The Australian Academy of Science says ABS data released today reveals Australian business expenditure on R&D is flatlining as a percentage of GDP, as leaders consider how to improve the nation's productivity.
The ABS data showed business spent $24,410 million on R&D in 2023-24, up 18% from 2021-22.
President of the Australian Academy of Science Professor Chennupati Jagadish AC said business R&D expenditure has remained at 0.9% of GDP, well below the OECD average of 1.99%.
"Business R&D expenditure as a proportion of GDP has not changed since 2017-18 and in dollar terms this is now a A$28,783 million gap between Australia and the OECD average," Professor Jagadish said.
The government's Strategic Review of R&D is looking for ways to grow business investment in R&D. The Academy has proposed incentivising companies with revenue over $100 million to invest in R&D by applying a 0.25% or 0.5% levy on those that don't, with funds from the scheme used to grow long-term research funding that keeps the innovation cycle going.
The Academy's proposal provides a source of long-term research funding - an area no government minister wants to address.
R&D levies are well tolerated and highly effective in other parts of the economy such as in the agricultural and grains industries.
The ABS data released today shows gross expenditure on R&D (GERD) in 2023-24 is estimated at $45,082 million (1.69% of GDP), compared to $38,571 million in 2021-22 (1.66% of GDP).
Professor Jagadish said while this is an increase, it does not reverse the overall downward trend in investment in R&D.
"It remains well below the OECD average of 2.7% of GDP. In dollar terms, this is a gap of A$27,089 million. Urgent measures are needed to reverse this trend if Australia is to participate in a technologically advanced world," Professor Jagadish said.
