Not long ago, our Prime Minister announced that it was time the lucky country became the innovative country. With the end of the mining boom it was time to roll up our proverbial sleeves and think our way out of it. To mine our minds, rather than our ground.
Since then, a glossy manifesto-style commercial designed to inspire our inner innovator has hit the air, but it has been largely overshadowed by talk of what lies in store for the Budget in May.
As an organisation dedicated to innovative thinking (ahem, number two most innovative company in 2014 according to BRW) we at M&C Saatchi wondered what things would look like if we combined the two and designed an 'Innovation Budget'.
But first a word of warning. We aren’t economists, accountants or politicians. We’re ad people. Our one qualification is a proven ability to think laterally – and hopefully sell our thoughts! So please, keep an open mind and join in the conversation.
And before we dive into how we’d spend $470 billion, a note on some innovative thinking practices.
Three things govern the way we approach innovations:
1. Insight – what problems are we trying to solve? What do we know about people?
2. Feasibility – we may think our idea is brilliant, but will anyone else and can we make it?
3. Viability – It is brilliant! But is it practical? Affordable? Doable?
There’s also a key behaviour – we constantly look at where we are and ask ‘how can we improve it?’, ‘what have we learned from our successes and failures?’. We don’t expect to get it right first time.
Back to that $470b or 25% of the GDP. That’s a lot of money, surely we can trim some?
What if we were to consider that instead of it being a cost to the nation (that people view taxes to be) it’s an investment in the nation? That we have close to half a trillion dollars of seeding capital in the greatest start up the world has ever seen?
And as any venture capitalist worth their salt would attest, seeding capital demands a return on your investment. So let’s apply the old ROI lens to our nation’s expenditure.
Which brings us to measurement and data. Fortunately, in this digital age we can track whether things are working. To make sure we are getting a return and not throwing good money after bad. Data surrounds us, but as anyone who has seen The Big Short will know, you first need to look for it.
Thanks to this wonderful analysis by the ABC we can see where the money is destined to go in 2016/2017 – based on the 2015 budget.
- Social security and welfare $170.72b - Assistance to the aged $65.5b
- Other purposes $99.13b – mainly to states
- Health $74.08b - Medical services and benefits $31.8b
- Education $34.06b - Non-government schools $11.2b more than higher education at $9bn and govt. schools at $6.2bn
- Defence $27.63b
- Transport and communication $9.3b
- Public order and safety $4.74b - Other public order and safety $3.6b
- General research $2.5b
- Vocational and industry training $1.5b.
Out of the $470 billion about $47 billion, just 10%, is on things that are genuine investments - Education $34.06 billion, Transport and communication $9.3 billion, General research $2.5 billion, Vocational and industry training $1.5 billion.
So we’d start by increasing those. Hell, let’s double it. But where will we get the money from?
And what can we do with the other 80% to make it more of an obvious investment?
Before we answer that, it’s worth checking out how we rate as an innovation nation.
Thanks to the Global Innovation Index we know where Australia stands in relation to other economies (17th – embarrassingly two spots behind NZ and worse, 15 places down from the UK in second, which allows us to ponder whether there’s a correlation between their expenditure and position in the world. It’s worth looking at how the GII is calculated.
It’s worked out as the average of Innovation Inputs and Outputs. Inputs gauge elements of the national economy which embody innovative activities grouped in five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. Outputs capture actual evidence of innovation results, divided in two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.
Combine 1, 2, 6 and 3 and you have your budgetary equivalents in: education, R&D and infrastructure.
Where we are currently spending a mere 10% of the budget. So, without further ado…
Education
Clearly education is key to an innovation culture, but it’s not just about how much we spend as where the money goes. The three R’s reading, ‘riting and ‘rithmetic would be joined by a couple of C’s Coding and Collaboration. Code is the language of the future and group working will get us there faster.
We’d look at the spending too, with a big injection at ages 3-7 where children’s brains are at their most absorbent and again at university where post puberty brains and exposure to the real world offer a huge opportunity for original thinking.
A study by Eric Hanushek and Ludger Wößmann (2007), Education Quality and Economic Growth, World Bank, shows a clear correlation between quality of education and growth – a loose parallel for innovation.
At the other end of the scale our Universities are falling behind. Three cheers to ANU for coming in the top 20 of the latest QS report, but sadly, Singapore has two ahead, at 12 and 13. Sydney is our next best performer at 46. What do they know that we don’t? Well, the world’s number one is MIT, a tech university. Enough said.
Infrastructure
This seems to fall victim to the grey area between states and federal. Had we started building a high-speed rail link between Melbourne and Sydney when we started talking about it 20 odd years ago we’d have a number of boom towns along the line which would have reduced Sydney’s traffic congestion and housing bubble. So yes, we’d be looking at some of those and we’d say yes to the Chinese plan to deliver high speed rail into Sydney from Newcastle.
Remember the Saritch Orbital engine?
Rather than cutting the CSIRO budget we’d double it – but with a catch – a dollar for dollar co-investment with local industry and commerce. Likewise the universities. A synergistic relationship between academic and business brains is essential. And as well as encouraging the institutions let’s encourage the individuals; the University of Tel Aviv shares patents with its staff on a 50:50 basis. One of the things we need is our own Silicon Valley – hell, it could have been Goulburn if we’d done the high speed rail.
The NBN was a great idea. It would appear to have been badly delivered, but is that politics or fact?
Ways of working
We were supposed to have ‘Replicants’ and ‘Hoverboards’ by now. The greatest innovation that we have seen is the internet of things.
But how come this invention, which has put instant knowledge at everyone’s fingertips and allowed us to work from anywhere hasn’t really changed the way we work? Sydney is spending billions of dollars on transport systems to get people to and from work when they could be working from home. Accelerate NBN and make our data costs competitive with the rest of the world.
And let’s remove the barriers that prevent great ideas getting off the ground. Not just the red tape, but the legal impediment to owning IP. How can start ups and more nascent enterprises compete with the establishment?
A little innovation in the way things are governed couldn’t hurt.
Health outcomes
An article in the SMH (12/2/16) made a very good point about vested interests in the health industry, the bulk of which is focused on treatment. Simply put, sick people are profitable people. There is a return on investment, but it goes to the industry.
For the budget, we’d be better off making sure people are less sick and require fewer treatments. So, we should increase expenditure on screening and health education – think how much the Quit campaign and Slip Slop Slap have saved the country. The RTA campaigns against drink driving and speeding have delivered great ROI. For example ‘Speeding, no one thinks big of you’ helped save 56 priceless young lives over two years and NSW $264m.
We should also shift the responsibility from the carer to the cared – health outcomes should be the result of a partnership.
We should use data more than drugs – it’s there, it benefits people, it can save money and lives. Hell, we should all have a health chip, or at least an app that tracks our activity, sun exposure, sleep, time in the pub, life stage (by the way, we’re neither medical practitioners or ethicists).
Immigration
We spend a lot of money ‘turning back the boats’ but surely the greatest economy in the world’s history, that has stayed ahead through the innovation of its people got something right when it said ‘give me your tired, hungry….’
But perhaps a big opportunity is in bringing our brains back home. Australia has a proud and high performing diaspora who leave for greater opportunities overseas and often stay. How can we lure them back? Outcomes from the the steps outlined above and below will help.
Law and order
The ‘crime industry’ is inherently innovative. Criminals are constantly looking for new ways to overcome the problem that what they do is illegal. They iterate and often what they provide is highly desirable. Certainly when it comes to the $7b each year Australians are spending on illicit drugs (according to the ABS 2010).
- The Economist, 13/2/2016 had an interesting lead article called ‘The right way to do drugs’. It promotes the legalizing of cannabis – the weed that accounts for ‘almost half of the world’s $300 billion illegal narcotics market’ - and explains how to do it safely. But why stop at Cannabis? The wonderful HBO series ‘Boardwalk Empire’ gave an object lesson in what happens when you criminalise something a large section of the public wants, but it seems the ‘war on drugs’ has learned nothing from the disastrous prohibition experiment.
The recreational use of drugs such as cannabis, ecstasy and cocaine is ubiquitous in Australia. Decriminalising these drugs would enable safer use, a new revenue stream and importantly, it would reduce the income of criminal organisations. It would also reduce the prison population and the lifelong struggle that many with a criminal record face.
Decriminalised, drugs would also be stripped of some of their cool cache among youth. We could build on this by funneling some of the extra revenue and reduced costs to outrageously clever viral campaigns aimed at teenagers to show how silly and sad the drug addled are - enlisting the profound power of peer pressure to work for rather than against us (as disclosed, I am an ad bloke).
Defence
Maybe we shouldn’t go here, but it does account for the lion’s share so we have to. Social security and welfare get $170.72 billion.
Our first thought is training. Stimulating training, which goes hand in hand with benefits.
Teach people how to think innovatively, identify areas of opportunity and then back the best ideas with a government co-funded Kickstarter program. It could turn out to be self-funding.
Finally, we’d refer our PM, Treasurer and all those economists trying to get it right to a book written by someone who knows far more than we do.
John Kao’s ‘Innovation Nation; How America is losing its innovation edge, why it matters and what we can do to get it back’.
Reading it they will be glad to see we’re not a million miles off the mark. And hopefully they have read it – it was written back in 2007.
And just for interest, here's the Global Innovation Index Top 10. Australia is nowhere to be seen.
1. Switzerland
2. UK
3. Sweden
4. Holland
5. USA
6. Finland
7. Singapore
8. Ireland
9. Luxembourg
10. Denmark
By Ben Welsh, creative chairman at M&C Saatchi.