Underpin innovation with good policy

In its pre-Budget submission to Government, the Institute of Public Accountants (IPA) is pushing for public policy to be developed to encourage innovation amongst small to medium enterprises (SMEs).

Around 10 per cent of Australian businesses produce innovative goods and services, while between 16 and 21 per cent innovate in their underlying business processes.

“Even if Australian SMEs are not the initial investors or innovators, they can still capture some of the value of innovations developed elsewhere,” said IPA chief executive officer, Andrew Conway.

“New-to-country, and particularly new-to-firm, innovations are often more economically important for improving national productivity.  Innovation policy should include measures to encourage the diffusion and uptake of existing innovations to a broad range of firms, as well as encouraging new innovations.

“Firms that can adopt continuous improvement methods to imbed incremental innovation can generate large productivity improvements.

“SMEs are an excellent starting point. Large firms often find it hard to change their business model to capture value, but SMEs can change them more easily.

“Public policy to support innovative SMEs should take into account value capture and business model innovation more generally.  It is important that regulation helps firms capture value while balancing the benefits other firms receive from the wider diffusion of value.

“Talent not technology is the key.  Without addressing wider skills requirements, research indicates it is likely to create bottlenecks downstream in the innovation process.

“What can governments do?  They can provide strong research and development support, enabling better linkages between cutting edge universities and industry; provide support to firms to adapt existing technologies and innovation; and, encourage firms to develop their ability to search for new options, evaluate them and successfully implement and adapt them to their specific context.

“The Government’s Industry Innovation and Competitiveness Agenda is a good start and we all need to do our part to ensure its effective implementation and ongoing benefits,” said Mr Conway. 

For further discussion refer to the IPA’s pre-Budget submission 2015-16 on the IPA website, /2015budget