Australian Innovation Research Centre

Strategic Innovation Research

Professor Jonathan West, founding director of the Australian Innovation Research Centre, thinks Tasmania has the potential to redefine its economic development by adopting an innovative approach to its Agri-food Industry.

“For 74 years Tasmania’s ‘hydro-industrialization’ drove the state’s economic development. Government-built dams and power stations lured energy-intensive private manufacturing industry to the state, that in turn transformed Tasmania from an isolated backwater into a sophisticated industrialized community. It was the mainspring in the state’s economic development clock. In 1983 that clock stopped dead,” says Professor West. In the 30 years since the High Court decision to terminate the Franklin Dam Project, Tasmania has struggled to find a new identity, he adds.

Professor West believes the Tasmania of today needs a new innovation strategy, one that will not only increase the quantity of economic activity but also its quality. One that will improve and develop new products, services and processes, improve efficiency and create new markets. “We need to continue to develop products that we as Tasmanians are proud of, like our wines and truffles,” he says.

With the development of high-value food products catering to growing markets for quality, Professor West believes Tasmania has a bright future. By developing this industry as a series of decentralised, small to medium scale businesses, a new class of entrepreneurs will emerge and society will be much less socially and economically divided.  “When people have a stake in their community they change their outlook, they want to be involved and become concerned citizens rather than just a workforce for a large corporation,” he explains. Although Professor West admits this may sound like a utopian dream, he is adamant it is achievable, especially considering Tasmania has one of the highest levels of community involvement in the nation.

Professor West sees government playing an important role in this process by providing policy platforms that encourage innovation, which in turn enables quality economic growth. He believes many government planning schemes would benefit from an innovation strategy, as it helps better coordinate infrastructure and economic development with environmental and social interests.

Government, it seems, is listening. Professor West was asked recently by the Tasmanian Government to research proposals for an innovation-oriented economic-development path for the State. His report formed the basis of the state government’s Tasmanian Innovation Strategy, which targets five priority sectors of the economy. They are high-value agriculture, aquaculture, and food; renewable energy; the digital economy; tourism; and an economic development plan to promote Tasmania’s ‘branding’, with its lifestyle advantages and gateway for the Antarctic and Southern Ocean.

The development of high-value agriculture is of particular interest to Professor West. Tasmania, already with a substantial disproportionate share of many of the nation’s food production categories, has the ability to capitalise on the growing, high-valued ‘prestige’ food industry. He has outlined seven initiatives that will strengthen Tasmania’s innovation capacity in food. They are:

Upgrade infrastructure: physical, logistics, information, market intelligence

This would require a significant commitment to both improving irrigation infrastructure to unlock the state’s food-production potential and to building an institutional structure to plan, assess, construct and manage this asset. Additionally, as much of Tasmania’s logistics is orientated to high-volume, low-value commodity movement, Tasmania would need to augment small-batch and specialty logistics. Lastly, landowners and potential investors would need access to high quality information about land-use potential to facilitate new development projects.

  • Improve human capital

With the average age of Tasmanian farmers at 60, a program to develop training and skills needs to be undertaken. At present there is no ‘top-flight’ farm management and food-based entrepreneurship tertiary training in Tasmania. At the other end of the food chain there is a gap in facilities to train high-end chefs. This needs to be established so that young Tasmanians do not have to move interstate to receive similar education.

  • Reduce the cost to Tasmanian businesses of utilising science and technology

While most government programs encourage commercial interaction between publicly funded research and private companies, they do so at a higher premium. By trying to capture as much economic gain as possible for their research and expertise, government research bodies can effectively retard adoption of their work. To offset this tendency, the Tasmanian Government could create a series of incentives and collaborative schemes between private business and universities.

  • Encourage capital allocation to innovation

Government could assist industry by ‘tilting the playing field’ in favour of investment into innovation projects. A loans pool, for example, similar to the successful Higher Education Contributory Scheme (HECS), could help facilitate innovative development that is unlikely to be privately funded. Examples include wineries that, of necessity, generate no income for their first five to eight years, but thereafter yield high returns and a capacity to repay loans. The creation of crop insurance and tax credit schemes could further stimulate innovative development.

  • Reduce regulatory barriers to innovative Tasmanian companies

Since being innovative often involves doing something new, bureaucracies may not even have rules in place to govern these entrepreneurs. Therefore, developing a ‘one stop’ regulatory approval process would speed up innovative developments.

  • Upgrade and focus Tasmania’s self image, its ‘brand’

If Tasmania is to shift to producing higher value, but fewer quantity food products, its national and international image needs to be strengthened – not only to increase sales but to further encourage other entrepreneurs to the state.

  • Strengthen community strategic and cohesion capability to facilitate entrepreneurship

These proposals need to be designed and taken up at the local level. An ideal way to begin would be to choose at first a handful, perhaps five, high-potential food-producing regions around the state, possibly river valleys in the first instance, to begin implementation. Success in these would encourage others to become involved and provide valuable lessons in the factors that underlie success.