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Innovation first – Darian Hiles

Richard Denniss argues that productivity drives innovation (The paradoxes of economic growth, AFR, 8 April). But innovation is much more than just an ally of productivity. It has traditionally referred to the creation of something new, but today the word has become degraded to mean the level of simple improvements made to the production process in order to create efficiencies and lower costs, i.e. to improve the status quo.

We need to focus on new and quite different products. Holden and Ford were in the former category. They need to be in the latter.

The mobile phone was not the result of a production improvement to the phone handset; it was a complete change and made far more money than productivity improvements to handsets ever would.

Australia is more attuned to the inventive model of Scandinavian countries than to mass production. We need to find new paradigms: ways to move away from existing systems, to focus on better rather than more. Innovation captures the market: it’s the key to the future. Productivity improvements just polish it afterwards. Denniss does hint at this: he’s on a good thing but we need to go further.

Darian Hiles is ERA President

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