Senator REYNOLDS (Western Australia) (13:13): I rise today to discuss issues that are near and dear to my heart. Those of you who heard my first speech will know them. They are the concepts of innovation, commercialisation and entrepreneurship. They are all concepts that are firmly embedded in the history and culture of Western Australia. Innovation and entrepreneurship, in particular, have been the backbone of development and prosperity in Western Australia since our colonial days because we have always been a trade exposed economy. These issues today remain critical not only for WA’s future growth but also for the growth and advancement of our nation. WA’s high-tech manufacturing industries, including shipbuilding, have for too long hidden their light under a very large bushel. This is because they are successfully competing on the world stage. They are successful because they are innovative and productive and, therefore, do not need subsidies.

Our competitive advantage in Western Australia and Australia is not in our labour costs but in the capabilities and the smarts of our people and in our ability to produce high-quality, bespoke goods and services. To put this into context, Australia’s national manufacturing growth over the past decade has been about 0.4 per cent per annum. In stark contrast, in Western Australia the manufacturing sector has been growing by 4.8 per cent per annum over the last 14 years and, today, in addition to the development and construction we do for the oil, mining and gas industries, Western Australia are exporting over $20 billion worth of manufactured goods per year. We have nearly 9,000 manufacturing firms who employ 91,000 Western Australians. Another little-known fact is that, after Silicon Valley, Western Australia has the second highest number of engineers per capita in the world.

If you listen to the prevailing eastern-seaboard narrative you would think that manufacturing has no future in Australia, but Western Australia is living proof that this is simply not true. We have the skills, we have the ingenuity and we have always had the roll-up-your-sleeves attitude in Western Australia to elevate our innovation culture into overdrive, but only if the right state and federal policy frameworks are in place. This is why I am so excited about the imminent release of the government’s innovation statement.

Today, the issue for all Australian governments is how to enable new ideas to flourish in Australia and then keep them here. While we have hundreds if not thousands of innovators, red tape and bureaucracy stifle their potential, which often sees Australian innovations and innovators move overseas, which, quite frankly, is criminal. Not only must we encourage and support innovation, governments must also be more innovative in their approach to policy development and service delivery. To this end, my Western Australian Senate colleague Zhenya Wang and I co-convened the Parliamentary Alliance for Research and Innovation, or PARI. Through our work with PARI, Senator Wang and I have been exploring the policy settings that enable innovative activity, and we have met with stakeholders across Australia to hear how they innovate, also, importantly, to learn what needs to be done to remove the many barriers they still encounter. We have compiled our findings into a comprehensive report, which we delivered to the Assistant Minister for Innovation, the Hon. Wyatt Roy, and we very much look forward to welcoming the minister to Perth in the coming weeks to see firsthand our innovation ecosystem.

Last week, PARI, in conjunction with the Parliamentary Friends of Defence group, which I co-chair with Gai Brodtmann MP, hosted an event for Mr Avi Hasson, the chief scientist of Israel. Mr Hasson offered his insights into Israel’s extraordinary innovation culture and now economy, and the steps taken to get there. Israel is unquestionably an international innovation powerhouse, which is quite remarkable for a nation of only eight million people. Today, Israel invests almost four per cent of GDP into research and development. In comparison, in Australia we invest just two per cent. Israel’s per capita levels of venture capital are 2.5 times higher than the United States, and 30 times than Europe. Israel has the highest number of companies listed on the NASDAQ outside of North America, and high-tech companies account for almost 50 per cent of Israel’s exports. The key point for us to note here in this place is that Israel’s success has not ‘just happened’, and we have much to learn from them and many other innovative nations who we are now in competition with.

Israel’s success has been the result of a determined effort from government, the research sector and its private industry to build a strong culture and a strong economy that supports innovation. Israel’s size and geographic location has also meant that it has always had to look further abroad when developing its export markets, which has also compelled it to build a responsive, well-equipped defence force, which is an organisation now embedded in and at the heart of Israel’s innovation culture. Israel’s chief scientist, Mr Hasson, is a world leader in innovation policy, and he has had a varied career across Israel’s finance and business sectors, as well as in the Israeli Defence Force.

In his address, Mr Hasson shared with us some of the driving forces behind the development of Israel’s innovation culture, and there were clearly many lessons for the many of us who attended. First of all, he emphasised the importance of collaboration in public-private partnerships. He pointed to the need to embrace risk and, a critical thing for Australia, the need to accept failure as part of the start-up and innovation culture. Failure is inevitable. Sometimes it takes two or three goes to make a good idea work, and not every project succeeds. That is something we have failed to, culturally and systemically, support in Australia. He also recommended building certainty by implementing a long-term funding model and support for the industries that outlive our current short political cycles.

What are the lessons for Australia today? We must put a long-term, bipartisan innovation policy framework in place that will see the government, the opposition, the private sector and our research institutions collaborate, embrace risk and invest for the long-term in research and development, particularly that which has a focus on commercialisation. If we do nothing as a nation we will continue falling behind the rest of the world, who are in absolutely fierce economic competition with us and each other. We have to innovate to create and sustain new jobs in Australia. If we do that it will improve our living standards and grow our productivity and our economy. In this regard, Mr Hasson’s insights are not only valuable but very timely.

I take this opportunity, on behalf on Senator Wang and Gai Brodtmann, to thank Mr Hasson for his attendance and sharing his insights. I also thank the Ambassador of Israel to Australia, Mr Shmuel Ben-Shmuel, and his staff at the embassy. I thank all of my many parliamentary colleagues who attended, in particular the Assistant Minister for Innovation, Wyatt Roy, and our Assistant Minister for Science, Karen Andrews. A special thanks go to my co-convenors, Senator Wang and Gai Brodtmann MP. In conclusion, our national prosperity depends on our ability to work together, to commercialise our innovative ideas, to retain our talented people and also to retain our industries of the future in Australia.