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Networks and Collaboration4.3 Government Engagement

4.3.1 Businesses receiving government financial assistance

In 2017-18, just over one in ten Australian business (12.6 per cent) received any form of financial assistance from either Commonwealth, state/territory or local governments for innovation. Business size largely determines the share of businesses receiving government financial assistance. Large businesses, those with 200 or more persons, receive the most financial assistance, but this assistance also fluctuates over time. Large businesses who received tax concessions almost halved from 21.9 per cent in 2011-12 to 12.7 per cent in 2017-18. Similarly, 28.5 per cent of large businesses received government grants in 2007-08, whilst only 16.9 per cent did so in 2016-17, which rose again to 23.6 per cent in 2017-18. By industry, the highest proportions of all businesses receiving financial assistance in 2017-18 were in Agriculture, forestry and fishing (24 per cent) and Arts and recreation services (23 per cent).[101]

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4.3.2 Innovative businesses that receive public support for innovation

Australia has the second lowest proportion of product and/or process innovative businesses receiving public support for innovation in the OECD (only 11.5 per cent for Australia in 2014-15 compared to 27.3 per cent for the latest available OECD average).[102] This may in part reflect the relatively high proportion of innovation-active businesses in the economy (44.5 per cent of employing businesses in 2016-17).[103] However, given this unusually low fraction of businesses accessing government programmes, the potential merits and costs of expanding the take-up of the relevant initiatives may be worth investigating further.

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4.3.3 Innovative businesses with public procurement contracts

Public procurement affects innovation by influencing the demand conditions in which businesses innovate and compete. The use of public procurement as a tool of innovation has been gaining in popularity in recent years, and there are some notable examples of long-standing successful adoption of such policies. However, the evidence base on the effectiveness and economic value of this type of support is surprisingly sparse. A recent survey of evidence suggests that the barriers encountered by businesses generally correspond to the deficiencies addressed by procurement policies but are not sufficiently addressed by them.[104] In 2014-15, Australia's proportion of innovative businesses with public procurement contracts was estimated at 21.7 per cent, below the latest available OECD average of 26.1 per cent. Countries with the highest proportions include Finland, Iceland, Austria and Norway.[105]

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