Australia has the opportunity to re-think its industry and innovation policy.  After decades of the dominance of small government, free market, neo-liberal economic settings, the promise of widespread economic prosperity and productivity gains has not been realised.

New approaches are in evidence, even if low-key and experimental.

• Designing industry policy as the operational means of addressing ‘wicked problems’ like intergenerational indigenous disadvantage or advancing aspirational goals like the transition to green energy. 
• Commitment to measuring social wellbeing, as well as economic growth, in the national accounts. 
• Supporting ‘smart specialisation’ in advanced industries and technologies where Australia can demonstrate a competitive advantage. 
• And simply, backing the policy goal of sovereign capability, of Australia being a nation that makes things.

Opinion is polarised on these new approaches and policy-makers puzzle over the programs likely to have most impact on improving the opportunities and living standards of all Australians.

A common critique of Australia’s industry and innovation policy is that it lacks coherence by being fragmented over a myriad of programs and agencies, and its effectiveness is diminished as modest resources are spread too thinly. 

By specifying selected priority technologies that are to be the focus of the National Reconstruction Fund and the Industry Growth Program, the Australian Government is placing a bet on proficient supply and use of those technologies being Australia’s best chance for an enduring competitive edge.

But as eminent innovation researcher and adviser, Professor Roy Green, cautioned “the National Reconstruction Fund is a financial mechanism, not an industry policy”.

Australia’s industry policy must be an intelligent and flexible mechanism for transformational change that addresses the deficiencies in Australia’s competitiveness and productivity, its economic complexity and industrial structure and its knowledge and skills base. 

The end goal is not merely being a technology powerhouse, but home to a critical mass of innovative competitive enterprises, providing good jobs and opportunities for a skilled and adaptable workforce. This drives sustained economic prosperity and enhances the quality of life, living standards and sense of social cohesion for all Australians.

Stronger industry policy

What are the key factors for re-shaping a stronger and more coherent industry policy for Australia? 

Firstly, an understanding that innovation, in all its dimensions, is essential to sound industry policy. The success of a broad range of innovation practices can strengthen manufacturing enterprises and redress industrial decline; open up imaginative new business offerings and markets; and apply technologies to pioneer fresh competitive capabilities.

Too often, however, innovation is perceived narrowly— commercialization of break-through technologies and discoveries; or simply creativity and bold ideas; or in entrepreneurial start-ups. Such single solution thinking extends to industry policy itself. Advocates abound—- for more new-to-the-world inventions; investment in STEM; better business links to universities; Silicon Valley-style tech parks; more funds for R&D; access to capital for scaling-up high-growth firms.

These advocates are warriors. They make a strong case for their cause and individual solution. But the missing link is how these disparate answers can be knitted together to make a positive impact on both Australia’s social fabric and economic performance.

Re-thinking the elements and dynamics for a robust industry policy for Australia needs bridge-builders, not single-issue warriors.

Bridge-building and collaboration

The importance of bridge-building is often under-rated, being seen as a set of soft skills like making connections, networking and being a go-between. To the contrary, bridge-building is a hard-headed intangible asset, better described as purposeful and sustained collaboration. It encompasses skills in negotiation, knowledge synthesis and translation, relationship management, collective problem-solving, and ability to appreciate different and contrary views and to broker acceptable ideas and compromises.  

Proficiency in collaboration is increasingly highlighted by innovation researchers and analysts as fundamental to successful economic and industry development. (Green,2023a; Forbes,2024; Merchant and Kastelle,2023).

This type of collaboration sets a high bar; it does not happen by accident, nor by periodic joint work between enterprises, nor through online matchmaking services and the like. Collaboration that impacts industry policy outcomes is relational, not transactional. It presupposes shared interests, mutual learning and trust. It operates on multiple levels with diverse but related parties. Collaboration of this calibre is a mutually reinforcing eco-system of interactions and interrelationships between those with a common cause.

An observation by Professor Roy Green on university-business links is illustrative.

Professor Green said commercialization is not all about a linear pathway from lab to market, but setting up a place-based innovation eco-system. Universities should engage with business, but not on a university campus. He commented that the way of the future which multiplied the benefits to firms beyond a single research project locally was constant interaction, not just one-off research activity between industry and universities and other researchers.

Making this type of collaboration a reality requires deliberate action.

Fund collaboration infrastructure

An immediate and practical step is to approve funding for collaboration infrastructure in the National Reconstruction Fund and the Industry Growth Program. This involves investment in intermediary organisations tasked with creating, nurturing and implementing industry-building collaborative clusters and eco-systems.

Canadian policy analyst, Nick Scott, illustrates the value of networked governance, his term for collaboration infrastructure, especially to achieve “lofty missions” such as reindustrialization or seeding new industries in declining regions or growing robust innovation hubs and jobs in advanced industries.

Intermediary organisations, designed for this purpose of bridge-building, are essential.

The skill set of these intermediaries is described as having “the potential to drive meaningful change by uniting diverse stakeholders around shared long-term goals……intermediaries can pool resources, leverage diverse expertise, (utilize collective intelligence), and forge connections between government and across sectors to tackle problems from multiple angles.”

Intermediaries shape industry policy

The other powerful bridge-building action the Australian Government could take is to ensure collaborative network governance approaches are used in the processes for reshaping Australia’s industry policy. Skilled intermediary organisations need to do this work, not special interest groups.

Appropriate intermediaries to lead the collaboration task of making Australia’s industry and innovation policy stronger and more coherent is an open question.

Calling all bridge-builders!

REFERENCES

Howe, B (2023), Australia’s industrial policy to be ‘re-cast’ for net zero world, InnovationAus.com, 2 November 2023.

Industry Innovation and Science Australia (2023), Barriers to Collaboration and Commercialisation, Barriers to collaboration and commercialisation | Department of Industry Science and Resources, 27 November 2023.

Howe, B (2023a), NRF is a financial mechanism, not an industry policy, InnovationAus.com.au, quoting Professor Roy Green, 30 October 2023.

Forbes, T. (2024), Unleashing Australia’s Economic Potential: The Imperative for Synergistic Innovation Eco-Systems, LinkedIn, 12 February 2024.

Merchant, N and Kastelle, T (2023), Intangible Labs, webinar presentation, 31^st March 2023.

Scott, N. (2023), Third Place Organisations, Networked Governance, and Mission-Oriented Innovation, Medium, 4 July 2023.