Governments and innovation

1. Governments and innovation Ralph Lattimore Assistant Commissioner Productivity Commission NATSTATS 2010, September 16,Sydney

2. A NASA story “There are no requirements for this kind of approach” “This just isn’t anything we’ve done before” “You’re creating quite a stir with these new ideas” See: Barriers to Innovation and inclusion Andrew Thomas, Astronaut NASA You-Tube video

3. Money is paper with pictures of dead national heroes on it

4. Innovation is about more than material prosperity • Upper level goal - a happy and worthwhile society • Solving social, environmental, social justice and health problems • Meeting human drives for curiosity, ego, altruism • Meeting people’s material aspirations - ‘prosperity’ • New products and services • Making life easier • Better jobs Shows up as higher incomes, conventional productivity, and as ‘competitiveness’ – but these are not the goals per se

5. Several direct roles for government in innovation • As a supplier and customer (just like business) • Fostering a cultural interest in innovation • Some peculiarities in knowledge

6. But government is a trivial source of ideas for business innovation Industry associations Conferences, meetings & trade shows Research publications Commercial R&D enterprises Private non-profit research 4.1 Government Higher education Consultant Same industry Suppliers Clients Within business 0 10 20 30 40 50 60 70 Share of businesses

7. Governments are more important to large enterprises Business source of ideas 9 8 8.3% 7 6 5 Share of businesses 4 4.6% 3 3.8% 3.6% 2 1 0 0–4 persons 5–19 persons 20–199 200 or more persons persons Employment size ABS 2010, Innovation in Australian Business, 2008-09, Cat. No. 8158.0

8. Government’s direct spillovers to business reflect its competencies Other Services Arts & Recreation Services Health Care & Social Assistance Administrative & Support Services Professional, Scientific & Technical Rental, Hiring & Real Estate Financial & Insurance Services Information Media & Telecommunications Transport, Postal and Warehousing Accommodation & Food Services Retail Trade Wholesale Trade Construction Electricity, Gas, Water & Waste Manufacturing Mining 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Ratio of government to suppliers as source of ideas

9. Several direct roles for government in innovation • As a supplier and customer (just like business) • Fostering a cultural interest in innovation • Some peculiarities in knowledge

10. Some historical examples of innovations in government ‘provision’ we now take for granted • Old ones • property rights and laws • sewerage • national parks • police and national defence • Not so old • unemployment benefits, social welfare, public schools • urban planning • an independent central bank • public health insurance • More recent or impending (often social, not economic) • higher education contribution scheme • case mix funding • Job Network • dealing with indigenous disadvantage? • a national disability insurance scheme? • carbon abatement policies?

11. Environmental needs suggest big gains from clever science and policy 97 96 0.98 96 95 94 0.96 0.94 0.92 89 0.9 0.88 0.86 0.84 Threatened Biodiversity NoX SO2 Volatile Carbon mammals organic emissions compounds

12. R&D as foreign aid

13. Is there scope for improvement? Does government? Best-performing firms (Big, successful) firms strategically think about innovation throughout their company Generally not Firms know why they should spend resources on innovation Not always Firms hire (some) people for their creative skills and encourages them to be creative Partly There are (pecuniary and non-pecuniary) rewards to individuals and groups from successful innovation Partly Firms recognise failure is necessary for good innovation Generally not Firms are unapologetic imitators Partly Firms stop what doesn’t work Not always Firms measure inputs and outputs of innovation Sometimes

14. 80 35 70 30 60 25 50 20 40 15 30 10 20 5 10 0 0 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2003- 2004- 2005- 2006- 2007- 2008- 2002- 03 04 05 06 07 08 09 03 04 05 06 07 08 09 The chance to be innovative seems to be of diminishing importance of job satisfaction in the public sector Is being innovative important for your job satisfaction? If yes, how satisfied with capacity of the job to allow innovation

15. What attracts public servants to their jobs? Job security Matches interests Make a difference Job location Money Important work Good workpractices Future career in agency Development More experience Innovative/leading edge job 0 10 20 30 40 50 60 70 80 90 Very important Important

16. Is there scope for improvement? Does government? Best-performing firms (Big, successful) firms strategically think about innovation throughout their company Generally not Firms know why they should spend resources on innovation Not always Firms hire (some) people for their creative skills and encourages them to be creative Partly There are (pecuniary and non-pecuniary) rewards to individuals and groups from successful innovation Partly Firms recognise failure is necessary for good innovation Generally not Firms are unapologetic imitators Partly Firms stop what doesn’t work Not always Firms measure inputs and outputs of innovation Sometimes

17. Governments and innovation Ralph Lattimore Assistant Commissioner Productivity Commission NATSTATS 2010, September 16,Sydney