R&D not the only innovation answer

With no sign of research and development tax reform ever passing the Senate how fortunate for the government that it may not be the main game after all

Innovation and Science Australia reports that “business expenditure on research and development is not a strong predictor of innovation investment … sectors where many firms are actively innovating are more likely to have greater productivity, whether or not they undertake R&D.”

Innovation that isn’t R&D based includes business models, plus organisation and marketing practice.

“Given the correlations between non-R&D innovation and economic growth and job creation, there is an opportunity for government to rebalance its existing policy mix,” ISA suggests.

It recommends, “government reduce reliance on the R&D Tax Incentive as the primary support to businesses and complement support with direct measures (such as grants) to encourage non-R&D innovation investment.”

There are no sure-signs the research and development tax incentive changes (see eleventy-one CMM stories starting in the 18th century) now waiting on the Senate’s wishes will ever pass. This could be an opportunity for the government to move the grounds of the argument.