In the absence of new money in the budget, the Government announced a “strategic review” of research and development. This gives research lobbies the opportunity to call for more (much more) R&D funding for them and less for business. But now the Group of Eight joins in, with a superior call for a national strategy.
The astute Eight pitches their bid for 3% of GDP across public and private sectors in terms that suit the national mood, as a “nation-building exercise (that) should be a national priority.”
But it still includes variations on long in-place proposals, notably to include universities in the business-focused Research and Development Tax Incentive. The Eight argues that businesses that quality for the R&DTI and collaborate with “an Australian research institution” could qualify for equity/debt finance incentives from the National Reconstruction Fund.
Admirable in consistency is the Group of Eight – in early 2023 it proposed a way round the Fund’s ban on contributing to university research by calling for it to allocate $500m (with matching private capital) for “innovation that is early in its commercial journey.” And going where the money is, the Eight now wants “additional intermediaries and aggregators” to encourage superannuation funds to invest in R&D. Plus there is a call for a similar in scale to the Medical Research Future Fund (now $22bn in capital) fund focused on unspecified other fields.
Discovery research, which can deliver dividends in the long term, is basic to the Eight’s case, “sometimes without basic research, applied research is not feasible.” The group is too astute to ignore arguments that productivity lifts as small and medium enterprises adopt products and ideas, irrespective of their origins, however the Go8 does pitch an idea which could be interpreted, however erroneously, as private sector=selfish and public research=service,
“it may well be in the private interests of individual Australian businesses to invest in non-R&D activities, but from a societal perspective, it is R&D that produces knowledge spillover and is the basis for increasing returns to scale, which matters more.”
Above all, the Go8 appeals to R&D as an expression of the nation-building politics Prime Minister Albanese asserts. “Should the decline in business R&D intensity reflect sub-optimal underinvestment by Australian businesses, it manifests over time in potentially less business innovation and productivity, which in turn implies that Australian businesses will be less competitive, globally and domestically, with productivity and real wages growth less than potentially achievable, and inflation higher than otherwise.”
All up, it is a cleverly-constructed, well-argued case for funding public research, some in-partnership with industry. The problem is it will be easily ignored by a government that dare not cut welfare spending and wants to increase defence outlays (have you seen the price of submarines?).
The research commercialisation strategy created by the coalition and continued by Labor gives the government cover to claim it is spending-up on what the Go8 advocates. It isn’t but there are sufficient industry-linked programmes that look like R&D, that make it look like the government is already doing what the G08 recommends.
