New innovation system analysis warns of risks to productivity

New figures and analysis on Australian Research and Development (R&D) depict an innovation system brimming with potential but constrained by low funding.  

The budget tables and analysis, released on Friday by the Department of Industry, Science and Resources (DISR), confirms that despite a small increase in absolute terms, government R&D expenditure is dangerously low and falling as a share of GDP, at just 0.52% of GDP in 2024-25. With R&D expenditure a key driver of productivity, the status quo represents a risk to future prosperity. 

Despite low government investment in R&D, the analysis demonstrates that there is a strong and growing potential for innovation.  

DISR’s analysis highlights a promising 45.7% of Australian business engaged in innovative activities during 2022-23, and that collaboration has been increasing between innovation actors. However, business innovation faces significant challenges including accessing skills and financing. 

The success of policies such as the Future Made in Australia Act rest on the strength of the innovation system. There is no Future Made in Australia without future innovation happening in Australia.  

ATSE looks forward to participating in the upcoming Independent Review of R&D, which provides an opportunity to identify and remove barriers to innovation. 

Lifting innovation investment to internationally competitive levels will allow Australia to realise its unique R&D strengths, foster new innovations and generate new industries.   

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