I am often asked, ‘what is the government doing to drive innovation across the economy’?
This sounds like a contradiction - an oxymoron - because governments, despite their best intentions, are rarely hotbeds of innovation.
Nothing drives performance quite like the bottom line, so for business there is an incentive to continually innovate – to incrementally improve performance to maximise returns. The incentives are not as clear cut for governments.
But nonetheless government has an important role to play in supporting innovation.
We need to get the fundamentals right, to create an environment where there is an incentive for people and business to innovate. This includes balancing the budget and investing in the enablers of productivity and innovation like science, research, education and infrastructure.
Australia’s competitiveness as a high wage and high cost economy is contingent on this. As Australia’s Chief Scientist, Professor Ian Chubb, has pointed out, 65 per cent of Australia’s economic growth per capita between 1964 and 2005 can be attributed to improvements in our use of capital, labour and technological innovation.
This growth was, in large part, the result of a labour force skilled in science, technology, engineering and maths (STEM). Over the next 50 years STEM will be central to Australia’s economic competitiveness. But with only half of Year 12 students today studying science, down from 94 per cent 25 years ago, governments across Australia must continue to invest in STEM to ensure that our graduates can find employment in the fastest growing occupations – three quarters of which will require STEM skills.
In last year's Industry and Innovation statement the government announced the repeal of Labor's misguided changes to Employee Share Ownership Plans (ESOP) which made it prohibitively expensive for start up companies to give their employees a share in the business they were building. We are also promoting STEM in schools and are rolling out the NBN more quickly and at less cost to consumers, creating the plumbing for the digital economy.
These initiatives are all about providing Australians with even more opportunities to succeed - to create, to innovate and to be more productive.
Government also has an obligation to shrug off its conservative shackles and innovate its own operations and lead by example.
We can talk about the benefits of new technologies or we can realise the opportunities afforded by new technologies and use these as case studies of what can be achieved.
I regularly hear people talk about the uniqueness of government, that there is no point applying business principles to government problems because the two are somehow unrelated. While there are certainly differences, there are many more similarities between service delivery agencies and businesses in the services sector, including a number of common challenges.
One such challenge is investing in ICT in ways that enables business and government to deliver services that meet the expectations of customers.
This is an area where government can learn a great deal from business, particularly the banking sector which has invested heavily in technology to digitise services.
In compute terms, government is not very big. Just consider the sheer volume of social media transactions that occur every minute of the day: 280,000 tweets are sent, 72 hours of video is uploaded to YouTube, there are 2.4 million Google searches and 1.6 million likes on Facebook – and these figures will already be out of date.
And yet at $6 billion a year, 1.6 per cent of the federal budget is spent on ICT. When combined with the states and territories, government expenditure on ICT accounts for a third of all ICT spending in Australia. Given that two thirds of this expenditure is operational, there is considerable scope to not only realise savings, but to significantly improve the quality and availability of public services by improving the way government invests in and uses technology.
The Internet is the most accessible, productive and cost efficient way for government to deliver services to the public and for the public to engage with government. Driven in large part by the ubiquity of smartphones and tablets, the public expects to be able to engage with government seamlessly over the Internet.
If we are serious about promoting the benefits of innovation, government must improve the quality and availability of its own services.
This is why the Prime Minister and I last week announced that the government will establish a Digital Transformation Office (DTO) within the communications portfolio, to deliver all major services digitally by default, and ensure that all services can be completed digitally from start to finish.
This means that for all major services, in time, users will no longer need to visit a shop front or sit on the phone to a call centre part way through a transaction due to poor functionality.
Modelled on the UK's hugely successful Government Digital Services (GDS), Australia's DTO will transform the service delivery experience, operating more like a start up than a traditional government agency.
The DTO will be made up of small teams of developers, designers, researchers and content specialists who will use technology to make services simpler, clearer and faster to use for the public and business.
Consistent with its mission to innovate, the DTO will promote a flexible and nimble culture - one that values principles and frameworks over rigid rules that are more likely to stifle innovation than foster it.
And as digital services improve and customers choose to interact more and more digitally, the potential for government to realise large savings is also significant, particularly when you consider that agencies still send about 250 million letters and manage 150 million over the counter interactions a year.
Manual interactions of this kind are not only costly, they are less convenient, efficient and accurate than digital transactions, with research from the UK estimating that online transactions are 30 times cheaper than postal transactions and a staggering 50 times cheaper than face-to-face transactions.
But to realise these savings the DTO cannot be driven by savings for savings sake.
Savings will inevitably follow if services are so compelling, accessible and easy to use that the public actually seeks them out.
The DTO will also work with state and territory governments to identify opportunities for collaboration, to streamline service delivery across all tiers of government.
Now it is time to get the digital transformation underway.