Is Australia now the most boring place to do business?

Australia is in the midst of a great depression. Sure, we’re fiscally fine, but when it comes to creativity in business we’re flatlining.

The Australian Bureau of Statistics’ latest data release has confirmed a trend that has been spanning the better part of the noughties and beyond: Australia is in the clutches of an innovation drought.  

Each year, the ABS issues a survey to over 6,500 random registered businesses around Australia, asking them if they are engaged in ‘innovative activity’. From this sizable pool of respondents, it then extrapolates the total number of businesses actually innovating across the country.

As you would expect, the ABS definition for the term ‘innovation’ is rather loose. It defines it as:  “the introduction of a new or significantly improved good or service; operational process; organisational/managerial process; or marketing method”. By this definition, it really isn't that hard to be considered by our chief number cruncher as being ‘innovative’.

But despite this, less than half (42.2 per cent) of Australia’s 770,000 businesses are highlighted as engaging in some form of innovative activity. Oddly enough, that’s actually a good result when you look at the history of the study. 

In contrast to the rate of growth of the number of businesses in Australia, the percentage for firms innovating in this country has essentially stagnated. The industry breakdowns in the data are equally as startling. At best, only half of the businesses in each sector consider themselves to be innovating. It might as well be a countdown of Australia’s most boring industries.  

So, why is this the case?

An earlier report from the OECD found Australia’s overall rate of innovation has slipped since the 1990s. Though it notes this is a strange outcome, given we have all the right ingredients for innovation: A strong capital market and market competition, a vibrant research culture and skills base, and -- cue the eye roll from Australia’s battling start-up community -- “favourable” conditions for entrepreneurs.

The report reasons that our geographic isolation, a lack of seed capital for start-ups and low collaboration rates between key players in the market has resulted in the current innovation issue. To the dismay of the Abbott government, it didn’t outline devious ‘red tape’ as a cause.

Grattan Institute productivity growth program director Jim Minifie suggests the result may be a bit more nuanced. He says Australian firms rank closely to others in the OECD when it comes to innovation that doesn’t involve new technology.

“But we do have fewer reporting product market innovations and fewer collaborating with other firms on innovation,” he said.

Got a question? Let us know in the comments below or contact the reporter @HarrisonPolites on Twitter.