Australia is struggling to keep pace in the global research and development (R&D) race. As technology reshapes industries such as automotive, where software is becoming more important than hardware, R&D spending has become essential. However, Australian businesses are reducing investment while other countries are increasing theirs.
Nationally, Australia’s investment in R&D as a share of GDP has declined to 1.68%, which is well below the OECD average of 2.7%. The gap is particularly noticeable in the private sector, where business investment dropped to 0.88% in 2022, nearly half the OECD average of roughly 2%. While universities and research institutions continue to perform well, they are not being sufficiently supported by domestic industry, creating a critical funding shortfall.
Some Australian research teams had relied on US funding to bridge the gap. But recent policy changes in the US led to the sudden withdrawal of financial backing for several Australian-led projects, leaving researchers without key support. In response, a major Australian tech firm launched a $3 million initiative called the Team Australia Fund to support local R&D affected by the loss of international funding. The program is now open for applications, although few large domestic firms have contributed so far.
Without a shift in how businesses approach innovation, Australia risks falling further behind. Weak private sector commitment to R&D not only limits the development of local technologies but also jeopardises the country’s long-term economic growth. Increasing domestic investment in research could help close the gap, especially if governments and universities prioritise partnerships with companies that show genuine commitment to advancing Australian tech.
