Earlier today Malcolm Turnbull and Christopher Pyne released their National Innovation and Science Agenda. This is not innovation policy, it is wasteful spending. And with a price tag of $1.1 billion, this isn’t a cheap experiment.
Recently you’ll remember Australia’s first (yay!) policy hack-a-thon. That exciting little social experiment explicitly sought to find ways to stimulate ‘innovation’, ‘agility’, ‘digital’, ‘disruption’, ‘start-ups’ and ‘coding’ by placing as many rent-seekers in one room as possible.
I was sceptical at the time, and I remain so. But I was at least diligent enough to wait until today’s announcement. So, let me take you on a tour.
We’re going to get more coding and STEM in our schools, an ‘incubator support program‘ ($8m), ‘global launching pads‘ in Silicon Valley and Tel Aviv, and, my favourite, a Digital Marketplace to make it easier for innovative SMEs to “do business with government”.
Isn’t rent-seeking wonderful to watch?
Innovation policy (as I feel I’ve argued ad nauseam) is about fostering economic freedom. This means getting the right institutions, lowering taxes, and deregulating.
Put simply, innovation policy is about government getting out of the way so entrepreneurs can do entrepreneurship.
Note that while it is positive ‘tax cuts’ get a look in, specifically targeting tax cuts in order to direct private investment will only distort entrepreneurial signals. If Australia wants to stimulate innovation these tax cuts should be across the board reductions — including payroll, corporate and personal income tax rates.
There’s further coverage of the Agenda at the Huffington Post, the Australian Financial Review, Sydney Morning Herald, and The Australian. Also, don’t forget this nice little summary over at Catallaxy Files. And see Mikayla Novak over at FreedomWatch:
With the package estimated to add another $1 billion to the overspending burden, think of the innovation statement, in truth, as a recombination of tired, old public sector strategies to override the market process by picking winners.
… All in all, mark this innovation statement down as a win for resurgent industrial policy at the expense of economic reform.
Many of these new reforms look suspiciously like those described in the book Start-up nation: the story of Israel’s economic miracle. Although I am a fan of Israel’s outputs, one thing I know as an economist is that taking their policies and blindly applying them here is a recipe for disaster.