Government says Australian R&D is strong – it is not

The federal government has issued an Australian Innovation Statistics (AIS) dashboard showing, according to the headline on the government’s media release, ‘Govt R&D up, overall R&D needs uplift’.

The problem with this convenient analysis is that it belies the reality established in @AuManufacturing’s editorial series – Towards 3% R&D – of a national innovation effort in freefall since 2012.

And despite this federal government’s statements on the benefits of innovation – the picture of decline has not changed markedly since the days of the coalition government.

The release from the Minister for Industry and Science Ed Husic makes much of a claim that the Albanese government’s investment in R&D is up 4.7 percent over this financial year to $14.4 billion.

However with inflation 3.8 percent year on year in Q2 of 2024, any real increase is small, and likely to be accounted for mainly by a rise in defence R&D.

But the main problem is that while Husic is looking at dollar expenditures which have been rising, the real measure of a nation’s innovation performance is a comparison of R&D spending to GDP.

On this score Australia’s innovation effort is in endless decline, and as shown by the main graph – the trends are all down for business, higher education and government spending as a percentage of GDP.

The fall in business expenditure on R&D is most worrying – Australian industry tends to operate in low innovation-intensive sectors, and those innovative sectors we do have are failing to paper over the reality of a dumbing down of Australia..

According to a document accompanying the AIS dashboard on R&D expenditure: “The business sector saw an increase in R&D investment as a proportion of GDP until 2009, but it fell from 1.37% to 0.88% in 2022.

“In contrast, the higher education sector experienced a slight rise from 0.39% to 0.56%, while the government sector saw a decrease in R&D expenditure over time.”

Contrast this reality with the release from the Minister for Industry and Science Ed Husic: “The Australian Innovation Statistics (AIS) dashboard shows Australia’s research efforts are strong, with an increase in published scientific papers and collaborations.”

How can Husic say innovation efforts are strong when innovation, and especially business innovation, has suffered such a precipitous decline?

And any business person would immediately spot the issue here – scientific papers and collaborations are just that, they are not innovations that can be utilised by business and industry.

The AIS report, launched online today, is a refreshed version of the Australian Innovation System Monitor, which the previous government cancelled in 2020.

Here is Ed Husic from his media release: “For over a decade, R&D investment has languished.

“Our predecessors tried to hide the uncomfortable statistics, which was wrong.

“We can’t put our head in the sand and pretend this isn’t happening, we need good data and an honest appraisal of what the barriers are to lifting R&D.”

Yet pretending innovation is not languishing is exactly what Husic is doing today.

Further reading:
Browse the numerous expert opinions published in @AuManufacturing’s editorial series Towards 3% R&D – turbocharging Australia’s innovation effort here.

Image: Research and Development Expenditure