Australian businesses that are active innovators outperform non-innovators on a range of measures, including sales, value added, employment and profit growth.

This is one of the key findings of the
Australian Innovation System 2016 report, released by the Department of Industry, Innovation and Science’s Office of the Chief Economist on 30 November. The report explores the impact of innovation and related activities on business, industry and national performance.

It provides an overview of Australia’s innovation system performance across research and development (R&D), business-research collaboration, commercialisation and intellectual property.

The report found innovation-active businesses make up 45 per cent of all employing businesses but contribute to over 60 per cent of sales and employment. Compared to non-innovators, they are 40 per cent more likely to increase income and profitability, twice as likely to export, and two to three times more likely to report increased productivity, employment and training.

Australian businesses spent between A$26 billion and A$30 billion on innovation in 2014–15. Sales from innovative goods and services were valued at about A$60 billion, meaning on average, every A$1 invested on innovation returns A$2 in sales.

While Australia ranks fifth out of 30 OECD countries for the proportion of innovation-active businesses, the report suggests the country’s innovation performance is hampered by a decrease in business expenditure on R&D relative to GDP and low levels of business-to-research sector collaboration on innovation.

As a consequence of this, Australia’s new-to-market innovation is lower than other OECD countries and has declined since the pre-Global Financial Crisis era.

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