Australia’s safety and prosperity is jeopardised by underinvestment in R&D, the Australian Academy of Science said last night, in a powerful call to reverse the course of research funding.
The Academy presented levying big business to fund research and development as a patriotic imperative, pointing out that business sector underinvestment had left a gap of $32.5 billion simply to meet the OECD average. Australian businesses commit just 0.89% of GDP, compared to an OECD average of 1.99%. The trend is not new, but the powerful statement proposing the new levy marks a fresh direction in the relatively conservative language from the Shine Dome.
“Investment in R&D is at a historic low. Within five years, Australia will be at the bottom of the OCED, a perilous place in a technologically advanced and volatile world where research – and the technologies it produces – is a source of intense global competition and power. Without it no nation can remain prosperous or safe,” the Academy states.
“Large Australian companies – those best positioned to invest, innovate and profit – contribute less despite significantly benefiting from publicly funded research and tax incentives,” the Academy announces in a new proposal.
“Developing sovereign R&D capability gives us the tools we need to be self-reliant, makes us more resilient to external shocks, and turbo charges productivity and economic growth. It is an investment in ourselves rather than rather than a reliance on others who are motivated to advance themselves, not us.”
The Academy proposes “incentivising” businesses with $100m plus revenue, via a 0.25 % or 0.5 % levy, to raise up to $12.8bn a year for R&D to help “maintain national competitiveness.”
It propose two options to allocate funds raised;
- The Australian Research Council and the National Health and Medical Research Council allocate funds on top of public allocations; or
- Payments are deposited in an equivalent of the present Medical Research Future Fund, invested to “generate a steady income”.
In both models the public sector agencies would distribute funds, “in areas of national significance on a competitive basis.”
At the top $12.8bn level the private sector would close to double the national research and development outlay. Total government spending is now $14.4bn. The existing R&D tax incentive would continue for smaller companies who run their own research and development programmes.
The Academy argues big corporates must step contribute more.
“There is a growing reliance on small and medium to drive business expenditure on R&D in Australia, which contrasts with other advanced economies where large companies primarily lead. SMEs make up 55 % of business expenditure on R&D in Australia.
Large Australian companies – those best positioned to invest, innovate and profit – contribute less despite significantly benefiting from publicly funded research and tax incentives.”
The Academy’s emphasis on more R&D by big business is in-line with the review of R&D, commissioned by former industry minister Ed Husic which rejects Australia being a researcher adopter rather than developer.
“Without developing Australian research and skills, we place our national sovereignty at risk. In this world, there is no safe space for a nation that leaves itself dependent on where other countries choose to invest. Nor is there a place that does not nurture local talent to identify, adapt to our own priorities, efficiently adopt and sustain research done elsewhere but used here,” the Academy says.
“We want technologies like AI to boost our productivity, we want new medicines to keep us healthy, and the most advanced defence capabilities to keep our island nation safe, but we aren’t willing to invest sufficiently in the discoveries that create them.”