Many Australians know that investment in innovation is a key driver of Australia’s economic growth and prosperity. Innovation helps to cultivate new ways of thinking, promotes technological development and helps us solve the biggest challenges facing society today.
However, few could describe the size of the relationship between Australia’s Research and Development spending and Economic Growth, or compare this to performance on other typical investment returns.
For example, future industries that could be unlocked by research and development in Australia include the Quantum Technology and Hydrogen Industries. Examples of emerging technologies that could change the way Australians work and live include artificial intelligence and robotics.
Despite the benefits, attracting investment in Research and Development and Innovation, Australia remains challenged, with the latest ABS figures showing that business expenditure on R&D is half the Organisation for Economic Co-operation and Development (OECD) average and the lowest it has been since 2003, while government expenditure is the lowest since 2005.
According to the latest CSIRO working paper, ‘Quantifying Australia’s returns to innovation’, there is a $3.5 return on investment and a 10 percent average annual return.
In consultation with government and academic stakeholders, the team at CSIRO Futures, the strategic and economic advisory arm of Australia’s national science agency, used a new yet simple economic approach to quantify the return on investment in overall research and development spending for Australia.
They adopted a method developed originally in the US that “calculates return on investment by defining the relationship between domestic gross spending on research and development, and the growth in per capita gross domestic product (GDP) that follows as a result.
This method ‘encompasses both successful and unsuccessful R&D investments and quantifies only monetary benefits (excluding non-monetary social and environmental benefits).1
As a result, the findings have found that Australian innovation investments, whether that be in a new product and/or service, have been well worthwhile and that increasing future investment into Research and Development in Australia could capture substantial economy-wide returns.
Located in the heart of Melbourne CBD, the team at Clearpoint Ventures intimately understand the benefits of what R&D can bring to Australia’s economy. So much so, that we have dedicated our entire consultancy to R&D Tax only. Our expert team has the knowledge to take you step-by-step through the R&D Tax Incentive process, as we have the skills to maximise your R&D Tax offsets. If you’re a tech company that conducts innovative research and development in Australia, get in touch! Alternatively, visit our website here