3 min read

How regulation powers innovation

Richard Dowling

If you want a good example of the way regulation can foster innovation, consider the global mobile market. Rules and standards are harmonised across borders, facilitating a global market of five billion users and wave after wave of innovation.

Too often we think of regulation as a speed bump slowing us down. But done right, it’s one of the most powerful enablers of innovation.

The people that make the rules - governments - are also beginning to see what a game changer good regulation can be when it comes to delivering their own services to citizens.

But things need to speed up if we are going to keep up with the rapidly evolving global digital economy. Let’s look at how better regulation can help us accelerate.

Creating the market conditions for innovation

Standards and competition fuel innovation. In the case of mobile, global technology standards fuelled innovation and adoption. The change from government monopolies to competitive markets was also a very powerful catalyst for innovation and growth in the early days of mobile.

Today, even traditionally conservative industries are shifting to make regulation an innovation enabler. For example, Australia and other nations are implementing “open banking” rules to allow customers to move between institutions more easily, fostering competition.

Governments have come to realise that these lessons should also apply to their own services. In a report on the federal government’s MyGov services portal, for example, auditors found that shifting to open standards had significantly lifted concurrent user capability to 500,000 -  50 times more than the previous limits.

But auditors also found that many systems still don’t talk to each other. It’s an issue that is increasingly important as the economy becomes more digital: the ability to move data between different systems safely, securely and reliably.

Interoperability and data exchange

The fact that data is one of an organisation’s most valuable assets has been recognised for a long time.  Now AI is promising us highly efficient ways to tap data’s value. But that only works when we can confidently and easily move data to where it’s needed. We need regulation that helps this happen.

The New South Wales Government’s citizen services portal, Service NSW, has become one of the most talked about IT projects in Australia. It combines around 1,300 services from across state government, covering everything from business registration to learn-to-swim vouchers, and serves them up through a single, easy-to-use portal.

At VMware we’re very proud of the work we’ve done in partnership with government to help bring the Service NSW app to life.  We also know future public IT projects will be more efficient if systems are designed from the beginning to allow data to be accessed safely and easily.

Again, standards and competition are key. Proprietary systems that operate in isolation are counterproductive, and regulations should establish interoperability as a priority. This also helps ensure systems are available equitably and don’t lock out any users.

With so much value locked up in data, security has to be built in. It is no longer enough to have it as an add-on. New technology needs to be ‘infused’ with the means of protecting us as we use it, and that’s a requirement that should be included in regulation. Rules also have to be framed with an expectation that technology will need upgrading, because choke-points preventing upgrades and enhancements must be avoided.

Membership of the global digital economy

As Australia formulates regulation to foster the digital economy, it needs to ensure its frameworks are keeping up with what’s happening internationally. More commerce is becoming data-based, and new standards are being established to allow for the efficient and safe transfer of information between nations, in the same way that rules govern the movement of physical goods.

New Zealand, for example, has signed the Digital Economy Partnership Agreement (DEPA) with Chile and Singapore to help its exporters forge new digital trade opportunities. In Europe, meanwhile, the Gaia-X initiative is being championed as a digital governance model “to obtain transparency, controllability, portability and interoperability across data and services”.

To fully participate in global data trade, we need to make sure our own regulations are enablers.

Culture and policy

Ultimately, positive regulation and the policy it flows from come from the same place: governments and public agencies that have solid digital knowledge and culture. Crucially, public agencies also need the skills to translate policy and regulation into great outcomes for citizens.

Whether it’s aligning data standards, allowing citizens to carry digital drivers’ licences, or providing regulatory “sandboxes” to test innovations in financial services, regulation is an essential part of fostering innovation and enhancing service delivery across the economy.

Governments have recognised what a powerful enabler regulation is. The challenge now is to put that into practice, and put in place rules and standards that encourage innovation, interoperability and competition, laying the foundations for a vibrant digital economy.