Science and Research

Budget Review 2022–23 Index

Tim Brennan, Dr Hazel Ferguson, Ian Zhou

Funding trends

Aggregate figures for Australian Government spending on research and development (R&D) are reported each year in the Science, Research and Innovation Budget Tables (SRI Budget Tables). The most recent SRI Budget Tables (published in December 2021) show that the Australian Government made a total investment in R&D of $11.8 billion during 2021–22.

This is a reduction of $184.1 million, or 1.5%, compared with the previous year. This follows, however, a significant one-off investment in research in the 2020–21 Budget (as discussed under ‘Research funding for universities’ below).

In 2021–22, the largest components of government spending were industry R&D tax measures (24.7%), research block grants (16.9%), and the Commonwealth Scientific and Industrial Research Organisation (CSIRO; 8.0%) (Sector: Table 6).

To enable comparisons across time and between nations, R&D spending is often measured as a proportion of gross domestic product (GDP). In 2021–22, Australian Government R&D spending is forecast to be 0.56% of GDP (Figure 1). By this measure, current R&D spending is higher than in the later years of the last decade (2016–17 to 2019–20) but below the long-term average of 0.61% (based on a data series dating back to the late 1970s).

Figure 1 Government investment on research and development as a percentage of GDP

Source: Department of Industry, Science, Energy and Resources (DISER), Science, Research and Innovation (SRI) Tables, December 2021, (DISER: Canberra, 2021), Sector: Table 6.

Agency budgets

Public research organisations

Table 1 outlines the funding for 3 of Australia’s key public sector research organisations: the CSIRO, the Australian Nuclear Science and Technology Organisation (ANSTO), and Geoscience Australia (GA).

Table 1 Changes in forecast budgets for public research agencies between 2021–22 Budget and 2022–23 Budget ($ million)

Agency	2020–21^(a)	2021–22^(b)	2022–23^(c)	2023–24^(c)	2024–25^(c)	2025–26^(c)
CSIRO (2021–22)	960.5	946.0	956.7	945.7	853.3
CSIRO (2022–23)		949.0	991.3	985.6	899.3	907.5
Difference		3.0 (0.3%)	34.6 (3.5%)	39.9 (4.0%)	46.0 (5.1%)
Geoscience Australia (2021–22)	171.2	260.0	224.8	191.2	172.9
Geoscience Australia (2022–23)		261.1	345.3	305.4	266.8	256.2
Difference		1.0 (0.4%)	120.5 (34.9%)	114.2 (37.4%)	93.9 (35.2%)
ANSTO (2021–22)	278.8	277.5	268.4	273.6	268.9
ANSTO (2022–23)		279.5	289.8	293.3	275.2	282.4
Difference		2.1 (0.7%)	21.4 (7.4%)	19.8 (6.7%)	6.3 (2.3%)

(a) Estimated actual.

(b) Budget (for 2021–22 figures), Estimated actual (for 2022–23 figures).

Source: Australian Government, Portfolio Budget Statements 2022–23: Industry, Science, Energy and Resources Portfolio, 128, 253, 281; Australian Government, Portfolio Budget Statements 2021–22: Industry, Science, Energy and Resources Portfolio, 117, 234, 259 . Figures are taken from the ‘Revenue from Government’ figure in each agency’s Table 3.1: Comprehensive income statement (showing net cost of services) for the period ending 30 June. Difference figures are Parliamentary Library estimates.

GA is forecast to receive a significant funding increase in the forward estimate years, with annual figures as much as 37% above last year’s forecasts.

The bulk of the increased funding appears to be building on the Satellite-Based Augmentation System (SBAS) used for global positioning information. SBAS was allocated $224.9 million (over 4 years and across 2 measures) in the 2018–19 Budget (Budget measures: budget paper no. 2: 2018–19, pp. 151–152). The 2021–22 Department of Industry, Science, Energy and Resources portfolio budget statements shows additional departmental payments of $324.5 million (over 4 years) for the SBAS program (p. 273). This funding does not appear to be outlined in Budget paper no. 2. GA will also be involved in implementing the space sector support measures discussed below, however, the funding allocated to GA for this work is not published in the Budget.

Table 1 also shows that CSIRO and ANSTO are allocated increased funding compared to the 2021–22 Budget, although CSIRO is still forecast to experience a decline in funding in 2024–25.

Research funding for universities

The Portfolio Budget Statements 2022–23: Education, Skills and Employment Portfolio (p. 61) show Research Block Grant funding for universities returns to approximately $2 billion per year from 2021–22, following the temporary $1 billion increase in Research Support Program funding in 2021, provided in the 2020–21 Budget (p. 43) in response to COVID-19. The focus of the Government’s university research policy is now on commercialisation, as discussed below. As part of these commercialisation efforts, changes to the Research Block Grants are planned to promote industry-university collaboration. These changes are currently subject to consultation, and relate to the grant allocation methodology, rather than the quantum of funding.

Funding for the major research grant providers is forecast to grow over the forward estimates. As highlighted by Research Australia, funding for the Australian Research Council’s (ARC) Discovery and Linkage grant programs is forecast to grow at slightly above inflation. By contrast, growth in funding for the National Health and Medical Research Council’s Medical Research Endowment Account (MREA) is not forecast to keep pace with inflation. Research Australia states (p. 2) that this real term decline in funding for the MREA is ‘of genuine concern to the health and medical community; it jeopardises our long-term research capability and increases the precariousness of research careers, especially for early and mid-career researchers’.

Budget measures

Investing in Australia’s university research commercialisation

This Budget’s most substantial new investment for universities is the research commercialisation package (Budget measures: budget paper no. 2: 2022–23, pp. 75–76), which provides $988.2 million over 5 years from 2021–22 (approximately $325.1 million per year ongoing). This will be used to establish Australia’s Economic Accelerator (AEA), Industry PhDs and Fellowships, and increase spending on research translation and commercialisation through the CSIRO.

These measures form part of the $2.2 billion University Research Commercialisation Action Plan (the Plan), which was announced by the Prime Minister on 1 February 2022, and are the outcome of consultations and scoping work funded in the 2020–21 Budget (pp. 43–44). Over the 5 years from
2021–22, the AEA is allocated $505.2 million, and $295.2 million will go to the Industry PhDs and Fellowships.

According to the Plan (pp. 5 and 40) total funding for the AEA is expected to be 1.6 billion over 11 years, making up the bulk of the Government’s investment in the Plan. This long-term funding commitment is intended to provide support to bridge the ‘valley of death’, in which innovations fail to progress to market due to uncertainties about commercial returns in the early stages of development. The program will fund projects in the six National Manufacturing Priority areas, and be stage-gated, with increasing amounts of funding available for projects that continue to demonstrate potential.

Funding arrangements for the AEA program and Industry PhDs are currently before Parliament in the Higher Education Support Amendment (Australia’s Economic Accelerator) Bill 2022. Further detail is available in the Bills Digest.

The Trailblazer Universities Program, which also forms part of the Plan but was announced earlier, is also before Parliament in the Higher Education Support Amendment (2021 Measures No. 1) Bill 2021, and detail is available in the Bills Digest.

The measure also includes funding for two CSIRO programs supporting research commercialisation. The CSIRO Innovation Fund will be allocated $150.0 million over 5 years and the Research Translation Start program $37.4 million over 4 years.

The CSIRO Innovation Fund (managed by Main Sequence) was first announced in the 2015 National Innovation and Science Agenda (p. 7) with a $200 million investment from the Australian Government. The Fund, which aims to commercialise technologies developed by universities and other publicly funded research organisations, has completed its first round of investments and commenced a second investment fund in mid-2021. Prior to the investment in this Budget, the second Fund had been solely raised through investment from private capital.

The investments in these programs are intended to contribute to long-term improvements in university-business collaboration, where Australia performs poorly, despite decades of policy effort. Recent analysis by Industry Innovation and Science Australia (pp. 37–38) highlights persistent barriers to such collaborations, including a lack of commercialisation skills among publicly funded researchers, and limited incentives to engage in commercial activity, but also points to their potential to ‘drive stronger productivity growth and more novel innovations’.

The Australian Academy of Science (AAS) welcomed the Budget’s investment in research translation and commercialisation but also noted the lack of funding for foundational research. The AAS stated ‘it is disappointing that fundamental science capability is not recognised as the first essential step in the commercialisation effort, and there are no measures to boost basic research investment.’

Support for the Australian space industry

The Support for the Australian Space Industry measure (Budget measures: budget paper no. 2: 2022–23, pp. 127––128) continues the Government’s focus over recent years in fostering the development of Australia’s civilian space industry. This work has included the establishment of the Australian Space Agency (ASA), the release of the Australian civil space strategy 2019–2028, and the inclusion of space as one of the 6 National Manufacturing Priorities. Investments in space have also taken place in the Defence sector, with the creation of the Defence Space Command.

Although total funding for this measure is $1.3 billion, it is provided over a 17-year period (to 2038–39). This results in an average annual allocation of $76.5 million per year, with a further $38.8 million per year beyond 2038–39 (see p. 18). The Government has already provided partial funding for this measure.

The bulk of the funding ($1.16 billion) is allocated to the establishment of a National Space Mission for Earth Observation. Earth Observation (EO) data is primarily generated using satellites and is used in fields such as agriculture, natural disaster response, weather forecasting, and climate science.

Australia currently receives its EO satellite date from foreign sources and this has been highlighted by both the ASA and AAS as a sovereign risk as there is no guarantee these data sources will remain freely available. The ASA’s Earth observation from space roadmap 2021–2030, highlighted the need to develop sovereign EO capacity, while focusing on addressing gaps in the EO system rather than replicating existing global capabilities (p. 15). The AAS’ Decadal plan for Australian space science also recommended growing a sovereign EO capacity with a focus on becoming a global leader in data validation and calibration (p. 35). The AAS also supported (p. 33) a proposed program to launch 2 Australian satellites per year.

The National Space Mission for Earth Observation aims to strengthen sovereign capability through designing, building and operating 4 satellites in Australia (although the timeframe for launching these satellites is unclear). The program will also support CSIRO to develop a ground-based satellite calibration and validation network.

As announced on 3 March 2022, the Budget confirmed the cancellation of plans to charge rocket launch fees, which had proved unpopular within the space industry. The Budget also allocates $65.7 million (over 5 years) to expand Australia’s space launching capabilities (Budget measures: budget paper no. 2: 2022–23, p. 127). As part of this measure the ASA (in collaboration with international partners) has been tasked with sending an Australian astronaut into space.

The Budget’s investments in the space sector have been welcomed by industry representatives. The Space Industry Association of Australia described it as a significant investment that ‘will mean we can begin to guarantee access to essential space services for weather, disaster monitoring, and science’. Professor Phil Bland of Curtin University noted, however, that there was no funding for basic space science. Professor Bland added that fundamental research is ineligible for funding under some space programs and that ‘no other major spacefaring nation has implemented a strategy that formally excludes basic research.’

Patent boxes

The Government announced it will expand the scope of Australia’s proposed patent box tax regime, which aims to promote R&D investment and the commercialisation of research in Australia. If passed in the Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022, the patent box scheme will provide a concessional tax treatment or tax incentive for corporations to commercialise their eligible patents in Australia. At the moment, eligible patents are limited to the medical and biotechnology sector.

The Government announced in the 2022–23 Budget that it will expand the scope of the patent box scheme to include the agricultural sector and the renewable energy sector (pp. 22–23). In other words, patents relating to agricultural technology and low emissions technology will also be eligible to receive the concessional tax treatment of the patent box regime. The expansion of the patent box regime was welcomed by the AAS and the Australian Academy of Technology and Engineering.

Other related measures:

The Advancing Science, Technology, Engineering and Maths measure (p. 122) allocates $45.4 million (over 5 years), with the bulk of this funding ($33.4 million) going to the National Measurement Institute. The remaining funds will extend 2 programs supporting women in science, technology, engineering and maths, as well as supporting the National Science and Technology Council (p. 122).

Advanced manufacturing is supported through budget measures including: $328.3 million for the Modern Manufacturing Initiative and Fund (p. 123); $83.1 million (over 5 years) to transition Australia to a more circular waste economy (p. 51); and the agreement with Moderna and the Victorian Government to establish mRNA vaccine manufacturing (p. 104).

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