Innovative creativity

What is this so-called "creative economy"? Of course it's the brilliant movies for which our directors and actors have received such high international acclaim, making Australia a globally respected talent pool.

It's also the interface designers who have worked in the finance industry to make huge changes in how we do our banking and make investments.

Naturally, it includes our great novelists, who reflect our life and times. It's also the "technical" writer, who produces online education and training materials that contribute to Australia's education export success - our fourth biggest export earner.

The creative economy is much bigger and broader than we think, and is much more than culture and the arts. It brings together a broader range of industry sectors than those which have traditionally been classified as cultural, giving birth to the notion of the so-called creative industries.

But it goes further than a sectoral focus to embrace how creative occupations are being found more and more throughout the economy.

We also need to capture what is actually causing deeper change in our economy - for that we need a better understanding of innovation and policies suited to it, not just in sectors that depend on laboratory science.

We need to understand better the full contribution of creativity to the wider economy. Creative industries constitute one sector of the economy; the creative economy is formed when we move from industry sectors to creative occupations as inputs into the whole economy. Over past decades, information and communications technologies were shown to enable economy-wide growth.

Recent work at the Australian Research Council Centre of Excellence for Creative Industries and Innovation has begun to show that creative skills and occupations too can enable broader economic growth.

Richard Florida, in The Rise of the Creative Class, has famously drawn attention to this idea, but his strategy of including all manner of white collar professionals in the "creative class" to bulk it up to about a third of the total US workforce has drawn widespread criticism. We have refined official categories of what counts as a creative occupation and industry without going overboard like Florida.

Our evidence demonstrates that these sectors are significantly underestimated in official statistics whose categories lag badly behind the growth of, particularly, the digital end of this industry sector.

Our analysis shows that, because so many designers are embedded in other industries and because design is defined in such an unhelpful way, the design sector is undercounted by some 36 per cent. People who are employed in creative occupations outside specific creative industries constitute almost 2 per cent of the total Australian workforce.

Of the total population who have "creative" qualifications at the last census, almost 70 per cent of those employed are working outside the specialist creative industries.

The whole sector has a mean income 34 per cent higher than the economy as a whole, which suggests a different profile for creatives than the usual view of a chronically low-wage, underemployed sector.

In Queensland, we found that exports from the state and gross value added are higher than average sectorally, and that creative industries tend to be more knowledge-intensive in that they spend more on knowledge-based workers as a percentage of their total wages spend than other sectors.

My last point is the most speculative and in many ways most interesting because it is about the wellsprings of economic thought.

Cultural economics, the traditional approach to arts and culture, uses an argument for public support based on "exceptional" activity in which there will always be market failure. Large cultural industries, such as broadcasting, attract content regulation also based on arguments for market failure. But economic theory that seeks to identify the sources of novelty and change, and the way industries grow, is better suited to understanding a creative economy.

We need to think less about optimal allocation of scarce resources and market failure and more about the wellsprings of innovation, and the way in which the creative industries may function as a bellwether for structural change in modern economies.

The UK group, Focus on Creative Industries, captured this well: "The challenge of the creative industries is the challenge of a new form of economic understanding - they are not 'catching up' with serious, mainstream industries, they are setting the templates which these industries will follow."