The challenge and opportunity hidden in Australia’s budget

On 14 May, Australian Treasurer Jim Chalmers delivered his latest budget, with two issues receiving a lot of attention – easing cost-of-living pressures, and bolstering the economy. 

These are clearly very immediate priorities for many Australians, and it’s no surprise that the Treasurer’s speech emphasised the Government’s proposed solutions. But in the detail of the budget papers is an additional commitment with the potential to radically transform how Australia invests in its current and future challenges:

The announcement of this review has already been welcomed by many in Australia’s innovation economy – including the Australian Academy of Technological Sciences & Engineering, and the Australian Academy of Science who describe the review as ‘thirty years overdue’.

At Challenge Works, we’re advocates for challenge-led, open innovation. We believe that challenge prizes, embedded into a revitalised R&D strategy, can play an important role in how the Australian Government harnesses innovation to deliver value for all Australians.

Challenge prizes can catalyse breakthrough innovations

Central to the Australian Government’s economic strategy is capitalising on the green transition with billions of dollars of funding for renewable energy, battery technology and the green metals industry. These are hugely significant investments, which the Australian Government will be hoping will drive equally significant innovation.

An example of how challenge prizes can support this innovation is Challenge Works’ Longitude Prize on Antimicrobial Resistance. Looking to solve one of the greatest challenges of the 21st century, this £8 million prize has incentivised innovators to create novel, point-of-care diagnostic tools which can reduce the overprescription of antibiotics. The winning test will ensure that people get the right treatment at the right time, and help preserve antibiotics for future generations.

In Australia, similarly ambitious challenge prizes could help unlock progress in Australia’s green transition. Challenge Works has already been thinking about how challenge prizes could help unlock transformative innovation in the recovery and extraction of rare earth elements – crucial to Australia’s ambitions to manufacture renewable energy technologies. We’ve also considered how challenge prizes could shape the future of quantum computing – another area of investment in this year’s budget.

Challenge prizes can inform regulation of cutting-edge technologies

The budget also includes investment in supporting and regulating AI. This is a balancing act that many governments around the world are grappling with – how can they seize the opportunities presented by technological innovation, while still protecting their citizens?

Challenge prizes can provide a way for regulators and policymakers to work with bleeding-edge innovators in a controlled environment to understand technological opportunities, and balance their approach appropriately. 

From 2017 to 2020, Challenge Works worked with the UK’s Competition & Markets Authority, the Open Banking Implementation Entity, and multiple major UK banks to deliver a series of ‘Open Up’ challenges to help demonstrate and understand the potential for open banking data to support consumers. In 2022, the Australian Treasury’s own report on the consumer data right recommended  supporting ‘initiatives like the UK’s Open Up 2020 Challenge’ as a way to develop innovative use cases for open banking technologies in Australia. 

More recently, Challenge Works has been working with the UK Government on the Manchester Prize – from almost 300 entries, 10 finalists have been selected with ideas ranging from using AI to identify defects in infrastructure; to analysing transport data to provide predictions which allow city authorities to manage public transport.

Challenge prizes can support regional economies and communities

The perennial challenge for any Australian Government is ensuring that, as well as meeting the macro-level challenges impacting the country as a whole; they’re able to address the specific needs of Australia’s regions. Housing, transport and healthcare issues will not impact each city and region in the same way; likewise, there will be no one-size-fits-all solution for regions adapting to Australia’s green transition.

City and region challenge funds can provide an overarching way to support locally tailored innovations around a specific mission, theme or priority. In 2020, the Mayor of London and Challenges Works launched the Mayor’s Resilience Fund, a £1 million challenge fund to incentivise innovators to address socially impactful issues facing London. 

Outside of the UK, the Government of Canada has embraced challenge prizes as a way to deliver meaningful results to Canadians. Working with Challenge Works, they launched Impact Canada, which has since launched challenges ranging from detecting dangerous drugs, to improving the efficiency of carbon-intensive mining processes, and supporting Indigenous innovators to tackle local housing challenges.

This approach could allow the Australian Government to work with all levels of government to engage community groups, Aboriginal and Torres Strait Islander communities and local innovators to develop fit-for-purpose solutions. 

Conclusions

For decades, governments around the world have embraced challenge prizes and other open innovation approaches as a way to transform markets, and address their thorniest problems. This latest budget is Australia’s opportunity to do the same.

Interested in exploring this with us? Get in touch.

Rhys is a Senior Programme Manager at Challenge Works. Prior to joining Challenge Works, he led the Queensland Government’s Innovation in Government team and challenge-based innovation programme.