Boosting Australia’s Innovation

In rapidly evolving sectors such as artificial intelligence (AI), biotechnology, and renewable energy, the lack of adaptive regulatory frameworks makes it difficult for innovators to keep pace with global advancements. This is compellingly evident.

There is a lot we can do to improve on our global innovation scorecard. As reported by the World Economic Forum, Australia ranks 23rd out of 133 national economies on the Global Innovation Index, and we are not in the top three in our region. We come in at 22 out of the 51 high-income economies.

Innovation by its very nature drives our research and development, and as a result, governments need to place it at the centre of a long-term strategic and economic push.

They need to focus our collective efforts on how well-thought-out and implemented innovation can address productivity gaps across sectors. Yet despite the clear need for a coordinated approach, numerous barriers hinder progress – particularly in Australia. Removing these barriers requires a coordinated approach across government, academia and industry. We need to step up and consider funding mechanisms, regulatory challenges, market limitations and talent acquisition constraints.

As the Minister for Science and Industry Ed Husic made clear at the National Press Club in February, Australian research has huge potential that we aren’t turning into reality. Other countries have used their innovations for social and economic gain, but much of what is invented in Australia is being taken overseas to be commercialised.

In our roles as speech pathology and and defence robotics experts, and as Fellows of the Australian Academy of Technological Sciences and Engineering, we see every day, the transformative impact of innovation on people’s lives. Developing the evidence base around speech therapy and Cochlear implants has helped improve medical treatments and change the lives of children experiencing extreme hearing loss. This is the kind of progress that Australian innovation makes. And the impact is felt around the world.

Roundtable discussions over the past 18 months, attended by hundreds of senior technology and innovation leaders from industry, government, academia and peak bodies, provided actionable insights we have compiled into a go-to guide for enhancing R&D capabilities in Australia. ATSE’s Practical steps for boosting Australia’s innovation ecosystem report makes clear exactly how, together, we can once again grow this foundational feature of a competitive and productive economy.

A significant barrier to shifting the innovation dial in Australia is insufficient and inconsistent funding. Many promising ideas fail to transition from concept to commercialisation due to a lack of financial support.

Governments and industry both have a role to play in growing Australia’s investment in R&D. At all stages of the innovation process, financial support grows skills, technologies, new businesses and future-ready workforces. In Australia, gaps in venture capital availability, particularly for early-stage start-ups and deep-tech companies, hinder firms from growing and scaling up.

Government grants and subsidies tend to operate on short-term cycles, limiting the ability to pursue long-term, high-impact projects. Short-term funding cycles also misalign with the long-term nature of innovation. In fields like clean energy, biotechnology and advanced manufacturing, breakthroughs require sustained investment over many years.

ATSE Fellow Professor Andrew Blakers’ solar cells innovations in the 1970s and 1980s have transformed the world. Today, half of all solar cells in use in the world are based on the designs he and his colleagues pioneered decades ago. Support at the start of the process yields dividends in both short and long term. 

Above: ATSE Fellow Professor Andrew Blakers AO FTSE FAA with his ATSE Award — the Clunies Ross Technology Innovation Award 2024. Professor Blaker’s solar cells innovations in the 1970s and 1980s have transformed the world. Today, half of all solar cells in use in the world are based on the designs he and his colleagues pioneered decades ago. 

Additionally, fragmented policies across our federated system of government create inconsistencies in how innovation receives uplift and fit-for-purpose regulation.

Even when innovation turns into reality, innovative products and services often struggle to gain market traction. Successful scalability of commercial products comes to pass only when innovation actors align their research focus with market needs. In turn, this can drive tangible impact and maximise the return on their innovation investments. Cue effective government and industry support. Governments and large-scale enterprises can play a key role as early adopters by purchasing innovative solutions. Yet procurement policies often favour established players over start-ups and hinder small and medium enterprises (SMEs).

Australian businesses face difficulties in scaling up and accessing global markets due to trade barriers, logistical constraints and a lack of international networks. Compared with the US, China and the EU, Australia has fewer mechanisms in place to integrate SMEs into global supply chains, limiting their ability to expand beyond the domestic market.

A shortage of highly skilled workers in key industries such as advanced manufacturing, AI, and quantum computing poses a major innovation challenge. The competition for global talent is intense, and Australian visa restrictions, limited career pathways and competitive salary structures make it hard to attract and retain top researchers and technical experts.

Additionally, gaps in Science, Technology, Engineering, and Mathematics (STEM) education and training mean that many graduates lack the practical skills needed for high-tech industries. Strengthening university-industry collaborations, and expanding apprenticeship and re-skilling programs, would help bridge this gap and ensure a steady pipeline of innovation-ready STEM talent.

Australia’s business and investment culture tends to be more risk-averse compared with other innovation-driven economies. Many investors prioritise short-term returns over long-term innovation, making it challenging for start-ups to secure funding for high-risk, high-reward ventures.

This hesitancy contrasts with ecosystems like Silicon Valley, where venture capitalists are more willing to fund bold, disruptive ideas.

Addressing these barriers requires a multifaceted approach that includes long-term funding mechanisms such as stable, multi-year funding programs to support high-risk, high-reward innovation. Governments should implement adaptive regulations that keep pace with technological advancements and reduce bureaucratic red tape. Investments in talent, procurement policies, financing, performance measurement and education can transform the Australian technology and innovation landscape.

The outcome of all this will be a resilient, responsive and powerful sector underpinning our future health and safety. The next Cochlear implant, cancer screening test and AI technologies are out there – we need to create the system to unearth them.