Abolishing the research and development (R&D) expenditure threshold would create a surge in Australian innovation and drive economic growth, according to the county’s leading business advocacy group.
Business Council Chief Executive Bran Black said private sector investment in R&D was critical to lifting productivity, and creating growth and jobs.
Mr Black said an overhaul of Australia’s R&D expenditure threshold would help make Australia a more competitive place for investment and the commercialisation of new products.
“The private sector wants to do more Australian R&D, but the policy settings are holding back investment that could transform local products, creating jobs and driving economic growth,” he said.
“Business stands ready to invest but we need to re-think current settings to unleash investment in new products.
“The BCA believes abolishing the R&D expenditure threshold, or at a minimum increasing it to $250 million and indexing it, would create a better incentive for investment.”
Mr Black said that while there should be a comprehensive response to the recently announced R&D Review, it was essential that a change to the threshold be implemented in the short-term.
“With the review not reporting until the end of 2025, Australia can’t afford to wait to take simple steps like this to kick-start our productivity.
“We need to create market incentives for non-taxpayer funded research, so businesses aren’t actively disincentivised from doing more R&D in Australia.”
“If the threshold were removed, we could see a flurry of Australian innovations that help solve some of our biggest challenges, including those in defence, energy, health and cyber.”
He said the United States has a R&D spend of 3.5 percent of GDP, while funding in Israel was more than triple Australia’s.
“The BCA believes Australia should aspire to a 3 percent of GDP R&D spend.
“Currently our R&D spend sits at around 1.7 percent.
“If we want to diversify our economy, boosting R&D spend via incentives is an important part of building an environment that fosters investment and local innovation,” Mr Black said.
