Key points
The 2 main metrics which are used to measure research and
development (R&D) spending in Australia are:
- gross
expenditure on research and development (GERD) — a performer-based
R&D metric reported by the Australian
Bureau of Statistics every 2 years which estimates total R&D spending
in Australia by business, government, higher education and private non-profit
sectors. In 2021–22, GERD was an estimated $38.8 billion and 1.68% as
a proportion of gross domestic product (GDP). This is below the OECD
average of 2.7%. There are calls for the government to aim for a higher total
country investment in R&D, closer to 3% as a proportion of GDP and
- total
government R&D support — a funder-based R&D metric reported in
the annual Science,
Research and Innovation (SRI) budget tables comprising budgeted R&D
expenditure from departmental funds, R&D support from administered funds,
and R&D tax incentives. In 2024–25, total government R&D support is
forecast to be $14.4 billion and 0.52% of GDP.
In the 2024–25 Budget, Minister for Industry and Science
Ed Husic announced that the government would commission a strategic
examination of the Australian R&D system. No specific funding amount
was allocated for this review. Under the Terms
of Reference (released in December 2024) the strategic examination will
be conducted until 31 December 2025.
- In
October 2024, the Government published a new innovation
statistics webpage, which compiles key data and provides a high-level
overview of the Australian innovation system.
Introduction
This paper, which is an update of the Parliamentary
Library’s November
2023 publication, is intended to provide a brief overview of the current
state of research and development (R&D) and innovation investment in
Australia. It contains an update of the key statistics relating to R&D and
innovation, graphs showing trends in these statistics, and a brief summary of
recent policy developments in R&D and innovation.
For further explanations regarding how R&D and
innovation expenditure is measured in Australia, including a summary of
definitions and key data sources in this area, please refer to the
Parliamentary Library’s 2025 research paper, Australia’s R&D andinnovation metrics: an explainer.
Gross expenditure on
R&D in Australia
In 2021–22, GERD was estimated at $38.8 billion, or 1.68%
as a proportion of GDP.[1]
GERD represents total R&D expenditure by business, government, higher
education and private non-profit sectors. This is the most recent estimated
GERD figure, published in August 2023. GERD as a proportion of GDP is a
key measure used to compare a nation’s investment in research and innovation
across the whole economy. There are calls for the government to aim for a
higher total national investment in R&D, closer to 3% as a proportion of
GDP.[2]
Figure 1 shows the breakdown of R&D spending (GERD) by
sector as reported by the Australian Bureau of Statistics (ABS).
Figure 1 Gross
expenditure on research and development by sector
Source: Australian Bureau of
Statistics (ABS), Research
and Experimental Development, Businesses, Australia, cat. no. 8104.0 (Canberra: ABS, 25 August 2023).
Real figures based on Library calculations.
The Organisation for Economic Co-operation and Development
(OECD) collects data on GERD as a proportion of GDP, which enables comparisons
over time of R&D spending between nations (see Figure 2). In 2009,
Australia was slightly below the OECD average for GERD as a proportion of GDP
(as shown in Figure 2). However, since then, the OECD average has trended
upwards while the Australian figure has declined steadily, leading to an
increasing gap between Australia and the OECD average on this measure.
Figure 2 Gross expenditure on research and development as a percentage
of GDP
Notes: GDP = gross domestic product; OECD data is the average
across OECD nations.
Sources: ‘OECD
Science, Technology, and Innovation (STI) Scoreboard’, OECD website.[3]
R&D by sector
In 2021–22, business expenditure on research and
development (BERD) was $20.6 billion.[4]
This is the most recent estimated BERD figure, released in August 2023.
In the 2022 calendar year, higher education
expenditure on research and development (HERD) was $14.0 billion.[5] This is the most
recent HERD figure, released in May 2024. Further information on HERD and
university research funding is available in the Parliamentary Library’s
research publication: University
research funding: a quick guide.
In 2022–23, government expenditure on research and
development (GOVERD) was $4.3 billion, with $2.8 billion (64%)
from Australian Government organisations and $1.5 billion (36%) from state
and territory government organisations.[6]
These are the most recent GOVERD figures, released in June 2024. GOVERD is
a relatively narrow measure of government spending on R&D. The next section
describes an alternative measure of total Australian government support for
R&D, based on budget allocation. Please see the Parliamentary Library’s
research publication Australia’s R&D and innovation metrics: an
explainer for further discussion of the differences between these measures.
In 2022─23, expenditure on research and development
by private non-profit organisations (PNPERD) was $1.6 billion.[7] This is the most
recent PNPERD figure, released in June 2024.
Australian Government support for R&D
In 2024–25, government budget allocations for research
and development (GBARD) is estimated at $10.1 billion.[8] This is the most
recent estimate of GBARD, released in October 2024. GBARD includes both
R&D expenditure from departmental funds and R&D support from
administered funds. Expenditure is spread across the government, business and
higher education sectors, depending on where the R&D actually takes place.
In 2024–25, total government R&D support (GBARD plus
tax incentives) is forecast to be $14.4 billion and 0.52% of GDP.[9] This is the most
recent estimate of total government R&D support, released in October 2024.
Total government support is one of the key metrics used to compare government
support for research and innovation across countries.
The OECD also collects and reports data on total government investment
in R&D, reported as the sum of GBARD and R&D tax credits (see Figure 3).
In Australia, this information is reported in the SRI budget tables.
Figure 3 Total government R&D support as a percentage of
GDP
Notes: Total government R&D support refers to the sum of
GBARD and R&D tax credits. OECD data is the
average across OECD nations. Australian data for 2023 and 2024 are forecasts.
The year listed reflects the first year in a financial year, for example, 2023
refers to the 2023–24 financial year.
Sources: OECD data: ‘OECD
Science, Technology and Innovation (STI) Scorecard’, OECD webpage;[10] Australian data: Department
of Industry, Science and Resources (DISR), Science,
research and innovation (SRI) budget tables 2024–25, (Canberra: DISR, 18
October 2024) (refer to ‘Sector’ tab, Table 6 of the downloadable SRI budget
tables spreadsheet).
Global innovation
rankings
In 2024, the Global
Innovation Index ranked Australia:
- 23rd
out of 133 countries listed (up from 24th out of 132 countries listed
in 2023)
- 22nd
out of 51 high-income economies listed (up from 23rd out of the
50 high-income economies listed in 2023)
- 6th
out of the 17 economies in Southeast Asia, East Asia, and Oceania (the
same position as 2023).
- 18th
out of 133 countries for innovation inputs and 30th for innovation outputs.[11]
Recent R&D policy news
In the 2024–25 Budget, Minister for Industry and Science Ed
Husic announced that the government would commission a strategic
examination of Australia’s R&D system. Under the Terms
of Reference (released in December 2024) the strategic examination will be conducted
until 31 December 2025. The review has a broad scope and will consider
opportunities to:
-
maximise the value of existing investment in R&D, across
government, universities, philanthropy and industry
-
strengthen linkages between research and industry, enabling
greater mobility of researchers and innovators between sectors and addressing
barriers to meaningful collaboration
-
support the achievement of national priorities, including
mechanisms to improve coordination and impact of R&D funding and programs
across Government and through our science agencies
-
drive greater R&D investment by industry, and boost industry
adoption of innovation
-
uplift Australia’s overall R&D intensity.[12]
The panel will also examine:
-
the current state of Australia’s R&D system, and comparable
state of OECD investment in R&D, including levels of investment in R&D,
R&D infrastructure and R&D workforce, across sectors
-
barriers and risks impacting on Australia’s capacity to maintain
R&D competitiveness
-
ways to better measure the value and impact of R&D
investments, and maximise efficiencies
-
ways to ensure R&D benefits are equitably distributed across
regions and communities.[13]
On 12 August
2024 an
updated National
Science Statement and National
Science and Research Priorities were released. The National
Science Statement is a ‘framework to shape science policy and
leadership across governments’, listing 5 imperatives that ‘will shape
Australian science investment’ to 2034.[14]
They are:
-
Australian scientists, science institutions, and infrastructure
shaping Australia’s science future
-
Science at the centre of Australian industry
-
A diverse, skilled workforce to underpin the translation of
science into new industries
-
Embracing science to drive Australia’s regional and global
interests
-
A science system prepared for future challenges.[15]
The National
Science and Research Priorities ‘emphasise the science and research
collaborations Australian will need to solve our greatest challenges’. The
priorities are:
-
transitioning to a net zero future
-
supporting healthy and thriving communities
-
elevating Aboriginal and Torres Strait Islander knowledge systems
-
protecting and restoring Australia’s environment
-
building a secure and resilient nation.[16]
Additional developments from 2024 included:
- the
final report of the Pathway to
Diversity in STEM Review, released on 13
February 2024
- the
Australian
Universities Accord: Final Report, released on 25
February 2024
- the
Australian
Research Council Amendment (Review Response) Bill 2023, which received
Royal Assent on 28 March 2024. Additional context is provided in the
Parliamentary Library’s Bills
Digest and in the Senate Standing Committee on Education and
Employment’s inquiry
report on the Bill.
- in
the 2024–25 Budget, Minister for Health and Aged Care Mark Butler announced the
development
of a National Health and Medical Research Strategy ‘to build on our
national strengths and fill any gaps, while attracting researchers and
investors’, in addition to investment in a ‘once in a generation transformation
of health and medical research in Australia’[17]
- Australia’s
first National
Robotics Strategy, launched on 28 May
2024
- Australia’s
RNA Blueprint, released on 16
July 2024
- the
National
Digital Research Infrastructure Strategy, released on 5
August 2024
- a
new Defence Innovation, Science and Technology strategy, Accelerating
Asymmetric Advantage, launched on 17
September 2024
- the
Australia Tax Office’s first
annual report of data about R&D tax incentive entities, published in
October 2024. This report lists all 11,545 businesses that claimed the
R&D Tax Incentive in 2021─22 and the quantity of expenditure
they claimed. The report also provides data on claimants based on the size
of the business and the sector
in which they are engaged
- publication
in October 2024 of a new Australian
Innovation Statistics webpage, including data dashboards and innovation
insights. This appears to restart the publishing of annual overviews of
innovation statistics that took place between 2010─2021.
Conclusion
Over the past decade, Australian investment in R&D, as
a proportion of GDP, has been falling steadily behind the OECD average. The
most recent figures for Australia’s GERD, or economy wide spending on R&D,
put research expenditure at 1.68% of GDP. Several stakeholders in the research
sector have called for this to increase to 3%.
The Australian Government has announced a strategic
examination of Australia’s R&D system, to be completed by December 2025.
This presents a significant opportunity to review the overall state of the
research sector and may provide an opportunity for the promotion of structural
reforms to boost investment in R&D across the economy.