Australia should follow the US and Britain by ensuring that small and medium businesses get a much greater share of government procurement and research deals, says the head of the innovation taskforce Terry Cutler.
Cutler is chairing the first meeting of the panel, set up to conduct a wide ranging review into a national innovation system, today.
He told SmartCompany that while the brief is big, he is well qualified to understand the SME agenda. “I have been involved in many start-ups,” he says.
Cutler says one of the key issues raised will be the assistance that government can provide to SMEs. “Areas like government procurement contracts; that is a shocker for SMEs in Australia.
“In the US a huge number of procurement contracts go to SMEs. It is vitally important to build an SME base, so we need to look at how do you use your government spending such as procurement to create more opportunities for SMEs.”
Who gets research contracts is another area he is keen to examine.
He says in the US, about 2.5% of research contracts from government are awarded to small and medium businesses. “For example the Defence Force might want better surgical dressings for breast cancer patients. They put out a request for tender and get SMEs to respond.
“When a company wins the tender, the Defence Force might them provide $500,000 to get the research to proof-of-concept stage and then a couple of million to develop it,” he says.
The company then becomes the sole supplier to government and the government may even take an equity position in the company. “This answers a need in the market, the customer pays for the development and the contract gives the small business credibility and cash flow,” he says.
Cutler acknowledges that big business groups will critisise such “favouritism.”
“Any critics should consider first of all how the program is working in the US, the home of the free market. Let’s ask instead why we are not thinking about this here? Besides if they (the US) didn’t find it helpful, or it didn’t work why have they have been doing it for years and years?”
Another focus of Cutler will be on making access to government programs easier and improving access to research institutions. “Have you tried to use government programs? People say what puts them off is the difficulty of accessing them and using the programs.”
He will also be focused on linking SMEs into global supply chains. “The UK has done this well.”
Last week, the Minister for Innovation, Industry, Science and Research, Kim Carr, announced the review would produce a green paper by July with the Government to respond by the end of the year, in time for the 2009 budget in May.
Cutler says that are a number of people on the panel who have a good understanding of SME issues, including Catherine Livingstone, former managing director of Cochlear, and Australian Business Foundation CEO Narelle Kennedy.