Australia needs a public policy rethink to realise the massive potential for innovation in the SME sector to achieve increased national productivity and economic prosperity, according to the Institute of Public Accountants (IPA).

The Australian Small Business White Paper recently launched by the IPA in conjunction with Deakin University through the IPA Deakin University SME Research Partnership, raises the subject of innovation and its direct correlation to productivity.

“Our research tells us there is insufficient cooperative behaviour between Australian businesses, creating a barrier to the spread of existing innovations to a wider cross-section of firms; this represents a significant lost opportunity to the economy,” said IPA chief executive officer, Andrew Conway (also co-author and chair of the research partnership).

“Our Small Business White Paper proposes a number of initiatives to promote increased innovation across the Australian SME sector including more government support for research and development by small and medium-sized firms; and government support for firms to adopt existing technologies and innovation.

“We also believe there needs to be better linkages between cutting-edge research universities and industry.

“Firms should also be encouraged to adopt continuous improvement methodology to embed incremental innovation as this will generate large productivity improvements more quickly.

“In addition, the focus of public policy towards entrepreneurs should shift from quantity to quality, with scarce resources directed towards a smaller percentage of firms that have the potential to grow.

“To help facilitate this, the Government could provide tax breaks for companies acquiring new technologies not developed in-house, along with a tax allowance for companies investing in intellectual property protection in-house, and a tax allowance for companies that generate licensing income from in-house new technologies,” said Mr Conway.

More details of the Australian Small Business White Paper can be found at