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Update on the R&D Review (announced in the May 2024 Budget)

November 18th, 2024

In the May 2024 federal budget, The Albanese Government announced a strategic examination and review of Australia’s R&D system to align it with national priorities and improve outcomes.

InnovationAus has recently provided an updated on the status of the review and noted that terms of reference for the review are awaiting approval from The Albanese government and that the review will not be completed for at least another year.

Australia’s R&D investment has been declining for over a decade, now at around 1.7% of GDP, well below the OECD average and global leaders like Israel and South Korea. The Government aims to increase R&D investment towards the OECD average of 3% of GDP

InnovationAus notes the government has begun reaching out to research stakeholders, with formal submissions to follow once a discussion paper is released. Any decisions from the final report are expected no earlier than late 2025.

Swanson Reed understands that the R&D Tax Incentive is likely to be within the scope of the Review, and this follows numerous reviews completed by various administrative agencies in recent years.

 

Business reactions to the review

Following announcement of the review of Australia’s R&D system, Business leaders were quick to declare that they wish for the R&D tax incentive to remain unharmed. Key opinions from Dr Larry Marshall, former CSIRO chief, Veteran venture capitalist Daniel Petre, on the board of the National Reconstruction Fund, Sally-Ann Williams, CEO of Cicada Innovations and Hon Weng Chong, founder of Cortical Labs in a piece published by the Australian Financial review highlight the importance of stability in the R&D Tax Incentive programme.

 

Recent Developments

Since the review of the R&D system was originally announced, the release of the transparency reporting has put the R&D Tax incentive in the news.

With the review of Australia’s R&D System not expected to be completed for another year, and the 2025 federal budget likely being early (possibly March 2025) due to next year’s federal election, it’s hard to see the review directly contributing to any changes to the R&D Tax Incentive in the near term. However, The Albanese Government could theoretically propose changes to the R&D Tax Incentive unrelated to, or ahead of the review of Australia’s R&D system.

Swanson Reed will continue to call for stability in the programme.

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