Australian research is confounded by politics as both federal government organisations and businesses spent less on research and development.
Research and development (R&D) spending by federal government organisations shrank $118 million or 5 per cent in 2016-17, with more than 400 staff cut last year, ABS data shows.
Professor of Innovation Studies at the University of Queensland School of Business, Mark Dodgson said the loss of researchers is "symptomatic of the way the government has taken its eye off the ball".
"It is important to consider these figures within the whole system in Australia, especially the low investment made by the private sector and the poor connections between business and research institutions," Professor Dodgson said.
Governments can focus on areas where there are deficiencies in the system or where we have comparative advantages, so declining funds for areas like environmental science is "damning, and reflects some retrogressive political choices", Professor Dodgson said.
Universities Australia chief executive Catriona Jackson said it is a "worrying trend" for governments to do less R&D.
“Research expands Australia's economy. Research saves lives. Research creates new products and industries that generate jobs," Ms Jackson said.
"Australia now spends 1.88 per cent of GDP on research and development, well below the OECD average of 2.38 per cent. And for the first time since records have been kept, OECD figures show that Australia’s business R&D declined in 2015-16."
The 2017-18 budget increased R&D funding by 2.3 per cent, a Department of Industry, Innovation and Science spokesman said.
The 2018-2019 budget includes $2.4 billion for a "science and technology growth plan", $1.9 billion over 12 years for "critical research infrastructure", $300 million on space industry and spatial imagery capabilities, plus $140 million for the next generation of Australia’s super computers," the spokesman said.
The government’s largest R&D investment is via a tax incentive program, which is 32 per cent of the total $10.3 billion R&D budget this year.
A senior economist, who asked not to be named, said Australia has "a more ideological approach" to science than anywhere else in the world and continuing to waste money on R&D tax concessions is a poor way to fund research.
"The mindset here is [R&D] tax breaks first to the three big sectors – finance, mining and technology – but even the OECD says you should only make those [tax breaks] available to SMEs [smaller businesses] as larger businesses can manipulate their tax activity," he said. "High-performing countries like Israel create an innovation authority and allocate funds for them to do a task, a local example of this is the clean energy finance corporation."
Professor Beth Webster, director of the Centre for Transformative Innovation at Swinburne University, said political interference needs to be cut out of research funding by creating durable research organisations.
"We need to have a more stable platform for these things, rather than just having it highly political and depending on the minister for their ongoing funding," she said.
"[Politicians] want to put their mark on things rather than be a custodian of a good [R&D] program."
Shadow Minister for Innovation, Industry, Science and Research Senator Kim Carr said the new figures show the effect of "savage cuts to the CSIRO, universities and other agencies since 2013".
"Labor will cooperate with business, industry, universities and research institutes to boost Australia’s investment in research and development, from 1.8 per cent today to 3 per cent of GDP by 2030," Mr Carr said.
Across all OECD countries, spending on R&D grew by 1.2 per cent in 2016. Businesses paid for about 69 per cent of total R&D in the OECD in 2016. Government R&D plateaued and higher education funding for R&D surged by 3.4 per cent in real terms.
Across the OECD, government budget allocations for R&D increased by 2.5 per cent in 2016, not including the cost of tax incentives for business R&D as these are considered foregone tax revenues rather than expenditure.