Home » News » November 2025 Industry Minister Update on Strategic Examination and Review of Australia’s R&D System

November 2025 Industry Minister Update on Strategic Examination and Review of Australia’s R&D System

In the May 2024 federal budget, The Albanese Government announced a strategic examination and review of Australia’s Research and Development (R&D) system to align it with national priorities and to improve outcomes.

In late 2024, then Industry Minister Ed Husic announced specific details to launch the review. It was noted that the review will assess how to maximise the value of R&D investments, strengthen industry linkages, and support national priorities, and that the review will examine existing systems, such as the Research and Development Tax Incentive (RDTI), and explore broader strategies to ensure Australia remains competitive in global innovation.

A general discussion paper for Strategic Examination of Research and Development was released in February 2025, and Swanson Reed made a submission to this in April 2025.

The independent panel had subsequently been consulting by releasing issues papers to inform the examination. This included an issue paper released on 4 September 2025, titled: RD&I incentives: Incentivising breakthrough innovation and ambitious R&D which Swanson Reed provided a submission to as per our earlier updates.

In early November 2025, recently appointed Industry Minister Tim Ayres gave an address at the National Innovation Policy Forum where he provided an update on the review. Some notable comments included:

• ‘The Strategic Examination of Research and Development led by an expert independent panel, including – what was the description – general significant individuals like Ian Chubb, will deliver a report at the end of this year that will subject our research and development systems to do some critical analysis and set out a pathway to delivering greater coordination that sets Australia up for success;
• More than 800 responses from industry, academics, researchers, government and other stakeholders.
• And of course, it’s natural in that process for each of the institutions, and individuals, to come at this set of questions from the interest of their own research and their own, you know, material interest in reform of the system. It’s entirely natural and correct.
• But the best of that is when we lift our heads up, you know, and focus on what is in the national interest here. What do we give? How do we connect? How do we deliver a more aligned system in the interest of Australia and Australians?
• The SERD panel has already highlighted that the current system is fragmented, under leveraged and, in some cases, misaligned with national priorities.
• There are 160 research related programs delivered across 14 portfolios of government at last count. 
• A particularly relevant theme in the submissions was the current public funding models, business R&D incentives, and research metrics favour safe, incremental research, rather than bold and purposeful and experimental ideas.
• The panel has continually heard about the importance of cultural change, building a national appetite for risk, experimentation and long-term thinking in the public and private sectors.
• The evidence shows that firms introducing novel innovations are up to 70% more productive than those sticking to familiar ground.’

These comments don’t hint at specific changes to the R&D Tax Incentive, and it appears as though the government will understandably await the report from the review panel before indicating any potential reforms.

Once the report is delivered, it is then likely that there will be time needed for the government to consider the report and then possibly propose reform, which would then require passage through parliament before any law relevant to the R&D Tax Incentive is changed.

As outlined in our original submission, The R&D Tax Incentive is not perfect, but it now has a firmly established infrastructure, and we remain of the view that the best and most efficient approach would be to enhance the existing system, rather than significantly overhaul or introduce a new system.

As outlined in our original submission, the following modest changes to the R&D Tax Incentive could further encourage business investment in R&D:

• An increase in the turnover threshold for the refundable offset:

• • The $20 million turnover threshold for the R&D Tax Incentive established in 2012 is now outdated. Many argue that, when accounting for inflation and growth, the definition of a “small business” from FY12 is vastly different from what it is today in FY25.

• • Perhaps the turnover threshold could be extended to $25M, along with a provision for future indexing.

• An increase to the R&D Expenditure Cap:

• • The Business Council of Australia and notable large claimants such as Cochlear have recently renewed their calls for removal or extension of the $150M annual expenditure cap on claims.

• • Changes to the cap could provide additional incentive for large companies to undertake more R&D.

• Collaboration premium:

• • A collaboration premium that provides enhanced tax benefits for expenditure with Research Service Provider (RSP) or University organisations was originally proposed in the Ferris, Finkel and Fraser review and may be worth exploring.

• Stability provisions or undertakings:

• • If changes to the criteria are made, it would be ideal if somehow a bi-partisan consensus could be reached that no further detrimental changes to the R&D Tax Legislation are to be made in the near term. If not within the law, this could be stated as a policy document to provide businesses with confidence to undertake R&D Activity.

Swanson Reed has made a submission to the consultation process reflecting the above and will continue to advocate for a stable and sustainable R&D Tax Incentive.

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.