The missing piece of NSW’s big innovation plan
New South Wales is on track to become Australia’s first trillion-dollar state economy by the end of the decade, and the government wants to get there sooner and double the mark over the next 10 years by developing innovation districts and key sectors that he believes will produce better jobs, higher wages and more complex exports.
Investment NSW this week presented the plan to private investors, conceding that venture capital remains a crucial missing piece in the state by global standards.
The pitch was that the government would use its own annual investment of $400 million in R&D – low by Australian and OECD standards – more strategically to develop a handful of priority areas that will “accelerate” new technologies that accelerate high value sectors but also have a broader impact.
“Our strengths in materials and chemistry and in healthcare mean we have a competitive edge in implants and prosthetics,” Investment NSW chief strategy officer Eamon Waterford offered as an example. to a room full of private investors in a Barangaroo skyscraper on Tuesday.
Mr Waterford headlined an event hosted by the Australian Investment Council, a leading private equity group representing $37 billion in assets under management and a further $13 billion in private equity and in venture capital ready to be deployed.
“One of the challenges and opportunities New South Wales faces is that while some of the industries here have readily available capital that they can access to grow and become a global leader, there are many sectors where we have competitive advantages that perhaps don’t have access to the capital they need,” Mr. Waterford said.
“It’s quite expensive for them to grow.”
The New South Wales government has identified four key technology themes – digital, materials and chemistry, biotechnology and energy – which span a dozen sectors, and 39 specific applications such as quantum computing, nuclear science and fintech where the state enjoys a competitive advantage. .
The areas, detailed in a 20-year R&D plan this month, are a signal to investors of where government support is heading and where more private sector activity should follow.
“We are interested in the growth of particular sectors where there might be market failures where government can play a role,” Waterford told investors.
Investment NSW is spending the rest of the year trying to ‘catalyze’ private investment in priority areas as it builds several innovation districts like Sydney’s Tech Central to speed up the whole process.
He told investors that New South Wales is already an “economic powerhouse” that offers the only state in Australia with a AAA credit rating, a large and well-educated population, several world-class universities, the home of most Australian startups and several tech unicorns, and a “killer combination” of excellent livability.
Sydney in particular is already a powerhouse of innovation, Waterford said, and should be mentioned alongside world leaders like Tel Aviv, London and New York.
“Obviously, we always think of Tel Aviv as this incredible world leader when it comes to its innovation ecosystem. And that’s it, it’s really good. It has around $26 billion in market capitalization for its unicorns. But Sydney has $45 billion, 70% more than Tel Aviv,” he said.
“It’s a story we don’t tell enough.”
Mr Waterford said it can be difficult to sell New South Wales to investors as a place of innovation, as the natural advantages that cultivate the state’s image as a tourist destination can overshadow its ingenuity.
“I think sometimes it can kind of crowd out a more nuanced conversation about the enterprising nature of Australians. The fact that we lived for 65,000 years in a space quite hostile to human existence and made it work for ourselves [shows] that we are resourceful in this area,” he said.
“We invented Wi-Fi. We do these cool things here and that’s a message that’s harder to sell when the photos you have are of beaches and koalas.
Similarly, the perception of Australia as “the lucky country and not the hard-working country” showed that Australia had become complacent in promoting its innovation credentials to investors, according to Mr Waterford. .
The state also faces the challenges of an aging population and declining expected productivity. The government’s own Innovation and Productivity Scoreboard in April acknowledged below-average public investment in R&D and university-industry collaboration, as well as relatively weak venture capital activity.
As for how success will be measured in the years to come, Waterford told InnovationAus.com it comes down to investment in innovation, export complexity, “good” jobs and wages.
“Unemployment is below 4%. So simply creating more jobs is not a particularly useful thing for government in this environment. They must be good jobs. They have to increase the productivity of jobs, they have to help increase the complexity of our economy,” Mr Waterford said.
Mr Waterford said his agency follows the four measures and takes a strategic approach to employment.
“There is a measure around job creation in our target sectors in particular. So there are areas where we know [we can do more]. We need more quantum jobs [for example]. We are not going to have a significant impact on the unemployment rate via the quantum computing sector, but we have to develop this sector – we know that,” he said.
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