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Australian Business Investment In R&D Has Fallen

According to the OECD Science, Technology and Industry Scoreboard 2017 and Australian Bureau of Statistics, Australian spending on research and development was down from 2.11 percent of GDP in 2013-14 to 1.88 percent in 2015-16, with the OECD average being 2.38 percent. Chief Executive of Universities Australia Belinda Robinson said that this represented a stark warning against government research cuts, which would put future jobs at risk. 

Research and development involve producing new and improved products, technologies, and processes or ‘knowledge-based capital’ and is a crucial driver of long-term economic gain. The government is key in supporting R&D through investment as it involves a high degree of risk for companies, with gains often not seen for several years.

A meeting between the Group of Eight universities and peer organizations next week will discuss how to defend long-term research in an environment demanding immediate solutions. Governments must keep in mind the planet’s future – areas such as climate change and food sustainability are critical areas that will need funding over long periods in order to find solutions.

The OECD report found that government R&D budgets have declined or stagnated in many OECD countries. Not for all though; Turkey has increased its R&D budget by almost 80 percent since 2008 and the British Government has recently announced an extra US$3 billion for R&D investment. In Australia, government support for business R&D is high, with R&D budgets increasing by 9 percent between 2008 and 2016.

In addition to direct funding, innovation is encouraged through indirect support like R&D tax incentives. Australia is one of the top countries for claiming R&D tax incentives, with claims totaling US$2.3 billion. R&D tax incentives are a key tool for promoting business R&D. In Australia, companies with a turnover of under $20 million can receive a refundable offset of 43.5 percent and businesses with a turnover of over $20 million can receive a non-refundable offset of 38.5 percent for eligible expenditure. Businesses can find out whether they qualify here.