Australia’s long-term productivity and prosperity depend on our ability to turn research into outcomes. But we are falling behind global peers on business investment, commercialisation, and the systems that support innovation.

In our submission to the Strategic Examination of R&D, the Business Council sets out a reform blueprint to rebuild Australia’s R&D capability, foster a stronger culture of risk-taking, and unlock growth across the economy. With the right policy settings, Australia can revitalise its R&D system and drive the productivity gains needed to secure future jobs and economic resilience.

We recommend:

Aligning priorities to maximise impact

• Elevate R&D as a national strategic priority.
  
  • Agree a target of 3 per cent GDP spend on R&D by 2035.
  • Commit to a 10-year national R&D strategy to drive innovation, boost productivity, and position Australia as a global leader in R&D.
• Align Australia’s R&D system to deliver on the national R&D strategy.
  
  • Establish a single, coordinated set of research priorities and direct the majority of Commonwealth R&D funding to areas where Australia can lead—such as clean energy, health, and advanced manufacturing.
  • Consolidate fragmented grant programs into fewer, larger initiatives with clear objectives, to maximise impact, reduce duplication and drive stronger cross-sector collaboration.
    

Incentivising risk

• Undertake a comprehensive review of Australia's insolvency regime.
  
  • Seek to simplify the regime, reduce costs and remove unnecessary barriers to restructuring and renewal while better supporting entrepreneurialism and innovation.
• Establish an Australian Investment Promotion Authority to drive innovation and strategic, large-scale investment.
  
  • Centralise investment attraction, facilitation and regulation under one body, with strong ministerial backing, to fast-track priority projects and boost Australia’s global competitiveness.
  • Encourage innovation by guiding and connecting businesses to the suite of R&D incentives available, beyond the RDTI.
• Design a suite of incentives for business to de-risk R&D, support national innovation and promote Australian-based Intellectual Policy (IP). These include:
• A Business R&D Loan Scheme to de-risk early-stage innovation.
  
  • Provide low-interest, stage-specific loans to businesses undertaking early-stage R&D in national priority areas.
• An Australian Innovation Commercialisation Incentive to encourage, retain and scale innovation onshore.
  
  • Apply a concessional tax rate to income from eligible IP developed through Australian R&D, across all national priority sectors.
• An Onshoring Innovation Scheme—a flexible, discretionary incentive to attract global R&D investment aligned with Australia’s national economic and strategic priorities.
• A National Researcher Directory to connect industry with research expertise.
  
  • Create a central, publicly accessible platform listing researchers by expertise, institution, and recent work to improve industry access—particularly for SMEs—and accelerate collaboration and commercialisation.
• Develop a national open access model for taxpayer-funded research.
  

Getting the tax settings right

• Modernise the R&D Tax Incentive definition to reflect real-world innovation.
  
  • Align the RDTI definition more closely with the OECD Frascati framework and ABS classification to better capture contemporary business R&D.
• Improve consistency between tax settings and data collection to reduce red tape and strengthen national insights.
• Streamline R&D Tax Incentive reporting to reduce red tape and improve efficiency.
  
  • Task the ATO with reviewing compliance processes and documentation requirements to ease the burden on claimants and improve administrative efficiency across the system.
• Abolish the R&D expenditure threshold to encourage large-scale innovation investment in Australia, or, at a minimum, lift it to $250 million with indexation.
• Revisit the design of the intensity measure to ensure companies investing heavily in Australian-based R&D are properly supported, regardless of their operating structure and cost.
  

Stronger together

• Build commercialisation capability through targeted skills development.
  
  • Encourage universities to partner with key industry sectors—such as information technology, health and advanced manufacturing—to design and deliver specialised training in product management and research translation.
  • Include ‘Product Manager’ on the Core Occupation Skills List to offer streamlined pathways for skilled migration.
• Embed research–industry collaboration in the higher education funding model, with a portion of performance-based funding tied to measurable indicators such as:
  
  • Growth in industry-linked R&D income
  • Number of co-authored publications or patents with industry partners
  • Commercialisation outcomes, including licences and spinouts
  • Placement of PhD graduates in industry roles.
• Establish a nationally coordinated network of industry-led R&D centres—modelled on the UK’s Catapult Network—to consolidate and scale Australia’s precinct, Trailblazer and CRC efforts.
  
  • Introduce a Collaboration Premium to drive high-impact research partnerships.
• Apply a premium of up to 20 per cent on non-refundable R&D tax offsets for projects involving startups, public research organisations or universities.

Read the full submission here.