A recent trip to China by Universities Australia included visits to numerous businesses which were using research and cutting-edge technologies to grow and thrive.
Meanwhile, Australia is undertaking a review of research and development (the SERD review) led by Robyn Denholm with eminent colleagues including Professor Ian Chubb. Australia is very good at reviews in research and development – we’ve undertaken dozens of them.
What we are less good at is implementing key elements of them to drive real innovation and increased economic complexity.
Now is the moment for Australian universities, governments and business to lift our collective efforts or risk being left behind by other countries.
A recent OECD report notes that Chinese growth in research and development expenditure now surpasses all OECD members at 8.7% compared to 2.4% in the OECD countries.
Australia comes in at 1.6%. While China certainly has a substantial government investment which helps drive this, China’s R&D spend by business is now at 95% that of the US.
In addition, we have what the SERD review has called a ‘conservative capital culture’ which they illustrate with 2019 data showing Australian venture capital was 0.04% of GDP, compared to 0.54% in the US and 0.12% in the United Kingdom.
Australian government policy is not currently incentivising industry in the right way with a huge spend of public money on the research and development tax incentive showing very poor returns. Many reforms have been suggested to address this in the past and the government must take seriously the SERD recommendations on this topic when they are finalised.
In addition, Australia has a fragmented and incoherent set of grants and schemes to support commercialisation of intellectual property. As a country we are getting increasingly good at starting up innovative businesses including those established through our universities. But
the current settings make it hard to scale them onshore.
It must be admitted that the companies we focused on in China are leaders in research and development, but that is the competition if Australia is going to be globally competitive.
The companies we talked to had substantial investment in the research workforce with all having over 10% of their workforce focused on research – in one case, 10% of the workforce was focused on fundamental, non-commercial research and another 10% on translation.
By contrast, the SERD review notes that over a ten-year period, spending on research and development by large Australian businesses declined 24%.
There was also, in several Chinese companies, recognition of the value of PhD trained workers. One company we visited ran its own academy for PhDs, co-supervising over 3500 doctoral students in partnership with dozens of partner universities in China and beyond. Many of those PhDs then go on to work for the company, further driving an innovation and research-oriented culture.
It has been encouraging to see the increase in joint supervision of PhDs by academics and industry leaders in Australia, but we are still far behind this sort of focused effort to boost the research workforce needed for hi-tech industries.
At the BYD showroom there is a ‘wall of patents’ which is only a fraction of the thousands of patents BYD has taken out worldwide. The very visible pride of the company at this drive for new products sets a tone of a drive for innovation.
Likewise, a number of Chinese companies displayed in central locations the publications their staff had written for prestigious international journals – celebrating academic collaborations.
Earlier this year, I travelled to the United Kingdom to observe first-hand the remarkable progress being made in fostering innovation, creating high-quality employment
opportunities, and driving industry growth. This progress is being generated by concentrated efforts in areas in the north of the country demonstrate that transformation is not limited to more centalised economies like China’s. It is possible in an environment like Australia’s.
This is a wake-up call to all of us: universities, government and industry all need a greater focus on how we bring our different strengths together in the national interest.
When the Denholm review is published, it will be critical to ensure it does not join the fate of too many other government reviews and languish on a webpage somewhere. China is already acting with urgency and focus to develop the industries of the future. Australia cannot afford to fall further behind.
Professor Carolyn Evans is Chair of Universities Australia and Vice-Chancellor of Griffith University.