The role of the state government in supporting entrepreneurship, start-ups and SMEs is the focus of a report Breaking new ground: Innovation in Western Australia, published following the parliamentary inquiry into WA’s innovation ecosystem which commenced in 2023.
Setting the scene
This comprehensive overview shows that while the flourishing start up sector has expanded 6-fold over the previous decade, the maturity of the innovation ecosystem in the west is still largely emerging. The current government, in its second term, aspires to promote innovation through a range of initiatives, notably:
- Innovation Strategy and Action Plan
- 10-year Science and Technology Plan
- The New Industries Fund ($25.8 M over 4 years)
- Investment Attraction Fund of $100 M
- Future Health Research & Innovation Fund (sovereign wealth fund backed)
A common policy driver is the diversification of the economy that has historically been heavily reliant on resources extraction and primary industries.
Key findings
1. Venture capital investment is lacking in WA
Establishment of a venture investment fund to accelerate development of the local venture capital market and attract private sector investment is proposed. Additional guidance is included for ensuring such a fund is competitive with other regions that have similar schemes. The importance of government having no direct involvement in investing in such schemes is emphasised, with suggested models for outsourced investment decisions. Investors in WA are unfamiliar with investing outside of resource and property projects according to evidence in the report. Programs providing high-net-worth individuals the knowledge, skills, confidence and networks to invest in start-ups are called for.
2. Universities are important ecosystem players
however it is widely acknowledged that structural and cultural barriers exist within universities which hinder collaboration and innovation. This issue is not unique to WA, as detailed in the federal government’s Research Commercialisation Action Plan . Current revenue pressure, workload of academics, and lack of recognition of innovation activities, are often cited as disincentives to commercialisation of research or partnering with industry. The WA government has interwoven universities into its Innovation Strategy and Action Plan, and findings in this report suggest they may need to do more to address some of the highlighted barriers.
3. Government procurement hinders innovation in WA
Purchasing by WA’s government was valued at $8.7 B in 2022-23, however the instruments governing the process limit opportunities for small business and innovative solution providers. Innovation-friendly policies which mitigate the perceived risk would allow the public sector to become an early adopter of solutions. Even if these changes were effective at a small level, the report states a very significant difference could be seen. It is noted that support from a one-off grant measured against the sustainable outcomes possible from a procurement contract are a significant step change.
Wide agreement across many submissions on this theme has prompted these recommendations:
- Simplify procurement processes, including documentation and guidance material.
- Consider targets to increase the participation of SMEs in public sector procurement processes.
4. Diversity and inclusion is one of the seven priority areas in the Innovation Strategy.
Data presented showed improvements on gender imbalance with 47% women participants in the ecosystem, increased from 24% in 2017, however, more needs to be done in these areas:
- venture investment – female founded start-ups received just 12% of capital,
- innovation grant recipients – 38% had female founders (4 year average),
- accelerator participants – 36% female.
The need for underlying culture change is clear and best practices from other states are highlighted, with a recommendation for the introduction of training, and a further recommendation for programs to tackle gender imbalance to be implemented in WA.
The final recommendation in the report is for development and implementation of programs to support indigenous business founders and innovators, which will build on existing initiatives Blak Angels, First Nations X and Make it Happen HQ.
What next?
This report highlights there is plenty of work to do to continue progress made and it should serve as a call to action. Marketing WA as an innovative state and appointing a Chief Entrepreneur should be focal points for planning the next activities.
The report includes details of extensive research findings from global exemplary initiatives that drive innovation, and these examples were well considered for their relevance in addressing WA’s challenges.
In March 2025 there will be an election in WA. Although unlikely that the sentiment of the wider electorate will swing on these issues, value for money and return to the state on investments will be on the agenda.