A precinct by any other name…


A new initiative from the Federal Government’s AusIndustry department will see $504.5 million committed to the development of new innovation precincts in key industry sectors across Australia.
AusIndustry is in the process of rolling out a series of consultations across Australia on the new Innovation Precincts initiative, which will bring industry, research institutions, start-ups and SMEs together to build capacity in order to compete more effectively in international markets.

Ten precincts will be established: up to five in areas of ‘competitive advantage’, or industries that already have a significant impact on the Australian economy and can demonstrate capacity for future growth in the sector; and up to five in areas of ‘emerging opportunity’, or industries that can demonstrate Australia’s growing capability in a specific sector area. Two competitive advantage precincts – in food and manufacturing – have already been established.

The precincts will attract annual funding for their day-to-day administration (up to $4 million for established industries and up to $1.5 million for emerging industries for up to five years) and will then be eligible for funding of up $20,000 to $10 million in government funding for successful projects. Some form of matched funding will be required from participating organisations. Activities that are eligible for funding include collaborative projects with the capacity to increase an industry’s export prospects; projects that have the potential to improve a precinct’s prospects as a result of government funding; and service delivery pilot projects that the precincts could reasonably offer as fee-for-service down the track.

So what is a precinct? According to AusIndustry, these precincts are set to be virtual national networks that will be led by industry organisations and will foster collaboration and support for organisations and research institutes with a vested interest in a particular sector area. In this context, the term ‘precinct’ does not refer to a physically-located hub where business gather, although each precinct will have a strategically located head office in the Australian state or territory most relevant to its operations.
The precincts are expected to be a connection point through which businesses can link with other like-minded organisations, business advisors, educators, research organisations and government to foster productivity. They will also be expected to develop a long-term strategy for, and provide services that are relevant to, the sector in which they operate, and to provide Growth Opportunities and Leadership Development (GOLD) services for precinct SMEs ‘assessed as having high growth potential’. Each precinct will be governed by a Precinct Board.

The application process will see organisations collaborate on the Stage 1 application process, in which ideas for precincts will be submitted and reviewed; Stage 2 will see the government identify key areas of interest and ask applicants to collaborate with other groups who have identified similar opportunities.

So what do we think?

At a base level, the concept is good. Industry-driven innovation, stronger industry networks and better defined pathways to entry in international markets can only be a good thing for Australia productivity. Mentoring of SMEs through the provision of growth and development services is a great way to encourage expansion at the small end of the industry scale, and collaboration across sectors that places a high value on research is very valuable in terms of growing industry capacity.

However, there are some clear issues facing the program so far. Many of the key terms on which the program will be run lack clear definitions, or have been gifted with terminology that misrepresents their purpose. For example, the use of the word ‘precinct’ in this program describes a virtual national network, rather than a geographical hub of sector-based activity, such as we see in places like Silicon Valley. While this may seem like a minor issue, the fact that most precinct headquarters may consist of a single office, and that the annual funding bestowed on precincts is not to be spent on infrastructure, makes the terminology extremely misleading for participants seeking a physical location in which to network and build strong industry relationships.

Of equal concern are vague guidelines around how intellectual property will be managed. Vague murmurs from government reps of IP being ‘shared’ between collaborating organisations are unsatisfactory to almost everyone involved. Additionally, for industry organisations who would normally be competing within the same market sector, the idea of sharing ideas and outcomes is not always a palatable one. Currently, industry associations play an important role in connecting direct competitors and identifying opportunities for collaboration. The precinct program has a fine line to tread here – investing in existing industry associations via the precinct funding model would be a smart move, particularly as these associations could significantly extend their reach and impact as a result. What we don’t want to see is a doubling-up of roles and responsibilities as a result of government trying to reinvent the wheel.

Further concerns remain around the way in which precincts will prepare Australian organisations for global markets. Despite the over-arching premise of the scheme being a need for Australia to engage more effectively overseas, there was almost no mention at the consultation sessions or the supporting documentation of how the precincts will be the conduit through which these sorts of relationships are developed.

Many of these issues may be resolved as a result of the consultation sessions – AusIndustry is seeking feedback from interested parties and seems responsive to the idea that some of these concepts still need more thinking and discussion in order to be developed fully. But with the Stage 1 deadline looming in May of this year, there is very little time for meaningful changes to be introduced.

Government has a patchy track record – only a few months after announcing a series of clean technology programs, funding was suspended (although to be fair, it was reinstated some two months later). This time around, with a federal election looming in September, it’s hard not to look at the Innovation Precincts program as a bit of electioneering. It’s also fairly easy to extrapolate the likely outcomes if we undergo a change of government later this year – is it a worthwhile investment of time and energy for government and industry alike if the funding rug might be pulled out from under us in only a few months’ time?