At a sectoral level, the distribution of government R&D investment has remained stable since 2021–22, with some small annual variation. Business and higher education sectors receive the most support. The business sector started receiving a larger share of R&D investment during the pandemic period (2020–21) which was sustained in later years. More detailed data in the SRI Budget Tables shows that most government R&D support for the business sector flows through the R&D Tax Incentive.
In addition to providing funding to support the business and higher education sectors to perform R&D, the federal government also funds R&D that it performs. In 2024–25, this includes separate $0.9 billion investments in the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Defence Science and Technology Group.
What do these figures mean for Australia?
R&D is one driver of innovation, which supports economic growth and higher living standards.
R&D can be risky for businesses and others in the innovation ecosystem, including universities. Government assistance can support and incentivise R&D investment in sectors, delivering benefits to the business and the broader economy. The SRI Budget Tables are one measure of government support for R&D in Australia.
In 2024–25, programs from the following three government portfolios made up the majority of the governments $14.4 billion investment in R&D:
- Industry, Science and Resources portfolio: $6 billion (up from $5.9 billion in 2023–24), including the R&D Tax Incentive (RDTI)
- Education portfolio: $4.3 billion (up from $3.8 billion in 2023–24)
- Health and Aged Care portfolio: $1.7 billion (up from $1.7 billion in 2023–24).
Significant programs or activities from these portfolios include the R&D Tax Incentive ($4.7 billion in 2024–25), Research Training Program ($1.2 billion in 2024–25) and National Health and Medical Research Council (NHMRC) research grants ($1 billion in 2024–25).
The SRI Budget Tables also break down government investments in R&D by socio-economic objective (SEO), which indicate the purpose of the R&D activity, providing insight into the objectives of the government’s R&D funding (OECD 2015). In 2024–25, the top three SEO includes:
- Industrial production and technology objectives (18.5%)
- Health (17.9%)
- General advancement of knowledge: R&D financed from General University Funds (17.4%).
The SRI Budget Tables also show a $1.7 billion investment in ‘other SRI’ activities/programs in 2024–25. These programs do not meet the OECD’s definition of R&D, but otherwise support science, research, or innovation. This includes $284 million in funding for Geoscience Australia, and the government’s investment in PsiQuantum.
Sources
OECD (Organisation for Economic Co-operation and Development) (2015), Frascati Manual 2015, OECD website, accessed 19 August 2024.
