Draft of 17 May 2023 at 9:19 AM

2017

TOWARDS THE DEVELOPMENT OF AN INNOVATION ECOSYSTEM POLICY: Paper to ASSIST IN PREPARATION OF ISA 2030 STRATEGIC PLAN

Dr John H Howard JULY 2017

Towards the Development of an Innovation Ecosystem Policy

Table of Contents1 Executive Summary.......................................................12 Policy background.........................................................43 The role of proximity in innovation................................73.1 Industrial milieu............................................................................................................73.2 Clusters.........................................................................................................................73.3 Industrial districts.......................................................................................................103.4 Innovation precincts, science parks, and innovation hubs..........................................113.5 Co-working spaces......................................................................................................143.6 Learning regions.........................................................................................................153.7 Cross campus collaborations......................................................................................163.8 Towards regional innovation ecosystems...................................................................17

4 Evaluating the role of geographical proximity in a broader context of ‘connectedness’..................................184.1 Geography is only one form of connectedness...........................................................184.2 ICT creates connectedness.........................................................................................184.3 Sharing knowledge is not always desirable.................................................................194.4 The ‘death of distance’...............................................................................................194.5 Geographical connectedness still matters..................................................................204.6 Conclusion..................................................................................................................21

5 Feedback from Expert opinion survey on place based innovation.......................................................................225.1 Should innovation policy address place-based dimensions?......................................225.2 Innovation hubs, precincts and districts.....................................................................225.3 Incubators, accelerations, and co-working spaces......................................................235.4 Support for fostering innovation ecosystems.............................................................23

6 Policy directions.........................................................256.1 Policy rationales..........................................................................................................256.2 Smart Specialisation in an Australian context.............................................................266.3 Policy initiative: an Innovation Ecosystem Investment Fund......................................276.4 Link to the Growth Centres Program..........................................................................286.5 Governance and funding.............................................................................................28

Attachment A: Further Discussion of University Innovation Districts..........................................................................29Attachment B: Australian innovation cluster/district/precinct initiatives........................................................................31New South Wales...................................................................................................................31Victoria...................................................................................................................................34Queensland............................................................................................................................38South Australia.......................................................................................................................38Tasmania................................................................................................................................39

References......................................................................41

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1 Executive SummarySpatial asymmetries in resources, including natural resources, skills, knowledge, and industry specific expertise have been an important dimension of location theory for some time. What is attracting current attention, in the context of thinking about the ‘knowledge economy’, is the idea that knowledge becomes cumulative and embedded in a particular region, area or location rather than a specific organisation (Enright et al., 1999).

It is often argued that this attribute can deliver locational competitive advantage. But delivery of this advantage would also require that new knowledge, whether created in a university, research organisation, or business can be translated, shared (communicated) and acted upon uniquely within the location to deliver a collective economic outcome. This could require, in turn, effective institutions for coordination, collaboration and engagement.

Typically, there are three broad categories of engagement institutions, represented as either networks (where knowledge is shared), markets (where knowledge is traded), or organisations (where knowledge is connected or linked). Linkages can be facilitated through intermediaries (Howells, 2006, Howard, 2007) and national and Global Value Chain (GVC) and Global Innovation Network (GIN) integrators (Howard, 2004, Johnston and Howard, 2003, Matthews and Lacy, 2017).

For several years a key issue in economic geography has been to determine the impact of proximity on interactive learning on innovation (Boschma, 2005). It has been found, and is now widely accepted that the importance of geographical proximity cannot be assessed in isolation: it should always be examined in relation to other dimensions of proximity that may provide alternative solutions to the problem of coordination. In particular:

… geographical proximity per se is neither a necessary nor a sufficient condition for learning to take place. Nevertheless, it facilitates interactive learning, most likely by strengthening …. other dimensions of proximity. However, proximity may also have negative impacts on innovation due to the problem of lock-in.

These other dimensions of proximity include cognitive, organisational, social, institutional and other factors.

Nonetheless, location is being seen as a major factor in the “battleground of international competitiveness … where cities are increasingly viewed as the cauldrons of innovation, enriching not only their surrounding regions but their nations as a whole” (Leon, 2008). Moreover -

Across the globe massive renewal is taking place in our cities, fundamental shifts in the nature of work and the workplaces they host, and transformation of their output as well as their consumption. Cities compete with one another to attract not only firms and direct foreign investment, but also skilled knowledge workers to develop their social capital and capacity for innovation (Leon, 2008).

Understanding the importance of cities in trade and economic development is of course not new. The economic and commercial role of cities can be traced back to the mercantilist city states of the 16th century, and more recently, to the emergence of modern city states such as Singapore and the Chinese cluster strategy. Much is made of the ‘triumph of the city’ in terms of efficiency in production of economic output (Glaeser, 2012) and the drift of population from rural areas to cities. This is not always seen as socially desirable, and is reflected in regional policies.

In the 1950s the case for Australian regional policy was made on the basis that Australia could become a “collection of City-States perched precariously around the edge of a depopulated bread bowl”. However, regional policy has had an ‘on again off again’ history since the 1960s.

More recent studies show that the role of geographical proximity and its evolution over the course of time differ according to the type of science-industry contact and the sectoral specialisation of the partners (Bouba-Olga and Ferru., 2009).

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Examination of the literature indicates that the impact of initiatives to encourage co-location of businesses, universities, and research agencies is mixed – where impact is taken to mean additional knowledge based employment, investment, increased sales of products and services, and exports into international markets and global value chains1. Co-location does not, of itself, dictate whether knowledge accumulates, becomes embedded, or is shared across firms.

Businesses may ‘cluster’ for the purposes of competing for customers and talent, but remain otherwise unconnected. Competition law prevents too much collaboration between similar firms.

It is now being appreciated that location based policy initiatives are concerned with generating knowledge spill-overs. It is argued that, from an innovation effectiveness perspective knowledge spill-overs explain both why geographical clusters of firms and innovative activity exist. Co-location allows these spill-overs to be exploited and explains why some clusters perform better than others (Matthews and Lacy, 2017).

For example, a start-up firm in a cluster with strong knowledge spill-overs is more likely to succeed commercially than one located in a weaker cluster. This is because better face-to-face advice is available to help start-ups avoid the myriad of risks confronted. This advice is based on previous local experience, i.e. geographically specific and therefore particularly valuable.

This perspective can explain why the ‘serial entrepreneurs’ found in high-performing innovation clusters play such an important role helping to spot new business opportunities and in driving down the investment risks faced when innovating (Matthews and Lacy, 2017). The business advice is most often sourced from independent, experienced, and trusted mentors and intermediaries. The availability of this capability is an essential ingredient in incubators and co-working spaces located in cluster arrangements (Howard, 2017a, Howard, 2015).

Knowledge spill-overs are a particularly important aspect of Global Value Chains (GVCs) and Global Innovation Networks (GINs) because global inter-firm transactions create opportunities for knowledge transfers to take place. Large technologically sophisticated multinational corporations deliberately cultivate knowledge spill-overs because they strengthen the competitiveness of their GVCs (Matthews and Lacy, 2017). Universities and Public Research Agencies are also active participants in Global Innovation Networks – notwithstanding their location in an innovation cluster, district, or precinct.

This alignment between the role of knowledge spill-overs in both geographically specific innovation clusters and geographically dispersed GVCs suggests that a focus on knowledge spill-overs could provide a unified framework for understanding the relationships between GVCs and GINs on a local and global basis (Matthews and Lacy, 2017).

In this context, there can be an important role of ‘integrators’ in building connections at the local and global level. This is being recognised in recent work relating to Smart Specialisation (Todeva and Rakhmatullin, 2016).

The OECD has lent its support to Smart Specialisation Strategies in this context: By promoting “smart specialisation” strategies, national and regional governments are attempting to enhance the competitiveness of firms and clusters. Smart specialisation is an evidence-based policy framework which uses indicators, technology foresight and other priority-setting tools to help entrepreneurs and firms strengthen existing scientific, technological and industrial specialisation patterns while identifying and encouraging the emergence of new domains of economic and technological activity (OECD, 2012).

1 These are standard metrics used in program evaluation and policy review relating to public venture capital investment, innovation and enterprise development programs. Outcome measures are of course difficult to obtain in the short term, and there has been a tendency to focus on output and process measures, such as number and amount of grants made. There is very little evaluation of programs in relation to achievement of objectives and return on investment.

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These observations suggest that the significance of innovation clusters, districts and precincts has become more nuanced than the economic geography thinking around agglomeration, and the urban and regional renewal initiatives that focus on upgrading urban services and infrastructure. Investments in science, technology, and urban and regional infrastructure have the potential to build depth and scale, but the connections between actors must be global as well as local in their orientation.

It is also the case that early stage venture investors, including angel investors, like to invest ‘close to home’. Emerging innovation precincts and ecosystems are attracting venture investors where they see opportunities connected with students and staff in universities, VET providers, and research organisations. But venture investors also bring global connections and opportunities to link with GVCs and GINs.

At one and the same time policy must address both local and global ecosystems of innovation.

In this context, the contemporary case for university innovation precincts in lagging and depressed regions in Australia is strongest on an industry and regional policy platform. Australian depressed and lagging regions are unlikely to become ‘cauldrons of innovation’ with initiatives such as university precincts. But regions have a potential role when thinking about the local and global connections in innovation ecosystems through GVCs and GINs.

This paper seeks to shed light on the case for government investment to support the formation and extension of innovation districts, university innovation precincts, and other place based initiatives, and what form that support might take. It is also important to sort out the case for investment on the grounds of ‘good theory’ following a fad promoted by ‘thought leaders’ (Drezner, 2017).

The paper concludes with a recommendation that:

An Innovation Ecosystem Initiatives Investment Fund (IEIIF) be established to build and sustain capability in entrepreneurship, collaboration, and start-up company formation in high growth innovation districts and emerging local entrepreneurial ecosystems. Funding should be available for collaborations between universities, other research organisations, VET providers, RDA Committees and business groupings.

The Fund would support investments, put forward on a business case, for initiatives that would create economic value for an innovation ecosystem. Funds would be allocated to an organisation with a specific responsibility for innovation ecosystem development. The investment manager would be independent from the collaborators

It would strengthen local innovation ecosystems, in terms of outcomes and results, by ensuring that investments were only made where a strong business case has been made. In this way, it would adopt what are seen as the successful investment strategies adopted in relation to the Innovation Investment Fund established in 2008. Many of the larger investments made by the Fund are now coming on stream.

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2 Policy backgroundIn November 2016, the Minister for Industry, Innovation and Science, Hon Greg Hunt, MP, expressed an interest in developing a policy around university research precincts.

Greg Hunt favours research precincts for all universities

John Ross, Higher education reporter, The Australian, November 23, 2016

All universities would share real estate and expertise with industry in a splurge of symbiotic research and development charted by federal Science Minister Greg Hunt.Mr Hunt said every university had the capacity to develop its own precinct, modelled on the Macquarie Park Innovation District in Sydney or Parkville in Melbourne.He said he wanted agreements in place with each university within the next 18 months.The first provisional agreement was struck last month with the University of Newcastle, which is formulating plans for a research precinct based around the redeveloped hospital in Gosford on the NSW central coast.An advisory board that was being assembled would undertake “a top-down national policy review” of “the key things federal and state governments can put into action”, and help negotiate the individual agreements. The board will be led by new Innovation and Science Australia chief executive Charlie Day, a former Rhodes scholar and rocket scientist who directed the University of Melbourne’s Carlton Connect Initiative.Citing data from NSW and the OECD, Mr Hunt said job creation occurred more than twice as quickly in technology precincts as elsewhere.“We haven’t really touched our universities as growth engines,” he said.“Things are happening but there’s never been a government policy in this space.“There’s not a vice-chancellor or chancellor I’ve met who isn’t deeply supportive of this.”He conceded that the growth of university precincts was often organic, with industry attracted by universities’ burgeoning areas of strength.Mr Hunt said government had contributions to make, both financial and organisational.Macquarie’s innovation district evolved from a focus on early childhood education, which spawned an interest in vision and acoustics.“From that they developed a hearing expertise, and then all of a sudden you’ve got Cochlear on site,” he said.“You have mixed-use buildings where there’s teaching and industry work on different floors. Campuses are attractive places for workers — they love the campus environment.”Macquarie’s innovation district now hosts 400 businesses, including more than 180 multinationals, along with 85,000 workers and students.The Australian Hearing Hub, which houses nine organisations in a single building, was kickstarted with a $40 million grant from the Gillard government.“In other places it’s about getting growth centres, entrepreneurs’ programs, the co-operative research centres or the Australian Research Council on board,” Mr Hunt said.“It’s about bringing the right combination of our support — along with the state — and it’s up to each university to identify their special strengths.”The availability of land had proven “indispensable” to Macquarie, he noted. This suggested some universities could face a problem, with the most research-intensive institutions located in city centres where land is in short supply. Mr Hunt said the University of Melbourne had managed to fabricate the Parkville precinct, considered one of the world’s top biomedical clusters, on land it did not own.Other universities would find their own solutions, he said.Some other universities were already in the process of developing precincts, he said. Wollongong had fashioned its iAccelerate incubator from an expertise in advanced robotics. The University of NSW was looking to transform its quantum computing prowess into a vision for Silicon Harbour.Deakin was looking to build on its world-leading strength in carbon fibre — the result of an expertise in fibre cultivated when Geelong was a wool port.http://www.theaustralian.com.au/higher-education/greg-hunt-favours-research-precincts-for-all-universities/news-story/1c3849ffdf5176ef31219e6c920adc61

While the Minister points to a great deal of activity around university innovation districts/precincts (the terms are used interchangeably), it is important to ‘unpack’ the range of policy issues and opportunities that are involved. In particular:

The concept of science, technology, and innovation parks has been around in Australia for many years – variously promoted by state and local governments, universities, developers, and ‘visionaries’ for a range of objectives and outcomes. Some have flourished, others have turned out to be unviable, and several are simply geographic descriptors.

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Local statutory and environmental planning regulations and university statutes can encourage (and limit) businesses to locate in particular areas. This does not, of itself, create a framework for interaction and knowledge spill-overs. The technology district at North Ryde has had, until quite recently, very little interaction with Macquarie University.

However, changes in planning guidelines enabled Melbourne University to develop its Carlton Connect sustainability and innovation hub on the former Royal Women's Hospital site to provide exhibition, function and office space, as well as educational and research and development facilities.

More recently, universities have been developing industrial development strategies around collaboration with government and business that involves leveraging their property assets to provide purpose built facilities around a particular technology or group of technologies.

Older universities, without substantial land holdings, are partnering with development agencies and developers to locate teaching and research centres on the urban fringes (The University of Sydney at Westmead) or collaborate with a regional university (the University of NSW with the University of Newcastle).

A number of universities have embarked on campus development strategies that involve establishing business and entrepreneurial ventures to generate revenue flows that will secure their future in a climate of declining government support and potentially falling student numbers (for example, the ACT cannot generate enough students to make the University of Canberra viable).

The Innovation Investment Fund, established in 2008, was successful in creating an environment for collaboration between universities and businesses to invest in buildings and facilities. Those buildings and facilities are now coming on stream.

Universities may be part of a broader urban renewal and development program, aimed at modernising urban services and infrastructure. This can be particularly important in regional cities, and the urban fringe, where the economic impact of a university, in terms of student numbers, staff, and procurement, can be substantial.

The rapid expansion in student numbers, and the increasing competition for national and international students, has encouraged universities to create student facilities aimed at enhancing the student experience. These include state of the art learning and teaching centres, innovation centres and hubs, and entertainment facilities.

The international student market has encouraged universities on the urban fringe to locate teaching facilities in ‘down town’ locations.

A university can be an important anchor point for a regional development strategy, particularly where there is only one ‘state’ university in the region (Newcastle, Wollongong, Wagga Wagga/Bathurst, Geelong, Ballarat, Cairns, Darwin, Tasmania, ACT). Several metropolitan universities have ‘satellite’ campuses in regional locations sometimes located in education ‘precincts’ with TAFE Institutes.

These observations suggest that there are many factors that must be taken into account in developing an evidence based policy to support innovation clusters/districts/precincts. It is clear, on the basis of evidence and the limited independent evaluation that co-location and the economic geography of agglomeration do not of themselves generate innovation outcomes.

There must be other factors at work. This paper argues that these factors relate to the existence and potential for knowledge spill-overs in local and global value chains and innovation networks. Moreover, these effects are likely to be established and sustained through independent, expert, credible and trusted intermediaries and intermediary organisations.

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There are of course, many consultants and professional advisers who work in this area, and the market is generally working well. The potential for conflicts of interest and moral hazard suggests that government may have an important role in funding intermediaries and intermediary organisations.

The innovation clusters/districts/precincts and ecosystems that have been established in other parts of the world have often involved very substantial investments by national and regional governments. The Australian practice of establishing relatively small funding pools and inviting applications from all and sundry, resulting in even small amounts being allocated for short periods (3-4 years), with no requirement for post acquittal commitment is not likely to lead to success.

Government has been strategic and targeted in the CRC Program, and the Rural RDC arrangements. They provide models for other longer-term innovation investments. The Industry Growth Centres Program has the potential, with further refinement, to develop a longer-term innovation strategy that links effectively with industry strategy.

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3 The role of proximity in innovationThere is a very limited amount of work on the impact of geographical proximity on innovation2. The potential merits of geographical proximity were identified by early classical economists, and picked up by economic geographers, sociologists/social commentators (Florida, 2002), and strategy economists (Porter, 1999, Porter, 2005). More recently, potential merits have also been advocated by policy think tanks (Katz and Wagner, 2014, Agtmael and Bakker, 2016) and consultants (KPMG, 2014).

Discussion of the nature of geographical proximity has been identified in a number of categories:

Industrial milieu Clusters Industrial districts Innovation precincts, science parks, and innovation hubs Learning Regions University ‘public spaces’ Co-working spaces Regional Innovation Systems

The key features of each category are summarised below.

3.1 Industrial milieuThe notion of an innovative milieu was introduced by the Groupe de Recherche Européen sur les Milieux Innovateurs (GREMI) in 1986. The main hypothesis is that the functioning of firms could not be considered separate from a “milieu”. An innovative milieu is to be seen as an incubator of innovations and innovative companies within a given region.

GREMI defined an innovative milieu as "the set or the complex network of mainly informal social relationships on a limited geographical area, often determining a specific external ‘image’ and a specific internal ‘representation’ and sense of belonging, which enhance the local innovative capability through synergetic and collective learning processes" (Camagni1991: 3).

According to this definition, the following key elements constitute the concept of an innovative milieu:

cooperation and information exchange between regional actors repeated face-to-face contacts engagement of actors from different branches of economy (companies, universities,

local authorities etc.) the awareness of actors of belonging to a coherent unity and regional culture.

An innovative milieu must be open to the outside world in order to obtain the specific information or resources and to be up to date with changes occurring externally.

The innovative milieu concept can be seen in the discussion about innovation incubators which goes back many years. It is reflected in Australian Government policy initiatives such as Building on IT Strengths (BITS) in 1998. The program was disbanded as an expenditure saving.

3.2 ClustersThe theory

2 A good analysis is provided by Gust-Bardon, Natalia Irena (2012): The role of geographical proximity in innovation: Do regional and local levels really matter?, Working Papers firms and region, No. R4/2012, http://nbn-resolving.de/urn:nbn:de:0011-n-2139400 Available at: http://hdl.handle.net/10419/60501

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The idea of clusters was developed by Michael Porter in the 1990s. He investigated the concept of a regional cluster of firms from the point of view of a business strategy. Porter defines a cluster as "a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities" (Porter 2000: 254).

Another definition of clusters coming from the OECD is that industrial clusters are "networks of production of strongly interdependent firms (including specialised suppliers), knowledge producing agents (universities, research institutes, engineering companies), institutions (brokers, consultants), linked to each other in a value-adding production chain" (OECD 1999: 315).

Porter and other scholars express the belief that companies in a cluster are meant to be more innovative because of:

Taking advantage of agglomeration economies Observing the competitors directly Benefiting from collective knowledge and network-based effects Strengthened social interactions Better chances to meet the needs of customers than outside firms because major buyers

are often part of a cluster Learning about early new technologies or a new approach to marketing and service.

Porter identifies several origins of clusters:

Research done at universities (e.g. clusters in Massachusetts initiated by research at the Massachusetts Institute of Technology or Harvard University)

A geographic location (e.g. Dutch transportation clusters driven by the central location of the Netherlands in Europe)

A need to solve some problems, as it was in the case of Finland, where the environmental cluster has appeared in response to pollution problems

One innovative firm stimulating the growth of the others.

It has been estimated that more than 100 regions and/or nations have experimented or implemented some kind of cluster policy based on Porter’s framework. It has been suggested, however, that clusters are intuitively understood by investors, property developers and real estate agents as a profitable value proposition.

In 2012 the US National Research Council Committee on Comparative National Innovation Policies reported a number of reasons why regional innovation clusters have regained prominence (Wessner and National Research Council (U.S.) Advisory Committee on Technology Innovation, 2012):

A shift in development thinking toward the notion that “all growth is local and grounded in place”

A greater appreciation that innovation is a “cognitive and contextual process” that is based on face-to-face interactions, serendipity, and chance encouragers and their outcomes

Research that suggests strong clusters foster higher employment and wages, economic growth, and opportunities for innovation; help provide a more grounded focus on the dynamics of the real economy as opposed to abstract macroeconomic management; and provide a conceptual “framework for rethinking and refocusing economic policy” that help policymakers set priorities and get maximum impact out of limited resources.

The special case of biotechnology clusters

Many of the innovation districts referred to in the literature have a medical/biotechnology orientation. They have involved investments in physical infrastructure by governments, research organisations and universities, philanthropists and pharmaceutical companies. Universities may complement these investments by recruiting (and retaining) eminent scientists and researchers.

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The presence of large acute care hospitals with a capacity to undertake complex medical and surgical procedures and a range of other health services delivery points is also a characteristic.

Biotechnology clusters came into prominence with the biotech boom at the turn of the century. A biotechnology cluster has been defined as a ‘geographical concentration of actors in vertical and horizontal relationships, showing a clear tendency for cooperating and of sharing their competencies, all involved in a localised infrastructure support’ (Chiesa and Chiaroni, 2005). Within this framework the key features of a biotechnology cluster have been defined as:

Formal input-output relationships along an industry value chain Buyer seller linkages in a ‘market’ for knowledge Geographic concentration of firms Shared specialised infrastructures.

In the early 2000’s the ‘Bio21/Parkville Precinct’ was referred to as a biotechnology cluster. However, an evaluation of the cluster arrangements indicated that not all of these relationships and linkages occurred within the Bio21/Parkville area, but they did occur to a greater extent across Melbourne (Howard Partners, 2006).

In 2017, with long term and sustained commitments to research investment, and collaboration between Melbourne and Monash Universities in research discovery and translation, Melbourne is entering the league of established biotechnology clusters around the world (for example, Cambridge, Heidelberg, Aarhus, Marseilles, Milan, San Diego, the Bay Area). Bio21 (and Melbourne generally) is still in an evolutionary and developmental phase3.

In a mature biotechnology cluster there is a ‘virtuous cycle’ in which a central role is played by the continuous generation of new science based companies. Some of these companies may trade but many are often established to hold and license intellectual property. The cycle is driven by a number of growth mechanisms that include a strong science base, availability of funding, a robust industrial base and supporting contextual factors. (Chiesa and Chiaroni, 2005).

Performance measurement

The ingredients for the formation of a successful cluster have been well documented (Devol 2003). Common factors, and measurements of performance used particularly in the United States include:

Innovation, as knowledge is shared more efficiently in close proximity. Metrics previously used to measure innovation are patenting activity and academic R&D relative to total employment

Human capital, where the weighted average of advanced and bachelor’s degrees and the percentage of the workforce (managerial professional and technical jobs) are calculated

Extent of globalisation. The share of recent immigrants as a percent of the working population and export sales per manufacturing employee are used as an indicator.

Dynamism, or the ability to start and sustain companies is instrumental in the success of clusters. The number of new businesses created, IPOs per $10m of gross metropolitan product and the number of jobs in fast growing companies as a percentage of total employment have all been used as measurements.

3 Refer to meeting with Melbourne University in the Consultations Program.

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3.3 Industrial districtsThe notion of an industrial district (ID) began with the contribution of classical economist Alfred Marshall in Principles of Economics, 1920. He showed the possibility of achieving the advantage of a large-scale production by a group of small-sized companies located in a specific area. This was seen to be made possible from the benefits coming from agglomeration (and scale) economies: reduction of transaction costs, accumulation of skills among workers, creation of "an industrial atmosphere", and promotion of innovation processes.

In an industrial district, it is thought that decisions on investment and production become local – and employees identify themselves more with a district than with a particular company. Entrepreneurs and labour force living in the same community take advantage of the fact that "the secrets of industry are in the air". Other features of an Industrial District, identified by Marshall, include:

long-term contracts and commitments between local buyers and suppliers low degree of cooperation or linkage with firms outside the district specialised sources of finance good long-term prospects for growth and employment.

A renewed interest in the notion of an industrial district took place in the 1970s and 1980s when the world economy went into recession. Despite growing unemployment and general economic stagnation, it was observed that there were some well prospering regions, e.g. the Third Italy (the Northeast and the Centre).

The rapid growth of the Third Italy (mostly the growth of small and medium-sized enterprises) was linked to the concentration of companies in specific sectors and geographic areas. These firms were able to gain a significant worldwide market share when it came to traditional products (shoes, leather handbags, furniture, musical instruments etc.) and industrial ones. It was noted that:

Sectoral specialisation, proximity of suppliers, component producers, subcontractors and producers, together with strong competitiveness between companies based on innovation, cooperation in associations of producers and socio-cultural identity enhancing trust were factors responsible for the ID phenomenon of the 1970s and the 1980s (Humphrey/Schmitz 1995).

This is also reminiscent of the mercantilist guild arrangements prior to the industrial revolution.

Early U.S. innovation districts such as Silicon Valley and Greater Boston emerged from the interaction between the private sector and major universities that received substantial federal research funding, but with little government design (Saxenian, 1996). By contrast, the Research Triangle in North Carolina is the result of early, substantial, and patient public and private support.

Renewed interest in Industrial Districts also emerged in the early 2000s as exemplars for industrial transformation and urban renewal. Early examples of ‘official’ innovation districts were Barcelona, Spain with 22@, and in Boston with the Seaport Innovation District. Following these two initiatives, mayors across the globe have replicated variations of this model in their own cities. It is estimated that there are over 80 ‘official’ innovation districts worldwide.

The industrial district concept is being promoted by “thought leaders” such as the Brookings Institution (Katz and Wagner, 2014) and other policy think-tanks (Agtmael and Bakker, 2016), management consultancy firms (KPMG, 2014), and technology businesses (Singtel Optus, 2017) as ‘big ideas’ that will, amongst other things:

Resolve an urban renewal and industrial transformation problem

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Address a research translation problem by building scale in research and capacity and encourage businesses to locate near research organisations for translation into industrial application

Create opportunities to develop ‘university cities’ that will be attractive to national and international students, and which will, in turn, crate a talent pool, that is attractive to business location.

Brookings suggests that for the past 50 years, the landscape of innovation has been dominated by regions like Silicon Valley—suburban corridors of spatially isolated corporate campuses, accessible only by car, with little emphasis on the quality of life or on integrating work, housing, and recreation. Brookings sees a complementary new urban model is now emerging.

Innovation Districts have proven to be effective solutions for cities to modernize their economies and pivot from traditional industrial-based production to technology-driven services. A wave of academic research is also emerging analyzing innovation districts’ positive effects on job creation and economic development.

A case study of the Barcelona story, which began 40 years ago, suggests that the key drivers of territorial performance are “innovation, human capital, connectivity, place quality, and governance capacity”. Policies on those dimensions are crucial, and should be explored and assessed (Parkinson, 2013). Continuity, commitment and national policies relating to decentralisation are also important, particularly where national and regional policy making are aligned horizontally and vertically to focus on place making.

In other words, it is not only a matter of strategic intent – it is a matter of implementation and execution over the long term. It is much more than ‘the big idea’.

Further discussion on innovation districts is at Attachment A, including a more qualified report written in 2015. Refer EU Report in Barcelona not a great economic success.

Other spatial categories associated with innovation districts include precincts, hubs, and technology parks.

3.4 Innovation precincts, science parks, and innovation hubsOver many years Governments, universities, and property developers have invested in the formation of science and technology parks as a way of building university-industry and government linkages. The performance of these developments is mixed.

There is global interest in and commitment to science parks. This is reflected in the membership of the International Association of Science Parks and Areas of Innovation. Membership is heavily concentrated in the US, Canada, Europe, the Middle East, and China.

Figure 1: Location of IASP Members

Source: https://www.iasp.ws/Our-members/Directory

The Innovation Campus - University of Wollongong is the only current Australian member.

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Australian Initiatives

The Adelaide Multi-function Polis (MFP), announced in 1987, was to be built near Mawson Lakes and meant to be a futuristic, utopian metropolis built in conjunction with the Japanese Government. It was to be a centre of biotechnology, computer wizardry, education, health and tourism. The Mawson Lakes Technology Park is the only legacy of the MFP.

The MFP was intended to have an initial population of 100,000, though some modelling was done on the assumption of a population up to 250,000. Futuristic infrastructure and modern communications were expected to help attract high-tech industries. Asian investors were targeted as an important source of funds, with an emphasis on Japanese investors. The South Australian Government terminated the initiative in 1998,

The Australian Technology Park (ATP), was created in 1995, by the Government of New South Wales, the University of Sydney, University of Technology, Sydney and University of New South Wales. It now operates under the control of the Redfern Waterloo Authority. The original intent of the park was for researchers to be located alongside companies with the capital and expertise to commercialise them.

ATP did not meet commercial expectations, and each of the universities appearing to prefer to undertake their innovation activities closer to home, and on their own campuses, closer to their students. An issue may have been that there were no plans or resources for ATP to reach the scale apparent in some of the more prominent international parks. An important and lasting legacy was ATP Innovations, a successful incubator, now known as Cicada Innovations.

ATP Innovations (Cicada)ATP Innovations (Cicada) is Australia’s leading technology business incubator. It is a collaboration between the Universities of Sydney, NSW, The ANU and UTS. It is to Startmate, Ignition Labs and university accelerator programmes. ATP Innovations’ portfolio comprises over 65 companies from the software, hardware and life science sectors.

ATP Innovations accelerates the growth of technology companies that target global markets, by providing advice and guidance from seasoned entrepreneurs, access to investors, customers and domain specialists, and world-class infrastructure tailored to the needs of start-up companies.

ATP Innovations works with researchers and entrepreneurs to help them raise capital, build a team, secure government grants, create new products, grow revenue and ultimately exit the business profitably.

The ATP community has access to unique serviced office space, laboratories, strategic guidance and mentoring, capital assistance and access to a professional network.

Over 300 software, hardware, and life science start-ups have been helped by ATP Innovations since 2000. Together, they have raised over $113m in capital since 2006.

In 2014 ATP Innovations’ companies had combined revenue of over $45m, half of which was export related. They raised $8m in equity capital, hired 69 new employees, launched 80 products, and had seven patents granted.

There are currently a number of science and technology precinct initiatives operating and being developed in other locations across the country, including:

Ballarat Technology Park Darwin Innovation Hub Geelong Technology Park at Warum Ponds La Trobe Technology Park at Bendigo QUT at Kelvin Grove RMIT Advanced Manufacturing Precinct Swinburne Advanced Manufacturing and Design Centre (AMDC) Tonsley Park (South Australia)

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UQ Biosciences Precinct University of Wollongong Innovation Campus

NSW is promoting ‘knowledge hubs’ as industry led collaborative partnerships centred on NSW industry sectors. They bring together businesses, research organisations and industry associations. Their purpose is to share information, direct research and collaborate through shared projects to drive innovation and create shared value.

Evaluation

Measurements commonly used by scholars as indicators of the performance of technology parks include the number of companies, the number of employees, turnover and the number of patents granted (Park et al 2004).

Many, however, agree that the single most critical factor for a science park’s long-term sustainability is its ability to foster the creation of new firms, in both existing and emerging sectors in order to continually renew itself (Koh et al 2005). Koh et al also found that the main growth mechanisms for technology parks are government led infrastructure provision, agglomeration effects, and continual self renewal through the creation of new businesses.

Early studies (for example Zucker 1994) appeared to show that, when successful, science parks could lead to a reduction in the costs of research, drug development, and commercialisation. These studies led many to be supportive of the benefits of science parks and clusters. However, some argue against their formation because many technology parks have been unable to continually renew themselves without long-term government support.

Agglomeration effects are believed to be negligible in many of these arrangements, leading to inabilities to create a virtuous cycle of attracting finance, human resources, self-renewal and new firm creation. Audretsch (2001) studied the failure of some efforts to establish science parks and concluded that the presence of a critical mass of scientific talent is a necessary, but not sufficient, condition for success – an entrepreneurial culture and nearby financial support are also required.

US Government perspectives

The US National Research Council Committee on Comparative National Innovation Policies concluded that “the proliferation of research parks, and the sheer scale of those being built abroad, highlights the need for U.S. policy makers to better understand the role of such parks in a nation’s innovation system” and “the ways in which successful parks are structured, financed, and operated”.

The Chinese model is seen to have important implications for the competitiveness of the U.S. and other nations in a 21st century global economy (Wessner and National Research Council (U.S.) Advisory Committee on Technology Innovation, 2012).

The Council noted that “despite the significant investments in such parks, there has been little rigorous study of which practices work best or to precisely quantify their economic impact”. Accordingly, there is no systematic framework to understand the dynamic interactions among the various stakeholders and participants in research parks and the outcomes that result.

To advance that understanding, the National Academies’ Board on Science, Technology, and Economic Policy (STEP) looked at US research and came up with the following conclusions:

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Successful research parks tend to have a large research university or national laboratory at the core and support a critical mass of highly trained knowledge workers.

Strong public-private partnerships among government, corporations, universities, and national laboratories are increasingly important to the success of research parks.

There is ample evidence that public investment in research parks have a high “spill-over” effect in terms of attracting corporate investment, creating jobs, and forming new companies, although more work must be done to measure such impact with precision.

Public financial and policy support must be sustained over the long-term if research parks are to win support from corporate investors. Given the long-time horizons of major corporate research programs, public commitment must be viewed as reliable.

Research parks must be viewed as much more than real estate projects if they are to be catalysts of regional innovation. Successful parks not only offer corporations access to first-rate public research institutions and talent, but also valuable services such as low-cost shared laboratory and prototyping facilities, small-business incubators, advice on intellectual property, and assistance in raising early-stage capital.

Successful research parks outside of the U.S. tend to benefit from strong government-supported programs to promote applied research as well as basic research.

https://www.ncbi.nlm.nih.gov/books/NBK100322/?report=printable

Moreover, comparative studies of performance of firms located within and outside of science parks have yielded ‘confounding’ results. Phan et al (2005) commented, that there is “no systematic framework to understand science parks and incubators”.

On this basis, there is not a strong case for major Australian Government investments in research parks.

EU perspectives

EU regions are making investments in technology parks with a substantial commitment of EU funding. Visions and strategies have been developed across the EU, but evaluation is limited.

An empirical study of Italian biotech start-ups (Colombo and Delmastro, 2002) confirmed the conventional wisdom that input and output measures of innovative activity are only marginally different between on- and off-park firms. Nonetheless, the study also showed that Italian technology parks managed to attract entrepreneurs with better human capital, as measured by educational attainments and prior working experience.

The study suggested that on-park firms showed higher growth rates than their off-incubator counterparts. They also performed better in terms of adoption of advanced technologies, aptitude to participating in international R&D programs, and establishment of collaborative arrangements, especially with universities. Lastly, they found it easier to get access to public subsidies.

Altogether, such findings support a view that science parks are an important element of a technology policy in favour of new technology-based firms. This is said to hold true especially in countries like Italy which are characterised by rather weak national innovation systems.

Cultural differences may be one explanation for the differing results of these studies. Abetti (2004) set out to determine if the proactive approach taken by the Finnish government, as exemplified by the encouragement and funding of 16 incubators in the Helsinki area, represented a viable method for accelerating economic growth, job creation and entrepreneurship in a region. The research yielded a strong positive answer, but whether a similar approach is viable in other countries is less clear, because of the different cultural settings.

These evaluation issues should be addressed before the Australian Government commitments are made to support technology parks ad precincts.

3.5 Co-working spacesThe innovation districts idea is connected to ideas about the ‘start-up’ economy, with co-working spaces and people motivated to start businesses by developing their own new idea.

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Co-working spaces may or may not be linked to the presence of universities and research organisations.

Many co-working spaces cater to hi-tech or other creative industries. Co-working has a strong social element with shared values and an understanding that by working side-by-side with other companies or individuals in a friendly social space, that the synergies created lead to new opportunities. It is argued that companies in co-working environments experience greater levels of success from these synergies.

Some co-working spaces have connections with universities, refaced in a wide range of incubators and accelerators, such as ATP Innovations, University of Melbourne Accelerator Programme, UTS Hatchery, iAccelerate (Wollongong), Slingshot (Newcastle), Venture Space (UNSW), RMIT New Enterprise Fund, iLab (UQ), Flinders New Ventures Initiative, Incubate (University of Sydney) and Curtin Accelerate.

These initiatives are directed towards producing technically capable and entrepreneurially enthusiastic young people with a desire to start a business and make a serious commitment.

Other co-working spaces, such as Fishburners in Sydney, do not have a university connection – despite being 100 metres from UTS.

Co-working spaces have also emerged as a commercial response to new ways of working in a services dominated economy and the high cost of urban office accommodation. Co-working is basically a shared office where different companies with symbiotic relationships work and share resources, ideas and sometimes ideals. Co-working is linked strongly to a startup culture. In general, there is a focus on the community created within the space. It is seen as a contemporary innovation in a world where more and more people are working for themselves.

3.6 Learning regionsThe learning regions approach has been developed by Richard Florida, who claims that the new age of global, knowledge-intensive capitalism demands a new type of region being defined by similar standards as companies: permanent improvement, original ideas, learning processes and formation of knowledge.

Florida stresses the necessity of accepting the rules of knowledge formation and permanent learning by regions – they have to evolve into learning regions in the process. He regards learning regions as "collectors and repositories of knowledge and ideas that provide an underlying environment or infrastructure which facilitates the flow of knowledge, ideas and learning" (Florida 1995: 528).

During the 1990s and early 2000s there was a global flurry of activity for cities to identify themselves as ‘knowledge cities’ as a reflection of concentration in tertiary education and an educated workforce. There were some policy initiatives (with little evaluation) but it also became a regional government ‘branding’ and inward investment attraction strategy.

A learning region cannot be seen as a single island ignoring other spatial levels – the awareness of being open to the national and international dimensions is crucial for companies. Due to the fact that the suitable environment for innovation occurs only in part in a single region, cross-regional activities are crucial and provide better support for innovation management and enhance the competitiveness of local and regional companies (Koschatzky 1998)

Some scholars stress two main factors influencing learning processes:

Business-economic intelligence, which would activate the demand for new knowledge Access or availability of that knowledge (Landabaso et al. 1999).

The major role of a regional government, which triggers learning processes in a regional economy, is also emphasised. A regional government, through an RIS, activates the creation

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and transfer of knowledge among different actors of an RIS, such as: companies, business consultants, technology centres, research and development centres, universities, development agencies etc. (Landabaso et al. 1999).

Another dimension of the learning region concept is that of universities as ‘public spaces’. That is, universities provide ‘space’ for open-ended conversations about industry development pathways and new technological and market opportunities (Lester and Piore, 2004, Lester, 2003).

These ‘public spaces’ – some of them focused on particular industries, others not – include university-hosted meetings and conferences, standard-setting forums, forums for potential investors (pre-seed, seed, angel, and venture capital investors), business plan contests, industrial liaison programs, alumni networking activities, and visiting committees and curriculum development committees involving local industry practitioners.

3.7 Cross campus collaborationsIt is well known that Australian universities compete – for students, for research funds, and for contracts and consultancies. Competition can be intense across cities - as indicated by an apparent duplication and overlap of offerings among four independent universities in the Kensington, Camperdown, CBD, North Ryde corridor4.

The NSW Innovation and Productivity Council brings Vice-Chancellors together to focus on State Development, but there is little evidence of co-investment to create facilities and services of scale. The recently announced Melbourne-Monash collaboration on research translation is a very welcome development.

The NSW Government has recently made funds available for a Sydney School of Entrepreneurship that will require collaboration of all Sydney based universities and NSW TAFE.

Collaborations can be ‘facilitated’ through initiatives such as the Cooperative Research Centres fund, and NCRIS. These arrangements suggest that collaboration is not all that location specific. However, the Westmead Precinct, being developed by NSW Urban Growth, involves Sydney, Western Sydney and Wollongong universities – but the extent of planned collaboration is not clear. All three universities have for example a medical school and a business school.

The university groupings, particularly the ATN Group, also facilitate collaborations in areas of common interest. It is therefore of interest to see the formation of an alliance between UNSW, Newcastle, Wollongong outside of the established university groupings.

NUW Alliance: NSW, Wollongong, Newcastle unis join hands

Julie Hare, The Australian, May 31, 2017

Three NSW universities have joined together in a new alliance in a bid to address major societal challenges.

The NUW Alliance will see the University of Newcastle, the University of NSW and the University of Wollongong band together to address complex issues around health, education, technology and business development.

“All three universities have complementary strengths and shared ethos in many areas,” according to Newcastle University vice-chancellor Caroline McMillen. “It has been described as a shared institutional DNA”.

“There is also a shared heritage among the three universities that is a factor.”

The NUW Alliance claims to be the first grouping of its kind in Australia.

The group points to similar alliances internationally that have delivered significant value for their communities 4 The University of London, by contrast, is a collegiate research university consisting of 18 constituent colleges, nine research institutes and a number of central bodies. There are over 160,000 campus based students as well as 50,000 external students. The University of California has 10 campuses and a combined student body of 251,700. NSW has 10 independent universities that enrol 290,000 students and close to 80,000 international students. The lack of scale, particularly in research commercialisation, may be a factor in Australia’s noted poor performance in this area. This is an area that would require further analysis before definitive conclusions could be put forward.

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through independent, research-intensive universities that share a geographic region, leveraging complementary strengths for public benefit.

Wollongong University vice-chancellor Paul Wellings said the alliance had the potential to deliver tangible economic and practical benefits to NSW.

“By harnessing our industry partnerships and our shared commitment to innovation we can help grow more jobs, build new businesses and drive economic growth across our regions,” Professor Wellings said.

UNSW president and vice-chancellor Ian Jacobs said the alliance would have significant impact.

“Given our historical and existing links, shared values, complementary strengths and the scale of the NUW Alliance, the potential to add value for the people of NSW is enormous,” he said.

He added that the alliance would start by carrying out community consultations to identify areas that would most benefit from the combined research and policy capacity of the universities.

3.8 Towards regional innovation ecosystems The notion of a regional innovation system (RIS) appeared as a territorially-oriented approach to innovation processes from a broader concept of a national innovation system (NIS) in the early 1990s. There are numerous definitions of a RIS but in general, they relate to "a set of interacting private and public interests, formal institutions, and other organisations that function according to organisational and institutional arrangements and relationships conducive to the generation, use, and dissemination of knowledge".

There are also several classifications of RISs based on the nature of connections, the production structure, and the institutional set-up, and have differing implications for policy:

Territorially embedded. Encouraging networking small and medium-sized enterprises in industrial districts building their competitive advantage on localised learning processes. This reflects a market-driven non-systemic model of innovation processes, addressing demand factors that influence the scale and paths of innovation.

Regionally networked. The aim is to influence public–private cooperation by intensifying the institutional infrastructure. This system represents a supply-demand interaction and is typical for German, Austria and the Nordic countries.

Regionalized national. Some parts of the production structure and institutional infrastructure, located in a region, are combined with national or international innovation systems. It is regarded as a science-supply model of innovation processes, where exogenous organisations and regular interactions are essential.

Regions in the context of a RIS cannot be considered as alone and separate islands in the world-wide economy; close connections with national and supra-national innovation systems are indispensable. This global connectivity allows companies to remain competitive in the globalising economy.

An effective innovation ecosystem enables entrepreneurs, companies, universities, research organisations, investors and government agencies to interact effectively to maximise the economic impact and potential of their research and innovation.

The degree of flexibility and dynamism, the openness of the ecosystem, and the extent and quality of its interactions and relationships provide important evidence of the health of the innovation ecosystem and the contribution that the innovation ecosystem can potentially make to the region and its innovation performance.

The OECD notes that one of the key success factors for strong regional partnership is the presence of regional facilitators who act as gatekeepers between different networks. They point to some OECD countries where closer co-operation has been encouraged between universities and other institutions in the region in order to facilitate the formation of critical mass for economic growth.

In an Australian context the Regional Development Australia Committees have the potential to undertake this role (Howard et al., 2016a, Howard et al., 2016b).

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4 Evaluating the role of geographical proximity in a broader context of ‘connectedness’

The issue of connectedness came up continuously in the consultations for the development of the ISA Strategic Plan. It was a term used much more than proximity.

The material in the previous Section points to the significance of regional innovation ecosystems as a unit of analysis. Such an approach picks up the contemporary idea of a ‘cluster’ but is much broader than the concept of an innovation district, and much broader than a science and technology park or technology precinct or innovation hub.

Innovation systems typically include co-working spaces and a range of innovation support capabilities, such as incubators, accelerators and co-working spaces. Ecosystems have local connections, but importantly national and global connections.

4.1 Geography is only one form of connectednessIn a seminal and continually cited article Boschma (2005) concludes that geographical proximity is neither a necessary, nor a sufficient condition for interactive learning . He assumes that other forms of proximity may substitute for geographical proximity.

Besides geographical proximity, there are four other types of proximity: cognitive, organisational, social and institutional proximity.

Cognitive proximity. The gap in competencies and skills needed to transfer knowledge, which could also be understood as the necessity of similarity of shared knowledge base between firms to exchange and understand information.

Organisational proximity. The extent within relations taking place between actors in an organisational setting.

Social proximity. Socially embedded relations between actors at the micro-level, where socially embedded relations are meant to be understood as relationships based on trust constituted of friendship, kinship and past experiences.

institutional proximity. Both formal and informal institutions providing conditions for interactive learning.

Boschma shows that organisational and cognitive proximity may substitute for geographical proximity. The reasons for this are seen in the declining role of spatial distance when, in terms of the organisational proximity, the job is precisely divided and coordinated by a central authority and furthermore, in terms of cognitive proximity, actors are in the same technology field and have a common knowledge base.

The role of geographical proximity in a company’s innovation performance depends on the industry, the size of a company, as well as on the target to which the distance is considered (e.g. distance to customers, partners, suppliers, knowledge sources, investors).

4.2 ICT creates connectednessThe development of information and communication technologies (ICT) suggests that the role of geographical proximity in knowledge transfers and innovation processes is diminishing.

The development of ICT facilitated the transfer of knowledge over long distance at low cost and accelerated the codification of knowledge. ICT is also perceived as means of replacing face-to-face relations, whereas virtual proximity is viewed as a surrogate for physical proximity.

The appearance of ICT changed the methods of generating, absorbing, storing and diffusing information and knowledge. Hence, face-to-face communication (crucial when it comes to tacit knowledge) could be substituted by communication via virtual proximity thanks to the technological evolution. Consequently, the frustration over the poor performance of the NBN.

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ICT increases the chances of changing tacit knowledge into codified knowledge (e.g. expert systems, knowhow databases, the use of removable media to store organisational knowledge).

4.3 Sharing knowledge is not always desirableLorentzen (2005) questions the assumption that the sharing of knowledge in a region is easy and cheap. Furthermore, the validity of a shared knowledge base has been challenged.

… firms are not willing to share knowledge for it undermines their competitive assets; moreover, companies are specialised and need individual combinations of knowledge from diverse sources … it is firms who have a hold on their capabilities and network environment, not regional networks and institutions (Lorentzen 2008).

The way in which people and companies share knowledge, and the behaviours and incentives involved, is a major topic in the knowledge management literature. Companies have active policies to promote knowledge sharing within their businesses and ecosystems. It can be a complex behavioural and political process, involving reciprocity, respect and trust.

The idea that there is a collective knowledge pool that companies can tap into is also challenged.

How Location Clusters Affect Innovation

Innovation is thought to come easily for companies in a high-tech cluster such as Silicon Valley, where firms in related businesses colocate. In a cluster, reasoned economist Alfred Marshall some 80 years ago, “the mysteries of the trade become no mysteries; but are, as it were, in the air, and children learn many of them unconsciously.” So, as theorists who continue Marshall's line of inquiry like to propound, technology is so pervasive in a cluster that surely clustered companies must have an easier time innovating than their competitors in the hinterlands, right?

Maybe not, say the authors of a February 2002 working paper, who measured the relationship between clustering and innovation on U.S. software firms and found unexpected results. “I thought that firms would try to free-ride,” says co-author Brent Beal, assistant professor at Louisiana State University's E.J. Ourso College of Business Administration. It's thought that within clusters, there is a collective pool of knowledge that companies can tap by hiring from local firms or simply socializing with their brethren's employees. So Beal and his co-author Javier Gimeno, associate professor at INSEAD, expected clustered firms to spend less per employee on R&D, because they would garner some tacit knowledge simply by breathing the air. The clustered firm's employees and suppliers would bring knowledge to the table that nonclustered firms would need R&D investment to realize.

That pattern of R&D expenditure didn't exist. Instead, the authors found that clustered firms launched fewer products for their R&D bucks. “[Clustering] didn't have much effect on the amount spent on R&D, but there is a negative impact on innovative output, which is counterintuitive,” says Beal.

Yu, L. (2002). How Location Clusters Affect Innovation. Sloan Management Review, 44(1), 16. http://sloanreview.mit.edu/article/innovation-how-location-clusters-affect-innovation/

4.4 The ‘death of distance’ The idea behind the territorial innovation models, stating that the key factor of the growth and competitiveness is to be seen in local environment and geographical proximity is beneficial for the transfer of knowledge and innovation processes, is often challenged these days. Some authors go as far as to proclaim the death of distance (Cairncross, 2001).

In addition to ICT factors, technological evolution in travel and transport also resulted in the increase in mobility of people which facilitates temporary geographical proximity. Efficient public transport systems are seen as a major enabler of innovation. This matter came out strongly in the consultations and particularly from the Committee for Sydney.

The need of innovators for geographical proximity is seldom permanent and can be easily fulfilled by travelling. The need for geographical proximity depends on the stage in the life cycle of a product or industry.

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Dividing the life cycle into three stages – the market introduction stage, the growth stage and the maturity stage – the first and the last stage are characterized by the need for spatial concentration beside other actors. This phenomenon applies mainly to small firms, as big ones are less susceptible to spatial obstacles.

4.5 Geographical connectedness still mattersNevertheless, the claim that geographical proximity and regional and local levels still matter also has proponents. The argument defending the position that geographical proximity stays crucial for knowledge transfer is that virtual proximity is not able to be a surrogate for geographical proximity concerning transactions characterised by ambiguity, tacitness and complexity (whereas for standardised transactions scholars admit that it is possible).

Moreover, while development of digital technologies may contribute to maintaining social relations which were previously established and formed by face-to face communications and relations, the establishment of social relations and communities from scratch cannot be done relying on new technologies in the initial stages of this process.

The idea of turning tacit knowledge into codified knowledge and, as a result, reducing tacit knowledge via ICT is also criticised:

the conversion of tacit knowledge into a codified one is an expensive process; constant development of science causes the creation of new tacit knowledge which

cannot be directly codified tacit and codified knowledge are complementary, hence the transmission of codified

knowledge is based on the appearance of tacit knowledge and vice versa the ability to take advantage of facilities coming from development of ICT requires the

use of common tacit codes and tacit practices of communication.

Studies show that spatial proximity is more relevant for small firms than for large ones (Sternberg 1999). Geographical proximity positively influences the propensity of small firms to collaborate with universities, whereas for large firms the distance is less important because the collaboration with world-class science is more valuable for them.

Therefore, large firms are eager to collaborate on local as well as on a global level – through high-quality partnership being a priority. Studies also provide evidence that distance to knowledge sources is particularly substantial for pharmaceutical industries, which locate their R&D activities next to high quality chemistry departments (Abramovsky et al. 2007; Abramovsky/Simpson 2011).

In the software industry, territorial closeness to other firms can improve productivity, but closeness to their customers does not matter for their innovation performance (Weterings 2006; Weterings/Boschma 2009). Where customer and supplier proximity is essential for time-based competition, they compress the time required to manufacture and distribute products and services, and significantly cut the time required to develop and introduce new offerings (Demeter 2012). Professional services firms have a priority to be close to their customers, and the decision makers, for example5.

With regard to distance to investors, the research conducted on the relevance of spatial proximity of companies to investment decisions of venture capitalists reveals that spatial proximity impacts the likelihood of investments and is especially important for less experienced venture capitalists (Lutz et al. 2012).

4.6 ConclusionGlobalisation and technological evolution influence the role of spatial distance in innovation processes. However, the local environment is still important for local companies due to the

5 When Commonwealth Government outsourcing began in earnest in the late 1990s, global professional services firms, ICT and vendors established a strong Canberra presence. In many cases the presence has moved from a mere sales office to fully fledged service offerings.

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presence of close knowledge networks and institutional support, which is especially important in the initial stages of a company.

To conclude, the theory of territorial innovation models stressing the local and regional potential is still valid and the development of ICT cannot eliminate the need for geographical proximity. Technological evolution has facilitated communications between actors of innovation processes, for example by making low-cost, temporal geographical proximity possible.

The needs of companies for geographical proximity are not the same in particular stages in the life cycle of their products, therefore temporal geographical proximity can be more suitable to fulfil the need of face-to-face relations in the growth stage. However, the first stage of the life cycle requires frequent face-toface contacts which means that local environment is crucial for this period. Geographical proximity alone is not a sufficient factor to encourage collaboration and enhance knowledge transfer.

As Rallet and Torre (1999: 375) sum up: "it is well known that individuals can be closely located and nevertheless behave like foreigners", hence organisational relationships and other forms of proximity are also essential.

Changeable conditions of innovation activities have implications for regional development policy, which should encourage cooperation both within the local network area and with distant partners. To create these non-local interactions, territorial innovation models cannot take the form of isolated islands but become open systems engaged in interactive learning by global connectivity.

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5 Feedback from Expert opinion survey on place based innovationThe Expert Opinion Survey, undertaken for ISA in the development of the Innovation System Strategic Plan, asked innovation experts for their views on a number of questions regarding place based innovation (Matthews et al., 2017).

5.1 Should innovation policy address place-based dimensions?Experts agreed that it is now important to balance a recognition that innovation has strong geographically-specific elements with a recognition of the importance of international connectivity in innovation (as addressed by the previous questions). This reflects the way in which there has been a strong emphasis on fostering place-based innovation capability (notably in the EU-backed ‘Smart Specialisation’ concept) over recent years – an emphasis that may have neglected the importance of international connectivity.

Figure 2: An effective national innovation strategy should balance a recognition of place-based dimensions with national and international connectivity between these places

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5.2 Innovation hubs, precincts and districtsThe survey indicates strong agreement for the proposition that “local place-based initiatives (e.g. innovation hubs, precincts and districts) make useful contributions to national innovation effectiveness”

Figure 3: Contribution of Local place-based initiatives to innovation

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5.3 Incubators, accelerations, and co-working spacesIn this part of the survey, respondents were asked for opinions on the performance of a range of activities and initiatives that are intended to support connections and collaboration between research organisations, business, and government.

Respondents generally agreed or strongly agreed with the proposition that “business incubators/ accelerators make a useful contribution to national innovation effectiveness”.

Figure 4: Contribution of incubators/accelerators to innovation effectiveness

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Experts also generally agreed or strongly agreed with the proposition that business co-working spaces make a useful contribution to national innovation effectiveness.

Figure 5: Contribution of co-working spaces to innovation effectiveness

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Co-working spaces are provided by a number of organisations including universities, innovation networks, and business incubators. Increasingly, large corporations are providing co-working spaces to stimulate innovation.

5.4 Support for fostering innovation ecosystemsRespondents also indicated strong support for fostering innovation ecosystems. A total of 232 respondents agreed or strongly agreed with the proposition that “A focus on fostering ‘innovation ecosystems’ (complementary assets, skills and relationships) makes useful contributions to national innovation effectiveness

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Figure 6: Contribution to innovation ecosystems to innovation effectiveness.

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This level of support provides string support for policy initiatives relating to innovation ecosystems.

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6 Policy directionsIt is recognised that innovation ecosystems, or clusters, are becoming increasingly important as a foundation for industry development and transformation. They emerge around large technology intensive businesses, technology entrepreneurs, universities and venture capital investors, as a combination of vibrant creative communities with both soft and hard infrastructure.

While some of the world's leading ecosystems specialise in high-technology industries (e.g. Silicon Valley, Bangalore) they are also found in sectors ranging from wine making to automobiles to biotechnology. Ecosystems may often appear location specific and internally connected, but their impact, in terms of value creation, comes through national and global connections in global value chains (GVCs) and Global Innovation Networks (GINs). The Australia wine ‘ecosystem’ provides a good example of this.

The formation of the Industry Growth Centres, as an industry policy initiative, could be a platform for the development of innovation ecosystems around these areas of identified competitive advantage. The Centres are in part location specific, but also connected to locations in Australia and globally. Smart specialisation strategies have an important role in building locational capability.

Smart Specialisation Strategies should link to at least one Industry Growth Centre.

Increasingly, universities are getting behind the development of these ecosystems in collaboration with regional development agencies, local, State/Territory and national governments, and global businesses. The focus must be global and well as local.

6.1 Policy rationalesAcross the OECD, governments are keen to enhance the competitive advantage of ecosystems and to help firms and entrepreneurs within them move up the value chain through innovation and greater specialisation.

The main policy rationale to promote ecosystem development through infrastructure and knowledge-based investments, networking activities and training, is an increase in knowledge spillovers among participants and thus the generation of a collective pool of knowledge that results in higher productivity, more innovation and an increase in the competitiveness of firms (OECD, 2012).

The essence of the rationale is not only infrastructure and knowledge based investments (hard capital) but also in the networking and training (relational and social capital). This would include support for independent innovation intermediaries, mentors, and trusted advisers.

The EU and the UK have been active in promoting and supporting Smart Specialisation Strategy policy frameworks. These are similar in many was to the cluster policies being supported in the US. The policy framework in Europe, also known as a knowledge for growth strategy, involves a number of elements:

effective investment in innovation complex instruments for allocation of resources and coordinated action interregional coordination of specialised more insight into the issues of fragmentation of production mapping regional capabilities; pro-active GVC governance and transfer of knowledge across the public and the private

domain Effective monitoring of the value creation and value capture at regional level.

The underlying principle for smart specialisation (the entrepreneurial discovery process) requires building new links between the sources of innovation (local and global) and the market place the global value chains as drivers for growth.

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Smart strategies are oriented towards ‘clustering’ around key enabling technologies – for example, digital technologies and digital content, biotechnology, nanotechnology, micro/nanoelectronics, robotics, artificial intelligence, and advanced materials in industries that have been identified as offering potential for growth.

In Australia, a number of RDA regions have, on their own initiative, developed or are in the process of developing Regional Innovation Smart Specialisation Strategies (RDA Hunter, 2016) Other regions should be encouraged to go down this track.

Strategies designed to support high growth innovation ecosystems should be linked with initiatives being developed in the Industry Innovation and Science portfolio (Industry Growth Centres) and the Cities and Built Environment portfolio – such as ‘city deals’.

6.2 Smart Specialisation in an Australian context An Australian context for evolution of the Smart Specialisation concept would for it to become less ‘insular’ in geographic terms. That is to say, maintaining the focus on distinctive place-based capabilities but adding a far stronger emphasis on national and global connectivity. In particular, this would recognise the Global Value Chains (GVCs) and Global Innovation Networks (GINs), which provide the structures within which much production, trade and innovation activities take place6.

This means the nature and extent of GVC and GIN connectivity would be the key to leveraging the ‘functional geographies’ that shape innovation performance. It is this connectivity that shapes regional income and employment as value is added to the GVCs that loop through a place. It is also connectivity in the science and research domain (reflected in GIN participation) that has a strong influence on place-based innovation effectiveness.

Current Smart Specialisation-based approaches (e.g. the UK ‘Science and Innovation Audits’) encourage place-based profiles of innovation performance and capability to present data on the export contributions of a sub-national region but avoid thinking about imports and, consequently, how value is added to these imports as a contribution to exports. An Australian approach would address this connectivity dimension and be of particular value in the Australian resource based economic setting.

If value added relies on knowledge, IP and know-how embodied in imports to a region is ignored (as tends to be the case) then a distorted profile of capability can result. This can be a particular issue of concern when assertions are made about the potential future yield from increased public sector R&D and innovation investments.

Consequently, there are compelling arguments for further evolving the Smart Specialisation concept to align with evidence on GVCs. This means moving to an approach to innovation strategy in an era characterised by GVCs and GINs with additional trade, national security and related considerations.

One benefit from considering the relationship between innovation strategy and GVCs is that it focuses attention on this ‘rounded’ set of issues – all of which should be considered when thinking about how a national economy positions itself in the global economy. From this perspective, innovation strategy matters most when it is framed by the important relationships in this policy ecosystem (Matthews and Lacy, 2017) .

The suggested policy ‘ecosystem’ framework, together with a focus on international knowledge spill-overs, is a possible solution to this challenge to develop a more holistic approach.

The approach would parallel thinking in the US, where cluster advocates have urged federal agencies to make more efficient and effective use of the limited and scarce resources they already deploy through a strategy of “link, leverage, and align” resources with innovation

6 Global connectivity was a key factor that initiated the development of the Hunter Smart Specialisation Strategy.

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cluster initiatives (Wessner and National Research Council (U.S.) Advisory Committee on Technology Innovation, 2012).

Intensifying international competition for leadership in next-generation industries means that U.S. state and regional governments no longer compete only against each other for investment. They also must compete against regions around the world with comprehensive and increasingly well-funded strategies to develop world-class innovation clusters that have absorbed many lessons from the United States. For U.S. innovation clusters to remain globally competitive, therefore, their policies and strategies should be benchmarked against those of rival clusters in Europe, Asia, and Latin America.

The Committee considered that Federally funded university and national laboratory basic and applied research programs could be oriented toward the activities of local innovation ecosystem and university research to accelerate development of strategic technologies or to promote economic development with regional ecosystem initiatives that are deemed to have the best chances of success.

The wide range of initiatives across the U.S. and around the world shows there are many methods of leveraging technology advances into an ecosystem of innovative companies. There are, however, several common features of successful ecosystems – they have research universities or national laboratories at their core, and in some cases, both. They sprang from pre-existing regional industries and R&D strengths.

Across the globe it is now an accepted practice for national governments to take the lead in targeting and developing innovation ecosystems (referred to as clusters in a US context). The approach that has proved most effective in the US is for initiatives to emerge from the ground up, from companies, research institutions, and public agencies that identify unique opportunities based on their strengths and share a common interest in economic development.

6.3 Policy initiative: an Innovation Ecosystem Investment FundTo give effect to this focus on innovation ecosystem development it is noted that a Report prepared by Professor Roy Green and Dr John Howard for the Senate Innovation System Inquiry recommended (Green and Howard, 2015):

An Innovation Ecosystem Initiatives Investment Fund (IEIIF) be established to build and sustain capability in entrepreneurship, collaboration, and start-up company formation in high growth innovation districts and emerging local entrepreneurial ecosystems. Funding should be available for collaborations between universities, other research organisations, VET providers, RDA Committees and business groupings.

The fund would support investments, put forward on a business case, for initiatives that would create economic value for an innovation ecosystem. Funds would be allocated to an organisation with a specific responsibility for innovation ecosystem development. The investment manager would be independent from the collaborators

The Fund would strengthen local innovation ecosystems through investment in local initiatives where a strong business case has been made. This would include:

Collaborative projects involving building strategic connections and partnerships between universities, business and government agencies – nationally and globally

Precincts, science parks, incubators, accelerators, and co-working spaces - where return on investment can be demonstrated, and additional value for Australian taxpayers can be established

Talent, skills development, and training that is appropriate to the industry and knowledge profile of the ecosystem

Network development, ‘soft infrastructure’ and maintenance, including intermediary and mentoring support

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Start-up, new venture business development, and enterprise training initiatives including scholarships to attend Executive Programs at globally business schools

In collaboration with investment attraction agencies, encouraging the location of global R&D intensive corporations, as a foreign direct investment (FDI) initiative

In collaboration with Infrastructure Australia and State infrastructure agencies (e.g. NSW Urban Growth, Regional Development Victoria) provision of hard infrastructure support, including digital connectivity, purpose designed buildings and facilities, rental housing for visiting entrepreneurs, business leaders and researchers, community facilities, and public transport.

Funding should be based on the development of common strategic goals and the articulation of development projects in a particular area of knowledge application. Above all, funding, should encourage the further development of initiatives underway and support and capture diversity in the innovation system. It should reward innovation and entrepreneurial initiative. The Fund would identify funding categories, but invite submissions on a business and value capture basis – rather than a rules driven ‘categorical’ framework.

The Fund could be modelled in the very successful Innovation Investment Fund, but with a broader base of investment opportunities. Investments would be evaluated at regular intervals and five years after the funds were acquitted in order to provide information on outcomes and impacts.

6.4 Link to the Growth Centres ProgramThe Industry Growth Centres have been established with a long-term focus on sectoral innovation in six priority areas (Department of Industry and Science, 2015). Consistent with comments about the short term focus of industry and innovation policy over the last 25 years (Howard, 2017b), growth centres should have a commitment of at least seven and preferably years.

The Industry Growth Centres model is evolving, and there is potential for them to be given a wider mandate for supporting smart specialisation/cluster investments where consistent with the growth centre mission. These investments could cover geographical, organisational, social and or institutional connectedness as discussed in Section 3 above.

In writing this I am reminded of the logic of the Urban and Regional Budget and Plan that was developing on the mid 1970s – and was in many ways ahead of its time.

6.5 Governance and funding ISA should have responsibility for coordinating the Innovation Initiatives Investment Fund. Other Ministers would be involved where their portfolio responsibilities were relevant to the business cases being evaluated. For example, the Minister for Cities could address urban development and renewal aspects.

Policy and investment strategies should be developed jointly with State/Territory Governments, university groupings such as the Go8, ATN, IRU, and RUN groups, and non-aligned universities, and build on achievements that are being made. Policy initiatives should not override the organic nature of innovation ecosystem development7.

Funding responsibility should be determined within the context of the overall level of funding available for Science, Research and Innovation, and might include new models for public-private partnerships.

7 Policy has not been able to replicate a Silicon Valley and very few of the many biotech clusters have achieved intended results in terms of job and wealth creation.

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Attachment A: Further Discussion of University Innovation DistrictsInnovation districts have been identified as a specific form of ecosystem.

Bruce Katz of The Brookings Institution has identified three types of innovation district development in his book "The Rise of Innovation Districts":

1. The “anchor plus” model - Cortex St. Louis, Kendall Square in Cambridge with a start-up incubator, University City in Philadelphia

2. The “re-imagined urban areas” model - Urban Areas: South Lake Union in Seattle, Boston Seaport, Brooklyn Navy Yard

3. The "urbanized science park" model - Research Park Triangle in Raleigh-Durham, University of Arizona Tech Park, University of Virginia.

Globally, Barcelona, Berlin, Copenhagen, London, Medellin, Montreal, Seoul, Stockholm, and Toronto all contain emerging innovation districts. In the United States, the most iconic districts are in the downtowns and midtowns of Atlanta, Cambridge, Detroit, Philadelphia, Pittsburgh, and St. Louis. In each, advanced research universities, medical complexes, and clusters of tech and creative firms are sparking business expansion as well as residential and commercial growth.

Other innovation districts are developing in Boston, Brooklyn, Chicago, Portland, San Francisco, and Seattle. Former industrial and warehouse areas are undergoing a renaissance, powered by their enviable location along transit lines, proximity to downtowns and waterfronts, and recent additions of advanced institutions.

Perhaps the greatest validation of this shift is the fact that traditional exurban science parks like Research Triangle Park in Raleigh-Durham are now responding with efforts to meet the new demand for more vibrant and collaborative work and living environments.

Innovation districts are already attracting an eclectic mix of firms in the app economy and high tech sector as well as in high-value, research-oriented sectors such as life and material sciences, clean energy, and data computing. They are also home to companies in highly creative fields like architecture, design, theatre production, advertising, and marketing. We even see a return to cities of small-scale and customized manufacturing, made possible by 3D printing, robotics, and other advanced techniques.

In 2015 Brookings published One year after: Observations on the rise of innovation districts . The following observations were made:

The model of innovation districts has been embraced, co-opted, and (in some cases) misappropriated, further reinforcing the need for grounding this work in empirically based evidence.

In a number of cities, local stakeholders have applied the label to a project an area that lacks the minimum threshold of innovation-oriented firms, start-ups, institutions, or clusters needed to create an innovation ecosystem. This appears to result either from the chase to jump on the latest economic development bandwagon, the desire to drive up demand and real estate prices, or sometimes a true lack of understanding of what an innovation district actually is. The motivation for real estate developers to adopt the moniker seems clear: to achieve a price premium for their commercial, residential, and retail rents. Yet these sites are typically a collection of service-sector activities with little focus on the innovation economy. The lesson: labelling something innovative does not make it so.

The core economic assets of innovation districts are not fixed; in fact, many innovation districts are being created or enhanced by the relocation of major anchor facilities as institutions strive to achieve the highest return on investment.

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The conventional notion of an “anchor” institution is that it is solidly weighted in a particular place. Yet over the past decade a substantial number of innovative companies and advanced educational and research institutions have moved key facilities and units as a means of generating greater innovation output.

The physical relocation of key innovation assets has now become a critical competitiveness strategy for companies, universities, and even states. Our strong sense in talking with leaders around the country is that we are still at the early stage of corporate and university relocations given the extent to which urban areas have been revalued.

Almost all innovation districts have significant work ahead to understand the rising value of “place” in the innovation ecosystem and leverage or reconfigure their physical assets to create dense and dynamic communities.

While some university-led districts have made some improvements over the years, districts anchored by medical campuses have significant work ahead. These spaces were designed as isolated fortresses that valued parking over walking (ironic given their health mission), with little or no attention paid to amenities, cultural activities, retail, or housing. This raises the potential for smart (and related) place-making activities in a nearby area and reinforces the need to rethink traditional geographies and artificial boundaries when considering interventions.

The rapid growth and impact of national intermediaries (what we call innovation cultivators) shows real promise in helping innovation districts grow and steward their networking assets and stimulating new innovation opportunities.

The past year has seen substantial growth in multicity intermediaries along with scores of locally grown accelerators and incubators. It appears more than ever that intermediaries are increasingly the catalyst to growing innovation and entrepreneurial energy within local districts and across start-ups, small and medium-sized enterprises, and, even to some extent, large companies and research institutions. They are designed to think and act horizontally, encouraging people and firms to interact and work together in ways and at a scale previously unseen.

A growing and increasingly important role for intermediaries is helping innovation districts evolve from the traditional “research and development” model to a “search and development” one, where crucial answers to their innovation questions and technological challenges are discovered by finding and collaborating with other firms. Some districts immediately recognized this potential and have gone to great lengths to grow, lure, and fund the development of multiple intermediaries across their districts.

As one can imagine, this clustering was deeply intentional and viewed as a way to stimulate new relationships, new networks, and the cross-fertilization of ideas; Cortex refers to this deliberate process as “innovation engineering.” We anticipate more innovation districts to follow suit, pursuing, if not cultivating, such intermediaries in their own innovation ecosystems.

The rise of innovation districts takes place in a national and urban political environment that demands inclusive growth and equitable outcomes.

Because of their location in the cores of central cities, many established and emerging innovation districts are located several blocks away from distressed communities. This proximity creates an enormous opportunity to show the positive impact that innovative growth can have on inclusive outcomes. Innovation districts create employment opportunities that can be filled by local residents and procurement and construction opportunities that can be fulfilled by local vendors and contractors.

Recognizing these benefits, local leaders are demonstrating a genuine commitment to growing more inclusive districts. For example, in the Barcelona 22@ district, leaders are

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trying to quantify the growth in service jobs accessible to local and regional residents while, at the same time, connecting those residents to training that increases their skills in more innovation-oriented sectors.

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Attachment B: Australian innovation cluster/district/precinct initiatives This Attachment provides information on a number of cluster/district precinct initiatives in place. It does not include all areas, but services to indicate the variety of initiatives in place.

New South Wales

University of NSW science and technology precinct

Innovation takes many forms; what UNSW's new science and technology precinct means*

On cue for innovation and technology, Prime Minister Malcolm Turnbull and Chinese Premier Li Keqiang unveiled research and development funding for Australian research through a new science and technology precinct at the University of New South Wales (UNSW).

The new Torch Innovation Precinct is the first such partnership outside China. It is backed by leading Chinese companies and the Ministry of Science & Technology’s Torch high technology industry development program. Eight Chinese companies have secured an initial $30 million investment in energy, and environmental engineering, advanced materials and biotechnology. UNSW President and Vice-Chancellor Professor Ian Jacobs said of the $100 million partnership, “This is about future proofing our national competitiveness by strategically positioning Australia as China becomes the world’s largest investor in R&D and the 21st century’s science and technology superpower.”

Since 1988, China’s Torch program has collocated Chinese businesses, universities and research organisations in science and technology precincts. The 150 Torch precincts in China now generate some 7 per cent of GDP, 10 per cent of industrial output and 16 per cent of export value. Independent economic modelling by Deloitte Access Economics estimated the new precinct would add more than $1 billion to Australia’s GDP in the first 10 years alone.

The first group of UNSW Torch industry partners will initially set up incubator spaces on the university campus, close to researchers and a growing community of student entrepreneurs. Investment is expected to build to $100 million, enabling the construction of the innovation precinct by 2025.

“The statistics are staggering. In China, Torch zones are home to over 50,000 tenant companies and invest RMB 347 billion [$A70 billion] in R&D,” said Laurie Pearcey, UNSW’s International Executive Director and former Chief Executive of the Australia China Business Council.

We also have another Smart Cities initiative from the Australian Government. Its Smart Cities Plan promises to “coordinate and drive smarter city policy”, including improved sustainability. It will also draw on “innovative finance mechanisms”, such as value capture as developers gain from infrastructure development.

With Chinese cities growing in size and number, more Australian cities and airports are wanting to be able to reach the people and markets of so-called second-tier cities, such as Dalian, in the northeast, Nanjing, located in the Yangtze River basin, and industrial and financial city, Wuhan. It is two-way with more and more citizens from outside the tier-one Shanghais and Beijings, visiting Australia.

And in a small way (but perhaps a small sign of an innovative future) Beijing is going to build 100 public toilets with free Wi-Fi service. Each toilet is expected to cost around 50,000 yuan (about $A9990) and is part of the program called "the toilet revolution". The connectivity drive will also cover mobile phones and electric vehicle-charging devices, a Beijing Municipal Commission of City Administration and Environment official, said.

*Deborah Singerman runs her own writing, editing, proofing and project managing consultancy specialising in the urban built environment and community. @deborahsingerma

http://www.architectureanddesign.com.au/features/comment/innovation-takes-many-forms;-new-science-and-techn

Piivot – Sydney’s Digital Creative Hub

Piivot is a UTS-initiated partnership of tech start-ups, digital, creative, cultural, corporate, government, and education organisations centred on digital creative innovation. It is directed towards entrepreneurs, partners, investors and students looking to connect, learn and work together. It is located ‘right in the heart of the digital creative ecosystem’ in Ultimo, Sydney, with its vibrant urban culture, world-class architecture, small bars, independent retailers and galleries.

Programmes and initiatives include:

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Hatchery ‘pre-incubator’ programme, designed to create entrepreneurs. The Hatchery is a safe and secure environment to ‘hatch’ students’ entrepreneurial talent, with further connections to commercial accelerators, incubators and co-working spaces such as Fishburners

Hatchery+ programme (in development) to provide tools, techniques and support for new venture creation by students, academics and external partners, in conjunction with UTS programmes such as the new MBA in Entrepreneurship

Springboard Enterprises Australia, a highly vetted expert network of innovators, investors and influencers who are dedicated to building high-growth, technology-intensive companies led by women

City of Sydney start-up pilot projects to support entrepreneurs in creative and technology start-ups (in development)

Pollenizer 60 day Start-up Programme. Australia’s first start-up incubator has a 60-day start-up programme to help start-ups scale and grow.

http://www.piivot.sydney/

The Westmead Precinct

The Westmead health, education and research precinct, located in the heart of western Sydney, is on a worldwide search for the most creative and innovative master planners. It is characterised by an established eco system of leading public and private health, education, and medical research anchor institutions. Supported by highly talented surrounding labour markets, these institutions have acted as magnets for further health related investment. In many ways they have facilitated the growth of a dynamic eco system that now includes over 350 complementary enterprises located at Westmead.

The Westmead precinct is one of the largest health, education, research and training precincts in Australia and a key provider of jobs for the greater Parramatta and western Sydney region.

More than $3 billion has been committed by government, universities and the private sector to upgrade and expand the precinct’s health services, education and medical research facilities over the coming years.

Spanning 75 hectares, the Westmead precinct comprises over 400,000m2 of high-end health-related developments, including four major hospitals, three world-leading medical research institutes, two university campuses and the largest research intensive pathology service in NSW.

Westmead has been identified by the NSW Government as a State Significant Development site due to the size, economic value and importance to Parramatta and Western Sydney. By 2036 the number of full-time staff working across Westmead will increase to more than 30,000 and the number of students will expand to more than 10,000.

Westmead precinct partners work together in an integrated and coordinated way to deliver world-class innovation and services for NSW and Australia.

http://www.westmeadproject.health.nsw.gov.au/precinct/westmead-precinct

For Westmead to develop as an ‘Innovation District’ it requires one final species to be added to the ecosystem; this species being major health technology enterprises such as bio and medical technology firms.

Proposed education and research facilities include:

Western Sydney University Westmead campus redevelopment (+2,500 students) The University of Sydney Westmead campus plans (+4,800 students) New Clinical Training facility (Western Sydney University) Consolidation of The University of Sydney Dental School, and development of Masters of

Nursing Western Sydney University Translational Health Research Institute National Institute for Complementary Medicine (Western Sydney University) Children’s Medical Research Institute, stages 2-5 (increasing researchers five-fold) The Westmead Institute for Medical Research

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NSW Bio-Banking facility Westmead Innovation Centre Dedicated paediatrics clinical trails centre at the Kids Research Institute Western Sydney University Clinical Training Facility Sydney University’s Knowledge Hub (Westmead spoke) Western Sydney University LaunchPad.

The Bays Precinct Urban Transformation Program

The Bays Precinct Urban Transformation Program is a whole-of-government approach being led by UrbanGrowth NSW. It includes the: Sydney Harbour Foreshore Authority, Department of Planning and Environment, Department of Premier and Cabinet, Infrastructure NSW, Property NSW, Transport for NSW including Roads and Maritime Services, Treasury NSW, Port Authority of NSW, NSW Trade and Investment, Arts NSW, Family and Community Services and Destination NSW. By bringing the planning and development work into one office there is one voice, one plan and one vision for government.

The Precinct comprises 5.5 kilometres of harbourfront, 95 hectares of largely government-owned land, and 94 hectares of waterways in Sydney Harbour. It is intended that it will transform over the next 20 to 30 years into a ‘bustling hub of enterprise, activity and beautiful spaces’. It is an ambitious venture:

So it was with a reputation as a can-do premier that Mr Baird declared a vision for a technology precinct to rival Silicon Valley at the disused White Bay power station on the Rozelle waterfront in October 2015: "We will be going to market ... to turn this power station into a technology hub that will drive the future of not just Sydney and NSW but I believe the national economy." The inner-western Sydney site would be "a place where global giants of technology and innovation cluster and connect with start-up entrepreneurs, business incubators and accelerators".

http://www.smh.com.au/comment/smh-editorial/nsw-government-needs-innovative-rescue-plan-for-white-bay-technology-precinct-20170414-gvlffg.html

Expectations ‘crashed’ with the revelation that Google, which had been looking at the site for its Australian headquarters, had walked away from negotiations. The complexity of the project and the timing of associated transport infrastructure could not meet Google's requirements at this time," the government said.

Google's withdrawal has dealt a heavy blow to NSW's touted aspirations to compete as a global tech hub where the jobs of the future are realised. Mike Baird's talk of a "quantum harbour in the Bays" comparable to California's Silicon Valley purposefully attracted the attention of the global tech world. A tweet by venture capitalist Miele Carnegie over the weekend in response to a New York Times article on the success of initiatives by city of Wellington to attract global tech talent suggests disillusion over local efforts: "Read this and stab yourself. Beaten by New Zealand again".

Many were dismayed when in November 2015 – one month after it revealed its White Bay plans – the government knocked back the bid by the home-grown tech giant Atlassian, now valued at $US7 billion on the NASDAQ, to redevelop the Australian Technology Park site at Redfern as a tech hub in partnership with Walker Corporation. The site was sold instead to a Mirvac-led consortium with the Commonwealth Bank as anchor tenant. Although Mirvac said it wanted the space to be a tech hub too, there was scepticism that the Commonwealth Bank would be as attractive as a neighbour to start-ups as Atlassian would have been.

It's also questionable whether start-ups will ever be able to afford the high rents that harbour views at White Bay might command. But the immediate problem is lack of transport to the site.

University of Newcastle NeW Space

NeW is a $95m landmark education precinct under development by the University of Newcastle in the heart of Newcastle's CBD.

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The project received state significant development (SSD) approval in February 2015 and the UON awarded the Principal Contractor contract to Hansen Yuncken in May 2015 after a lengthy and in-depth procurement process. A commencement celebration was recently held on the site, marking the official turning of the sod that signifies the commencement of construction on site.

The new precinct is a significant revitalisation project for the city of Newcastle and will host a range of University-supported activities including:

Business and law programmes Digital library services and information commons Collaborative learning and research spaces Facilities for engagement with industry, business and the community Social learning spaces.

Although initially for the delivery of business and law programmes, NeW Space will be a resource for the entire University community across different disciplinary and knowledge fields. Developed as a technology-rich and engaging site, NeW Space will provide a unique platform for our staff to develop and test innovative ideas and to deliver a 'next generation' university experience for students.

The NeW Space concept is designed to be a place that invites the city and the community into the building, the University and onto the city campus through social spaces, connecting pathways and active student learning spaces that are right on the street front

NeW Space is supported by Australian Government funding of $30m through the Education Investment Fund Regional Priorities Round, NSW Government funding of $25m, and $40m invested by the University.

https://www.newcastle.edu.au/about-uon/our-environments/new-space

Victoria

Carlton Connect

The Carlton Connect Initiative has laid the foundations for Australia’s leading innovation precinct, anchored by the University of Melbourne. It aims to position world-class talent with 21st century technologies in the heart of Melbourne and drive partnerships between different sectors and disciplines to address global challenges that can’t be solved by one sector alone.

The University is committed to:

Driving multidisciplinary partnerships between research, industry, government, entrepreneurs and the social sector

Attracting world-class talent A community committed to sharing knowledge and exploring new terrains Breaking down the barriers between disciplines, sectors and geographies Programming diverse activities designed to drive collaboration

With the innovation precinct, the University of Melbourne is:

Developing a site with a strong social history to meet the highest standards in design and sustainability

Creating a new platform to showcase technological innovation and research outcomes Building new public engagement spaces including Science Gallery Melbourne

Carlton Connect provides an umbrella for the following initiatives:

LAB-14 has been operating as a successful prototype of the innovation precinct over the last two-and-a-half-years. The new innovation precinct is expected to be completed by 2020.

The Translating Research at Melbourne (TRaM) program accelerates commercial insight for researchers.

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Based on the US National Science Foundation’s I-CORP’s Lean LaunchPad methodology, the TRaM program gives teams access to essential resources (including funding, space within LAB-14, structured mentoring and networking, as well as opportunities to pitch to industry and investors) to identify and act upon “market pull” for their research.

The Melbourne Accelerator Program (MAP) backs the people behind big ideas. It is the eighth best university accelerator in the world, and the best in Australia. To be hosted at the Carlton Connect innovation precinct, MAP is leading the charge to transform Melbourne into a truly world-class entrepreneurial community. In just under four years, MAP has accelerated 24 companies with 56 founders, leveraged over $10m in funding and created over 200 jobs.

After working with startups committed to social or environmental impact, MAP recognised the unique challenges these startups faced and founded Compass – its impact entrepreneurship program. Compass provides unique experiences for impact entrepreneurs and their founding teams as they begin their journeys.

The European Union (EU) Centre on Shared Complex Challenges fosters EU-Australian dialogue and collaboration between academia, policy makers and practitioners on the shared global challenges of climate change and energy, regional governance, innovation and entrepreneurship. Co-funded by the University of Melbourne and the European Union (EU), the EU Centre promotes a shared understanding of the EU-Australia relationship and developments on complex challenges such as: climate change and energy, regional governance and innovation and entrepreneurship.

Science Gallery Melbourne will be a bold addition to our city, exploring the collision of art and science, and playing a vital role in shifting our understanding of science, art and innovation. Part of the acclaimed Global Science Gallery Network, and embedded in the University of Melbourne, the Gallery will be a dynamic new model for engaging 15-25 year olds with science. One of only eight nodes worldwide, Science Gallery Melbourne will involve, inspire and transform curious minds through arts and science.

Geelong

An important regional example is the Geelong Technology Precinct, which was established to apply knowledge and advanced technology to reposition Victorian industry from traditional routinised mass production to more flexible and specialised activities. The Precinct focuses on Deakin’s core research capabilities in materials, biotechnology, chemistry and environmental engineering, along with regional strengths in manufacturing and agri-processing8.

The Precinct offers opportunities for collaborative and contract research, provides tenancy for technology-oriented businesses, and enables 'proof of concept' and 'industrial prototyping'. It aspires to be the leading Australian regional hub for higher degree training in science and engineering.

The precinct is the base for:

The Australian Future Fibre Research and Innovation Centre, a partnership between Deakin University, CSIRO, VCAMM and the State and Federal Government. The Centre received a $37m Education Investment Fund grant

The Institute for Frontier Materials (IFM), which undertakes a unique style of research combined with industry co-operation.

A state of the Art Electron Microscopy Suite The Centre for Intelligent Systems Research CSIRO Materials and Science Engineering Carbon Nexus, world's first, dedicated, pilot scale Carbon Fibre Plant A Proof of Concept facility comprising 2,000 m2 of open floor space and 1,000 m2 of

laboratory space for Metal, Intelligent Systems and Corrosion laboratories Metabolic Research Unit, a purpose-built molecular facility that supports research

focussed on the causes and characterisation of complex metabolic diseases. A number of industry partners including Carbon Revolution, Kemin Nutrisurance,

Victorian Centre for Advanced Material Manufacturing and the International Fibre Centre

8 These plans follow overseas initiatives, such as the Lüneburg Innovation Incubator where Leuphana University and the German federal state of Lower Saxony strengthened the research and economic potential of the former governmental Lüneburg district. See OECD 2015. Lessons Learned from the Lunebirg Innovation Incubator. OECD Working Paper. Paris.

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http://www.deakin.edu.au/gtp/ Ballarat

The Ballarat Technology Park (BTP) is a 29-hectare site set in a park-like environment, 7km from the regional city of Ballarat. It is easily accessible from Melbourne, Geelong and Bendigo.

Adjacent to Federation University's Mt Helen Campus, the BTP is situated to support innovative technology-based enterprises grow and prosper. Enterprises can access skilled graduates through the University, as well as take advantage of the applied, academic and research knowledge available.

BTP has been successfully supporting and fostering industry, innovation and job creation since 1995. This fast evolving precinct encourages and supports the development of emerging and existing technology-oriented enterprises.

Currently, more than 30 enterprises are located at the Park, including IBM, State Revenue Office, Emergency Services Telecommunications Authority, Primary Health Care and others. The Park's ideal location on the outskirts of Ballarat provides great lifestyle opportunities as well as having the convenience of being close to Melbourne, Geelong, Bendigo and Western Victoria.

The BTP has evolved and expanded steadily since its beginnings and is now embarking on a further growth strategy.

The Greenhill Enterprise Centre (GEC) is the BTP's early-stage business incubator, hosting start-up technology focused businesses navigate their way through any challenges, better equipping them for survival.

The Global Innovation Centre (GIC) is the next step for small-to-medium sized enterprises. It is currently the home to a range of innovative technology focused enterprises.

http://btp.federation.edu.au/index.php

Werribee: The Australian Education City initiative

Australian Education City is an Australian company formed for the purpose of creating education and Innovation Districts in Australia. Building on Australia’s strengths in education, R&D and innovation, combined with leading Smart City technologies and global capital, Australian Education City aims to create sustainable prosperity for Australia.

Its vision is to create bespoke precincts in each State and Territory of Australia that leverage, enhance and optimise opportunities for businesses and people to connect on a local and global scale. http://aec-id.com/. The current proposal is being assessed and considered, with a decision expected to be made later in 2017.

AEC currently has exclusive right to negotiate development of the 400ha East Werribee Employment Precinct, which is state government-owned land around Sneydes Rd that was previously used for agriculture and research. It is understood that talks are under way with local and overseas educational institutions to provide tuition to a potential student population half local and half from abroad.

Australian Education City

At the core of our masterplan is our vision for a liveable and sustainable city, combining the key ingredients of mixed use, density, connectivity, high quality public realm, local character and adaptability. We’ve embraced the best of what we’ve seen around the world to help us create an amazing future for these precincts.

Inspiration has been drawn from Eidhoven (Netherlands), Biopolis (Singapore), Hammarby Sjöstad, Sweden, Masdar City, United Arab Emirates.

Education

Our masterplan is centered around the creation of an inspirational education hub which combines world-class

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university campuses and education pathways for over 50,000 students. Our education component comprises of pathways from early learning centers to high schools, through to vocational institutions and universities.

To facilitate international collaboration and student engagement, we have partnered with EIC Group, one of the world’s largest student placement groups, to undertake a crucial role in bringing diversity to our international student body in each of Australian Education City’s locations.

Research and development

Australian Education City will be the genesis for developing Innovation Districts throughout Australia which integrates pioneering R&D with education and commercialisation.

AEC Innovation Districts will concentrate on established fields of research excellence such as biomedical research, cleantech, agri-food sciences, advanced manufacturing, and Information & Communications Technologies.

We are proposing to partner with experienced global science park operators in the development of our Innovation Districts. The depth and scale of these operators’ expertise will underpin the development and growth of our Innovation Districts through the attraction of quality tenants that facilitates engagement for Australian businesses in the next phase of their growth.

AEC has Memorandums of Understanding to partner with global companies such as IBM, Honeywell, and Cisco who will establish industry-led innovation within our flagship location.

City Centre

Australian Education City includes its own commercial center at a scale and massing of several city blocks which is integrated into a broader city framework. The commercial center is complimented by a vibrant lakeside entertainment area of restaurants and cafes, theatres and galleries, and performing arts centers to attract key corporate entities as anchor tenants.

Convenient high-frequency transport systems have been designed to provide both residents and employees with efficient circulation throughout the Innovation District, together with segregated shaded boulevards to accommodate pedestrians and cyclists.

Residential

Our masterplan’s signature reflects choice, liveability, sustainability and community inclusiveness. Based on the concept of a 20-minute walkable neighbourhood, Australian Education City provides connectivity and accessibility to a range of transport modalities and lifestyle choices for everyone. Our precinct includes up to ~2,850,000m2 of residential GFA for ~26,500 dwelling new low, medium and high density dwellings to cater for up to ~67,000 new residents. From waterfront properties to quiet tree lined streets, our residential developments provides access to high quality community sporting facilities and assets, and a vibrant arts and entertainment precinct.

Along with commercial, education and R&D areas of the Innovation District, our residents will benefit from the next generation of Smart Cities technology. Australian Education City will use big data analytics to help the ICT system to learn from its residents and businesses, thereby improving how city infrastructure responds to the demands of its end-users, together with improving quality of life through efficiency of services to meet the city’s needs.

The project is being funded by international investment and supported by an assembly of local and global project partners, Australian Education City will deliver the critical mass of each precinct within an unprecedented timeframes. Our rapid delivery approach will drive several billion dollars of infrastructure delivery throughout each precinct within the first few years, and will see the education campus and associated facilities completed and welcoming the first student cohort within 7 years of super-lot selection.

Let’s export education and technology, not coal

The Australian12:00AM July 1, 2017

ALAN KOHLER, Editor-at-large, The Australian Business Review

It’s a measure of how stuck in the past Australia’s politicians are that the Queensland and federal governments are supporting a high-profile $20 billion coalmine in Queensland that will generate 1464 jobs, when a $30bn education and technology export project in Victoria, predicted to create 94,000 permanent jobs, is virtually unknown and remains on a knife’s edge.

After two years of due diligence and negotiations, the state Finance Minister, Robin Scott, told the Herald Sun recently that a decision was expected to be made in a few months. It’s been a long, difficult process, and

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could still go either way.

It’s hard to avoid comparing this project with the proposed Adani coalmine, given their similar scale. The Carmichael mine would be the biggest export coalmine in the world at a time when coal’s future is, to say the least, under a cloud.

Meanwhile in Victoria, the AEC in Werribee is estimated by PwC to create 94,000 permanent jobs in education, research and technology. There will be no government subsidies sought or provided; in fact, the developer will pay the state government millions for the land.

The city will cost $30bn to build over 20 years and would end up housing between 80,000 and 100,000 people in more than 30,000 mostly medium-density dwellings.

It is likely to be self-contained in energy, with solar panels on every roof and biomass generation from waste, although it would also be connected to the grid for backup, and would be the world’s first fully “cognitive city” — that is, with everything connected via the internet and the data managed by artificial intelligence.

It could also be a model for decentralisation that could take pressure off housing and transport in Melbourne and Sydney.

Australian politicians have been spouting for years about the need for this country to be smarter, and to replace brute resources with smart innovation.

Well, here is the first technology project with the scale to rival the Australian resources sector. It would transform not just Melbourne, but set up Australia up as a globally significant exporter of education and technology.

The project is the idea of a 43-year-old Victorian property developer and financial adviser named Ross Martiensen, and his business partner, Bill Zheng, 50, who immigrated from China 27 years ago.

IBM has signed a memorandum of understanding to use AEC as research centre and model for cognitive cities around the world, and MOUs have also been signed with Telstra, Cisco and Honeywell for other technology partnerships to connect with the university research centres.

The core of the plan is for up to 20 universities to lease campuses there. They would link with the technology partners for joint research and commercialisation.

Too good to be true? Maybe. But trying that instead of another massive coalmine would seem to be a no-brainer. Both the Prime Minister, Malcolm Turnbull, and the Opposition Leader and member for coal, Tony Abbott, should get behind it.

http://www.theaustralian.com.au/business/opinion/alan-kohler/lets-export-education-and-technology-not-coal/news-story/a0a2fd5b801bade5ae5c2d52163f463b

Queensland

Kelvin Grove

The Creative Industries Precinct at QUT's Kelvin Grove campus is an incubator for the next generation of ground-breaking ideas, emerging and experimental artists and designers, and creative enterprise. The Precinct, which hosts some of Australia's most sophisticated, high-tech digital facilities, is located on the western fringe of Brisbane's Central Business District and is part of the newly established Kelvin Grove Urban Village.

The Precinct provides a unique opportunity to easily connect and collaborate with partners from government and industry to create new work, develop new ideas and grow the creative industries sector in Queensland and Australia.

The yearly exhibition program bolsters Brisbane's contemporary art scene by showcasing the emerging field of new media and digital art, and is supported by innovative public programs and student showcase theatre productions, all taking place in our state-of-the-art facilities.

The Precinct represents a $60m investment. http://www.ciprecinct.qut.edu.au/about/

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South Australia

Tonsley innovation District, Adelaide

Tonsley brings together leading-edge research and education institutions, established businesses and start-ups, business incubators and accelerators as well as government and the wider community to connect and collaborate in Australia’s leading innovation district.

TONSLEY INNOVATION DISTRICT OFFICIALLY LISTED AS AN ADELAIDE SUBURB

The new Tonsley includes the 61 hectare former Mitsubishi Motors site, an area south to Sturt Road, and the existing residential precinct bounded by the Tonsley rail line, Sturt Road and South Road. A small industrial precinct to the northeast of the site is also included.

The site has long been known as Tonsley and the name has a 140-year history in the district. The Ragless family bought the original site in 1876 and named it after Tonsley Hall in England. It was farmed for several generations before being developed by Chrysler in 1964, which was bought out by Mitsubishi in 1980.

The site, purchased by the South Australian government in 2010, is now home to Australia’s leading innovation district, and encompasses more than 70 business and around 1000 workers.

As well as being a hub for advanced manufacturing businesses and services, Tonsley is viewed internationally as a model for urban renewal. It has a significant research, education and training focus with Flinders University’s School of Computer Science, Engineering and Mathematics and TAFE SA’s Sustainable Industries Education Centre both on site.

https://renewalsa.sa.gov.au/tonsley-innovation-district-officially-listed-adelaide-suburb/

The Tonsley Innovation District’s four focus sectors reflect South Australia’s major economic strengths and opportunities:

Health, medical devices & assistive technologies Cleantech & renewable energy Software & simulation Mining & energy services.

Supports optoelectronics initiative

Tasmania

Science and technology hub for Hobart CBD wins Infrastructure Australia approval

By Harriet Aird

A $400-million science and technology precinct for Hobart's CBD is now a step closer to becoming a reality.

The University of Tasmania wants to turn a city car park into a STEM (science, technology, engineering and mathematics) hub and Australia's peak infrastructure advisory body has given its stamp of approval.

Infrastructure Australia (IA) chairman Mark Birrell said the project was nationally significant.

"This is captivating in what it can do for Tasmania, but my point is it is captivating for what it can do for Australia," he said.

University of Tasmania vice-chancellor Peter Rathjen said the $400-million project could transform the state's capabilities in science, technology, engineering and maths.

"It makes such a statement about the future of Tasmania itself," he said.

"We would be putting science and knowledge physically at the heart of our community."

The precinct would provide teaching and research facilities to 3,000 students and 700 staff.

IA has added the project to the national infrastructure priority list — the first time a university proposal has been backed with such high priority.

But IA approval does not mean the precinct is guaranteed.

"What this means is that the university's got over a very high hurdle, of proving strategic merit and national significance," Mr Birrell said.

"The business case is a good one and I hope that it can get the funding together now as a result of this

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approval."

The exact funding breakdown of the project will depend on ongoing negotiations between the university and both state and federal governments, but the ABC understands the Commonwealth will be asked to contribute roughly $250 million.

The IA approval of the STEM project comes as close to 300 students prepare to move into the university's newly built student accommodation this weekend.

Local business owners said they were excited by the influx.

"It's giving the 'midtown' precinct a new vibrancy that we've been working towards for some time," store owner Katina Challen said.

"We know that beyond the students themselves, their visiting friends and relatives will be a great marketing opportunity for us."

Stuart Addison owns a nearby bar and bistro, he said it was unclear exactly what the population boost would mean.

"We don't know [whether they] want what we're offering, or whether we maybe adapt our offering a bit to be a bit more student friendly," he said.

"At the end of the day, the energy it's going to bring to this part of town is fantastic. I'm really excited about that."

http://www.abc.net.au/news/2017-02-18/stem-precinct-for-hobart-cbd-gets-infrastructure-australia-nod/8281912

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