Australian business innovation activity rose over the longer term, reaching its highest point in 2023–24, but was broadly flat between 2021–22 and 2023–24, according to the new CommBank-Melbourne Institute Innovation Index.
Developed by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne in partnership with Commonwealth Bank, the Index draws on 18 years of data. To the authors’ knowledge, it is the first Australian measure available at this combination of consistency, coverage, geographic and time detail.
Built from secure, de-identified Government data sources covering Australian firms and workers rather than a survey sample, the Index brings together measures spanning R&D, skilled employment, intellectual property and knowledge-intensive trade, and tracks them across industries, regions and time.
Melbourne Institute Professor and report author Paul Jensen said: “As a nation, Australia needs to become more innovative to boost productivity. Examples of everyday innovations include embracing new software which saves administrative time, expanding a business interstate or overseas, or modifying processes, products and services. Making innovation investments can lead to something valuable; even if there is failure, the lessons learnt can still provide benefits."
CommBank partnered with the Melbourne Institute to provide better evidence on where innovation is happening and what can help more Australian businesses put ideas into practice.
CommBank Group Executive Business Banking Mike Vacy-Lyle said: “This Index gives us a clearer picture of where Australian businesses are innovating and how that is changing. The opportunity is to help more businesses turn ideas into new products, services and better ways of working, and help successful ideas reach more customers and markets.
“For many businesses, innovation does not mean inventing something from scratch. It might mean adopting new technology, improving a process, using data better or getting a product to customers faster. Those practical changes can save time, reduce costs and help a business compete and grow. When gains like these are repeated across many businesses, they can lift productivity and, over time, support jobs and higher living standards.
“The Index gives us an important foundation. Building on this, we need to better understand how to encourage experimentation, development and commercialisation, so more businesses can turn good ideas into practical outcomes.”
Key findings from the CommBank-Melbourne Institute Innovation Index include:
- The national Index reached almost 110 in 2023–24, compared with a 2016–17 benchmark of 100. It rose steadily over the longer term but was broadly flat between 2021-22 and 2023-24.
- Wholesale trade recorded the highest broad-industry Index score, followed by manufacturing and professional, scientific and technical services.
- Victoria recorded the highest state Index score in 2023-24 and has ranked ahead of NSW since 2017–18. Victoria and NSW were the only states consistently above the national benchmark over the full period.
- Western Australia overtook Queensland in 2023-24 and has been a stand-out in recent years with the index growing at a much faster rate than the national average since 2021-22.
- Biotechnology ranked highest among the emerging technology sectors analysed, followed by space, clean energy and quantum.
- The highest-scoring group of firms engaged in complex global value-chain exports ranked alongside biotechnology among the leading groups in the Index, highlighting the link between international trade and innovation activity.
