Better Leveraging Australia's R&D Investment
Paul Hodgson
Director, Centre for Hydrogen and Renewable Energy & Executive Director Regional Futures - Energy Transitions, CQUniversity | Vice Chair, Hydrogen Flight Alliance | Chair, Queensland Manufacturing Institute
Thanks to Brandon How for his article in InnovationAus.com today: “https://www.innovationaus.com/biggest-rdti-spend-this-financial-year-industry-dept/“.
“The overall estimated investment through the Research and Development Tax Incentive (RDTI) scheme is expected to be more than $3.2 billion in financial year 2022-23, about $200 million (6.7 per cent) more than was estimated in 2021-22.”
This outlay represents about a quarter of the $12.1 billion expected expenditure on all science, research and innovation (SRI) programmes in 2022-23.
This is a significant annual recurring investment by Australian taxpayers. Reviews over time have found that it is a worthwhile investment but I have often wondered if we could be doing more for both the recipients and our national prosperity.
I was fortunate to be the first Queensland R&D Tax Concession Coordinator for the Department of Industry, Science and Resources in April 1994.
While the current iteration of the tax incentive is a little over a decade old, it is part of a continuous programme that started in 1985-86, initially for a five year period.
In those days, forms were lodged on different coloured paper forms representing the financial year of claim. You could retrospectively claim until 1996, so it was common to receive up to 10 years of forms, usually from a consultant. The ‘snooker’ book was the ‘bible’ (and I still have my well-worn copy).
In my R&D Tax Concession role, I helped hundreds of innovative companies. Some went on to be commercially successful, while many disappeared before they made a return. Such is the risky nature of R&D and commercialisation.
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As my career moved into broader business advisory, I saw that R&D funding was only part of the recipe for innovation-achieving market success. Companies need the right capital, structure, business plan and model, marketing, management and leadership, suppliers, partners, customers, professional advice, equipment, recruitment, discipline and the list goes on and on.
A lot of those issues are or have been addressed by other Government-supported initiatives over time but, almost without exception, there has been no connectivity between them.
By design, the R&D Tax Incentive is eligibility-based and the recipients’ identities are protected by tax privacy.
However, if Australian taxpayers invested?$3.2 billion in 2022-23 (and how much in the 38 years since 1985-86), are we getting the biggest bang for the buck? The programme aims to stimulate R&D not for R&D’s sake but for the private and public benefits that can flow from that R&D.
According to the 2021-22 Industry Innovation and Science Australia Annual Report, the programme has supported over 30,000 companies since 2011 and there were 12,090 registrations representing 13,960 R&D performing entities in 2020-21. SMEs represent?82% of program participation.
Through all the subsequent initiatives I have been involved in (grants, mentoring, advisory, education and training, global promotion,?incubators, accelerators, industry growth centres, etc), I have often thought about this invisible cohort of founders, inventors, entrepreneurs and business owners striving to undertake R&D with the vision of having a new product or service reach its potential impact on the market. This entrepreneurial drive builds our future economic, social and environmental prosperity.?
What if we encouraged those companies to be visible, while protecting their tax data? What if we managed this group as a national annual $3.2 billion investment portfolio - mentoring, procuring, mapping, connecting, aggregating, supporting, informing, showcasing, celebrating and funding them in ways that maximised their chance of realising their commercial potential?
We would also reduce the administrative costs and increase the impact of other initiatives by focussing efforts on this targeted group. A common diagnostic, growth plan and facilitated access to the wider support ecosystem could actively leverage our existing investment and leave less of our future prosperity to chance.
I would love to know your thoughts!
Commercialisation and BD Manager at UniQuest
1 年Great idea Paul Hodgson! I can recall the godsend that was meeting Chris Burnett in late 2016 just after lodging the first R&D claim for the startup I had co-founded - it would have been even more amazing if he could have had the role you have suggested from that point in time.
Nudging things for the better.
1 年Paul Hodgson a good idea. It’s deeply beneficial having R&D alumni advice to government and for their R&D stories to be told.
Managing Director at prmpt. | President at YP Gold Coast
1 年A great article Paul, I didn’t realise you had been so previously involved in the R&D Tax Incentive. Love the “snooker” book!
I work with innovative companies to get their R&D Tax Incentive so they can invest more into their key projects delivering faster outcomes - R&D Tax Incentive and EMDG specialist.
1 年Paul Hodgson very good article...R&D recipients may be published later next year...
Research And Development Specialist
1 年Commercial in Confidence is always going to be vital for R&D Tax Incentive recipients, so I don't think any of them would be overly willing to release that sort of information. The ABS does have a generic questionnaire sent to a sample of the companies, but it really doesn't go into more detail than the costs involved with undertaking the R&D.