Australia needs a strong innovation and Research & Development (R&D) led agenda to grow our current economic standing and develop new competitive industries to drive productivity into the future.
With the Government due to hand down the 2022-2023 Federal Budget on 25 October, our experts have provided their insights about what innovation measures we can expect to see from the new Government.
Collaboration driven R&D
Australia has a strong history of generating quality academic research, however, translation of ground-breaking research into successful commercial ventures has typically been poor. Greater investment in public and private sector collaboration is key to assist the commercialisation of Australian research projects onshore and we anticipate this will be a key focus for the Government in the upcoming Federal Budget.
The Federal Government has already indicated a $2.2 billion investment in public and private sector collaboration to create the next generation of Australian companies and products. This amount includes $1.6 billion to create Australia’s Economic Accelerator focused on supporting projects with high commercialisation potential and additional R&D funding to universities.
Investment in clean tech and sovereign manufacturing
When Labor delivered its Federal Budget reply in April, they advocated for Australia to become a renewable energy powerhouse with strong investment in the clean technology sector. Australia has the resources to produce clean energy minerals such as lithium, copper and nickel as well as the ability to manufacture the finished products such as wind turbines and batteries, but the upfront capital costs stand in the way. We anticipate the 2022-2023 Federal Budget will have a strong focus on investing in a renewable and clean energy future through both supporting disruptive clean technology innovation and highly capital-intensive renewable projects.
We also expect the government to continue its push to expand Australia’s sovereign manufacturing capabilities with the spotlight on the key priority areas. These areas will likely be similar to the key priority sectors identified by the prior Government and include, health and biotechnology, agriculture, defence, resources and food and beverage.
Certainty for the R&D tax incentive
The R&D Tax Incentive (R&DTI) is the Government’s flagship program for incentivising Australian-based innovation.
The R&DTI rate changes introduced in the 2020 budget are well and truly in effect. These changes are having a positive effect on highly intensive R&D companies and are providing greater clarity around the net benefit available by linking the R&D rate to the corporate tax rate. However, the continued reviews and changes to the R&DTI have created uncertainty around the program and adversely impacted industry’s confidence to invest in R&D activities.
The Labor Government has historically supported the R&DTI and industry will be looking to the Government to provide greater certainty about the program’s future. Further, industry will be looking to the Government to continue to simplify the process for accessing the R&DTI, such as, the clinical trials determination that was released earlier this year.
Conclusion
As our nation rebuilds post the pandemic and global supply chain constraints continue, the 2022-2023 Federal Budget is the Government’s opportunity to show strong investment in the Australia of the future. Investment in a collaborative R&D led agenda is key to drive our nation through the current economic challenges and boost our competitive advantage in priority sectors.
