Submission to the Australian Government’s Strategic Examination of R&D

Overview

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CPD’s submission to the Australian Government’s Strategic Examination of Research and Development (R&D) makes seven recommendations by for drawing on two recent CPD reports:

  1. Setting Direction: A purposeful approach to modern industry policy lays out a practical framework for Australian governments to use industry policy to invest in a sustainable and prosperous economy.
  2. Ideas to Industries: How to get the most out of public money for industrial development finds that government funding for industry development is generally skewed towards the later stages, which are already comparatively well-financed by private capital markets, than the early stages including R&D.

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The Centre for Policy Development submission to the Australian Government’s Strategic Examination of R&D makes seven recommendations drawing on CPD’s recent work on industry policy, procurement and industry development.

About the strategic examination

The Australian Government has commissioned a strategic examination of Australia’s R&D system. An independent expert panel is exploring how Australia can encourage more home-grown ideas, more research and more translation, which it says will lead to benefits and prosperity for all Australians for decades to come.

It sought input on its discussion paper. CPD’s submission focuses primarily on the role of governments, and answers three out of the ten consultation questions:

Q1. What should an integrated, sustainable, dynamic and impactful Australian R&D system look like?

Q2. What government, university and business policy settings inhibit R&D and innovation why?

Q4. What types of funding sources, models and/or infrastructure are currently missing or should be expanded for Australian R&D?

 

What does the submission recommend?

  1. As part of a modern industry policy, the Commonwealth Government should identify a small number of priority areas for R&D activities to focus on and formulate objectives in these areas that are specific, measurable and time-bound.
  2. The Commonwealth Government should focus on a multi-pronged approach to increasing R&D in Australia, providing direct funding and growing demand for R&D, and coordinating supply chains and capacity building.
  3. Increase the relative share of financial support for early-stage R&D as compared to later stages of commercial investment.
  4. Encourage R&D innovation through government procurement.
  5. Make broader use of profit-sharing mechanisms for funding R&D, to increase the potential for funding continuity and ensure a fair return to society for incubating nascent industries.
  6. Design R&D tax credits to have a material impact on early-stage ventures (e.g. by being transferable).
  7. Give R&D projects assistance to navigate the complex system of government funding opportunities and policy frameworks.

 

What are the barriers to government investment in R&D?

CPD broadly agrees with the barriers addressed in the discussion paper, but we draw attention to three specific barriers in relation to government investment in R&D:

  • Barrier 1: The Australian government institutions that receive the most funding for industry development are designed to take low levels of risk and pursue profits.
  • Barrier 2: Public sector funding does not currently sufficiently plug the gaps left by private sector financing of new industry development.
  • Barrier 3: There is no clear coordination mechanism to navigate the many potential avenues for public funding of R&D projects.

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