With research and development investment lagging Victoria and the OECD, New South Wales is doubling down on its competitive advantages in areas like AI, quantum computing, and nanotechnology, the state’s head scientist revealed in launching the state’s new 20-year R&D strategy.

The NSW 20-Year R&D Roadmap – whose creation was recommended as part of the state government’s broader ARDAC Action Plan – was developed by the Office of NSW Chief Scientist & Engineer (OCSE) during a six-month “deep analysis” of the industry sectors where NSW is said to have “aggregated competitive advantages versus domestic and international peers”.

Arguing that “it makes sense to prioritise R&D by focusing on technologies and applications in which NSW has competitive advantages,” the roadmap groups the state’s most promising capabilities into four broad themes – digital, chemistry and materials, biotechnology, and energy – and analyses the relative maturity and promise of 39 technology applications.

Those applications include digital technologies like quantum computing, blockchain and cyber security as well as more industrial developments including robotics, AgTech, smart materials, energy storage, cell-based meats, and sustainable fuels.

With almost 45 per cent of Australian AI businesses based in NSW, for example, the report notes that NSW’s “strong local cluster of AI businesses” and strong representation of AI universities provide an opportunity through the state’s “skilled AI workforce, deep AI R&D capabilities, and a technology-ready, diverse multicultural consumer base ideal for AI product development, testing and insight generation.”

NSW’s primacy in Australia’s nuclear science research is another standout, with the report noting that availability of such facilities offers benefits through the AUKUS alliance and potential export capabilities across the Asia-Pacific region.

Identifying key opportunities for NSW is critical in a state challenged by climate change, urbanisation, automation, and demographic and economic power shifts, NSW chief scientist Prof Hugh Durrant-Whyte said, noting that the 20-year plan would help NSW’s government and business communities best direct their resources for national and global strength.

“In an increasingly connected global market for goods, services, investment and skills, economies that leverage world-leading R&D dominate industries,” he explained.

“Economies that are unable to sustain sufficient R&D capabilities and technology adoption will fall behind international competitors that can.”

Reversing the trend

Efforts to catalogue NSW’s current capabilities reflects growing awareness of the need to improve R&D investment in the state, which has fallen behind national and “fierce and well resourced” international rivals in terms of how much of its gross state product (GSP) goes to R&D.

The latest NSW Innovation and Productivity Scorecard (IPS) – which will be expanded as a digital dashboard later this year – rated NSW well ahead of international rivals in areas such as university education, published papers and researchers, startup founders, digital capability, and GDP growth.

Yet the benchmark also identified several areas where NSW is well behind international rivals, including government investment in R&D, university-industry collaboration, and venture capital investment.

Slightly behind average were business investment in R&D – which declined in Victoria, NSW, Australia and New Zealand through most of the past decade – as well as patent applications, employment of tertiary-educated people, labour productivity, and growth firms.

NSW’s R&D investment of 1.8 per cent of GSP put it on parity with the UK and Australia, the IPS found, but the state was lagging Singapore (1.8 per cent), Victoria (2.1 per cent), the USA (3.1 per cent), and Germany (3.2 per cent) and was well behind the OECD average of 2.5 per cent.

In the context of the post-COVID recovery and NSW’s lagging R&D business expenditure, “an R&D Roadmap for NSW has never been more important,” the report notes.

“Given the scale of our future challenges and opportunities, NSW needs to effectively focus its R&D investments and activities to maximise the positive impacts of science and technology R&D.”

Industry group Science & Technology Australia has been vocal about the potential returns from increased R&D investment, and NSW Minister for Science, Innovation and Technology Alister Henskens believes the OCSE report will help improve NSW’s standing amongst investors by helping direct government support and private-sector investment.

The strategy “puts in place a plan to better target funds to fast-track new technology and commercialisation for our people, the economy and our environment,” he said as the roadmap was released.

The state has a “world-class innovation ecosystem,” he added, “but we want to continue to improve, which is why this roadmap will build on our strengths and help lift our game in other areas.”

NSW’s struggles around R&D follow years of uncertainty for scientists and technologists, with Australia long lagging behind comparable nations and the Morrison Government exacerbating the situation by slashing R&D investment, then introducing and ultimately rescinding contentious R&D tax reform.