The Research and Development Tax Incentive scheme is estimated to reach its highest total value this financial year, according to new data from the Department of Industry, Science and Resources.
The overall estimated investment through the Research and Development Tax Incentive (RDTI) scheme is expected to be more than $3.2 billion in financial year 2022-23, about $200 million (6.7 per cent) more than was estimated in 2021-22.
Total spend on science, research, and innovation (SRI) programs across all government portfolios is also expected to be $12.1 billion, exceeding the previous peak of $11.8 billion in 2021-22, according to the data. The 2022-23 estimates includes $1.2 billion in funding for CSIRO and ANSTO.
In March, a spokesperson from the Department of Industry, Science, and Resources said that the data in the SRI Budget Tables are “estimates from each budget, which are later revised”. As the RDTI is a tax offset, investment comes in the form of foregone tax revenue from the government that is retained by firms, with some direct tax refunds for smaller companies.
Industry and Science minister Ed Husic on Friday reiterated that science, research, and innovation is fundamental to the government’s priorities, which includes “rebuilding Australia’s manufacturing capability, supporting home-grown innovation, and securing our long-term productivity, energy security and prosperity”.
“Strengthening the bond between industry and research organisations is crucial to delivering research outcomes, creating well-paid secure jobs and supporting our economy,” Mr Husic said.
“The government will continue looking for ways to expand Australian research and innovation opportunities, drive scientific breakthroughs and industry growth and create high paying, sustainable jobs for Australians.”
There are two R&D tax offsets available under the scheme, a refundable offset for firms with annual turnover below $20 million, and a non-refundable offset for firms above that.
Most of the scheme’s investment will come through the refundable offset at an estimated value of $2.54 billion, with the remaining $620 million through the non-refundable offset.
SRI figures estimated that investment through the refundable R&D offset was in decline between 2015-16 and 2018-19, while the non-refundable R&D offset was in decline from 2012-13 and 2018-19. However, expenditure on both has been on the rise since then.
Data on the estimated value of the RDTI scheme is reported by three government sources, each published at different times.
Besides the Department of Industry, Science, and Resources’ SRI Tables, there is the ATO’s taxation statistics – the most recent version of this document is of data from financial year 2019-20 – and the Department of Finance’s Tax Expenditures and Insights Statement.
The latter only includes estimates for the non-refundable R&D tax offset. It also estimated that investment through the non-refundable R&D tax offset would be $530 million in financial year 2022-23, $90 million less than what was estimated in the SRI budget tables.
The Treasury’s 2022-23 budget portfolio statement has total 2021-22 investment in the RDTI scheme as $2.7 billion.
The 2022-23 SRI tables note that most of the R&D investment will come from the Department of Industry, Science, and Resources (40.6 per cent), followed by the Department of Education (28.8 per cent), and the Department of Health and Aged Care (13.9 per cent).
The Department of Defence will make up just under six per cent of the estimated investment, while the Department of Climate Change, Energy, Environment, and Water will make up five percent.
Australia’s level of R&D investment as a proportion of GDP has been in decline since 2008, and sits below the OECD average, as of 2019. Meanwhile, R&D spend at government agencies as a proportion of GDP also falling across the near decade between 2011-12 and 2019-20.
A commitment to push Australia’s investment in R&D “closer to three per cent of GDP” was a part of the policy platform Labor took to the 2022 election.
Ahead of the federal Budget this month, research representative groups have called on the government to meet this commitment, with some calling for a review of the Australian research sector.
Editor’s note: This story originally stated the previous peak in government SRI spending was on 2010-11, but has been corrected to 2021-22.
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