Atlassian, Cochlear and BCA push for $7bn R&D reform
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The news: Atlassian, Cochlear and the Business Council of Australia are pushing the government to reform R&D policy, commissioning a Mandala Partners report showing Australia is missing out on billions of dollars worth of productivity growth.
Mandala recommends six changes to R&D policy, including removing the current $150 million R&D Tax Incentive cap and incentives for businesses to develop technology alongside universities or government research institutions.
The context: Australia's R&D spend has long lagged behind that of the world's wealthy countries.
Australia spends 1.7% of its GDP on research and development, according to 2021 CSIRO data, much lower than the 2.7% OECD average. While universities and governments spend at globally average levels, Mandala found that business investment lags behind.
Australia's tech industry has long pushed for the government to reform its Research and Development Tax Incentive (R&DTI), first implemented in 2011, to reverse that trend. Boosting R&D spend has been a mission for the Tech Council of Australia, now chaired by Atlassian co-founder Scott Farquhar, for the past year.
Tesla chair and former TCA chair Robyn Denholm, meanwhile, is leading her own review into Australia's R&D policies.
Mandala's report recommended the following reforms:
- Simplify the Tax Incentive by introducing a flat 18.5% premium.
- Completely remove the R&DTI's current cap of $150 million.
- Provide incentive tax rates for companies that do R&D in collaboration with universities or government institutions.
- Introduce a concessional tax rate of 10% for commercialisation of Australian IP.
- Consolidate R&D grants into a smaller batch of national programmes and slash red tape to ease compliance costs.
The numbers: Mandala found that R&D spend among large businesses has declined by 24% over the past decade. Part of the problem is that conducting R&D is 12% more expensive in Australian than the OECD average, largely due to high labour costs.
The current R&D regime benefits small businesses more than large corporations, Mandala said. The report indicated that is a problem, because small companies lack the scale for their innovations to boost the wider economy.
The report found that boosting Australia's R&D would add up to $7.7 billion to the country's economic output, generating $5 in value for every $1 invested, mostly due to attendant productivity increases.
The source: Mandala Partners report
