Government should be corporate sector's R&D and innovation guinea pig

The Business Council of Australia says government procurement should be used to support startup and cutting-edge technology suppliers, as well as absorb the organisational risk of new technologies.
Written by Tim Lohman, Contributor

The Business Council of Australia (BCA) has called on the federal government to use its enormous buying power to drive innovations among the country's small and medium enterprises, while at the same time shielding business from the risk of untried innovations.

The government should also overhaul regulation and industry standards so that they stimulate innovation, move to realise the benefits of the digital economy, and re-examine regulation to better facilitate digital commerce.

The calls are among 93 recommended actions across nine policy areas that the peak business lobby group has outlined in its Action Plan for Enduring Prosperity (PDF) report. The report identifies what the BCA believes are major weaknesses in the Australian economy, and how the government should act to remedy them.

In the area of IT, the Australian government should begin by taking its lead from the US government's Small Business Innovation Research Programme (SBIR), which requires federal agencies to allocate a portion of the contracts from their research and development budget to SMEs. These agencies effectively become the "lead customer" in the case of a first-of-a-kind service or a trial product.

"As a lead customer, government undertakes the organisational risk of untried innovations and at the same time signals endorsement to subsequent customers or investors in the innovation space," the report said. "This confidence stimulates market demand for the innovation."

By way of example, the BCA points to how the government's adoption of innovations around ePortals, online services, and mobile applications could act to both trial innovations and overhaul government service delivery.

The government should also adopt a "digital first" policy, which would increase the government's use and application of innovative IT in the public sector and reform service delivery among agencies such Centrelink, Medicare, and the Australian Taxation Office.

Pointing to the digital economy, the BCA said it is essential that regulation focuses on enabling, rather than restricting, both innovation and participation.

A major area of the digital economy, e-commerce, could be stimulated by developing regulations and systems that promote better online security and trusted identities, as well as developing principle-based regulation that provides protection to consumers and service providers.

The BCA's calls echo those of the Australian Computer Society (ACS), which this week released its set of recommendations for promoting the digital economy. Chief among them is the creation of an IT Ministerial Advisory Council to better inform the next federal government about the digital economy and how to tackle major industry challenges.

The government has also been called upon to adopt the recommendations of its Inquiry into IT Pricing, including the removal of geo-blocking, to help boost the productivity of the country's businesses, IT professionals, and research sectors.

Turning to Australia's R&D sector, the BCA said that the government should protect funding for Australia's research and university sector, and for public innovation organisations the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and National ICT Australia (NICTA).

Addressing the issue of skills, the BSA said education curricula should also be overhauled to ensure that the country has access to technical aptitude in science, technology, engineering, mathematics, and IT, as well as soft skills like adaptability, design thinking, and creative thinking.

Rules around finance should also be improved by making it easier for banks and other lending institutions, venture capital, angel investors, crowdsourcing, and/or government grant programs to fund startup companies.

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