Australia 2030: Prosperity through Innovation
A plan for Australia to thrive in the global innovation race

Innovation enriches our lives

Australians now live much longer, healthier, and more fulfilling lives, and Australia has some of the highest standards of living in the world thanks in large part to technological progress.

The benefits that innovation has brought to our lives are all around us in the quality of life that Australians enjoy and the meaningful work we undertake. This is why innovation continues to be critical for Australia’s future, and why this plan is ultimately a plan for the sort of society and economy all Australians can aspire to create for themselves and their children by 2030.

In a world that continues to become more interconnected and complex, innovation is becoming more and more critical to national economic performance, job creation and standards of living. As the historical drivers of our productivity growth wane, we need to strengthen our capacity to generate value from our ideas and our inventiveness. Rather than being fearful of the disruption and change that technology will inevitably bring to all countries, Australians should see in these transformations the seeds of renewed growth that can sustain our enviable prosperity and quality of life. We are well placed to take advantage of these opportunities, and we can therefore be confident, but not complacent.

ISA has developed a strategy looking out to 2030 to advise the Australian Government on how to generate and capture more of the benefits of innovation for Australians. The strategy makes 30 recommendations which are framed in the context of five strategic imperatives:

• Education: Respond to the changing nature of work by equipping all Australians with skills relevant to 2030
• Industry: Ensure Australia ‘s ongoing prosperity by stimulating high-growth firms and raising productivity
• Government: Become a catalyst for innovation and be recognised as a global leader in innovative service delivery
• Research & Development: Improve R&D effectiveness by increasing translation and commercialisation of research
• Culture & Ambition: Enhance the national culture of innovation by launching ambitious National Missions.

As an enterprising and ambitious country, standing still is not an option. By putting our energies into creating a world-class Australian innovation system, we are giving our children the best chance at thriving in an Australia that successfully navigates a dynamic future.

ISA’s report to the Australian Government—Australia 2030: Prosperity through Innovation (the 2030 Plan) sets out the path to a more innovative Australia in 2030. However, innovation is not solely driven by government, so it’s up to all Australians to make our innovative future a reality. For further information on the 2030 Plan see ISA’s website: www.industry.gov.au/ISA.

Australia’s Opportunities and Challenges in the journey to 2030

The 2030 Plan highlights a number of themes that will shape the future landscape that our innovators will help us to create and to navigate:

Productivity will determine our future prosperity

In recent decades Australia has benefited from a favourable move in its terms of trade during an expansionary period in its exports of commodities. However, this contribution to national income growth is now forecast to be -0.5 per cent through to 2025. Australia must offset the impact of this expected decline in the terms of trade by developing new sources of income and improving domestic productivity and growth, to improve GDP per capita by 2025. Innovation drives productivity and in the long run, productivity growth is the key to increasing the living standards of all Australians.

Because improving employment growth and labour productivity alone will not be enough to close the growth gap, Australia will also need to improve capital and multifactor productivity. How well we use digital technology will be critical in this challenge. Digital technology increases the productivity of existing practices and creates new domestic and export markets and services that expand growth. Greater adoption of digital technology could increase Australia’s annual GDP growth rate by 0.7–1.2 per cent.

Many jobs will get better, but we will need different skills to do them

Over the past 70 years, the nature of work in Australia has transformed. The first major shift was a gradual transition in the industries Australians worked in: jobs in construction, manufacturing, mining and agricultural decreased while service sector jobs increased and now employ 80 per cent of Australians. A second shift is now underway involving an increase in interaction jobs (involving more complex human interactions and judgements) and a decrease in production and transaction jobs.

The skills needed to perform jobs are also changing. Digital skills and skills relating to science, technology, engineering and mathematics (STEM) are increasing in importance, and occupations currently requiring STEM skills are outstripping overall employment growth. At the same time, jobs across the board will require employees to spend more time using 21st century skills, including interpersonal, creative, problem-solving and entrepreneurial skills. These trends mean our education system needs to develop and support both STEM skills and humanities, arts and social sciences (HASS) skills that nurture interpersonal skills such as empathy and creativity.

Given the mix of future occupations is uncertain, but the skills needed to perform them are clear, it is important that Australia’s education system provides the right foundation of skills to give every child the best chance in life, and provides the lifelong opportunity to retrain throughout their working life.

Our companies face greater opportunities, but fiercer competition

Australian companies operate in a fundamentally different business environment to the one they knew at the start of the century. They have a greater ability to seize global market opportunities, enabled by digital technology and the rise of emerging country economies. They also face stiffer competition.

Australian firms are operating in an environment where companies that can solve a global need using technology can scale fast and generate significant financial value. The countries that generate globally successful firms benefit disproportionately in the global economy because the firms create most jobs in their local market. However, Australia’s business R&D investment is low relative to our peer competitor countries, highlighting that Australian companies will need to increase their efforts to scale, innovate and become more productive to thrive.

Technology will continue to transform our world

Opportunities in the next decade will be amplified and accelerated by the ubiquity of technology in our lives, the pace of innovation, and the scale of adoption. Digital technologies will combine with asset-intensive domains like healthcare and agriculture to create more value for consumers, and new methods for competing. A suite of new digital technologies, such as machine learning, optimisation, artificial intelligence, sensing, robotics, visualisation and distributed ledgers, are opening new opportunities for innovation.

Although Australian companies have generally been ready adopters of digital technology, there is still room for growth. Around 15 per cent of global goods and services are now traded on e-commerce platforms, such as Alibaba and Amazon. These platforms are also serving as the launch pads for thousands of small-sized and medium-sized enterprises, giving them the reach to challenge larger companies. Although there are significant benefits for businesses who can scale and adapt quickly, there are also risks for incumbents as new business models disrupt traditional markets and services. The key for Australia to capitalise on these opportunities is to combine our core strengths on asset-intensive physical domains with emerging digital technologies and economic structures.

We need to use a new toolkit to solve our biggest social challenges

Science, technology and innovation are instrumental in meeting Australia’s rising demand for public services, and tackling Australia’s biggest social and environmental challenges, including improving health outcomes, increasing public safety, and decarbonising the economy. Tackling our national challenges is not the job of governments alone. Australia has a world-class pool of researchers, and an increasingly powerful technological toolkit, created by concurrent improvements in the performance and cost of complementary technologies such as genome sequencing, low-carbon energy, machine learning, AI, optimisation, visualisation, sensors and robotics.

The strength of Australia’s local talent—and advances in technology and science—mean we need to raise our aspirations as a nation about what we can achieve. One example is the opportunity to integrate genomics and precision medicine into our healthcare system to ensure that Australia continues to be one of the healthiest countries on Earth. Genomics is the study of genomes, our complete DNA, and it will play an important role in improving health outcomes through early diagnosis, preventative health, and safer and more personalised treatments. Australian researchers can use genomics to build on advances in precision medicine to tackle key causes of death and disability, and to accelerate access to breakthrough treatments to deliver better and more affordable health outcomes.