Posted 12/04/2021 by Tim Brennan
On 17 February 2021, the Government introduced the Industry Research and Development Amendment (Industry Innovation and Science Australia) Bill 2021 (IISA Bill) in the Senate. On 18 March 2021, the Bill passed the Senate and it was introduced into the House of Representatives on 22 March 2021. The main purpose of the Bill is to rename the statutory board called Innovation and Science Australia (ISA) to Industry, Innovation and Science Australia (IISA). The Bill also makes consequential amendments to other Commonwealth legislation resulting from the name change. While the addition of a single word may appear minor, it is indicative of the Government’s emphasis on ensuring that innovation policy is directed towards benefitting Australian industry. It also presents the opportunity to briefly reflect on five years of activity for ISA.
Establishment of ISA
In December 2015, then Prime Minister Turnbull and then Minister for Industry, Innovation and Science Pyne announced the establishment of ISA as part of the $1.1 billion National Innovation and Science Agenda (NISA). This was to help place innovation and science at the centre of policymaking. The NISA aimed to create an ‘ideas boom’ by providing a new framework for innovation policy in Australia.
However the antecedents of ISA stretch back at least as far as the Industry Research and Development Board established by the Industry Research and Development Act 1986 to ‘recommend grants to assist research and development in industry’. In 2007, that board merged with the Venture Capital Registration Board, to become Innovation Australia, which in turn became Innovation and Science Australia through the Research and Development Amendment (Innovation and Science Australia) Act 2016.
ISA’s role
As innovation policy stretches across multiple portfolios, ISA was tasked with providing broad strategic advice to government as well as an oversight and coordination role for innovation programs.
Oversight activities
ISA oversaw several committees related to science, research, and innovation policy (and IISA will continue this oversight), including:
- the Research and Development Incentives Committee, which advises on the operation of the R&D Tax Incentive program
- the Entrepreneurs’ Programme Committee, which provides assessments and ranking recommendations of applications for grant programs
- the Cooperative Research Centres Advisory Committee, which provides advice and recommendations on:
- funding applications
- ongoing progress and performance of individual Cooperative Research Centres
- the Innovation Investment Committee, which assists with ISA’s venture capital programs and
- the Biomedical Translation Fund Committee, which assists with the fund’s work in biomedical commercialisation.
Key reports
As part of its advisory role, ISA oversaw the release of several key policy reports on Australia’s research and innovation system, including:
- R&D Tax Incentive Review (April 2016)—tasked with identifying opportunities to improve the effectiveness and integrity of the Australia’s R&D Tax Incentive (R&DTI) program. The Government’s final response to the review was enacted by the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 —however, the Government’s initial response (see the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019) was heavily criticised for focussing on ‘Budget savings’ and for not adopting the recommendation for a collaboration premium (see Bills Digest to the 2019 Bill and Budget Review).
- Performance Review (December 2016)—ISA’s review of Australia’s innovation, science and research (ISR) system found that ‘strong performance in research is not matched by similar performance in commercialisation’. Additionally, the review found business innovation was incremental rather than major new-to-world innovation and that the education system was not providing young people with entrepreneurial skills.
- Australia 2030: Prosperity through Innovation (November 2017)—ISA’s strategic plan for the innovation system, contained 30 recommendations for action across education, industry, government, research and development, and culture and ambition. The plan projected that with the right mix of policy instruments, business R&D spending could rise at a rate of 8-10 per cent per year to 2030 (p. 96). In May 2018, the Government released its response to the 2030 Plan which included support for 17 of the recommendations.
More recent developments
At the end of 2018, the three-year term of ISA’s inaugural Chair Bill Ferris ended and he was replaced by Andrew Stevens (whose term runs until the end of 2021). After leaving ISA, Mr Ferris commented that many of the recommendations from the Australia 2030 Plan had not been acted on and, in 2020, he called for a renewed focus on innovation.
In February 2019, the Minister for Industry, Science and Technology Karen Andrews delivered a Statement of Expectations to ISA directing it to deliver two reports: one focussed on increasing business investment in innovation; and the other on the effectiveness of Government innovation investment and system performance. In February 2020, ISA delivered the first of these reports focussing on business innovation. Among the report’s findings were that Australian firms which invested in innovation experienced greater revenue and job growth. Additionally, ISA suggested that business innovation policy should not focus solely on traditional R&D but also on encouraging other types of innovation such as new processes, business practices, or marketing methods.
The second report, Driving effective Government investment in innovation, science and research was released by IISA in January 2021. It identified three recommended actions to increase the overall effectiveness of the Government’s ISR investment:
- the development of whole-of-government ISR priorities to drive investment decisions
- a 10‑year ISR investment plan aligned with these priorities, coordinated at the whole‑of‑government level and with effective evaluation processes
- a strategically balanced, whole-of-Government ISR investment plan to ensure short, medium and long-term returns.
In announcing the name change in October 2020, as well as the addition of five new board members, Minister Andrews described the IISA as ‘reinvigorated’ and added that it reflected ‘an enhanced Government focus on making science and technology work for industry’. As noted in the Explanatory Memorandum to the IISA Bill, this is part of the Government’s broader policy reform and will reflect an updated focus for IISA on Australian industry and its role in innovation and science.
The emphasis on industry-based innovation is also reflected in the Modern Manufacturing Strategy (MMS) identified in the 2020–21 Budget and a National Press Gallery address by the Prime Minister. The MMS takes a different approach to the 2030 Plan by prioritising support in key industries where Australia has a competitive advantage, known as the National Manufacturing Priorities.
IISA has recently supported the development of a road map for each of the six National Manufacturing Priorities: resources technology and critical minerals processing; food and beverage; medical products; recycling and clean energy; defence; and space. MMS funding streams have also opened to businesses and IISA will play a key advisory role in the provision of grants for projects related to research translation and supply chain integration.