“As we move into the internet age, our public policy instincts are essential wrong,” he said.
“Digital goods are always and everywhere a potential public good.”
The traditional way we create policy and deal with goods, that is letting the market decide is clearing away, he said.
Dr Gruen said it is important for governments to recognise this and develop the correct policy settings for the creation and use of these goods.
On another megatrend of today, Dr Gruen said there has been a surprising rise of “vox pop democracy”.
Using the Brexit decision and support for Donald Trump as examples, Dr Gruen said nations are making decisions which educated people thing are dead wrong.
Also speaking on the panel, Giant Ideas Director and IoTAA – Smart Cities and Industries Chair, Catherine Caruana-McManus said the Internet of Things is important because it touches on a range of portfolios from economic development to the environment.
“I think it’s something we need to be debating and having more energy applied to for Australia as an innovation nation,” she said.
Discussing connectivity, Ms Caruana-McManus said it is vital for Australia to be an innovation nation.
“For us to have an innovation imperative, we must activate industry and business also with connectivity,” she said.
“It has to enable that so people can have 24/7 capability.”
Ms Caruana-McManus said Australia is currently falling behind on connectivity in comparison to OECD countries.
“Countries such as Korea and Singapore are reaping the benefits of cohesive and comprehensive strategies around the backbone of fast broadband and the internet,” she said.
CSIRO Data61 Insight Team Leader, Dr Stefan Hajkowicz said productivity levels in OECD countries are declining.
“There is an overarching need for Australia, for the OECD to kick start the economy and reinvigorate where we are and this is this notion of the innovation imperative,” he said.
“The fuel source of Australia’s economy today, it’s not resources, it’s ideas, knowledge, innovation, it’s experimenting with new business models.”
Dr Hajkowicz said as countries in Asia develop to advanced economies, Australia must develop into a more advanced services economy.
Food and agriculture are key opportunities for Australia and we must capitalise on the increase of “high value nutrition markets” that is market with increasing interests in safe, healthy food.
“Digital allows us to close the gap between the Shanghai food consumer buying the tomatoes in the store and the grower who made them in Victoria,” he said.
Watch videos from State of the Nation 2016.