Occasional Paper Series THE DEVELOPMENT OF AUSTRALIA’S INNOVATION STRATEGY: CAN THE PUBLIC SECTOR SYSTEM ASSESS NEW POLICY FRAMEWORKS? Professor Ian Marsh Dr Lindy Edwards April 2008 © Copyright 2008 by the Australian Business Foundation. This document is not to be reproduced, copied, or distributed without the written per- mission of the Australian Business Foundation. April 2008 ISBN 978-0-9804138-2-3 Published by the Australian Business Foundation Limited ABN 56 067 381 999 Level 12, 83 Clarence St, Sydney, NSW 2000, Australia Phone: +61 2 9350 8126 Email: [email protected] To order Australian Business Foundation publications or download individual reports, go to: www.abfoundation.com.au Designed & typeset by: Kim Webber, Southern Star Design Cover design by: Mandos Design Pty Ltd Australian Business Foundation Ltd 2 AUSTRALIAN BUSINESS FOUNDATION LTD Table of Contents PREFACE.................................................................................................................4 ABOUT THE AUTHORS.....................................................................................4 REFEREED PUBLICATION..................................................................................4 ABOUT THE AUSTRALIAN BUSINESS FOUNDATION ......................................5 FOREWORD............................................................................................................6 INTRODUCTION ....................................................................................................7 BACKGROUND ......................................................................................................9 INTELLECTUAL FRAMEWORKS ........................................................................9 POLICY FRAMEWORKS ..................................................................................12 FROM INNOVATION SUMMIT TO BACKING AUSTRALIA’S ABILITY..................16 PARTICIPATION...............................................................................................17 ANALYTIC FRAMEWORKS..............................................................................19 INSTITUTIONS AND THE REFINEMENT OF FRAMEWORKS ..........................23 THE SUMMIT...................................................................................................24 INNOVATION SUMMIT IMPLEMENTATION GROUP. .....................................25 THE PRIME MINISTER’S SCIENCE, ENGINEERING AND INNOVATION COUNCIL .............................................................................27 POLICY OUTCOMES........................................................................................27 SUBSEQUENT MAPPING PROGRAMS ............................................................28 BACKING AUSTRALIA’S ABILITY 2.................................................................30 DISCUSSION AND ASSESSMENT..........................................................................31 PRE-SUMMIT...................................................................................................32 THE SUMMIT...................................................................................................33 POST-SUMMIT................................................................................................ 34 BIBLIOGRAPHY ....................................................................................................38 OCCASIONAL PAPER SERIES 3 Preface ABOUT THE AUTHORS* Professor Ian Marsh holds the ANZSOG Chair of Public Management at the University of Sydney and a former Senior Fellow of the Research School of Social Sciences, Australian National University. A graduate of the Kennedy School of Government, and the Graduate School of Arts and Sciences, Harvard University, Professor Marsh was formerly an Associate Professor of the Australian Graduate School of Management, Research Director of the Liberal Party of Australia, and Associate of McKinsey & Co, and Private Secretary to the Minister for Defence. Professor Marsh has been a prolific contributor to public discussion about the role of government for over 20 years. Dr Lindy Edwards is a Post Doctoral Research Fellow of the Research School of Social Sciences, Australian National University, and her central area of specialty being the politics of neo-liberalism. She is the author of “How to Argue with an Economist: Re- Opening Political Debate in Australia” (2nd Edition, 2007). She was previously an economic adviser in the Department of Prime Minister and Cabinet, a Press Gallery journalist for the Sydney Morning Herald and Economic Adviser to then leader of the Australian Democrats, Natasha Stott Despoja. REFEREED PUBLICATION* This paper is published following peer review by two anonymous expert referees. * The authors are grateful for comments and advice on earlier drafts from Glenn Withers, Alan J Jones, Evan Jones, Don Scott-Kemmis, Allan Fels, Narelle Kennedy and several anonymous sources. 4 AUSTRALIAN BUSINESS FOUNDATION LTD Preface ABOUT THE AUSTRALIAN BUSINESS FOUNDATION The Australian Business Foundation is an independent, non-partisan organisation undertaking evidence-based research to deliver fresh insights and practical intelligence to boost Australia’s capabilities and global competitiveness. For over ten years, the Foundation has been bringing together forward-looking business executives, policymakers, academics and opinion leaders to share knowledge, shape debate and incite practical action. This has established the Foundation as a thought leader bridging academic scholarship with the realities and challenges of everyday business experience. The Foundation is now the centre of an active and informed community of common interest, undertaking research in partnership with expert scholars and practitioners both nationally and internationally. For more information and background on earlier research reports, visit the Australian Business Foundation at: www.abfoundation.com.au. OCCASIONAL PAPER SERIES 5 Foreword he Australian Business Foundation’s series of Occasional Papers features cogent T and substantial presentations on key aspects of public policy or business strategy that advance knowledge and informed debate about the potent issues impacting on Australia’s competitiveness, innovation and sustained prosperity. The Foundation is delighted to present the first paper in this series, a retrospective analysis of the Innovation Summit held in 2000, its lead up and its aftermath. In this paper, Ian Marsh and Lindy Edwards deliberate on two important questions: • How well did the Australian policy system cope with the task of evaluating a new policy paradigm? • What governance capacities are required to recognise, assess and, if necessary, adopt new policy paradigms of strategies? It is extremely timely to reassess this significant event in Australia’s innovation policy making. With its election in November 2007, the new Rudd Labor Government has embarked upon reviews in a number of significant areas of public policy, including one to address Australia’s national innovation system. This Occasional Paper is a ‘must read’ for the Expert Panel conducting the Review of the National Innovation System, and for anyone interested in learning about deft policymaking that breaks new ground and makes discernible difference. Marsh and Edwards have produced a well-grounded contemporary analysis of the policy- making process in Australia, and it challenges us to do better. Thus, the paper meets the Foundation’s test for an Occasional Paper - it enunciates a well-argued case that provokes deeper thought and the groundwork for better informed and more nuanced debate. As the Australian Business Foundation moves into our second decade as an activist and futurist researcher and thought leader, we invite you to be part of the community of interest concerned with Australia’s capabilities and global competitiveness and to read, think and act on the ideas brought to you in this inaugural Occasional Paper. Narelle Kennedy Chief Executive Australian Business Foundation 6 AUSTRALIAN BUSINESS FOUNDATION LTD Introduction n recent years, innovation has been seen as an increasingly important base for econ- I omic dynamism and growth and thus has risen in priority as a concern for governments. But approaches vary significantly between states.1 This partly reflects the complexity of the concept of innovation, which has come to involve two quite distinct concerns. One covers the development of science-based industries (like biotechnology or nano- technology) and the other the upgrading of established industries through the dissemination of knowledge (Smith and West, 2005). Differences between states also reflect normative, technical and other issues concerning such factors as industry structure, research capabilities, circumstances, opportunities, and the role of government. Innovation as a capability that yields benefits for the economy is one issue. No less impor- tant is a capacity for innovation in public policy: indeed this might be regarded as a special instance of the more general theme. Policy systems and processes need to be able to identify and assess strategic challenges. The public sector is an especially challenging context for such assessments. The well documented hazard of lock-in in large complex organisations is especially salient to a governmental policy system with its multiple inter- connections and dispersed and divided authorities. Interdependence, on the one hand, between political and administrative structures and, on the other, between administrative