New South Wales is producing some of the world’s best innovation inputs like research and workforce but is struggling to turn them into outputs like economic growth and productivity.
That’s according to the latest NSW Innovation and Productivity Council’s 2024 Scorecard, which sparked a robust debate on Thursday.
The scorecard reveals the state is churning out graduates and spinout companies from some of the world’s best universities while attracting skilled migrants and venture capital at nation leading levels.
But the state is among the worst advanced economies for university-industry collaboration, business and state government R&D investment and scaling up firms, keeping key indicators like productivity and GDP growth middle of the global pack.
The latest report has renewed calls for bolder long term policies that survive election cycles, a rethink of universities’ role in innovation and closer alignment with federal efforts ahead of a new state plan for innovation from the Minns government.
Running since 2019, the biennial scorecards provide a snapshot of NSW’s innovation and productivity performance in comparison to other states and selected international economies.
The latest scorecard covers key metrics grouped across three areas: productivity, new industry creation, and research.
In what the report calls an “uneven” innovation system, there are strengths like tertiary education level and skilled migrants but worrying signs like low levels or labour productivity and emissions reductions.
It’s a “wake up call” for the state and Australia, NSW Innovation minister Anoulack Chanthivong said.
“We can’t keep continuing what we are doing and expecting a different result. We actually have to change,” he said at the launch of the Scorecard in Sydney.
Later this year, Mr Chanthivong will release an ‘Innovation Blueprint’ for the state, expected to set the strategic direction for the NSW innovation ecosystem and outline plans for areas like skills, capital and leadership.
The minister is promising a more strategic approach to the government support and more effort on linking the innovation with industrial priorities like clean energy, housing and local manufacturing.
“Most important, the blueprint will end the situation that sees grants and support rolled out without any consideration to their role in a cohesive and consistent strategy broader strategic objective,” he said.
While NSW claimed top national spot on several marks in the latest scorecard, it is typically well behind international powerhouses on key metrics.
That’s important because innovation is increasingly a global competition, according to George Peppou, founder and CEO Vow, a Sydney based cultured meat manufacturer with around 100 staff.
“This is a global competition for talent, for businesses and for capital,” he said. “We shouldn’t be looking within our borders, we should be looking globally. And when we do, NSW and Australia are significantly underperforming the benchmark economies of Korea, Singapore, Israel, California, that we should be aspiring to.”
Mr Peppou said time is running out for policymakers to develop a thriving innovation ecosystem, with his company “getting knocks at our door” to move operations overseas.
The Vow founder was speaking on a panel at the launch that sparked robust discussions on just how the state should develop the system.
UTS director of entrepreneurship Murray Hurps raised the high attrition rate of around 190 startup accelerators and incubators since the pandemic. He said around 80 per cent had shut down in a “great reset” that saw the bulk of startup support programming continue inside university programs.
Pressures on university funding has put the future of around half of the programs in doubt and threatens the pipeline of innovative startups, according to Mr Hurps.
When Mr Peppou replied that 190 accelerators may be too many and questioned whether successful companies came through them, Mr Hurp said it was an “ignorant” comment.
There were also frank discussions on the role of universities in leading collaborative research efforts and their perception as the source of innovation.
“When we say that businesses aren’t getting involved enough in R&D, [but] we’re giving money to universities to run things,” Maritime Impulse founder Angus McDonald said.
“In Europe, they give money to clusters that are business oriented to run things and universities get invited into help, but they don’t run it. Funnily enough, they spend a lot more private money because the clusters are actually focused on needs the business.”
The crowd was in agreement when DigitalX CEO and DroneX founder David Nguyen teamed with Mr Peppou to call for long term bipartisan innovation policy.
Government changes at state and federal level has seen both founders’ operations disrupted and in the case of Mr Nguyen, manufacturing moved offshore.
“I spent a lot of time in countries outside of Australia,” Mr Peppou said, “and you see these policies that are set and then maintained for decades… Other regions [have] policy set in the eighties that are still operating dependably today.”
In contrast, Australian policy is typified by “tedious” and costly grant programs that have repeatedly caused delays and late cancellations for Vow, its founder said.
“If there’s one thing I can say to you, Minister,” Mr Peppou said. “Just set policies and don’t touch them, regardless of whether it is a Liberal or a Labor policy.”
This article has been updated to clarify figures about accelerators and incubators raised by Mr Hurps.
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