Business lets Australia down on R&D

Australia lags all serious nations on research and development spending, according to a new analysis by Frank Larkins (Uni Melbourne).

On the basis of up to date data, released June-September, Professor Larkins reports that Australia, at 1.68 per cent, is a distant last for gross expenditure on research and development as a percentage of GDP

Australia lags the OECD average (2.71 per cent) and even the collective average of all 27 EU members (2.15 per cent).

Plus, we are way underdone compared to the serious competition,

  • Republic of Korea: 4.93 per cent
  • United States: 3.46 per cent
  • Japan: 3.3 per cent
  • United Kingdom: 2.93 per cent
  • China: 2.4 per cent
  • Singapore: 2.2 per cent

And while they have all increased outlays since 2015, Australia has slowly slid, from 1.88 per cent to 1.68 per cent. In contrast Korea is just short of a full per cent of GDP higher, 3.98 per cent in ’15 and 4.93 per cent in ’21-’22.

Blame not the feds. Professor Larkins reports R&D spending by government in Australia accounts for 9.5 per cent, marginally ahead of the top-five trading partner average. And the private, not-for-profit sectors is nearly two per cent higher than the competition.

As for universities, what the lobbies announce is correct; HE funded research is a huge share of Australia’s effort, 33 per cent of the national total, compared to 12 per cent among the top five nations.

The problem is what business does not do.

The average share of R&D spending by business in the US,UK, China, RoK and Japan is 76 per cent – here it is 52 per cent.

The spread of what companies in Australia spend is broadly in-line with the competition, IT, engineering and biomed/clinical sciences account for nearly 80 per cent  – it is just they don’t spend all that much in comparison with the international competition.

“An increased national focus on Australia’s underperformance is warranted,” Professor Larkins understates.

He is not the first.

The Department of Industry, Science and Resources annual report this week states the Research and Development Tax Incentive “encourages additional R&D investment, which generates wider benefits for the Australian economy.”

Good-o, but the politically-untouchable programme (12,700 companies registered) is perhaps not best value for the $3.2bn it cost last financial year.

As the widely applauded, but never enacted, Ferris, Finkel and Fraser review concluded in 2016, the R&DTI, “could do more to encourage additional research and research spill-overs into other sectors.”



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