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Implications of May 2025 Federal Election Result on Business R&D and Innovation Policy Settings

Business R&D and Innovation Policy settings were not focal point of the recent federal election, which was fought primarily on cost of living.

The unsuccessful Opposition Coalition had announced in the lead up to the election that their policies included:

• Savings by:
  • Scrapping the Future Made in Australia (FMiA) agenda, including tax credits for green hydrogen and critical minerals processing;
  • Winding back the National Reconstruction Fund;
  • Unwinding the expansion of the Australian Renewable Energy Agency that supports pre-commercial innovation in the energy sector.
• Funding for:
  • Programmes related to Entrepreneurship Accelerator tax incentives and a new ‘Tech Booster’ initiative;
  • Increasing the early Stage Venture Capital cap;
  • Export grants for “tariff affected sectors”.

The returned Labor Government’s policies included:

• Continuing investment in its landmark Future Made in Australia (FMiA) agenda including widening the FMiA to green steel and aluminium;
• Ongoing investments made in the $15 billion National Reconstruction Fund;
• Prioritisation of proposed mandatory guardrails for AI in high-risk settings;
• Abolishing R&D Tax Incentive eligibility for Gambling and Tobacco activities as announced in December 2024.

The R&D Tax Incentive Programme was not discussed specifically by either party during the election campaign. Now that the Labor Government has won the election with a majority, focus will likely turn to the progress of the Strategic review of the National R&D System which The Government had commissioned in its first term, and will be due to report during its second term.

Swanson Reed has recently completed our submission to the review and some details of the Swanson Reed submission are within our prior updates.

Comments by Treasurer Jim Chalmers following Labor’s victory noted that “the first term was primarily inflation without forgetting productivity. The second term will be primarily productivity without forgetting inflation.”

Innovation and R&D Activity (including development of more efficient processes or more efficient ways to produce goods) is recognised as being key to increasing productivity in the economy. Productivity has been shown to be positively correlated with innovation performance across multiple documented academic studies.

The Labor Government’s second term should seek to ensure that suitable settings are in place (including business access to resources and the maintenance of a stable, generous R&D Tax Incentive) to assist business in playing their role in increasing Australia’s productivity and controlling inflation.

Swanson Reed is hopeful that the Labor Government’s initiation of the R&D Review (with a stated objective of seeking to grow business investment in R&D) will be fruitful and lead to positive outcomes.

Swanson Reed plans to continue to participate in the consultation process for the strategic examination of Australia’s R&D system and will be advocating for maintenance of a broad based, market driven and stable R&D Tax Incentive system.

Please get in touch with our office if you require assistance, would like to speak to someone about a potential claim, or check out our website for more information.