Governments and innovation

Productivity Commission

Ralph Lattimore

Assistant Commissioner


Governments and innovation

NATSTATS 2010, September 16,Sydney

Productivity Commission 2

A NASA story

See: Barriers to Innovation and inclusionAndrew Thomas, Astronaut NASAYou-Tube video

“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”


Money is paper with pictures of dead national heroes on it


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


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


But government is a trivial source of ideas for business innovation

0 10 20 30 40 50 60 70

Within business

Clients

Suppliers

Same industry

Consultant

Higher education

Government

Private non-profit research

Commercial R&D enterprises

Research publications

Conferences, meetings & trade shows

Industry associations

Share of businesses

4.1


Governments are more important to large enterprises

8.3%

3.6%4.6%

3.8%0123456789

0–4 persons 5–19 persons 20–199persons

200 or morepersons

Employment size

Sha

re o

f bu

sine

sses

Business source of ideas

ABS 2010, Innovation in Australian Business, 2008-09, Cat. No. 8158.0


Government’s direct spillovers to business reflect its competencies

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Mining

Manufacturing

Electricity, Gas, Water & Waste

Construction

Wholesale Trade

Retail Trade

Accommodation & Food Services

Transport, Postal and Warehousing

Information Media & Telecommunications

Financial & Insurance Services

Rental, Hiring & Real Estate

Professional, Scientific & Technical

Administrative & Support Services

Health Care & Social Assistance

Arts & Recreation Services

Other Services

Ratio of government to suppliers as source of ideas


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


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?


Environmental needs suggest big gains from clever science and policy

96

89

96 97

94 95

0.84

0.86

0.88

0.9

0.92

0.94

0.96

0.98

Biodiversity Threatenedmammals

NoX SO2 Volatileorganic

compounds

Carbonemissions


R&D as foreign aid

Project Benefit/cost ratio

Conservation tillage for dryland cropping in China

205

Breeding and feeding of pigs in Vietnam 118

Controlling Phalaris Minor in the Indian Rice belt

275

Bio-control of the banana skipper pest in Papua New Guinea

258


Is there scope for improvement?

(Big, successful) firms strategically think about innovation throughout their company

Firms hire (some) people for their creative skills and encourages them to be creative

There are (pecuniary and non-pecuniary) rewards to individuals and groups from successful innovation

Firms recognise failure is necessary for good innovation

Firms measure inputs and outputs of innovation

Firms stop what doesn’t work

Firms are unapologetic imitators

Generally not

Partly

Partly

Generally

not

Sometimes

Not always

Partly

Best-performing firms Does government?

Firms know why they should spend resources on innovation Not always


The chance to be innovative seems to be of diminishing importance of job satisfaction in the public sector

0

5

10

15

20

25

30

35

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

0

10

20

30

40

50

60

70

80

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

Is being innovative important for your job satisfaction?

If yes, how satisfied with capacity of the job to allow innovation


What attracts public servants to their jobs?

0 10 20 30 40 50 60 70 80 90

Innovative/leading edge job

More experience

Development

Future career in agency

Good workpractices

Important work

Money

Job location

Make a difference

Matches interests

Job security

Very important Important


Is there scope for improvement?

(Big, successful) firms strategically think about innovation throughout their company

Firms hire (some) people for their creative skills and encourages them to be creative

There are (pecuniary and non-pecuniary) rewards to individuals and groups from successful innovation

Firms recognise failure is necessary for good innovation

Firms measure inputs and outputs of innovation

Firms stop what doesn’t work

Firms are unapologetic imitators

Generally not

Partly

Partly

Generally

not

Sometimes

Not always

Partly

Best-performing firms Does government?

Firms know why they should spend resources on innovation Not always


Ralph Lattimore

Assistant Commissioner


Governments and innovation

NATSTATS 2010, September 16,Sydney

Governments and innovation

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