New Report Urges Boost to Australia’s Innovation Effort
29 April 2004
The National Tertiary Education Union (NTEU) endorses the thrust of a major report released today that advocates urgent action to boost Australia’s innovation effort. The report, Innovating Australia, by the Committee for Economic Development of Australia (CEDA) examines Australia’s recent track record in regard to Research & Development (R&D) and Innovation.
“The report is timely given that the Government is due to unveil details of its research and innovation policy in the May Budget. The NTEU endorses the report’s main thrust that if current weaknesses in Australia’s innovation track record are not urgently addressed, Australia’s future economic development will be seriously impeded,” said NTEU President, Dr Carolyn Allport.
“The broader research community expects the Government to take the opportunity in the upcoming Budget and announce some major policy initiatives to arrest the decline in Australia’s research and development performance.”
“The report acknowledges the critical contribution of Australia’s universities and publicly funded research agencies to Australia’s R&D and innovation performance. The NTEU will be looking for policies in the Budget that encourage and facilitate collaborative research between the public institutions and business and that build on our current strengths in both these areas.”
“This must include improvements to the current policy settings to facilitate quality research in our universities and publicly funded research agencies and a commitment to increased funding,” said Dr Allport. “Unfortunately, all the indications so far in terms of what we can expect to see in the upcoming budget in terms of research and innovation policy appear to fall well short of these expectations.”
“Analysis undertaken by the NTEU indicates that the Governments needs to invest approximately $34 billion to the end of the decade to arrest the decline in total Government Expenditure on R&D as a percentage of GDP, relative to our OECD economic competitors (see attachment 1).”
“In other words, the Government needs to deliver at least a $6.8 billion increase over its 2003-04 levels of expenditure simply to maintain the status quo,” said Dr Allport. “This is the absolute bottom line from the research community’s point of view. ”
|
Table 1: Total Government Expenditure on R&D $m | ||||||||
|
Year |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
Total |
|
Published Data |
5,426 |
|
04-05 to | |||||
|
NTEU Estimates |
|
Estimates of Required Expenditure Levels |
09-10 | |||||
|
Maintain existing Share of GDP (Total Expend) |
5,426 |
5,735 |
6,062 |
6,408 |
6,773 |
7,159 |
7,567 |
33,969 |
|
Increase over 03-04 |
|
309 |
636 |
982 |
1,347 |
1,733 |
2,141 |
6,839 |
For information and comment:
Andrew Nette, NTEU Policy and Research Coordinator: 0438 026277
Paul Kniest, NTEU Policy and Research Officer: 0418 357 499
A more detailed briefing note on the 2004-5 Budget and Government support for research and development is attached.
National Tertiary Education Union Government Support for Research and Development (R&D)
Funding for most Backing Australia’s Ability (BAA) programs will cease in 2005/6. The Government has committed to announce the future of BAA in this year’s Budget. This note provides a set of estimates for levels of Government funding that would be required to maintain a) Total Government investment in R&D and b) BAA as;
i) a constant percentage of GDP, and
ii) in real terms.
BAA is only one component of Total Government R&D expenditure. In 2003-04, Total Government expenditure on R&D (including foregone revenue) was estimated to be $5,426m (0.68% of GDP). BAA programs were $633m or 11% of total Government expenditure on R&D in 2003-04.
Australia’s total expenditure on R&D is 1.59% of GDP, well below the OECD average of 2.33%. The OECD average is increasing with the EU and Canada, for instance, committing to 3% by 2010.
GDP and inflation assumptions
The assumptions in our tables are more conservative than the latest Treasury estimates of the 2003 Mid Year Economic Review:
- Estimated real GDP to grow at an average of 3.5% per annum (Treasury 3.75%)
- Estimated inflation rate of 2.2% per annum (Treasury 2.25%).
Funding Estimates
|
Table 1: Total Government Expenditure on R&D $m | |||||||
|
Year |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
|
Published Data |
5,426 |
Source: 2003 Innovation Report, Table 5 page 98 | |||||
|
|
|
Estimates of Required Expenditure Levels | |||||
|
Existing share of GDP (0.68%) |
5,426 |
5735 |
6062 |
6408 |
6773 |
7159 |
7567 |
|
Maintaining Real Value |
5,426 |
5545 |
5667 |
5792 |
5919 |
6050 |
6183 |
Table 1 shows the levels of Total Government Expenditure on R&D required to meet the funding benchmarks for each of the years 2004-05 to 2009-10.
Maintaining Total Government R&D expenditure at its current share of GDP requires current levels of expenditure to grow at an average rate of 5.7% per annum to allow for both increases in real GDP (3.5% per annum) and inflation (2.2% per annum).
Maintaining the real value of Total Government R&D expenditure would require an increase of 2.2% per annum to compensate for the assumed inflation rate.
|
Table 2: Government Expenditure on BAA (Version II) $m | ||||||||
|
Year |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
2010-11 |
|
Published Data |
633 |
819 |
997 |
Source: Innovation Report 2003 Table 4 page 97 | ||||
|
|
|
|
|
Estimates of Required Expenditure Levels | ||||
|
Existing BAA share of GDP |
|
|
997 |
1054 |
1114 |
1177 |
1245 |
1315 |
|
Maintaining Real Value |
|
|
997 |
1019 |
1041 |
1064 |
1088 |
1112 |
Table 2 shows the level of BAA funding required in each of the years 2006-07 to 2010-11 to meet the funding benchmarks specified above (assuming the Government makes no significant additions or deletions to the existing suite of BAA programs).
The last row in Table 2 shows the levels of BAA funding necessary to maintain real levels of expenditure. Note the value for each year is the order of $1b per annum. That is, if BAA funding was less than $1b per year in each of these years this would not only represent a significant drop in its share of funding as a % of GDP, it would actually represent a real cut in levels of Government expenditure.