Australian Economy

Husic calls for R&D lift to 3% of GDP – report

By Peter Roberts

Federal industry minister Ed Husic has talked of a new goal of raising Australia’s R&D spending ‘towards three percent of GDP’.

According to a report in Campus Morning Mail, Husic told an audience at UTS, Sydney on Thursday that the goal should be to raise spending from today’s 1.79 percent of GDP which covers government and industry research.

However Husic has not released a media release or speech which reflects this well overdue call.

The history of R&D spending in Australia is one often visited by this author, with the Rudd/Gillard government’s policies taking Australia’s R&D spend – essentially a proxy for national innovation effort – past two percent.

This put R&D spend in the low to middling range of developed nation – hardly a figure which reflects oft talked about public pride in Australia’s innovative scientists and businesses.

However national R&D spend fell in every year of the past Coalition government, with the latest figures from the OECD (March 2022) showing we have even fallen out of the top 20, coming in as the 23rd biggest spender on R&D at 1.80 per cent of GDP.

This is way behind and falling further behind the leaders – unsurprisingly led by Israel on 5.44 per cent, Korea on 4.8 per cent, Taiwan 3.64 per cent and Sweden on 3.53 per cent.

The average spend by OECD nations is the red bar on the graph of 2.68 per cent of GDP, 50 per cent more than Australia spends.

I should say that Husic, and Labor, barely mentioned R&D spending prior to the election or afterwards.

But if Husic genuinely wants to raise innovation effort by 50 percent then the government needs to do a lot more than it has done to date including in the recent Budget.

It really does all come down to government policy. We don’t spend enough, and we don’t have the policy settings we need to reverse our innovation deficit and decline.

We had an easy to understand policy position in the early 1990s – a universally available 150 per cent tax deduction on R&D which sent a clear message to business that innovation was critical, and valuable.

Today we have a mish mash of hard to access tax breaks that go to SMEs and a myriad of grants schemes, poorly executed and under scaled though well intentioned.

Then there is the lack of national institutions driving and co-ordinating innovation – policy and winners are set by those in ministerial offices and a revolving door of ministers.

Over to you for some action Mr Husic?

Picture: Picture: March 22 OECD main science and technology indicators database

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