Australian Government responds to Cutler Review on Innovation

So this budget is the first one to follow the Australian Government's review of the "National Innovation System".

The so-called Cutler report, which was released last year, and a Government response entitled "Powering Ideas", released along with the Budget, are both available here.

The main recommendations of that report were to fund research infrastructure, increase research funding, increase business research funding and improve collaboration between business and research institutions. The Government seems to have responded to many of the main recommendations of the report, with its simplification of reseach concessions in the tax code, various investments in research infrastructure (great stimulus of course) and several other measures.

One big message is that Australian expenditure on research has declined in recent years relative to GDP, while other nations have increased.

So the current budget includes a 25% increase in spending on science and innovation.

Commonwealth spending on science and innovation has fallen 22 per cent as a share of GDP since 1993–94. Business spending on research and development collapsed in the late 1990s, and while it has grown since then, we still lag many of the countries we compete with. The proportion of Australian firms introducing innovations has been stuck at one in three for years. A decade of policy neglect has hurt Australia’s innovation performance, making us less productive and competitive, and reducing our ability to meet the needs and aspirations of Australian families and communities.

Meanwhile, the bar keeps rising. China’s R&D spending has grown by 22 per cent a year since 1996, compared to 8 per cent a year in Australia. Australia spends 2 per cent of GDP on research and development. Austria, Denmark, Germany, Iceland, Switzerland, Taiwan, and the United States spend more than 2.5 per cent; Finland, Japan, South Korea, and Sweden spend more than 3 per cent; Israel spends more than 4 per cent.
While Commonwealth spending on science and innovation fell to 0.58 per cent of GDP in 2007–08, Denmark is steadily increasing government spending on R&D — from 0.89 per cent of GDP in 2008, to 0.94 per cent in 2009, with a target of 1 per cent in 2010. In the United States, President Obama has pledged to double funding for federal science agencies over the next decade.

One figure from the Budget Education overview struck me.



The Government should be happy that after years for rewarding Australian academics for every paper we write, our per capita publication rate is 20% above the OECD average. Don't inquire too closely into measures of impact of those papers!

Obviously we should be very much less happy that apparently the fraction of firms with "new products" is 30% below the OECD average. This despite very healthy levels of venture capital!

Science Funding in New Zealand

Can I applaud the recent signs that lifting science funding in New Zealand may reach some level of political priority. In particular Anthony Scott's opinion piece in the Herald. Hat-tip The Hive.

I strongly disagree with Scott on one point. The Marsden Fund is essentially the only source of pure science research funding in this country and its value in real terms seems to have been decreasing markedly in recent years, driving several excellent scientists in my field to desparate measures, including expatriation. I know of at least three excellent young researchers in my relatively small area of physics that have left permanent jobs in New Zealand universities for a variety of reasons including better funding opportunities overseas. Maintaining research expertise in areas like physics is essential and I am not talking about people that lack international reputations. These people are supported by blue skies research funding like the Marsden Fund and they are able to attract it in other countries with relative ease. Not all Government science funding should have a definite technological of commerical application in view. Indeed it seems to me that the private sector should be funding the lion's share of such work. Please someone, increase the value of the Marsden Fund now.

For some time one of the glaring issues in science funding has been appallingly low private sector funding for research. This will always be an issue in New Zealand's small economy and it is great to see the government addressing it with the Fast Forward Fund. However there are companies that should be more involved in funding scientific research given their size and the huge role of technical advances in their business, I'm thinking of you, Fonterra.