Robust research and development (R&D) programs are the cornerstones of any vibrant economy. In an increasingly competitive globalised marketplace, it has become more important than ever to ensure that Australia’s businesses are able to keep pace with the rate of global innovation.
Much has been made politically of our enviable streak of economic growth. However, the reasons for this prosperity do not bode well for our economic future. Largely, we have been the beneficiary of a land overflowing with natural resources that have been in high demand by our trading partners.
Use the talent we have
Our universities and other research institutions contain a wealth of expertise. The contributions Australia has made, for example, in the biotech and pharmaceutical space over the years have been significant and demonstrate our capacity to be world leaders in innovation. However, little has been done by the Government to tap into this knowledge base for the benefit of the private sector. The experience of other advanced economies strongly suggests programs that inspire greater cooperation between small businesses and domestic research bodies provide a significant net benefit to rates of R&D investment .
Australia’s existing R&D inducement, the R&D Tax Incentive, is an essential element in any business’s R&D program. However, the program could do more to assist small and medium enterprises (SME) invest in R&D initiatives. A report from the IPA-Deakin SME Research Centre  shows that making relatively simple adjustments to the incentive scheme and funding programs to increase collaboration between industry and research institutions, can lead to increased R&D spending among SMEs.
R&D is often prioritised in the face of a crisis, such as the 2008 global financial crisis which stimulated an uptick in R&D expenditure. This is to be expected as businesses seek to quickly reposition themselves in a volatile economic environment by developing new products and services.
The current COVID-19 pandemic has upended the lives of many people and forced businesses to reconsider their operations in a period when they are faced with the constant threat of extended lockdowns. Refining R&D programs and increasing subsidies to help them adapt to rapidly changing circumstances is more important than ever.
While the R&D Tax Incentive remains the private sector’s best mechanism to support the cost of R&D projects, more needs to be done to support the ability of businesses to cope in times of uncertainty. Leveraging Australia’s wealth of research expertise across a range of fields, increasing government R&D subsidisation, and enacting sensible reforms to existing programs will help underpin our economy’s long-term growth.
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 Post COVID Policy Options to Enhance Australia’s Innovation Capabilities Small Business White Paper 2021. https://www.deakin.edu.au/__data/assets/pdf_file/0009/2330559/Small-Business-White-Paper-2021.pdf?_ga=2.217535125.2030742933.1626313661-1058862936.1625612647