A new report has found that greater investment in innovation and digital technologies could increase Australia’s GDP by $37bn by 2024 and help grow the startup sector.
The study by PricewaterhouseCoopers calls for a better balance between investment in physical and knowledge based industries. It warns that too great a reliance on traditional industries like manufacturing, construction, mining and agriculture will result in missed opportunities.
Highlighting the dilemma, the report finds that despite $4.5bn provided in subsidies to the automotive sector, Holden and Toyota will close their Australian operations. By comparison, it suggests that a flourishing startup ecosystem could create 540,000 jobs by 2034, contribute 3.5 per cent to GDP and reduce the deficit by $24bn.
The report, Expanding Australia’s economy: how digital can drive the change, highlights the obstacles to unlocking the economic benefits of greater innovation and the development of a more friendly environment for startups.
It finds that Australia’s level of venture capital activity is low when compared to other developed countries with the US investing four times more in venture capital on a per capita basis than Australia between 2003 and 2013.
More than 50 per cent of research and development in Australia is targeted at physical asset industries like manufacturing, construction, mining and agriculture. While Australia has one of the highest proportions of researchers in higher education, it also has one of the lowest proportions of researchers based in enterprise. This has led to a failure to successfully commercialise innovation.
By contrast, the Singaporean government has prioritized advanced manufacturing and earmarked $500 million in investment and development in 3D printing and robotics over five years.
It has also created an attractive R&D investment environment with organisations receiving tax deductions for R&D between 100 and 400 per cent. In Australia, the rate is 45 per cent.
Dai Le is the business development manager for impact Management Group’s new TaxAid app which launched at the CeBIT technology fare in Sydney this week and which allows individuals to complete their tax returns over their mobile phones.
Ms Le said the concept was developed on the back of assistance provided from the ATO, the help of a small group of shareholders and income redirected from Impact Management Group’s lead product, GovReports.
She said governments needed to focus on Australia’s long term future by investing in science and technology based innovation. “The manufacturing industry is dying and our innovation and technology and services is where the growth is going to be,” she told Dynamic Business.
The government’s commission of audit has made a number of recommendations to more strategically target the roughly $9bn a year that is provided to support Australian research and innovation. There is media speculation Joe Hockey may slash the R&D tax deduction.
