was valued by participants and had “significant potential to deliver long-term value”.
The review backed the design of the Growth Centres, their success in leveraging private sector and government funding, the extensive networks they formed, and impact on the wider innovation ecosystem.
“While it is too soon to assess the magnitude of the changes that have occurred, ACIL Allen considers that the [Growth Centres] have aimed high and the magnitude of their impact is likely to be large,” the report said.
“The GC’s have improved outcomes for the businesses they have engaged with.”
The report also identified several areas for improvement and found limits on resourcing and expertise had limited the six centres’ impact on their respective sectors.
“In particular, the GC’s lack the resourcing and structures to drive transformational change at a sectoral level,” the review said.
Issues were also found with demanding reporting requirements, potential conflicts of interest with the centres assisting with administering government grants and assisting applicants, governance models, and the “significant challenge” of centres measuring their performance not being helped by inconsistent data collection.
Innovation stakeholders also told the review it could be difficult to tell where the initiatives boundaries begin and end, and how it integrates with other government innovation initiatives.
ACIL Allen was not asked to recommend the continuation or cessation of the IGCI or individual Growth Centres, but noted the Coalition government’s $1.5 billion Modern Manufacturing Strategy (MMS) announced in 2020 offered an opportunity for realignment.
Staying relevant in this changing environment would take more funding and more time, the review suggested.
“…a flexible, industry-led program can be a powerful tool and clearly has a place within the innovation ecosystem. However, the IGCI’s funding envelope is small relative to that of comparable international programs such as the UK’s Catapult Program and there is now the MMS with its larger funding opportunities,” the report said.
“If they are to maintain relevancy in the new environment, it may be opportune for the existing GC’s to reframe their value offering drawing on their networks and knowledge/people/project asset base and focus on investments which will deliver the greatest comparative and competitive advantages to the sectors they operate in.”
But the individual centres would not see the report, and the initiative’s funding ended in June, with centres competing for the remaining funding based on their individual transition plans.
The alternative funding sources seemed unlikely to the evaluators in 2020.
“In ACIL Allen’s view, noting that none of the international comparators operate on purely private sector funding, it is unlikely the GCs will become self-sustaining. It may be possible that a public/private funding model will provide a transitional platform.”
The new Labor government, which campaigned for the release of the report last year and warned the Coalition was killing off the program for political purposes, did not reverse the cut in its budget last month despite appearing to back an extended run during the election campaign.
Nor did it fund the new growth centre it had promised during the campaign.
Centres are understood to be at various stages of transitioning to self-sufficiency. Some are expected to operate at least another two years to deliver their commitments from previous government funding.
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