NICTA submission to the Review of the National Innovation System NICTA Submission to the Review of the National Innovation System Authors: David Skellern, Phil Robertson and Emma Barron Organisation: NICTA Type of organisation: Not-for-profit research institute, incorporated as an unlisted public company limited by guarantee, funded by the Australian Government and our Members and Partners (the University of New South Wales, the Australian National University, the University of Sydney, the University of Melbourne, the University of Queensland, Queensland University of Technology, Griffith University and the state governments of New South Wales, the Australian Capital Territory, Victoria and Queensland) Address NICTA Locked Bag 9013 Alexandria, NSW 1435. State or Territory NSW, ACT, Queensland, Victoria and South Australia. Email and phone contact Emma Barron [email protected] 02 8374 5468 Declaration of interest 1. NICTA is funded by the Australian Government with initial funding of $AUD124.5 million over four years (from 2002-2006) with a further funding commitment of $AUD249.48 million over five years (from 2006-2011). NICTA was established following a competitive bid process by its members: The Australian Capital Territory Government, The Australian National University, NSW Department of State and Regional Development and The University of New South Wales. NICTA is also supported by its partners: the University of Sydney, the University of Melbourne, the Victorian Government, the Queensland Government, Griffith University, Queensland University of Technology and the University of Queensland. 2. NICTA was created to help bridge the gap in the Australian ICT Innovation System. The broad recommendations contained in this submission may apply generally to other parts of the innovation system. However, for the ICT industry sector, in some cases we believe NICTA to be the most appropriate mechanism for implementation. 3. NICTA is funded until 2011, and we believe continued funding is critical to Australia’s future. 1 NICTA submission to the Review of the National Innovation System SUMMARY NICTA has a unique perspective on the Australian and international Information and Communications (ICT) innovation systems. Over the last five years, we have first-hand experience of what works and what doesn’t in these innovation systems as well as experience of the emerging issues and trends in ICT innovation. We have identified gaps in the system where government intervention, research sector and industry cooperation is needed. We propose six main areas to build the ICT innovation ecosystem: 1. Supporting future ICT research Australia’s future competitiveness in ICT will be delivered through step-change technology breakthroughs, not incremental change. This requires investment in basic research. In addition, Australia must address the market failure and increase investment in applied research to get research to product stage. Specifically, Government should support the publicly funded research institutes to bridge the gap between research and business. 2. Managing our Intellectual Property (IP) If Australia wants to access global markets we need to develop more sophisticated IP strategies and protect IP with patents, where appropriate. Support is required to develop IP management expertise and increased resources to fund patents. 3. Enabling international engagement Australia needs to support a higher level of engagement in international innovation systems. Australian Government support is required for the research sector to play a greater role in international innovation networks to connect with international research consortia and their industry links. 4. Developing internationally competitive ICT skills Australia’s computer science and electrical engineering PhDs need broad skills to be internationally competitive. We believe that PhD training and funding should be extended by another year to develop broader cross-discipline experience, greater technical depth and professional skills. 5. Growing a global scale commercial R&D capacity Growing a commercial R&D capacity will help to bridge the innovation gap by developing strong industry engagement, channels to market and industrial research and development (R&D) skills. 6. Continuing support for the NICTA model NICTA has become an important part Australia’s innovation system over the last five years. Our inter-university networked collaboration model is working. We are delivering on research, commercialisation and cultural change. NICTA has a track-record of success and should be funded past 2011. Connections with our university members and partners are an important foundation for NICTA. 2 NICTA submission to the Review of the National Innovation System ISSUES Tackling the high-tech frontier Australia needs to up the ante on scientific innovation if we are to expect long-term results. Australia currently ranks 19th in the World Economic Forum’s Global Competitiveness Report (2007-08). In 2006, Augusto Lopez-Claros, Chief Economist and Head of the World Economic Forum’s Global Competitiveness Network said that: “Australia gets top scores in those indicators which assess the country’s ability to absorb new technologies and use them to leverage the development process. However, efforts should be made to move the country even closer to the high-tech frontier, beyond simply using technologies developed elsewhere, towards a greater capacity for scientific innovation within a more sophisticated business environment.” ICT is crucial to developing this greater capacity for scientific innovation. We need to go for step-change innovation not incremental change. These research breakthroughs need to be transferred into use by industry. The real challenge that faces Australia is that our ICT industry is made up largely of SMEs that do not have the capacity to invest in research and, more importantly, to take products from research to market. In other countries this role is served by the development arms of large companies such as Nokia, Philips, Ericsson, or the many large Japanese and US corporations. In the Australian ICT industry 95% of all companies have less than 20 staff and less than 1% of all companies have over 100 staff. That represents about 250 companies1. This means few companies have the capacity to invest in turning basic research into product. Australia needs to think creatively about how we can bridge this ICT innovation gap. 1. Supporting future ICT Research Use-inspired basic research NICTA carries out use-inspired basic research. This term was coined by Donald E. Stokes in Pasteur’s Quadrant: Basic Science and Technological Innovation (1997). Stokes describes different types of research: • Bohr’s style basic research of universities that focuses on excellence and fundamental understanding; • Edison style applied research of industrial laboratories that focuses on use and markets; and • Pasteur style use-inspired basic research that incorporates both new knowledge and considerations of use. For NICTA, research does not require making a choice between academic excellence and consideration of use. It is possible to do both. Balancing research and commercialisation objectives is difficult, and indeed, one of NICTA’s greatest challenges. 1 Whitehorse Strategic Group The Whitehorse Report ICT Industry Survey and Analysis (2007) 3 NICTA submission to the Review of the National Innovation System NICTA’s research is striving for step-change in knowledge, not incremental change. Our strategy for step-change innovation is to build a portfolio of research with an emphasis on long-term, medium to high-risk research carried out by larger, cross-discipline teams. Our use-inspired basic research complements the role of other institutions in Australia’s innovation system and ensures a pipeline delivering breakthroughs and market impact. Support for basic research is an important way to generate novel and fresh ideas. As the Prime Minister’s Science, Engineering and Innovation Council paper Australia’s Information and Communications Technology (ICT) Research Base – Driving the New Economy noted back in 2000: “Basic research and the pool of talent in science and technology have been identified by the US Competitiveness Council as two of the key contributors to a nation’s innovation capability. Australia is relatively weak in both these two key factors in relation to ICT innovation.”2 NICTA is conducting a survey of Australian university departments and centres of excellence, to discern where Australia’s collective strengths lie and produce a landscape of Australian university based ICT research. Our preliminary results suggest that levels of ICT basic research today remains very low. Australian ICT R&D figures show under-investment in key areas and very different trends to the R&D figures across all Australian industries. The 2004-05 figures for investment in ICT basic research compares poorly with the overall R&D expenditure in all industries. Even with the significant investment in NICTA, basic research makes only 14% ($210 million) of all ICT R&D ($1.5 billion)3. This is well under the expenditure on basic research across all industries which is 24% ($3.75 billion) of all R&D ($15.77 billion)4. Recommendation 1.1 Basic Research: The Australian Government should increase the investment in ICT basic research to ensure knowledge breakthroughs and a pipeline of creativity. Australian ICT R&D In 2004-05, the total expenditure on ICT R&D of $1.5 billion is just under 10% of R&D across all industries.