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Statutory Review Report
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Innovation Council Act 1996
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June,2002
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Published by:
New South Wales Department of State and Regional Development
Level35
1 Farrer Place
SYDNEY NSW 2000
Phone: (02) 9228 3535
Fax: (02) 9228 3626
E-mail: businessweb@business.nsw.gov.au
Website: www.business.nsw.gov.au
The New South Wales Department of State and Regional Development is pleased to allow this
material to be reproduced in whole or in part, provided the meaning is unchanged and its source,
publisher and authorship are acknowledged.
ISBN 0 7313 3173 7
New South Wales Department of State and Regional Development
June2002
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Table of contents
Foreword
Need for review ........ ........ ......... .......... ....... ... ............. .................. .......... ................. ..... 1
Context of the review ... ............... .......... ........................... .................. .. ........ .. ...... ... ... .. 1
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Achievements of the last five years .............................................. ..... .................. .... ..... 2
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Appendix ...................................................................................................................... 7
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Issues raised during the course of the review and proposals for change ..................... 3
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Foreword
The Carr Labor Government came to office in 1995 with a clear commitment to create jobs,
investment and exports through increased innovation in the private and public sectors.
While acknowledging New South Wales' traditional strengths in the finance, insurance, property,
business services, wholesale trade, transport, and tourist and related services, it realised that the
education, health, agribusiness and manufacturing sectors all had significant growth potential.
The Government chose to set up an Innovation Council made up of eminent persons to provide a
business focus to research and development activities, to build bridges between the public,
private and tertiary sectors and to provide top level advice on the development of the knowledge
economy.
The Council has existed for five years and provided much valuable assistance and advice during
that period, as detailed in the following review report. It has contributed particularly to the
challenges of creating innovative industries in western Sydney and regional New South Wales.
My thanks to both current and past members for their continued efforts.
It is now time to build on the Council's strong achievements and move forward to meet new
challenges in the innovation area, not only for the next five years but well into the 2000s.
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The Government welcomes this current review and believes adoption of the proposals it contains
can only strengthen the lnn~tion Council's capacity to contribute to the commercialisation of
great ideas for New SouthoiWIIes.
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Michael Egan
Minister for State Development
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Need for the review
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Section 24 of the Innovation Council Act 1996 requires that a statutory review of the Act be
conducted after five years of its assent. It states that:
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1. The Minister is to review this Act to determine whether the policy objectives of the Act remain
valid and whether the terms of the Act remain appropriate for securing those objectives.
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2. The review is to be undertaken as soon as possible after the period of five years from the date
of assent to this Act.
3. A report on the outcome of the review is to be tabled in each House of Parliament within 12
months after the end of the period of five years.
The policy objectives of the Innovation Council are listed in Section 5 of the Act as:
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1. The object of the Council is to assist in the creating of jobs, investment, exports and interstate
trade by raising the level of innovative activity in New South Wales.
2. The Council's role in achieving that object is:
a) to investigate issues relevant to promotion of innovation; and
b) to facilitate the flow of information and ideas between the Government, industry and the
research community; and
c) to advise on proposed programs, and Government initiatives, that promote public and
private sector innovation.
Five years out is certainly an appropriate time to review how effective the Council's role has
proved to be in contributing to the development of innovative activity in New South Wales. The
terms of reference for the review required consultation with major stakeholders including
accessible members of the Innovation Council, the Department of State and Regional
Development and representatives of research institutions and technology businesses. This
provided both an opportunity to reflect on achievements and to develop other new approaches to
the promotion of innovation.
Context of the review
Obtaining an agreed definition of innovation is a difficult thing, as innovative activities span many
areas of industry, science, research and business. Prior to 1996, the government sought advice
in these areas from the NSW Science and Technology Council, the Manufacturing Industry
Council and the Technology Development Board. The Innovation Council subsumed many of the
roles of these pre-existing bodies. The Act defined the Innovation Council's objectives, and in
Section 8 prescribed its functions under 12 headings, covering investigation, advice to the
Department, Minister and Government, promotion and communication and alerting the public and
private sectors to opportunities.
In a paradoxical sense, this task has been more difficult because of the success of the New South
Wales economy. This State dominates the Australian economy and has a Gross State Product
(GSP) larger than the Gross Domestic Product (GDP) of all the South East Asian nations, with the
exception of Indonesia. Sydney's economy is larger than that of Singapore.
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New South Wales' GSP was $239 billion in 2000-01, accounting for 35.6% of the nation's GOP.
Victoria accounts for 25.6% and Queensland 16.3%.
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New South Wales' GSP grew by 2. 7% in 2000-01, compared to 1.9% for the Australian GOP.
New South Wales GSP has averaged 4.2% annual growth over the last eight financial years,
compared to 4.0% for Australia overall.
New South Wales accounts for 36% of Australia's services sector, with particularly high shares in
key industries like finance and insurance, and property and business services. New South Wales
also accounts for major shares of the national income generated by the wholesale trade and
transport and storage industries. It also dominates the accommodation, cafe and restaurant and
cultural and recreational services industries.
Almost 45% of the total value of New South Wales' exports are in the services sector. Victoria
relies more on manufacturing and Queensland on agriculture.
The "neatesf' definition of innovation offered during the review was as "commercialisation of
intellectual property''. Victoria and Queensland are committing large funds to research and
development to "commercialise intellectual property" in the high-tech manufacturing and
agricultural sectors. In a high-growth phase of its economic development, does New South
Wales really.have to worry much about promotion of innovation?
Probably not as much as Victoria or Queensland, but the potential to develop other sectors of the
New South Wales economy in parallel to its traditional strengths is necessary to maintain its
competitive advantage. New South Wales now has its $68 million funded Biotech strategy,
BioFirst, and has won the Information and Communications Technology Centre of Excellence for
the Australian Technology Park. It still has to respond to the issues of globalisation and
education modernisation, as outlined in the Vinson report. The Innovation Council could play a
significant role in these areas.
Achievements of the last five years
Since 1996, the Council has provided advice and support to emerging companies and produced a
number of reports to Government on innovation matters, including a significant strategy paper
outlining the potential for the development of the biotech industry in New South Wales. It has
also:
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participated in the development of the Australian Technology Showcase (ATS), which has
approved over 300 technologies, with Council members constituting review and assessment
panels to vet potential participant businesses;
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assisted New South Wales researchers seeking Commonwealth endorsement as Cooperative Research Centres (CRCs), through coaching and documentation review; and
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initiated the "IT Business Matchmaking in Western Sydney'' project, which aims to identify
business opportunities that international IT companies can provide, and match them with local
IT companies.
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The Council has established a strong working relationship with the Innovation Unit of the
Department of State and Regional Development. Unit members provide secretariat services to
the Council and work with Council sub-committees on specific projects. Council members
provide expertise to Unit members in the advancement of established government innovation
programs and projects, and participate in promotional and educational activities.
The Council has been highly supportive of innovation-led growth in regional New South Wales
and has held meetings in Bathurst, Wollongong, Newcastle and Wagga Wagga. It has used
these occasions to liaise with local businesses and promote innovative industry development in
these regions. To date, in its regional visits, the Council has focussed on promoting a more
innovative culture encouraging best practice in innovation, identifying and supporting key pivotal
projects, and showcasing and encouraging regional innovation.
It meets annually with the Minister for State Development and reports on its a.ctivities and
achievements.
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Issues raised during the course of the review and proposals for change
Does the Act need changing?
None of the stakeholders consulted (listed in an appendix to the report) thought that the Act
required re-writing. The business development object and the role and functions defined for
Council were seen as broad enough to enable it to operate effectively.
The sections covering general business were considered to give it sufficient authority. The terms
and procedure sections were also considered adequate. Some stakeholders suggested a
variation to the title: Innovation and Enterprise Council, or Innovation, Knowledge and Enterprise
Council, to establish more formally its role in supporting the commercialisation of ideas and
concepts.
Procedures for appointing members were considered suitable, with high quality members being
attracted. The majority of members consulted favoured the current two monthly intervals between
meetings being retained, that is, six full meetings per year.
There was a clear understanding that the Council had a role to advise and comment on
Government initiatives, but not to run programs or make policy.
Who should the Council advise and where should it report?
Sections 7 and 11 of the Act establish that the Council is subject to the control and direction of the
Minister for State Development and reports to the Minister. Section 8 also defines its advisory
functions to the Department of State and Regional Development.
Given the Council's object of assisting "in the creation of jobs, investment, exports and interstate
trade by raising the level of innovative activity in New South Wales", primary reporting
accountabilities to the Minister for State Development are logical. In the course of the review,
many comments were made concerning the desirability of a broader whole of government
approach to the promotion of innovation.
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Three sub-sections of Section 8 of the Act require the Council to advise the Minister and the
Government.
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Two [(k) and (1), respectively] are specific to programs and funding applications, but (b) requires
the Council to provide an ongoing source of intelligence, information, comment and analysis to
the Department, the Minister and the Government on issues relevant to the promotion of
innovation in the private and public sectors of New South Wales, and (c) to facilitate the
communication of information about innovation between the Government, industry and the
research community.
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Section 13 gives the Council considerable powers to obtain reports and information from any
public authority to assist it in the exercise of its functions.
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Innovation has potential impacts on multiple portfolio areas (Health, Education, Information
Technology, Regional Development, Fisheries, Western Sydney). The Act both requires advice
to be provided to the Government and also provides a mechanism for obtaining information to
guide in the development of such advice.
It would appear that there is potential for the Council to provide further advice to the Government
on a broad range of matters and thereby add value to the operations of Government.
The range of skills represented on Council and the specialist knowledge residing in its members
are not available elsewhere in government.
How should the Council set its work program?
The Act provides an object and broad functions for the Council, and its terms of reference mirror
the Act. What did not exist in 1996 was a clear set of references or requests from Government
for specific advice in particular areas of innovation.
Examples offered in the course of the review were the potential impact of nanotechnology on the
economy; how venture capital is attracted to innovative enterprises; and how teaching in schools
can stimulate innovative thought.
Without these references or requests, the Council set an initial work program linked to existing
Department of State and Regional Development (DSRD) programs. It set up standing
committees that, in some instances, shadowed these programs: Biotechnology, the Australian
Technology Showcase, Cooperative Research Centres, Regional Innovation.
It added Smart Manufacturing, Innovation Awareness and Capability, and Design to its range of
areas of interest and comment. Some of these committees met regularly, worked with DSRD
officers, provided substantial assistance to existing initiatives and produced reports and papers.
The current Chair, Professor Denis Wade, takes the view that standing committees are not the
best use of Council members' time and skills, preferring task-focused working parties with sunset
provisions. This is in line with Section 9 of the Act that states that:
1. The Council may, with the approval of the Minister, establish committees for the purpose of
assisting the Council to exercise its functions.
2. All such committees must be chaired by a member of the Council. It does not matter that
some or all of the other members of any committee are not members of the Council.
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Sub-section (2) provides the ability for committee chairs to bring in the best innovators from
various fields for assistance.
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Section 14 states that the Council may arrange for the use of the services of any staff (by
secondment or otherwise) or facilities of a public authority, which gives the ability to bring in the
best of the public sector for specific tasks.
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Inputs from beyond the Council could thus be used to assist in the formulation of a possible work
program and a suite of opportunities could be put forward to Government for its consideration and
prioritisation. Once Government has established its priorities, the Council could be referenced to
work and provide advice on a new range of innovative projects.
How should the Council network and promote its functions?
A process such as that described above for work program development would enhance the
Council's visibility with both Government and the private sector. Better relationships, formal and
informal, with the tertiary education and public sectors should result. It could then advise more
effectively, and address more fully the following functions described in Section 8 of the Act:
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(e) to promote and take part in activities and programs so as to increase the understanding in the
private and public sectors of New South Wales of the importance of innovation in improving
the international and interstate competitiveness of New South Wales businesses and in
improving public sector efficiency in New South Wales;
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(f) to provide the Minister and the Department with guidance on issues relevant to the conduct of
research and development in New South Wales, having regard to their effect on public and
private sector innovation in New South Wales;
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(g) to advise the Minister and the Department on appropriate Government responses to trends in
the provision of education and training, having regard to the impact of those trends on future
levels of innovation;
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(h) to advise the Minister and the Department on activities and programs that promote the
demonstration and commercialisation of new technology in New South Wales and, where
appropriate, to institute, or participate in the institution of, such activities or programs (in a
manner consistent with the other functions of the Council);
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(i) to promote activities and programs in such a way as to co-ordinate, so far as practicable,
those activities and programs with any Commonwealth Government initiatives, the objects of
which are similar to the object of the Council;
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0) to alert the private and public sectors of New South Wales to any new business opportunities
that arise from the exploitation of technology;
(k) to advise the Minister and the Government on programs that the Government could undertake
for the purpose of increasing the ability of new firms in New South Wales, in particular, small
to medium size gnterprises, to access technology and to manage innovation.
Outcomes could include:
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better cross-portfolio linkages into health, education, regional development, small business
and information technology agencies;
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increased access to Commonwealth Government initiatives and programs for New South
Wales enterprises;
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a more rational and integrated approach to research provision by the public, tertiary education
and non-government sectors; and
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development of a more strategic/less reactive approach to the growth and promotion of
innovative businesses in the State.
The Council has the ability to move across Government through a participative process. It can
add a dimension beyond bureaucracies' usual businesses, and contribute to key priority areas,
such as aquaculture, salinity and regionalisation. Risk and unconventionality is linked intimately
with innovation.
What level of support should the Council receive?
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The Council has formed an excellent working relationship with DSRD's Innovation Unit. Members
of the Unit have provided secretariat services to the Council for the last five years.
If the Council is to embark on a more ambitious work program and substantially lift its degree of
networking, it is suggested that it should be provided with a full-time secretary within DSRD.
Unlike Innovation Unit members, that person would have no responsibilities other than assisting
the Council to operate to its full potential.
As well as providing basic secretariat functions, the position could facilitate the linkages between
government, tertiary education and private sectors. It could manage the work program and assist
in the development of performance measures against which the Council could report annually to
the Minister. It could arrange briefings to the Council by the appropriate state bureaucrats and
seek meetings with Ministers who may be impacted by the Council's activities. It could manage
the Council's DSRD provided operational budget, and investigate opportunities for project-specific
funding from other sources. It could also assist with updating the Council's terms of reference.
Given the calibre of the current Chair and members, with some added support, the Council would
be in an even better position to support innovative business development in New South Wales
over the next five years.
Conclusion
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This review has found that the Innovation Council Act 1996 overall is still highly relevant and that
the goals and objectives for the Council remain appropriate to its intended purposes. Given these
findings, there is no need for amendment to the existing legislation at this time.
The New South Wales Government has established a very useful advisory body in the New South
Wales Innovation Council. There is evidence that the Council could do more of benefit to the
Government if it were given a relatively small amount of additional support.
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Appendix
Those interviewed in the course of the review
Members and immediate past members of Council
Professor Denis Wade (Chairman), Chairman and Managing Director, Johnson & Johnson
Research
Professor Tony Blake, Vice-Chancellor, University of Technology, Sydney
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Ms Narelle Kennedy, Chief Executive Officer, Australian Business Foundation
Mr Christopher Janssen, Managing Director, GPC Electronics
Dr Wanda Mackinnon, National Manager, Commercialising Emerging Technologies
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Dr David Fischer, Managing Director, Brandon Capital Pty Ltd
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Dr Claire Baxter, Director, Business Liaison Officer, University of Sydney
Professor Ron Johnston, Executive Director, Australian Centre for Innovation
Mr Loftus Harris, Director General, NSW Department of State and Regional Development
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Members of the research and business communities
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Dr Jonathan lzant, Director of Business Development, Garvan Institute of Medical Research
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Dr Kelvin Hopper, Managing Director, Aoris Nova Pty Ltd
Dr Tim Littlejohn, Managing Director, BioLateral Pty Ltd
Dr Mark Bradley, Chief Executive Officer, ATP Innovations Pty Ltd
Dr Kate Grenot, Director, BCP Investments Pty Ltd
Mr Ralph Nixon, Chief Financial Officer, Technico Pty Ltd
Professor Tony Basten, Executive Director, Centenary Institute
Dr David Garman, Executive Director, CRC for Waste Management and Pollution Control Ltd
Members of the NSW Department of State and Regional Development's Innovation
Unit
Mr Shane Coombe, Acting Senior Manager, Innovation
Mr Jamie Callachor, Manager, Innovation
Mr John McFarlane, Manager, Innovation
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