Australia has one of the lowest levels of government support for research and development

Australia has one of the lowest levels of government support for R&D and innovation development in the world and business must build industry-specific R&D corporations if Australia is to compete in the global economy, a policy brief from the Melbourne Institute at the University of Melbourne shows. 

The study highlights that the US government has committed over 0.22 per cent of GDP to business R&D and the UK Government 0.14 per cent, while the Australian government has committed 0.09 per cent. 

The report’s author Professor Beth Webster says public debate often erroneously suggests Australian governments are generous in this area. 

“The alarm bells should be ringing about the rate at which our secondary and service sector industries are slipping behind not just other high-income countries but increasingly middle-income countries such as Malaysia, South Korea and the Czech Republic,” she says.  

In 2012, the OECD ranked Australia as 20th  out of 26 countries on its patent quality index; the United Nations (UN) ranked Australia 23rd behind almost all other OCED countries on its Global Innovation Index. 

The UN ranked Australia 13th on the calibre of its innovation inputs (institutions, infrastructure, and knowledge workers), while Australia’s innovation output was considered so low that our innovation efficiency was ranked 107th in the world.

“The data are clear: compared with other developed Western nations, Australian governments’ support for business sector innovation is low,” Professor Webster says. 

“Although R&D is only one part of total innovation spending, it represents the most consistent and universal data we have on innovation activities.” 

The report also states that business must take the lead and build industry-specific R&D corporations if Australia is to compete in the global economy. 

“Improving the diffusion and transmission of knowledge around and within industry is a matter that should be led by industry. There is only so much governments and their public servants can do directly.

Professor Webster says the loss of car manufacturers Holden, Ford and Toyota underlines the pertinence for industry to map out its future without waiting for federal or state Government to take a lead. Industry-led R&D corporations can give Australia the decisive edge in the global economy.

Industry-owned corporations would fund R&D for the benefit of the members with funding coming from a mix of industry levies, membership fees and government funds. Strategic priorities are identified by the industry through a range of consultative activities and the research is targeted at specific industry needs. 

“The advantage of the R&D corporation model is its comparative permanence. A program that is established under an act of parliament is less prone to annual budget cuts. Confidence in the longevity of a program gives the industry, and the research community that services it, the reassurance it needs to establish the architecture to support it” she says.  

The Melbourne Institute Policy Brief Series is a collection of research publications that examines current policy issues and provides an independent platform to examine pertinent issues in public debate. 

Melbourneinstitute.com