Australasian Science: Australia's authority on science since 1938

Heal our Commercialisation Gap

By David Brockway & Alan Finkel

Collaboration, industry links, secondments, metrics and tax can all help to take R&D to market.

Australia punches well above it weight in R&D but, with a few notable exceptions, has a lesser record of commercialisation, with many Australian R&D outcomes taken to market overseas.

Australia needs to create new industries focused on high-value products, applying our undoubted excellence in R&D and driving it to market through innovation – the conversion of new ideas into products and services.

Manufacturing in Australia is a key to this commercialisation initiative, but for the past three decades manufacturing as a percentage of GDP has been in regular and significant decline. Almost daily we learn of the closure of manufacturing plants, with direct negative impacts on the Australian economy.

The flow of ideas and initiatives from R&D through to meeting – or creating – market needs through innovation and specialised manufacture rests on many factors. One of the most important is effective, long-term collaboration between researchers and industry.

Researchers are highly knowledgeable in the science and engineering underpinning a technology. Successful industry uptake relies on the involvement of these “champions” of the technology who will work extraordinarily hard to see it come to fruition. The importance of effectively engaging the champion of a technology cannot be overstated.

Innovation has a limited chance of success if a research institution simply licenses its technology to industry, rather than working closely with the industry to see it commercialised. Australian innovation has successfully created a number of new products where researchers have worked closely with industry, usually at the industry site and for a period of years, but this is not common. We don’t have a culture in Australia of research staff exchange or secondments with industry. This sort of exchange is common in the most effective manufacturing economy in Europe: Germany.

A key impediment to this sort of exchange in Australia is that researchers are usually not prepared to risk their careers, employment and security by joining a corporate venture. This is understandable, but we need to enable long-term secondment of research institution staff to industry.

Solutions could include:

  • allowing seconded personnel to return to their research institution after some years without loss of career opportunities;
  • permitting the time a researcher spends in industry-based R&D activities to be viewed as a positive enhancement of career prospects;
  • enabling researchers to take part-ownership of the new company; and
  • viewing “failure” of an innovation, if that occurs, as a learning exercise for future innovations.

Currently, under some circumstances, the CSIRO and Cooperative Research Centres can facilitate long-term secondments of research staff to support innovation in industry, but much more needs to be done to encourage this.

The challenge is greater for universities because of institutional barriers, particularly around criteria for promotion, which are based heavily on published refereed papers rather than contribution to the Australian economy. To meet this challenge, government funding authorities and universities should use broad measures of impact – such as industry engagement and patents issued – rather than relying on a researcher’s publication record as the only metric of research excellence.

Another impediment to collaborations is that granting ownership or stock options in a new company attracts punitive tax treatment. Granting options in a company creates an immediate tax liability for the employee despite there not being any income associated with the options or the ability to sell some to raise the money to pay the tax. This liability is compounded by the possibility that the options might not have a significant value in the future if the innovation on which the company is based is not successful. The obvious solution is to impose the tax liability after the options are exercised and sold, as is done in other countries, rather than when they are issued.

Successful innovation and the creation of new manufacturing industries in Australia can be achieved by facilitating long-term collaborations that will enable the effective uptake of our undoubtedly excellent R&D. But it will require a significant cultural change that must be supported by our funding agencies and research institutions.

Dr David Brockway FTSE is a company director and was formerly Chief of Energy Technology, CSIRO, and CEO of a Cooperative Research Centre. Dr Alan Finkel AM FTSE is President of the Australian Academy of Technological Sciences and Engineering, and Chancellor of Monash University.