For years, Australia has talked about productivity, resilience and sovereign capability as if they were abstract ambitions rather than outcomes of deliberate policy choices. The Strategic Examination of R&D final report makes clear that this era of drift can no longer continue.
The panel’s conclusion is blunt: key elements of Australia’s research, development and innovation system need bold reform. Incremental change has failed.
That assessment should come as no surprise. Productivity growth has stalled, business investment in R&D has declined, and the research system has been left fragmented and under‑coordinated — sustained largely by universities absorbing risk and cost in the absence of consistent national policy.
Universities have not stepped back from this challenge. Each year, the Group of Eight universities collectively invest more than $10 billion in research, representing around one‑fifth of Australia’s total R&D effort. They educate almost half of the nation’s PhD graduates, train advanced skills across every critical field, and underpin collaboration with industry, defence and government. Yet this national capability increasingly rests on unstable funding foundations.
This matters because productivity is not an accounting concept. It is the difference between countries that can absorb shocks and those that are permanently on the back foot.
Australia is not insulated from these forces: as supply chains are re‑shored, energy systems re‑engineered and defence, cyber and critical technologies increasingly contested, nations that hollow out their research base to patch short‑term budgets don’t save money — they lock in long‑term vulnerability. In that environment, economic resilience and national security are inseparable from sustained investment in research capability.
The SERD report rightly recognises universities as the backbone of Australia’s R&D system. They generate the bulk of the nation’s new knowledge, educate advanced researchers at scale, and anchor collaboration with industry and government. Yet for more than a decade, public investment in research and indirect research costs has declined in real terms, even as expectations on universities have continued to rise.
This imbalance is not sustainable. Every advanced economy that has successfully lifted productivity — whether the United States, Germany Canada, or South Korea — has done so by protecting discovery research during periods of uncertainty, not by treating it as discretionary spending.
The report’s proposed structural reforms are therefore overdue. Greater focus and coordination, clearer national priorities, and more effective pathways from research to impact are all necessary. But structure alone will not deliver results if the engine room of the system is weakened.
Basic and discovery research is not a luxury to be indulged in good times. It is the foundation on which applied research, commercialisation and sovereign capability are built. Without strong and consistent investment in knowledge creation, Australia erodes the base it needs to turn innovation into enduring economic and strategic advantage.
The same logic applies to people. PhDs are not simply academic credentials; they are the talent base that advanced economies rely on to deliver productivity growth, national security and technological leadership. In Australia, around half of all research‑based PhDs are trained at Go8 universities, across health, energy, cyber, defence and critical technologies. Weakening that pipeline weakens the nation’s capacity to compete.
There is also a compelling case to mobilise patient capital. The report’s call to unlock greater participation by superannuation in Australian innovation reflects a simple reality: Australia has one of the world’s largest pools of long‑term capital, yet too little of it is connected to the domestic research and innovation effort. If we are serious about building advanced industries at home, that disconnect must be addressed.
None of this ignores the pressures facing government. Fiscal constraints are real. Strategic uncertainty is growing. Productivity has been weak for too long. But those pressures strengthen the case for rebuilding Australia’s R&D bas — they do not weaken it.
The war in the Middle East is a reminder that energy security, supply chains and strategic stability can deteriorate rapidly and with global consequences. For countries like Australia, distance is no shield.
Energy systems, critical minerals, defence technologies and cyber capability all depend on deep research strength built over decades, not election cycles.
In moments of global instability, nations either draw on the resilience they have already built — or confront the cost of having failed to invest when they had the chance. Locking in Australia’s R&D base now is not optional. It is the price of sovereignty in an increasingly uncertain world.
Vicki Thomson is the chief executive of The Group of Eight
Do you know more? Contact James Riley via Email.