Australia is experiencing significant economic and social change. We are entering a new era in which skills, knowledge and ideas will become our most precious commodities. Successfully navigating these changes will require Australian businesses and research organisations to work in partnership to create the new products, processes and industries needed to secure Australia’s future economic prosperity. 

The Australia university system provides the critical intellectual and research infrastructure that underpins national productivity, prosperity and innovation. Our universities deliver excellence in teaching, scholarship and research; support regional economies and communities; transform lives through educational opportunity and research; and have been at the forefront of Australia’s ‘soft diplomacy’ agenda. They provide the building blocks that will enable us to make the transition to a productive and internationally competitive innovation nation. 

The low levels of industry–university research collaboration in Australia are well-documented and are the subject of the Government’s recently released National Innovation and Science Agenda (NISA). Adjustments to university research funding and the introduction of a new impact and engagement assessment announced in the NISA convey a strong expectation that universities should do more to reach out to industry and other end-users in the collaborative effort needed to drive national innovation. 

These changes to the ‘supply side’ of the collaborative effort, however, must be complemented by commensurate ‘demand side’ incentives to encourage industry to become active partners in the national research and innovation effort. Government policy, particularly through the design of the Research and Development (R&D) Tax Incentive, has an important role to play in serving as a catalyst for change. 

In Australia the R&D Tax Incentive is the principal form of support for business innovation. Despite an annual cost of almost $3 billion in revenue foregone, Australia continues to lag behind comparable countries on indicators of business innovation. 

As highlighted in the R&D Tax Incentive Review Issues Paper (the issues paper), legitimate concerns have been expressed about the level of ‘additionality’ and ‘spillover’ that the measure delivers. Universities Australia welcomes the review’s focus on improving the effectiveness and integrity of the R&D Tax Incentive.  

Universities Australia supports the introduction of reforms to ensure the incentive is supporting the aims of the NISA to stimulate world-leading innovation and greater collaboration between industry and research organisations.

Universities Australia encourages the reviewers to also consider the case for supplementing the incentive with more direct and targeted measures, including competitive grants and non-financial support measures, like mentoring and network development. Australia must ensure we have the right balance of indirect and direct support for business innovation. 

To view our full submission, click the link below.

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