Towards integrated science, tech, research and innovation policy

Management textbooks and business self-help books tell us that strategy drives structure which in turns drives funding and resource allocation decisions.

Yet in public administration and public policy it seems to go the other way: first decide on some money to address a problem or opportunity, then set up a structure to find a way of spending it and lastly, rationalise this into a strategy, and then print it in a four-page glossy brochure – only for it to disappear from public view and internal attention after a Ministerial launch.

Over the last 25 years the Commonwealth and the States/Territories have released literally hundreds of seemingly unconnected science, technology, research, innovation, and industry strategies – with very limited impact. We should be able to do better than this.

The June 2022 Australian Government Administrative Arrangements Order (AAO) gives the Minister for Industry, Science and Resources (Ed Husic) complete coverage of “science and technology policy”.

This has been recognised among commentators as a good thing. Research and industry policy responsibilities, however, are distributed much more widely among several other ministers and departments.

The AAO gives the Minister for Education (Jason Clare) and the Department of Education responsibility for the “co-ordination of research policy in relation to universities”. This is a significant mandate, as university research represents a very large element in Australia’s national R&D effort.

The AAO also recognises research roles for other ministers and departments—Agriculture, Climate Change, Energy, Environment and Water, Defence, and Health and Aged Care.

Departments of Finance, Infrastructure and Treasury also have research roles in the context of their specific policy responsibilities. However, the Minister for Education does not have a specific research coordination role in these agencies.

Intriguingly, the term “innovation” is not used at all in the AAO. But everyone seems to be talking or writing about it.

Each year the Department of Industry, Science and Technology (and its predecessor departments) publishes The Australian Government’s Science, Research and Innovation Budget Tables which provide details of “Australian Government investments in R&D and innovation, and of Science, Research and Innovation (SRI) related Australian Government organisations”.

The SRI Tables first surfaced in 1980 as the Science Statement, and from 1989 as the Science and Technology Budget Statement. In 2001 it reverted to Science and Innovation Budget Tables and in May 2010 the Science, Research, and Innovation Budget Tables.

The SRI Tables are not a strategy document in any policy or budgetary sense. They are simply an aggregation and historical record of numerous and quite often separately determined policy and expenditure decisions made across portfolios.

Nonetheless, the Tables assist in pointing to the scope and direction of these uncoordinated SRI decisions.

Moreover, in recent discussions there is an implied connection between science, research, and innovation policy and industry policy. Terms are often used interchangeably, but they are not one and the same.  

Can we go further with this important SRI resource in developing an Integrated Science and Technology, Research, and Innovation Policy that links to a robust industry policy.

In 2021-22 the R&D component of SRI Tables totaled $11.8 billion, with a further $0.7 billion in programs designed to support innovation, but do not include R&D activities – such as the Entrepreneurs Programme, the Growth Centres Program and AI and Digital Capability Centres.

The SRI Tables identify 167 separate expenditure items, down from 182 in 2020-21. Nonetheless it could provide a foundation for developing an Australian SRI Strategy and Budget.

The recently authorised five-year United States Chips and Science Act provides 240 separate authorisations over 1034 pages totalling $US248 billion ($AU360 billion).

Division A of the Act appropriates $US54.2 billion to implement the Chips for America Act, 2021, which authorised the Departments of Commerce, Defense, and State to develop onshore domestic manufacturing of semiconductors.

It also includes provisions that prevent funding recipients from building advanced semiconductor production facilities in countries that present a national security concern, such as China. The Act also covers a US$24 billion Investment Tax Credit for semiconductor investment.

The Chips Act also authorises implementation of the USA Telecom Act, part of the National Defense Authorization Act, 2021 which reinforces the global telecommunications supply chain and limits the involvement of telecom companies with close ties to the Communist Party of China

Division B of the Chips and Science Act provides US$169.9 billion for Research and Innovation, distributed between the National Science Foundation (NSF), Department of Commerce Technology Hubs, National Institute of Standards and Technology (NIST), Department of Energy (DOE) and the National Aeronautics and Space Administration

Yet, despite the obvious differences in scale and scope, the Chips and Science Act has a marked similarity with the Australian SRI Tables: firstly, it is an “upwards” culmination and aggregated result of two years of Congressional negotiations and bargaining, and secondly, it covers multiple agencies and organisations.

The critical difference is that it is forward looking with a five-year appropriation horizon. But there is also a very striking dissimilarity.

The Chips and Science Act makes specific reference to an as yet undelivered national science and technology strategy.

Section 206 of the Act requires the Director of the Office of Science and Technology Policy (OSTP), in coordination with the National Science and Technology Council, to develop and submit to Congress a comprehensive national science and technology strategy for the United States to meet national research and development objectives for the following four-year period.

The Strategy is to include a description of—

1. A) strategic objectives and research priorities necessary to maintain and advance—

(i) the leadership of the United States in science and technology, including in the key technology focus areas, including near-term, medium-term, and long-term economic competitiveness; and

(ii) the leadership of the United States in technologies required to address societal and national challenges, including a transition to a circular economy;

(B) programs, policies, and activities that the President recommends across all Federal departments and agencies to achieve the strategic objectives and research priorities described in subparagraph (A);

(C) plans to promote sustainability practices and strategies for increasing jobs in the United States;

(D) global trends in science and technology, including potential threats to the leadership of the United States in science and technology and opportunities for international collaboration in science and technology; and

(E) plans to foster the development of international partnerships to reinforce domestic policy actions, build new markets, engage in collaborative research, and create an international environment that reflects United States values and protects United States interests.

In developing the strategy, the OSTP director is required to consult with the Office of Management and Budget and other appropriate elements of the Executive Office of the President to ensure that the recommendations and priorities set out in the science and technology strategy are incorporated in the development of annual budget requests.

The connection between the strategy and the budget is clear.

The Chips and Science Act has a specific but exceptionally comprehensive focus.  For example, the Act under Section 10102, Basic Energy Sciences Program, authorises

…  a research and development program in basic energy sciences, including materials sciences and engineering, chemical sciences, physical biosciences, geosciences, and other disciplines to provide the foundations for new energy technologies. … sustainable chemistry research, upgrades and related improvements to multiple user facilities including: the Advanced Photon Source; the Spallation Neutron Source; the Advanced Light Source; the Linac Coherent Light Source II; the Cryomodule Repair and Maintenance Facility; the Nanoscale Science Research Center; and the National Synchrotron Light Source II. This subsection also authorizes computational material and chemical sciences research and development, including up to six centers. It authorizes development of a materials research database.

Subtitle G of the Act establishes a new directorate to accelerate use-inspired and translational research and technology development to advance solutions to pressing societal challenges.

Other parts of the Act authorise basic research and development activities to ensure U.S. competitiveness in energy storage, multivalent ion materials in electric energy storage systems, a “Carbon Materials Research Initiative”, a research, development, and demonstration program to accelerate innovation to support quantum network infrastructure, research to improve the use of advanced sensing systems in rural and agricultural areas, and so on – up to the total of 240 separate authorisations.

So, what could an Australian National Science and Technology Strategy, or a Science, Research, and Innovation Policy look like? A second question concerns how a SRI policy would connect to a national industrial policy.

Australia has developed a list of nine “national research priorities” covering food, soil and water, transport, cybersecurity, energy, resources, advanced manufacturing, environmental change, health.

These areas are important for Australia’s future. However, the descriptors are non-challenging and read more like “business as usual”.

In the 2021-22 SRI Tables, mentions of research priorities is very thin among the 167 programs. There was one identified program in cybersecurity, three in energy, three in food, 18 in health, one in resources, five in soil and water, three in transport and 26 in multiple priorities.

The government is currently updating a 2021 list of of “Critical Technologies in the National Interest”. It features 63 technologies across seven categories: Advanced materials and manufacturing; AI, computing and communications; Biotechnology, gene technology and vaccines; Energy and environment; Quantum; Sensing, timing and navigation; and Transportation, robotics and space.

The government is also investing $1 billion in critical technologies as part of the National Reconstruction Fund, “to build our strategic capability and power the economic growth we need to create jobs”.

But with 63, and possibly more, critical technologies, some investment prioritisation and transparent allocation model will be required.

There is a connection between the research priorities and the critical technologies, but these should be articulated. But more importantly a link between critical technologies and priorities in industry policy would need to be established.

Those priorities should reflect, as in the US Chips and Science Act, industries in which the nation must have adequate capabilities to be secure.

In January this year the influential US Information Technology & Innovation Foundation suggested in the world of current practical politics “no advanced nation can afford not to have a strategic industry policy – unless it wants to put its national and economic security in the hands of foreign powers”.

The Foundation identified strategic industries as including aerospace, semiconductors, biopharmaceuticals, quantum computing, and advanced manufacturing.

Strategic industries are those where if a nation lost leadership, it would take a long time to catch up – consequently the overarching US concern with semiconductors.

In Australia, strategic industries might be identified as national defence, aerospace, biopharmaceuticals, and quantum computing. Several of these industries are ones where Australia holds a very substantial lead in knowledge, research quality, capacity and capability.

Policy responses for strategic industries require sector specific and targeted policies, including tax incentives, direct industry funding, trade provisions, regulatory provisions, R&D workforce development, etc.

They supplement more generalised industry policy goals oriented towards efficiency and productivity, competition, a supportive business climate, and correcting market failures.

A new targeted approach to science, research and innovation policy that addresses strategically important industry outcomes is required.

The approach must define a policy framework first – a framework that will drive strategy development, establish the organisation structures for implementation and delivery, facilitate resource allocation decision-making, and provide processes for performance monitoring and review, and accountability.

John Howard is a Visiting Fellow at UTS Business School and Managing Director of Howard Partners, a public policy research and strategic advisory firm. You can contact him at  john@howardpartners.com.au

Do you know more? Contact James Riley via Email.