RDTI savings must go back to innovation

Denham Sadler
National Affairs Editor

The hundreds of millions of dollars in savings from planned cuts to the research and development tax incentive should be reinvested in direct support for Australian innovation, according to Science and Technology Australia.

In a submission to the Senate committee inquiring into the federal government plan to shave $1.8 billion from the R&D tax incentive (RDTI), Science and Technology Australia said this cash boost could provide a “new opportunity for the innovation sector”.

Reforms to the scheme will save the government $435 million in 2020-21 and $1.8 billion over the forward estimates, according to budget documents. In light of COVID-19, the legislation underpinning the changes won’t be passed this financial year, and its is uncertain surrounds how the government plans to proceed.

The savings from any cuts to the RDTI should be used to create a Research Translation Fund, modelled on the successful Medical Research Future Fund, Science and Technology Australia president Jeremy Brownlie said in the submission.

Robot research
Calls for a Research Translation Fund to drive innovation

“While the RDTI is the single largest source of funding for research and development in Australia, it is becoming less effective in encouraging new research from the private sector. Australia is one of the few economies that incentivises business investment in research and development almost wholly through a tax incentive,” Dr Brownlie said.

“To incentivise more business investment in research and development, STA recommends reinvesting the savings from this legislation into the sector through a Research Translation Fund.”

The fund would assist with translating research from various disciplines covered by the Australian Research Council, and could be administered by that organisation, addressing “gaps in the innovation pipeline for key Australian industries”.

This would also address issues with the current Australian Research Council linkages, which are still “heavily research driven”, Dr Brownlie said.

“While the linkage grants can work to turn research into final products, the Research Translation Fund would then develop these products into new and exciting industries in Australia’s economy,” he said.

The Coalition has given no sign that the savings from the planned cuts to the RDTI will be reinvested in Australian innovation in some form.

Innovation and Science Australia’s 2030 report also recommended the government use the savings from the RDTI reforms to increase direct grants and commit to ensuring funding for research, science and innovation not fall below the medium-term average of 0.64 per cent.

In response, the government merely “noted” this recommendation, leading the Opposition to label the move “budget fraud”.

In its submission to the senate inquiry, Science and Technology Australia also called for the introduction of a collaboration premium to the RDTI to incentivise public-private R&D collaboration. This was also recommended by Innovation and Science Australia and the Three Fs report that led to the Coalition’s RDTI reforms.

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