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Innovate or Perish! Australia’s Innovation System

La Trobe University Professor of Practice in Economics, Dr Mark Cloney, questions popular reports that Australia performs badly in industry-university collaboration and innovation when compared to other OECD countries.

If Australia’s current innovation policy is based on questionable OECD data might the Australian Government run the risk of targeting scarce resources into the wrong areas as it prepares its strategic plan for Australian Innovation to 2030?

Concerns over the performance of Australia’s innovation system caused the Australian Government to undertake a Senate Inquiry (2014) and then flag innovation as a major policy focus when it announced its $1.1 billion National Science and Innovation Agenda (Commonwealth of Australia, 2015). A central element of that policy statement was to substantially increase university-industry collaboration on the basis that such alliances internationally have become a prominent feature of the knowledge-based economy, dealing with the speed of transformation and economic disruption.

Australia, like the rest of the global economy, is facing significant structural change in the coming decades which offers both challenges and opportunities. Some suggest 40 per cent of today’s jobs will no longer exist in 10 years and that changing technology (robotics and artificial intelligence etc.) and new business models will continue to disrupt ‘old’ business processes and structures. Others say that this same disruption will also create new growth markets.

So is Australia’s innovation glass half full or half empty?

One strategy in meeting challenges and opportunities is adopting continuous innovation and the uptake of innovative skills and technologies. Continual innovation results in new markets, mindsets, skills and organisational re-design which are critical drivers of productivity and growth.

According to Universities Australia (2017), universities are central to skilling and upskilling the next generation of Australian entrepreneurs and startups and thereby improving Australia’s innovation system and sustainable growth. Its research finds that more than four in five Australian startups founders are university graduates (Universities Australia, 2017, p.3) and that startups were the largest contributor to job creation in Australia in the last decade (Universities Australia, 2017 p.8).

As suggested, the health of Australia’s innovation system still remains subject to conjecture and contrasting opinions with, for example, Australia is sitting at the bottom of OECD (2015) rankings in terms of university-industry collaboration. Moreover, according to Global Innovation Index (2017), Australia slid further down the world rankings in terms of innovation inputs and outputs from 19 to 23 in the latest world rankings among 127 countries (Cornell University, INSEAD, and WIPO, 2017). However, is this really the case?

A report by IP Australia challenges the notion that Australia is at the bottom of the OECD university-industry collaboration index arguing that this finding is based on questionable data selection. For example, when you focus on patent applications filed by an Australian university with a collaborator (business partner) Australia moves to the middle of comparable international tables (IP Australia, 2017).

The city of Melbourne, home to nine universities, was recently named as the ‘most intelligent community’ in the world at the Intelligent Community Forum in New York in June 2017. Based on six intelligent community indicators the New York think tank pointed to Melbourne’s broadband speed, research institutions, new innovation precincts and its focus on sustainability as its major strengths.

The challenge seems to be that Australian universities specialise in innovative research to answer fundamental questions, while businesses have specialist skills in commercialising and implementing products, services and ideas. However, university research can be often disconnected from the innovative needs of business (e.g. startups and SMEs) and not-for-profits.

So is there a disconnect? If so, why the disconnect? Or, are we doing better than we think?

Our National Innovation Forum on September 28 and 29 in Melbourne features  Dr Benjamin Mitra-Kahn, Chief Economist at IP Australia, and Dr Charles Day, CEO of the Office of Innovation and Science Australia. They will explore the current health of Australia’s innovation system. The Forum also presents industry and academic perspectives on how we can continue to improve innovation through university-industry collaboration and engagement, particularly for startups and small- to medium-sized enterprises (SMEs) through the use of business accelerators and incubators.

No doubt the forum will shed some more light on whether Australia’s innovation glass is indeed half full or half empty, and where the Australian government may choose to target its resources to achieve its 2030 vision for Australian Innovation.

Innovate or Perish! – Australia’s Innovation System


For more information on the forthcoming LBS Northlink National Innovation Forum, see the conference website. Early Bird tickets available until 31 August 2017.

Dr Mark Cloney, Professor of Practice, Economics

Dr Mark Cloney, Professor of Practice, Economics

LBS Professor of Practice in Economics, Dr Mark Cloney, questions popular reports that Australia performs badly in industry-university collaboration and innovation when compared to other OECD countries.

Australia, like the rest of the global economy, is facing significant structural change in the coming decades which offers both challenges and opportunities. Some suggest 40 per cent of today jobs will no longer exist in 10 years and that changing technology (robotics and artificial intelligence etc.) and new business models will continue to disrupt ‘old’ business processes and structures. Others say that this same disruption will also create new growth markets. So is Australia’s innovation glass half full or half empty?

One strategy in meeting challenges and opportunities is adopting continuous innovation and the uptake of innovative skills and technologies. Continual innovation results in new markets, mindsets, skills and organisational re-design which are critical drivers of productivity and growth. According to Universities Australia (2017), universities are central to skilling and upskilling the next generation of Australian entrepreneurs and startups and thereby improving Australia’s innovation system and sustainable growth. Its research finds that more than four in five Australian startup founders are university graduates (Universities Australia, 2017, p.3) and that startups were the largest contributor to job creation in Australia in the last decade (Universities Australia, 2017 p.8).

However,  the health of Australia’s innovation system remains subject to conjecture and contrasting opinions with, for example, Australia sitting at the bottom of OECD (2015) rankings in terms of university-industry collaboration. Moreover, according to Global Innovation Index (2017), Australia slid further down the world rankings in terms of innovation inputs and outputs from 19 to 23 in the latest world rankings among 127 countries (Cornell University, INSEAD, and WIPO, 2017). Is this really the case?

A report by IP Australia challenges the notion that Australia is at the bottom of the OECD university-industry collaboration index arguing that this finding is based on poor data selection. For example, when you focus on patent applications filed by an Australian university with a collaborator (business partner) Australia moves to the middle of comparable international tables (IP Australia, 2017). Moreover, the city of Melbourne, home to nine universities, was recently named as the ‘most intelligent community’ in the world at the Intelligent Community Forum in New York in June 2017. Based on six intelligent community indicators the New York think tank pointed to Melbourne’s broadband speed, research institutions, new innovation precincts and its focus on sustainability as its major strengths.

Concerns over the performance of Australia’s innovation system caused the Federal Government to undertake a Senate Inquiry (2014) and then flag innovation as a major policy focus when it announced its $1.1 billion National Science and Innovation Agenda (Commonwealth of Australia, 2015). A central element of that policy statement was to substantially increase university-industry collaboration on the basis that such alliances internationally have become a prominent feature of the knowledge-based economy, dealing with the speed of transformation and economic disruption.

The challenge seems to be that Australian universities specialise in innovative research to answer fundamental questions, while businesses have specialist skills in commercialising and implementing products, services and ideas. However, university research can be often disconnected from the innovative needs of business (e.g. startups and SMEs) and not-for-profits.

So is there a disconnect? If so, why the disconnect? Or, are we doing better than we think?

LBS in partnership with NORTH Link is exploring these questions at its National Innovation Forum to be held over September 28 – 29, 2017 at its Bundoora Campus. The Forum offers a unique opportunity not only to hear from recognised national and international thinkers and business leaders on the topic of innovation and university-business collaboration but to also engage with them in Q&A. Two of the speakers, Dr Benjamin Mitra-Kahn, chief economist at IP Australia, and Dr Charles Day, CEO of Office of Innovation and Science Australia, will explore the current health of Australia’s innovation system in some detail. The Forum also presents industry and academic perspectives on how we can continue to improve innovation through university-industry interactions and engagement, particularly for startups and small to medium size enterprises (SMEs) through the use of business accelerators and incubators.

The Forum will no doubt provide new insights on whether Australia’s innovation glass is indeed half full or half empty.

References:

Commonwealth of Australia (2015), National Innovation & Science Agenda: Welcome to the Ideas Boom, Department of Prime Minister and Cabinet.

Cornell University, INSEAD, and WIPO (2017), The Global Innovation Index 2017: Innovation Feeding the World, Ithaca, Fontainebleau, and Geneva.

IP Australia (2017), Australian Intellectual Property Report 2017, Commonwealth of Australia (https://www.ipaustralia.gov.au/ip-report-2017).

OECD (2015), OECD Innovation Strategy 2015: An Agenda for Policy Action, October 2015.

Universities Australia (2017), Startup Smarts: Universities and the Startups Economy, University Australia, March, universitiesaustralia.edu.au

La Trobe’s tourism studies garner international recognition

By Warwick Frost

La Trobe University has made the inaugural QS World University Rankings for Hospitality and Leisure Management this year, while a key faculty member recently received an international award for her tourism research.

For the first time, this year’s QS World University Rankings include Hospitality and Leisure Management as a category. From Victoria, Monash University (22) and La Trobe University (50) were included in the top 50. The other four Australian universities recognised were: Griffith University (9), The University of Queensland (12), University of South Australia (27) and Southern Cross University (38).

This comes as we are celebrating the 50th anniversary of La Trobe University and the 21st birthday for our Bachelor of Business in Tourism and Hospitality. It is also significant that Tourism and Hospitality was the only area at La Trobe to be placed in the global top 50.

The rankings are based on academic reputation, employer reputation and research impact. Sixteen of the top 50 institutions are located in Europe, 15 are from North America, 10 from Asia and six from Australia. The University of Nevada – Las Vegas came in at first place.

Many of the universities in the top 10 are specialist institutions, including Ecole hôtelière de Lausanne (2) and Swiss Hotel Management School (8).

LBS Associate Professor Jennifer Laing awarded Emerging Scholar of Distinction for 2017

Associate Professor Jennifer Laing of the Department of Management, Sport and Tourism at La Trobe University was recently awarded the Emerging Scholar of Distinction for 2017 by the International Academy for the Study of Tourism. She received the award at a conference in Guangzhou, China in May.

Laing says that most of her research has been conducted in Victoria. “My research on festivals and events has primarily examined their social benefits and meanings, such as their role in changing environmental behaviour,” she says. “I have also looked at practical problems such as governance issues affecting the viability of rural festivals, like succession planning and volunteer burnout.” Her  work has covered four main research areas: the social dimension of events, the role of tourism in rural and regional development, media and travel narratives, and health and wellness tourism.

The Academy (which is headquartered at the School of Hotel and Tourism Management, The Hong Kong Polytechnic University) was created to further scholarly research in tourism, and its Fellows are comprised of highly accomplished tourism researchers from around the world. Up to three scholars receive this award every two years and applicants must be within 10 years of having completed their PhD.

The award acknowledges Dr Laing’s contribution to tourism research and her substantial publication track record of innovative and ground-breaking research in top-tier journals and co-authorship of five research books. It is the first time a Victorian scholar has won this award.

LBS’s Associate Professor Suzanne Young featured on ABC Radio 774’s Mornings with Waleed Aly discussing governance

young-466-002

Recently, LBS’s Associate Professor Suzanne Young was featured on ABC Radio 774’s Mornings. On the show, she spoke about how the two-strike rule works, and how Board spills can happen in the 2016 round of Annual General Meetings due to protest votes on Remuneration reports.

If you missed the report, listen to the full fragment here. Associate Professor Suzanne Young speaks around the 2:25:00 mark.

LBS’s Liam Lenten featured on ABC’s Radio 666 Canberra discussing the Brownlow Medal

 Liam Lenten Sports La Trobe Business School Federal Election

Recently, Dr Liam Lenten was featured on ABC’s Radio 666 Canberra, talking about his research on the voting process in the AFL’s Brownlow Medal (the ‘Best and Fairest’ award). In his research, Dr Liam Lenten analysed how umpires vote and whether they have any biases.

During the segment, Dr Lenten says he became motivated to test for how Indigenous players draw votes from umpires early on in the project – a time at which there were a number of unsavoury incidents involving adverse fan behaviour (particularly) towards now-retired Sydney star Adam Goodes.

‘As economists, we are interested in voting biases whenever and wherever they occur, as they violate the notion of pure rationality. There are many examples in the literature involving data from various competitive environments, including many from sports, but also political elections, and even song contests such as Eurovision or Idol’, Dr Lenten says.

In this case, he employs econometric modelling and regression techniques, as well as a comprehensive database of over 100,000 player-within-match observations, in all of the 2,288 home-and-away AFL matches from 1998-2010.

Lenten says ‘…when I compared the number of votes between groups, Indigenous players quantitatively poll 6.6% more average votes per match than non-Indigenous players – this difference was statistically significant, but only weakly so’.

He qualifies this by saying that this alone does not imply a voting bias: “The comparison does not account for various factors, which could be driving the result. One possible explanation is that the pool of Indigenous players in the AFL is simply drawn from a higher-distribution of talent than non-Indigenous players. Aspiring Indigenous footballers are more likely to be from regional and remote areas, consistent with being at an elite-level recruitment disadvantage.”

According to Lenten, if this explanation is true, then such differences in talent levels should be picked up by using player performance measures. Specifically, he uses a range of 13 well-known player-level match statistics; such as kicks, handballs, goals scored, and tackles.

The model results show that controlling for player performance explains most (but not quite all) of the difference in average votes awarded. Indigenous players still poll approximately 1.2% more votes than non-indigenous players.

Is this remaining difference evidence that umpires unfairly give more votes to Indigenous players? As a former 200-game umpire himself (at suburban level), Dr Lenten is open to this possibility, but not committal.

‘There could be other productive actions off the ball for which Indigenous players outperform their contemporaries that are not captured within the statistics I use, yet are nonetheless noticed by umpires’. Also, he says: ‘…with respect to goals, it may be that Indigenous players often kick goals with higher degrees of difficulty, which would imply that not all goals have the same vote impact’.

Listen to the full fragment on the ABC website, here (Dr Liam Lenten speaks around the 3:26:00 mark).

LBS PhD Student Pedro Flores wins the 2016 AARES-NZARES Heading West Award

pedro-flores-tenorio

Recently, LBS PhD student Pedro Flores won the 2016 AARES-NZARES Heading West Award. For this award, Pedro travelled to the Australian Agricultural and Resource Economics Society in Nelson, New Zealand, where he presented his winning paper on Economics of Biodiversity Conservation in the Peruvian Amazon. The abstract of the winning paper, “Including the maintenance of ecosystem resilience of an old-growth forest as a choice for natural carbon sequestration funding. An ecological-economic approach”, can be found below.

La Trobe Business School would like to congratulate Pedro on his success!

Abstract

Australia is one of the first countries to prepare long-term pathways studies to decarbonize its economy. Peru is a megadiverse country with the second extension of forests in the Amazon basin. The design of efficient public policies for these territories is challenging due the fragility of public institutions and lack of economic valuation of important ecosystem services provided from old-growth forests.

This paper presents an ecological-economic model for a key non-timber forest product of the Peruvian Amazon basin: the Brazil nut (Bertholletia excelsa) and analyses the bioeconomic dimensions of two ecosystem services: pollination and the forest cover to provide habitat for flora and fauna. Could the investment in natural carbon sequestration in the Amazon be the best economic option for developed countries as Australia or New Zealand to mitigate the effects of climate change instead of man-made carbon sequestration strategies? We discuss the implications of this choice from the ecological-economics perspective.

LBS Associate Professor Cardak quoted in The Age on wealth and access to higher education

Buly Cardak La Trobe Business School
On 18 January 2016, La Trobe Business School economics researcher Dr Buly Cardak was quoted in The Age article ‘University offers benefit wealthy and realistic students’.

In the article, A/Professor Cardak comments on his recent research findings showing that wealthier school leavers with a realistic worldview and ongoing forms of support access higher education at greater rates compared with students from disadvantaged backgrounds.

Dr Cardak is a specialist in the economics of education, and has been researching factors influencing students’ university studies since early 2006. Read the full article on The Age’s website.

For more information on Dr Cardak’s research, see his website.

Can Economics Improve People’s Wellbeing?

jan Libich La Trobe Business

jan Libich La Trobe BusinessLBS economist Jan Libich has a mission. He has been determined to show that economics, often referred to as the dismal science, can be very useful in helping us improve our lives. His newly published book ‘Real-World Economic Policy: Insights from Leading Australian Economists’ is a culmination of his effort so far. It bridges the gap between academic economists, policymakers, students and the general public by exploring how influential economists – including four former central bank Governors/Board members, an ACCC Commissioner, and a current member of the federal parliament and Shadow Minister – use economic research to develop and evaluate policy.

When asked what constitutes this gap between economists and the general public, Jan Libich’s passion for economics shows: “Economics is often portrayed as divorced from the real world; it is criticized for being about boring curve-shifting, equations and heartless definitions. The book attempts to show that such image is not accurate, that economics can help people and policymakers to make better decisions and thus improve their prosperity.”

Real-World Economic Policy: Insights from Leading Australian Economists is based on a series of one-hour video-interviews the author recorded from 2011–2014 , aiming to help the reader identify welfare-improving policies in areas including healthcare, education, retirement financing, monetary and fiscal policies, banking regulation and climate change. Libich explains: “We all make hundreds of decisions every day. Economics attempts to understand how we make them, and whether we can perhaps improve on our decision making to achieve our goals (whatever they may be: economics does not prescribe that money is all we should care about). The same is true at the country level, whereby the quality of public policies can have a major impact on people’s wellbeing.”

In Jan Libich’s eyes, research in economics has been getting more mathematical over time to enable a more rigorous and objective examination of the economy: “It is about discipline, it is easier to see a flaw in logic when one has to clearly state all the assumptions rather than just use verbal arguments. Together with improvements in computing power this enabled exploration of more complicated models and environments.”

However, these developments have also created a gap between what academic research can teach us and what policymakers in government and the general public can understand. “To me, this implies that academic economists need to pay more attention to communicating their findings and recommendations in an understandable and convincing fashion. And to be honest, we have not done that as well as we should have,” Libich says. “My book is a humble attempt in this direction.”

More information on ‘Real-World Economic Policy: Insights from Leading Australian Economists’ can be obtained here.

ISBN: 9780170364386, Published by Cengage Learning Australia, Pub Date: November 2015, © 2016

“Near Enough is Good Enough”

Mark Morris La Trobe Business School Professor of Practice
By Mark Morris

It’s not often that I intuitively align the laborious machinations of industry policy deliberations in Canberra with the wise intonations of the Rolling Stones but that is exactly how I responded after I digested the Federal Government’s National Innovation and Science Agenda report issued on Monday 7 December 2015.

As Mick and Keith once sagely wrote ‘You can’t always get what you want but if you try sometime you find you get what you need.’ This pretty much sums up the overall impact of the myriad of changes announced which collectively makes Australia a far more attractive place in which to invest in innovative businesses. This is the case even if the report falls short of the cutting edge vision of economies like the United Kingdom.

On the plus side it is clear that the Federal Government has commendably adopted a multi-disciplinary approach to improving research and development (R&D) and related commercialisation. It has done this by proposing measures that enhance access to venture capital, drive closer collaboration between universities and industry, improve educational outcomes in science, technology, engineering and maths, ensure digital by default delivery of government services and capitalises on the growth of big data and the need to leverage it for the benefit of the economy through advanced data analytics.

As such the Federal Government is seeking to apply a more holistic view on innovation policy along the lines championed by the Cutler Review of the National Innovation System way back in 2008. This was before the Global Financial Crisis derailed the process to the point where we did not need a Minister for Science as if that distracted us from the fixation of repairing the Budget Deficit.

Crucially the tax settings of the new innovation regime are also a considerable improvement over the status quo. Tax incentives are not only available for companies undertaking R&D but also for investors who provide the venture capital to fund the commercialisation of any resulting R&D.

Accordingly, the Federal Government has finally recognised that tax breaks need to be provided over the life cycle of a business to encourage entrepreneurs to conduct and invest in risky projects which may ultimately not be viable especially in the new rapidly dynamic and volatile digital economy.

As a case study to the Report highlights the retention of the existing refundable R&D tax offset allows start-up companies to leverage tax credits to help finance eligible research and development. This is so, even if it appears that the offset will be retrospectively cut from 45% to 43.5% from 1 July 2015).

This has been augmented by new tax breaks which allow individual investors a 20% non-refundable tax offset for investments in certain start-ups, and a capital gains tax exemption where investments held in such companies are held for more than three years but less than 10 years. In addition, partners in early stage venture capital limited partnerships (ESVCLP) will get a 10% non-refundable tax offset on capital invested in the partnership which can now raise funds of up to $200 million in early stage development of eligible activities.

Taken collectively there is therefore much to be praised in the new package.

So where does it fall down?

Firstly, the Report flags that there will be yet another review of the efficacy of the R&D incentive by the newly created Innovation and Science Australia Board. This concession has been around in various forms since 1985 and has had almost as many reboots or variants as the James Bond franchise. The last thing that an innovative entrepreneur wants to see is uncertainty as to whether it will still be around to help finance their initial R&D so let’s hope it is enhanced and not diminished.

Secondly, the take up in ESVCLP has tended to be relatively low as high wealth investors with surplus cash want some control over their venture capital investment. This is not the case with this investment vehicle where your investment is generally capped to a maximum 30% interest. I do not see that radically changing because of the prospect of a 10% non-refundable tax offset. And the proposed rules on other investors are typically over-restrictive.

Thirdly, and perhaps most importantly, the Report does not address our internationally uncompetitive corporate tax rates of 28.5% and 30%. Additionally, the demarcation between those tax rate regimes can itself be a practical nightmare to navigate.

How does this compare to the United Kingdom’s 18% corporate tax rate to apply from 1 July 2020, and particularly to royalties and capital gains arising from intellectual property subject to their patent box regime which will likely be subject to further concessional tax treatment?

I would suggest not that well even if it is not an apple to apple comparison.

It’s true that businesses don’t do things solely because of a tax break but a whopping differential in tax rates could be a deciding factor in a mobile digital world as to where you want to invest your capital in innovative products and processes.

However, even if the proposed changes fall short of addressing all facets of our international competitiveness they do signal that our Federal Government is finally serious about instilling an innovation mentality and culture in our businesses, universities and the broader community.

Which leads us back to Mick and Keith.

Maybe the announced changes are not what we ideally want in becoming an international trendsetter on innovation but maybe it’s what we need to allow us to nationally lift our head and embrace being part of the new innovative digital economy.

And given where we have been perhaps that is enough at this point.

 

Public Administration in a globalised world: La Trobe Business School’s Zahirul Hoque takes leading role at 2015 Greater China Australia Dialogue

La Trobe Business School Zahirul Hoque

Zahirul Hoque (far right) at the 2015 Greater China Australia Dialogue Conference.

On 14, 15 and 16 November 2015, leading Australian academics were invited to attend the 2015 Greater China Australia Dialogue Conference, to share their knowledge with Chinese and Taiwanese scholars and practitioners working in public sector administration.

Why from Australia?

The public administration sector is changing rapidly in a globalised world. Creating structures in the public administration sector to ensure government programs and organisations use their funds efficiently and effectively has been shown to be crucial as a means to nurture good practices within a community. In Australia, the government has developed a highly efficient model that in time has also cultivated government agencies to start generating their own funds. By introducing performance audits along with performance management practices, not unlike companies in the private sector, Australian government agencies are no longer required to fall back fully on government finances.

In rapidly expanding economies such as China or Taiwan, these auditing and management structures are largely still being established. Government agencies are still heavily reliant on government money, often without being assessed thoroughly enough. By initiating the Greater China Australia Dialogue Conference, China and Taiwan want to sharpen ties with eminent Australian academics so as to exchange knowledge on the public sector, thereby equipping Chinese and Taiwanese scholars with the tools they need to engage with public sector reform.

Professor Zahirul Hoque

Professor Zahirul Hoque, who is La Trobe Business School’s Head of Department of Accounting, as well as the Executive Director of the La Trobe University Centre for Public Sector Governance, Accountability and Performance (CPSGAP), has more than twenty years’ experience in the Public Sector. During a workshop themed ‘Value for Money’, he presented two papers on performance auditing, performance management and parliamentary oversight.

In his presentations Professor Hoque highlighted how the use of performance auditing and performance management can create a strong sense of accountability at all levels of a public sector organisation. By introducing this auditing process that independently evaluates the effectiveness and efficiency of government undertakings, parliaments can not only see how much government initiatives are costing them, but also how those initiatives benefit the country’s economy and, in turn, the community.

The positive effect of performative auditing is notable around the world, with performance auditing increasingly become international best practice. As Professor Hoque concluded in his paper, there is a lesson in this for other nations. But the road is long: developing and implementing new practices takes significant work and effort over many years. Having guidance from experts in such a situation is invaluable. For China and Taiwan, sharing knowledge with scholars like LBS’s Professor Zahirul Hoque is an important step in this process.

La Trobe Business School Zahirul Hoque

La Trobe Business School Zahirul Hoque

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