Investment in Research and Development (R&D) in Australia has collapsed since 2008. It has fallen from 2.24% of GDP to the current 1.68%, and shows no signs of recovering.
This Paper examines in detail the downward trends in Australia’s national R&D effort and draws out some of the implications.
R&D investment is fundamentally important for Australia. It fosters innovation, leading to the development of new technologies, products, and services. This, in turn, enhances our competitiveness on the global stage.
In this way, R&D investment is linked to economic growth and increased productivity. It fuels the development of cutting-edge technologies, which are the driving force for growing the Industries of the Future and a shift away from our reliance on resource extraction.
A thriving R&D sector generates employment opportunities. The development of new technologies and industries requires knowledgeable and skilled workers, contributing to job creation and economic development.
Nations with a robust R&D sector are better positioned to compete globally and stay at the forefront of technological advancements, ensuring they remain competitive in the international arena.
A strong commitment to R&D investment stimulates international scientific and technological leadership and will enable Australia to take the lead in critical areas, influencing global standards and developments. The higher education sector performs well in this role, but not so much the business sector.
R&D investment is instrumental in solving pressing societal challenges, such as healthcare, climate change, and energy. Countries that invest heavily in research are better equipped to navigate economic uncertainties, as innovation becomes a driver of resilience and adaptability.
The contributors to the collapse in R&D are the business and government sectors. Australia’s higher education investment in R&D, as a proportion of GDP, is among the highest in the world.
Many have observed that higher education is doing the “heavy lifting” in Australia’s national R&D effort, enabled by fees paid by international students and the R&D recorded by overseas PhD and postdoctoral candidates.
Others would argue that the higher education sector is not appropriate for leading Australia’s transformation from a commodity-based economy to a modern, vibrant, and dynamic industrial ecosystem. It is the business and government sectors that are not pulling their weight. All have distinct but complementary roles in the “triple helix” of business-higher education-government collaboration.
Should the expenditure trends described in the Paper continue, and in the knowledge of the complementarity of government, business and university research investment, the aspiration of politicians, policy analysts and commentators for Australia to achieve a target of 3% R&D investment in GDP, will remain little more than a rhetorical aspiration.
Very substantial investments by government and business are required to leapfrog into the future: digital infrastructure, AI and machine learning, robotics, virtual and augmented reality, cyber security, and green technologies.
Commitments are being made, but progress is serpentine. A sense of urgency is absent.
Lifting R&D is not a matter of shifting funds from one portfolio to another. It requires genuinely new and sustained public and private investment commitment of all ministers and business leaders to address what is at stake.
These are matters for the Prime Minister to take the lead, with the support of his Cabinet colleagues. A Ministerial Research Council must be convened that comprises the ministers with responsibility for significant science and research activities – education, industry and science, health, defence, climate change, energy and the environment, agriculture, and foreign affairs.
The Council would be supported by a standing inter-agency committee of their secretaries and the relevant agency heads within those portfolios. Yet another external review is not required. It's time to get on with the job.
We can no longer rely on the “bottom-up” aggregation of the decisions and Cabinet submissions of six (and possibly 14) individual ministers and their portfolio advisers to “coordinate” Australia’s science, research, and innovation investment policy.
The process must be “top-down”, as seen in several of our “peer” countries—for example, Germany, Netherlands, Israel, Korea, and the USA.
The output of the process would be a White Paper on Australia’s National Research Investment. It would follow the precedent set with Working Future: The Australian Government’s White Paper on Jobs and Opportunities.
By Dr John Howard
April 2024
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Dr John Howard is a Visiting Professor at the Institute for Public Policy and Governance at UTS and Executive Director of the Acton Institute for Policy Research and Innovation.
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