A new report finds boosting research and development (R&D) investment through targeted policies is critical to fixing Australia’s productivity problem and unlocking significant investment, which will boost jobs and real wages across the country.
Commissioned by the Business Council of Australia, Cochlear and Atlassian, ‘Unlocking Australia’s R&D Potential’ by Mandala Partners, reveals improved R&D policies can unlock upwards of $7 billion annually in additional gross domestic product and will increase productivity growth 0.1% each year.
This report provides real world examples through companies like Atlassian and Cochlear of how large business R&D investment has a positive spillover effect on the economy, by creating better environments for commercialising innovations, entrepreneurship and finding new discoveries.
However, the report paints a concerning picture that Australia’s R&D capability is going backwards, with business investment much lower than in comparative countries and dropping 24% over the last decade.
According to the report, increasing R&D spend would unlock a number of economic benefits for Australia, with the report finding every $1 of government expenditure on the proposed reforms to support business R&D creates an economy wide return of $5, while also providing a raft of new sectors and career pathways for current and future workers.
The report recommends:
- A simplified, flat-rate R&D tax incentive (R&DTI) premium of 18.5%.
- Removing the $150 million cap on the R&DTI
- Introducing a concessional 10% tax rate for profit from Australian R&D commercialised in Australia.
- Incentives for collaboration between industry and research institutions.
- Streamlining compliance and reporting requirements for R&DTI.
- Consolidating R&D grants into fewer nationally significant programs.
BCA Chief Executive Bran Black says reversing the current trend in R&D investment and giving businesses the right environment to invest is critical to driving an economy-wide plan to increase innovation and productivity.
“Empowering businesses to make R&D investments is critical to making our economy more productive and innovative, and for delivering greater prosperity for all Australians,” he says.
“This report sets out clear recommendations to create a better environment for private businesses to invest in and make significant contributions to our economy – and if we don’t act now then we will keep losing innovators, capital and ideas to other nations.
“Better tax, collaboration and commercialisation policies will give businesses the confidence to take the next step and create new Australian technologies that benefit everyone’s lives.
“With government and industry working together, we hope to create dozens of new Australian made innovations and world leading companies like Atlassian and Cochlear.”
