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The Role of Science, Research and Technology in Lifting Australian Productivity

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The Role of Science, Research and Technology in Lifting Australian Productivity The role of science, research and technology in lifting Australian productivity FINAL REPORT PROJECT AUSTRALIAN ACADEMY OF THE HUMANITIES AUSTRALIAN ACADEMY OF SCIENCE ACADEMY OF THE SOCIAL SCIENCES IN AUSTRALIA AUSTRALIAN ACADEMY OF TECHNOLOGICAL SCIENCES AND ENGINEERING SECURING EXPERT AUSTRALIA’S WORKING FUTURE GROUP A three-year research Dr John Bell FTSE (Chair) program funded by the Dr Bob Frater AO FAA FTSE (Deputy) Australian Research Leslie Butterfield Council and conducted Professor Stuart Cunningham FAHA by the four Learned Professor Mark Dodgson FASSA Professor Kevin Fox FASSA Academies through Professor Tom Spurling AM FTSE the Australian Council Professor Elizabeth Webster of Learned Academies for PMSEIC, through the Office of the Chief Scientist. Securing Australia’s Future delivers research-based evidence and findings to support policy development in areas of importance to Australia’s future. © Australian Council of Learned Academies (ACOLA) ISBN 978-0-9875798-3-6 This work is copyright. Apart from any use permitted under the Copyright Act 1968, no part of it may be reproduced by any process without written permission from the publisher. Requests and inquiries concerning reproduction rights should be directed to the publisher. DATE OF PUBLICATION June 2014 PUBLISHER Australian Council of Learned Academies Level 1, 1 Bowen Crescent Melbourne Victoria 3004 Australia Telephone: +61 (0)3 98640923 www.acola.org.au SUGGESTED CITATION Bell, J, Frater, B, Butterfield, L, Cunningham, S, Dodgson, M, Fox, K, Spurling, T and Webster, E (2014). The role of science, research and technology in lifting Australian productivity. Report for the Australian Council of learned Academies, www.acola.org.au. REPORT DESIGN Lyrebird [email protected] 2 The role of science, research and technology in lifting Australian productivity ACOLA is the interface of the four Learned Academies: Australian Academy of the Humanities Australian Academy of Science Academy of the Social Sciences in Australia Australian Academy of Technological Sciences and Engineering 3 Australia’s Learned Academies Australian Academy of the Humanities Australian Academy of Science The Australian Academy of the Humanities The Australian Academy of Science is a private advances knowledge of, and the pursuit of organisation established by Royal Charter in excellence in, the humanities in Australia. 1954. It comprises ~450 of Australia’s leading Established by Royal Charter in 1969, the scientists, elected for outstanding contributions Academy is an independent organisation of to the life sciences and physical sciences. The more than 500 elected scholars who are leaders Academy recognises and fosters science excellence and experts in the humanities disciplines. through awards to established and early career The Academy promotes the contribution of researchers, provides evidence-based advice the humanities disciplines for public good to assist public policy development, organises and to the national research and innovation scientific conferences, and publishes scientific system, including their critical role in the books and journals. The Academy represents interdisciplinary collaboration required to Australian science internationally, through its address societal challenges and opportunities. National Committees for Science, and fosters The Academy supports the next generation international scientific relations through of humanities researchers and teachers exchanges, events and meetings. The Academy through its grants programme, and provides promotes public awareness of science and its authoritative and independent advice to school education programs support and inspire governments, industry, the media and the primary and secondary teachers to bring inquiry- public on matters concerning the humanities. based science into classrooms around Australia. www.humanities.org.au www.science.org.au Working Together – ACOLA The Australian Council of Learned Academies (ACOLA) combines the strengths of the four Australian Learned Academies: Australian Academy of the Humanities, Australian Academy of Science, Academy of Social Sciences in Australia, and Australian Academy of Technological Sciences and Engineering. 4 Academy of Social Sciences in Australia Australian Academy of Technological The Academy of the Social Sciences in Australia Sciences and Engineering (ASSA) promotes excellence in the social sciences in ATSE advocates for a future in which technological Australia and in their contribution to public policy. sciences and engineering and innovation contribute It coordinates the promotion of research, teaching significantly to Australia’s social, economic and advice in the social sciences, promote national and environmental wellbeing. The Academy is and international scholarly cooperation across empowered in its mission by some 800 Fellows disciplines and sectors, comment on national needs drawn from industry, academia, research institutes and priorities in the social sciences and provide advice and government, who represent the brightest to government on issues of national importance. and the best in technological sciences and Established in 1971, replacing its parent engineering in Australia. Through engagement body the Social Science Research Council of by our Fellows, the Academy provides robust, Australia, itself founded in 1942, the academy independent and trusted evidence-based advice is an independent, interdisciplinary body of on technological issues of national importance. We elected Fellows. The Fellows are elected by their do this via activities including policy submissions, peers for their distinguished achievements workshops, symposia, conferences parliamentary and exceptional contributions made to the briefings, international exchanges and visits and social sciences across 18 disciplines. the publication of scientific and technical reports. It is an autonomous, non-governmental The Academy promotes science, and maths organisation, devoted to the advancement education via programs focusing on enquiry- of knowledge and research in the based learning, teaching quality and career various social sciences. promotion. ATSE fosters national and international collaboration and encourages technology transfer www.assa.edu.au for economic, social and environmental benefit. www.atse.org.au By providing a forum that brings together great minds, broad perspectives and knowledge, ACOLA is the nexus for true interdisciplinary cooperation to develop integrated problem solving and cutting edge thinking on key issues for the benefit of Australia. ACOLA receives Australian Government funding from the Australian Research Council and the Department of Education. www.acola.org.au 5 Contents List of figures 8 List of tables 9 List of boxes 9 Acronyms 10 Project aims 12 Executive summary 14 Key findings 22 Chapter 1: Introduction 26 1.1. Background 26 1.2. About this report 29 Chapter 2: Building Australia’s future manufacturing industries 32 2.1. Australia’s industrial future 34 2.2. International trends in manufacturing and services 41 2.3. Australian manufacturing firms responding to trends 49 2.4. Role of Government in supporting manufacturing 54 2.5. Conclusions 62 2.6. Findings 63 Chapter 3: Effective collaboration to improve Australian innovation and research impact 64 3.1. Collaboration between business and publicly funded researchers 66 3.2. Collaboration between businesses 82 3.3. Conclusions 89 3.4. Findings 90 6 Chapter 4: An innovative workforce to meet Australia’s future needs 92 4.1. Key issues for an innovative workforce 93 4.2. Building a broader science, research and technology base in Australia’s workforce 101 4.3. Future workforce needs of Australian industries 111 4.4. Conclusions 118 4.5. Findings 119 Chapter 5: The contribution of innovation to productivity and economic growth 120 5.1. Productivity growth: definition, importance and sources 122 5.2. Investment in knowledge capital and economic growth 127 5.3. R&D and other intangibles 130 5.4. Public R&D investment and productivity performance 131 5.5. Conclusions 134 5.6. Findings 134 Annex: Intangibles and the productivity decline 136 References 142 Expert working group 152 Acknowledgements 154 Evidence gathering 156 Appendices 162 Appendix 1: HASS-STEM skill mixing in innovative Australian firms 162 7 List of figures Figure 2.1: Manufacturing contributes Figure 3.6: Australian firms have low disproportionally to exports, innovation levels of international collaboration 85 and productivity growth 34 Figure 4.1: Domestic IT undergraduate Figure 2.2: Industry contribution to enrolments, by student status, Australian GDP, 1975-2013 percentage shares 35 and completions 94 Figure 2.3: Australian manufacturing Figure 4.2: Australian firms’ performance by sub-sector, 1982-83 to 2012-13 35 in business management, compared to global best performers 99 Figure 2.4: Industry employment, 2011-2012 36 Figure 4.3: Human resources devoted Figure 2.5: Business expenditure to R&D in Australia, by occupation type 103 on R&D by sector, 2011-12 37 Figure 4.4: R&D personnel, per Figure 2.6: GVC participation index as a 1,000 employment, 2011 104 percentage share of gross exports, 2009 42 Figure 4.5: Employment in knowledge- Figure 2.7: The Boeing 787 Dreamliner intensive services as a percentage manufactured around the world 45 of total employment, 2011 104 Figure 2.8: Investment in tangible and Figure 4.6: Contributions of intangible capital as a proportion of GDP, 2006 47 education completions and skilled Figure 2.9: Average
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