Networks and Collaboration4.3 Government Engagement
4.3.1 Businesses receiving government financial assistance
In 2019–20, nearly 8 in 10 Australian business (78.3 per cent) received financial assistance from either Commonwealth, state/territory or local governments. This represents a dramatic increase from the previous year when only 12.8 per cent of businesses received assistance, reflecting the scale of fiscal stimulus deployed during the initial stages of the COVID-19 pandemic. Extensive use of government financial assistance was reported across all business sizes, most notably for small and medium businesses with 5 to 199 employees. All industries have seen sharp increases in the use of government assistance, with large relative increases in Financial and insurance services and Rental, hiring and real estate. Businesses that relied most heavily on government financial assistance were those operating in Arts and recreation services (86.3 per cent) and Accommodation and food services (85.0 per cent). Across all businesses, assistance was most commonly dispensed in the form of Subsidies followed by Tax concessions.[122]
4.3.2 Innovation-active businesses receiving public support for innovation
Australia has the third lowest proportion of innovation-active businesses receiving public support for innovation in the OECD (only 10.1 per cent in 2016–17, compared to 25.0 per cent for the latest available OECD average). The data only capture businesses pursuing product and/or process innovation.[123] For context, it is important to note that Australia has a large services sector, and that ABS estimates cover a broader range of business innovation activity than product and/or process innovation. For 2017–18, the ABS data show that some 49.8 per cent of all Australian businesses were identified as innovation active.[124] That said, the OECD estimate for Australia seems low relative to other countries, so the potential benefits and costs of expanding the take-up of the relevant business innovation initiatives may be worth investigating further.
4.3.3 Innovation-active businesses with public procurement contracts
Public procurement affects innovation by influencing the demand conditions in which businesses innovate and compete. The use of public procurement as a tool of innovation has been gaining in popularity in recent years, and there are some notable examples of long-standing successful adoption of such policies. However, the evidence base on the effectiveness and economic value of this type of support is surprisingly sparse. A recent survey of evidence suggests that the barriers encountered by businesses generally correspond to the deficiencies addressed by procurement policies but are not sufficiently addressed by them.[125] In 2014–15, Australia’s share of innovation-active businesses with public procurement contracts was estimated at 21.7 per cent, below the latest available OECD average estimate of 26.1 per cent. Countries with the highest proportions include Finland, Iceland, Austria and Norway.[126] The data only relate to businesses pursuing product and/or process innovation.
Footnotes
[122] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[123] OECD (2019) Innovation indicators, OECD Publishing
[124] ABS, Characteristics of Australian Business, Cat. No. 8129.0, Cat. No. 8158.0, Cat. No. 8166.0, Cat. No. 8167.0 and ABS.Stat
[125] Georghiou L, Edler J, Uyarra E and Yeow J (2014) Policy instruments for public procurement of innovation: Choice, design and assessment, Technological Forecasting and Social Change, Volume 86, July 2014, Pages 1–12
[126] OECD (2017) Innovation indicators, OECD Publishing