02 April 2017

Where Are Australia’s Most Innovative Postcodes?

Macquarie University AreaAccording to IP Australia data covering live patents and applications, and recently-filed provisional applications, as at the end of 2015, the most innovative postcodes in Australia, across all fields of technology, are those taking in Macquarie University and surrounds in the North of Sydney.  Postcodes 1710 (Epping, NSW) and 2612 (represented by the nearby Blenheim Road post office) collectively accounted for nearly 1200 patents and pending applications, and 200 provisional applications filed by Australian applicants within the preceding three years.  This represents around 17% and 5%, respectively, of all such patents and applications owned by Australian applicants at that time.

Other hotspots are the regions around the CBDs of the New South Wales, Queensland and Victorian state capitals Sydney, Brisbane and Melbourne.  Also featuring strongly in the top 50 postcodes for patent filing are major university precincts in and around the University of Sydney, Monash University and the University of Melbourne.

In addition to the major cities, where it is unsurprising to find significant concentrations of innovative activities and industries, there are also a number of notable regional centres of innovation.  These include the NSW Central Coast, north of Sydney, particularly around Somersby (postcode 2250), west of Sydney around Long Point (postcode 2867), and Aitkenvale in the suburbs of Townsville in North Queensland (postcode 4814).

More generally, a map of Australian patent filing and ownership by postcode leads to a similar conclusion to the one I reached in my recent analysis of the origins of biotechnology patent applications – innovation is a collective activity that tends to occur in geographic clusters.  By exploring the interactive map below, you will be able to identify the various localities on national, state, regional, urban and suburban scale within which much of Australia’s innovative activity takes place.

The Map

Two types of information are represented in the map below.  First there is a ‘heat map’ layer, which indicates the intensity of patenting activity by entities within different geographic regions.  The more applications originating from within a region, the more ‘intense’ the colour – with red being more intense, or ‘hotter’, and green being less intense, or ‘cooler’.  The ‘dispersion’ of the heat, i.e. the extent to which it spreads out from the the sources of activity, scales with the zoom level.  Thus, as you focus in on particular areas, the ‘hot’ regions resolve into a more detailed representation of where patent filings have originated.

Secondly, the map includes markers, i.e. the blue circles, identifying the top 50 postcodes by patenting activity.  Clicking on any of these markers will cause a pop-up tooltip to appear, listing the postcode and name of the corresponding region, suburb or post office, along with its rank and the numbers of provisional and complete patents/applications originating from the postcode area.  Further details of how this information has been derived, along with a full list of the top 50 postcodes, are set out below the map.

Deriving the Data

The primary source of data for this analysis was the publicly-available Intellectual Property Government Open Data (IPGOD) 2016 data set, which I have used in a number of other recent articles.  In order to measure origins of innovation as at the end of the period covered by this data, i.e. 31 December 2015, I extracted:
  1. all ‘complete’ (i.e. standard and innovation) patents and applications naming at least one Australian resident applicant and still in-force at the time; and
  2. all provisional applications filed within the preceding three years, i.e. on or after 1 January 2013.
This selection resulted in a set of 34,999 patents and applications, collectively owned (either individually or jointly) by 18,202 Australian resident applicants.  I have assumed that all of these applicants may be treated as ‘active users’ of the patent system, since they have filed an application of some description within the preceding three years and/or are continuing to prosecute one or more applications, or to maintain one or more patents, that they have previously filed.

In determining rankings, and weighting of ‘heat sources’ on the map, I allocated one point for each complete application, and one quarter point to each provisional application, on the basis that, overall, Australian applicants file about four times as many provisional as complete applications.  Broadly speaking, this implies that only around one in four provisional applications lead to subsequent filings with the potential to result in granted patent rights.  It therefore seems reasonable to ‘devalue’ provisional applications accordingly.

I have used a number of data sources to associate each Australian applicant with a corresponding postcode.  Again, the primary source is the IPGOD 2016 data set, which includes geolocation information (i.e. latitude and longitude) to at least postcode-level accuracy and/or a corresponding Australian Business Number (ABN) for around 65% of all applicants in the extracted data set.  Where IPGOD included geolocation coordinates I used these to identify the closest post office and corresponding post code.  Where IPGOD included only an ABN, I used the Australian Business Register (ABR) Web Services API to look up the corresponding post code of the business entity.  I additionally used the Google Maps Geocoding API to try to look up the applicant using its name and any available location information (which is essentially the programmatic equivalent of typing a business name into the Google Maps search box).  Finally, and as an absolute last resort, I attempted to extract a state and postcode for an applicant from the AusPat record of the most recent corresponding patent application.  Through these sources I was able to obtain a postcode for 92% of applicants in my extracted data set, which were then used to generate the map.

It is also necessary to say a few words about the geographic location I have assigned to each postcode.  Each Australian postcode can cover a number of suburbs and/or post offices or distribution centres.  In remote regions, a postcode can cover many tens of thousands of square kilometres!  Some postcodes are used only for post office boxes in particular post offices.  There is, therefore, no unique mapping between a business location, a postcode and a suburb, region or post office.  My solution to this ambiguity was to associate a unique location with each postcode, defined as the geographic average of all Australia Post locations (post offices, distribution centres and/or PO box locations) corresponding with the postcode.  Then, in order to obtain a unique region, suburb or office name to associate with the postcode I identified the Australia Post location that is closest to the geographic mean point.  This will hopefully explain why the names selected in some regions may appear somewhat arbitrary – although, in fact, they are not arbitrary at all, and they make perfect sense to a computer!

The Top 50 Postcodes for Australian Innovation

The list below summarises the data associated with the 50 markers appearing in the map above.  In many cases it will be obvious to readers familiar with the localities why they are so prominent.  Many of them are in or around major academic or research institutions.  Number 2 on the list, the Canberra suburb of Reid, is the location which, by the algorithm noted above, has the benefit of being associated with all applications filed in the name of the Commonwealth Scientific & Industrial Research Organisation (CSIRO), which also featured prominently in my biotechnology map last month.  The reasons for the prominence of some other areas may be less obvious, however I would welcome any observations in the comments below.

#
P'code
Region, Suburb or Post Office
Prov'l
Complete
1
1710
Epping, NSW
48
759
2
2612
Reid, ACT
242
464
3
2113
Blenheim Road, NSW
151
434
4
2000
Sydney, NSW
251
352
5
4000
Brisbane Adelaide Street, QLD
257
334
6
3000
Melbourne, VIC
130
254
7
4067
St Lucia South, QLD
148
168
8
2015
Alexandria, NSW
134
154
9
3122
Kooyong, VIC
59
171
10
2060
McMahons Point, NSW
115
146
11
3095
Eltham, VIC
31
147
12
1221
Royal Exchange, NSW
44
137
13
3121
Richmond, VIC
80
124
14
2006
The University Of Sydney, NSW
128
104
15
3168
Monash University, VIC
64
118
16
2066
Riverview, NSW
103
106
17
4113
Runcorn, QLD
29
123
18
5000
Adelaide, SA
61
109
19
3195
Waterways, VIC
28
116
20
3010
University Of Melbourne, VIC
85
99
21
3130
Laburnum, VIC
22
114
22
3800
Monash University, VIC
127
87
23
8009
Flinders Lane, VIC
38
108
24
4064
Paddington, QLD
90
94
25
4814
Aitkenvale, QLD
105
85
26
3049
Melbourne Airport, VIC
14
104
27
3166
Oakleigh, VIC
30
100
28
6005
West Perth, WA
51
93
29
3178
Rowville, VIC
28
97
30
1455
Botany, NSW
58
87
31
2170
Liverpool, NSW
32
88
32
2867
Long Point, NSW
115
67
33
2127
Homebush Bay, NSW
44
84
34
3175
Bangholme, VIC
33
83
35
3207
Hampton North, VIC
51
78
36
3005
World Trade Centre, VIC
19
85
37
2019
Ermington, NSW
27
83
38
5007
Hindmarsh, SA
14
86
39
2065
St Leonards, NSW
61
74
40
2077
Asquith, NSW
73
69
41
2250
Somersby, NSW
62
70
42
4074
Middle Park, QLD
53
72
43
2145
Wentworthville, NSW
61
68
44
4207
Mount Warren Park, QLD
28
76
45
3068
Clifton Hill, VIC
19
78
46
2164
Smithfield, NSW
24
75
47
3050
Royal Melbourne Hospital, VIC
44
70
48
2067
Chatswood, NSW
28
73
49
3004
Melbourne, VIC
42
69
50
2010
Darlinghurst, NSW
58
65
Total
3639
6901

Conclusion – The Tyranny of Distance?

It is often said that modern communications and IT systems make geographic distance irrelevant.  Furthermore, the 2016 Australian Innovation System Report (published annually by the Department of Industry, Innovation and Science) once again highlighted Australia’s poor record of business-research sector collaboration:

Australian industry’s collaboration with higher education and research institutions ranked the lowest of 27 countries in the OECD, both for large businesses and for SMEs... (Section 4.2, p 60)

And yet... the map above strongly suggests that innovation in Australia occurs significantly within ‘clusters’ – that ‘birds of an innovative feather flock together’, if you will.  The Innovation System Report also noted that:

Research institutions are a source of expert knowledge that businesses can leverage in order to innovate more effectively, both in outcomes and cost. Collaboration with research organisations such as CSIRO and universities has been found to more than triple the likelihood of businesses reporting annual productivity growth and increases in other performance measures.

Taking all of this together, it is tempting to hypothesise a correlation between innovation, business growth and proximity to centres of academia and research.  And if that is so, then being at a distance from such innovation centres would represent a competitive disadvantage.  Australia is a large country, with a small and dispersed population relative to its size.  It therefore stands to reason that most businesses are not located in close proximity to relevant academic and research institutes.  Could something as mundane as geography be substantially influencing Australia’s poor record of industry-research collaboration?

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