Towards 3% R&D - budget responds to slump in Australian innovation effort

By Peter Roberts

The 2024 budget has responded to the issues being raised by @AuManufacturing’s one-month long series of articles around the theme Towards 3% R&D – turbocharging Australia’s innovation efforts.

Treasurer Jim Chalmers announced a ‘strategic examination of Australian research and development’ as part of the Future Made in Australia package of measures.

According to a statement by Industry and Science Minister Ed Husic: “Greater investment in research and development (R&D) by businesses in Australia is fundamental to maximising the impact of science, research and innovation on Australia’s long-term prosperity, security and wellbeing.

“The Government will commission a strategic examination of Australia’s R&D system to determine how we can get more value from every taxpayer dollar invested in research, maximise the contribution of science and R&D to the broader economy, and maintain our competitive edge.”

While @AuManufacturing cannot claim to have sparked this announcement, we have been publishing opinion articles daily charting the precipitous fall in government and business spending on R&D since at least 2009, as well as ways to improve it and highlighting some of the growth areas of innovation.

Innovation almost everywhere you look is faltering, threatening the community’s investment bin the long term health of our companies and the economy as a whole.

The figures are stark compared to the government’s stated aim of achieving 3% of GDP devoted to R&D and innovation.

Australian R&D reached a peak of 2.24% of GDP which was close to the OECD average of 2.28% – then it collapsed, reaching 1.68% of GDP in 2021.

Business research has also fallen from a peak of 1.37% of GDP in 2007 to 0.92% in 2019.

And between 2020 and 2022 higher education spending fell as a share of GDP from 0.61 percent to 0.55 percent – the biggest decline in the higher education component of R&D expenditure since the ABS started collecting this data.

Our series Towards 3% – Turbocharging Australia’s innovation effort continues for the rest of this week, after which we will publish an e-book.

However if you want to catch up on what you have missed: