Australia: Business urged to collaborate more as R&D nosedives

R&D investment in Australia has fallen to its lowest since pre-mining levels, new figures show, despite relentless efforts by the nation’s universities to drive innovation through academia-industry collaboration.

Statistics released by the Australian Bureau of Statistics (ABS) show that investment levels as a percentage to the economy dropped from 1.0 to 0.9 percent between the 2015-16 and 2017-18 periods.

Total investment in R&D has also fallen to its lowest in four decades relative to the size of the economy, going from 1.88 percent to 1.79 percent of GDP. Declining levels of productivity and innovation-boosting research have forced Australia to lag behind its peers in the developed world; the OECD average for R&D investment is 2.38 percent of GDP.

Responding to the numbers, the country’s universities are once again urging businesses to take a fresh look at how university research can drive productivity and stimulate economic, jobs and wage growth.

Catriona Jackson, Chief Executive of university peak body Universities Australia, said the latest figures from ABS were “worrying portents for Australia’s future economic growth”.

“We know that today’s investments in research and development breakthroughs will determine the size of future dividends paid back into Australia’s economy and living standards,” she said in a statement.

“That’s why we need all sectors of our economy — business, universities and government — to work even more closely together to make strategic investments that will deliver ongoing returns.”

Jackson also agreed with recent remarks by Education Minister Dan Tehan that business-university collaborations in Australia have yet to reach satisfactory levels, despite the high returns of such partnerships presenting an impetus for both parties to come together.

There is definitely more scope for these partnerships, she said, to deliver new technologies and innovation and, as a result, drive up productivity levels.

“And once again we extend the offer to Australian businesses: come and talk to us about how we can help your firm to innovate and boost growth,” she added.

Jackson also said universities have long backed a premium rate for businesses to collaborate with research organisations as part of the R&D tax incentive — as recommended by the government’s 2016 review.

“We need further incentives for business to tap into the wealth of expertise already in Australia’s universities — and use that expertise to create the next generation of products and services.”

At the Australian Financial Review Higher Education Summit last month, Tehan had said the government would “like to say yes” to extra funding for research but this was contingent on universities doing the “hard work” to help the government lift efficiency across all sectors. 

“We’ve got to show the Australian people that we will get maximum value for the dollars that we spend on education,” he said in Financial Review.

After cutting AU$2.1 billion to funding for student places late 2017, the Australian government slashed AU$328 million from university research to pay for regional education commitments costing it some AU$135 million. 

The cuts sparked major outcry from Australia’s educators and research communities, who warned of their impact to science and innovation in a country already struggling to keep pace with its global competitors. 

Additionally, the slashing of nearly AU$4 billion from R&D tax incentives in the past two federal budgets came at a heavy price to innovation in Australia, as it drove down investments further.

In June, a report examining Australia’s productivity and wage performance in recent years revealed that growth had stagnated on both accounts. A big reason for this, the Productivity Commission said, is underinvestment in R&D in Australia. 

Responding then, Jackson told businesses that the country’s universities were “ready, willing and able” to work with them to help arrest the slide through more research collaborations.

She also pointed out that collaborations could add billions of dollars to business bottom lines, with figures from a Cadence Economics study in 2018 showing that the 16,000 Australian firms who partnered with universities derived AU$10.6 billion from the collaborations.