Mr Howitt revealed that Cochlear, which has R&D spending that equates to 12 per cent of annual revenue, had already shifted parts of its long-term product development to Europe because of better policy settings.
“We get better access to [public] funding for those way-out ideas,” he said.
And Cochlear has set up its “sandbox” for technology development to the US, which Mr Howitt said was “partly to do with opportunity [and] partly to do with regulation”.
“I think in the US they are more used to setting up cells more quickly and nimbly, and experimenting and failing.”
The use of R&D tax concessions by major companies became a flashpoint after the Australian Taxation Office rejected a $100 million claim for software development from Commonwealth Bank in 2018.
This led the government to announce a series of changes designed to save $2.9 billion over four years by cutting grant levels and beefing up compliance around the scheme.
AGL chief executive Brett Redman said R&D tax concessions were an important way that policy can play a role in “greasing the wheels” of innovation.
“While it’s a multitude of things that should be done, R&D concessions are one way of not picking winners, but supporting others to put skin in the game,” he said.
Telstra chief executive Andy Penn backed calls from day one of the summit for government to present a more coherent industry policy.
“R&D tax concessions, they are just one part of the overall puzzle,” Mr Penn said.
“I do think that it is important that we have a broader range of policies that are about building skills, that are around private investment, that are around innovation, that are around R&D, that actually sets the policy and regulation framework to enable us to be successful in what is a rapidly changing world.”
He said the rise of artificial intelligence was an example of are where government need to prepare for a “profound impact” over the next two decades.
“We do need to set those policies in place because they will determine how Australia navigates through and we capitalise on some of the opportunities to come.”
Banks shed 20,000 jobs
The chief executive of online jobs and education giant Seek, Andrew Bassat, said he was concerned about the rise of AI and what it might to do to what he sees as a hollowing out of the jobs market, where highly-paid technical roles are in demand, and lowly-paid service roles are abundant, but mid-level jobs are much harder to find.
“It’s the middle jobs that tend to be disappearing,” Mr Bassat said. “I have genuine concern about automation attacking the middle jobs and jobs generally.”
He said while the jobs market had been able to adapt to great technological advances through history, the period feels “a little bit different this time” in that AI and automation were replacing roles that had previously required human discretion.
Mr Bassat said the potential that the rise of AI could collide with a period of economic weakness only added to his concerns.
“You get a downturn and the jobs that disappear don’t tend to come back. You’ve seen that in mining, which went through its own downturn a few years go.”
He pointed to the banking sector as an example of where the hollowing of mid-level jobs would hit next.
“You’re seeing 20,000 people go out of the banks – those jobs aren’t going to be replaced.”
Mr Bassat said Seek was not reliant on R&D concessions, and the key to lifting innovation levels was at least in part brute force.
“It’s about 20 per cent getting smarter and 80 per cent about just spending a whole lot more money.”
On day one of the summit, the former chairman of Innovation and Science Australia, Bill Ferris, said government needed to double its spending on R&D by 2030, but he called on the corporate sector to triple the amount it spends over the same period.
Mr Redman said AGL was still struggling to find the right internal model for innovation, after previous models of separating innovation team from the core of the business proved unsuccessful.
“You did get this organ rejection,” Mr Redman said of the failure of some innovation initiatives. “The big monolithic machine that churns out 4 million accounts on a monthly basis struggled to bring these ideas back to the centre.”