July 22, 2024
Australia’s future economic prosperity will hinge on private and public sectors working together to lift investment in research and development to bring Australia back on par with comparable OECD economies.
The Group of Eight (Go8) comprising Australia’s leading top 100 globally ranked universities is calling on the Australian Government to adopt an ambitious 10-year Roadmap of policy reforms to lift R&D intensity to 3 per cent of GDP by 2035.
A new Go8 report to the Australian Government: – the culmination of a six-month project with Australia’s leading business and industry groups, and government officials across portfolios – sets out 12 evidence-based and fiscally responsible recommendations to achieve this target.
Australia’s R&D intensity (R&D expenditure as a percentage of GDP) has been in decline for over a decade – from approximately 2.25 per cent in 2008-09 to an estimated 1.68 per cent in 2021-22. Australia’s R&D expenditure as a per cent of GDP is around 1 percentage point lower than the OECD average, and that gap has been widening. We need to reverse this downward trend as a priority.
The Roadmap sets a clear national purpose and direction – the Australian Government should formally adopt a target of 3 per cent of GDP invested in R&D by 2035, include this target in its Measuring What Matters Framework and report annually on progress.
Recommendations covering the short, medium and long term include measures to incentivise small businesses to engage with Australian research institutions on R&D collaboration; leverage the Research and Development Tax Incentive (R&DTI); encourage investment in R&D by Australian superannuation funds; and establish a fund similar to the Medical Research Future Fund (MRFF) focussed on fields of research outside of the MRFF.
Group of Eight Chief Executive Vicki Thomson said:
Australia, like economies around the globe, is grappling with complex policy challenges while setting the nation up for a prosperous future. This will depend on our capacity to be an innovative and productive nation. Increased investment in R&D is central to unlocking that capacity and building a more resilient and dynamic economy.
Investment in R&D is a key element of successful modern economies. Australian R&D supports high societal returns – an average economy wide return of $3.50 for $1 of R&D investment.
In consultation with Australia’s leading business and industry groups, we have developed a Roadmap for Government to achieve optimal investment in R&D over the next decade.
It’s an ambitious timeframe but universities are in the ‘solutions business’. This is not a target for Government spending – it is a national target requiring all parties to come to the table – Government, business, industry and universities – and embrace some innovative thinking.
With investment in R&D from both government and business in decline, universities have stepped up and expenditure by the higher education sector on R&D has increased from 0.40 per cent of GDP in 2000, to 0.61 per cent of GDP in 2020.
Given our reliance on international student fees to fund research and factoring in the current policy mix being imposed on the sector, there’s a limit to how much universities will be able to contribute to R&D in future. We need a whole of nation approach.
With productivity growth at a 60-year low, and other significant challenges and opportunities such as transitioning to a net zero economy, addressing ageing of the population, and taking full advantage of emerging technologies such as artificial intelligence and quantum computing, now is the time for decisive action to secure our future prosperity.
Group of Eight (Go8) universities are responsible for 70 per cent of the research conducted by Australian universities, investing $7.7 billion annually. This represents 20 per cent of the total national investment in R&D by business, governments, and the higher education sector combined.
