It is always hazardous to make a distinction between technical and non-technical innovation, lest one be accused of favouring one over the other. As has been pointed out, technical innovation is still a critical area where Australia is falling behind the rest of the world.
Business spends only the equivalent of one per cent of GDP on R&D, half the OECD average and a third of that of the leaders - even Icelandic business does better. Our venture capital sector which might fund businesses to come from research is 0.1 per cent of GDP - again even Iceland manages more. Australia accounts for a mere one half of one per cent of global exports in technology-intensive industries.
The fact is there are few R&D driven business on the stock exchange other than the familiar, Cochlear, Resmed and CSL. Most of our top companies are banks or miners. Multi nationals from Ericcson to JDS Uniphase have voted with their feet and ceased large scale R&D in Australia while most global giants in pharmaceuticals and IT spend a fraction on R&D locally compared to overseas rates.
Bar the occasional exception, we just don't rate in R&D driven industries.
The real loss here is this type of technical innovation is the type most likely to employ highly qualified Australians at high salaries; most likely to create highly sophisticated exports; and the most likely to 'seed' through small beginnings our involvement in growth technologies and industries of the future. We guarantee a brain drain and a banana republic balance of trade, and lock ourselves out of so many future opportunities as a result.
Unfortunately the mining boom is sending all the wrong messages at the moment - we can be rich just by digging the stuff out of the ground and shipping it offshore for value-adding. BHP Billiton, for example, is trying to avoid building a new smelter when it upgrades its giant Roxby Downs copper and uranium mine.
We may be superficially rich, but many of our best people work overseas, we make few of the sophisticated products we consume, and we condemn ourselves to being a quarry forevermore.