Scientists’ big business ‘solution’ to raise billions for research each year

The Academy of Science has proposed a new levy for big business to raise up to $12 billion annually for research and development, saying it’s ‘absolutely urgent’.

Australian Academy of Science chief executive Anna-Maria Arabia. Picture: Bradley Cummings

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An independent group of Aus­tralian scientists has proposed a new levy for big business to raise up to $12 billion annually for research and development, saying it’s “absolutely urgent” to address underinvestment.

The Academy of Science wants the government to apply either a 0.25 or 0.5 per cent research and development levy to businesses with an annual revenue of $100m or more, that can be discounted if businesses invest in R&D.

In its issues paper “Incentivising business investment in R&D”, the Academy of Science said independent modelling, based on publicly reported data for 201 companies, found such a levy could raise between $2.1bn and $12.8bn annually.

That money would then be put into a Research Future Fund, with the returns invested into research.

Chief executive at the Australian Academy of Science Anna-Maria Arabia said the analysis of 2021-22 ATO data showed that companies such as Atlassian, CSL and Breville, which already have high or very high R&D spends, “would have little or no burden as a result of the R&D levy”.

Atlassian spends 5.6 per cent of its revenue on R&D, CSL Ltd spends 3.63 per cent, and Breville spends 4.4 per cent.

For a business such as Fortescue, which spends just 0.36 per cent of its $21.6bn revenue on R&D, the levy cost would be a “very small percentage of their profits so it’s tolerable,” Ms Arabia said.

“Fortescue and Wesfarmers are two examples where they have a low investment in R&D – they have a choice to offset their R&D levy by investing in R&D.”

Yet “no doubt there’s going to be people who seek to resist it,” Ms Arabia said. “We have consulted widely in preparing this proposal and one thing that has come through, including from some of the business groups, is that they have to engage … they understand it is an intolerable consideration.”

The Academy of Science said government investment in R&D was historically low, while higher education sector investment in R&D was higher than the OECD average and business investment in R&D was “strikingly low” at 0.89 per cent of GDP.

Small and medium-sized enterprises make up 55 per cent of business expenditure on R&D, while “large Australian companies – those best positioned to invest and innovate – contribute less despite benefiting the most from publicly funded research”, it stated.