Atlassian co-founder Scott Farquhar leads charge on $1.4bn R&D tax incentive

Atlassian’s Scott Farquhar, Cochlear’s Doug Howitt and Business Council of Australia push for $1.4bn R&D tax incentive.

Atlassian co-founder Scott Farquar.

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Labor ally and co-founder of technology giant Atlassian, Scott Farquhar, will lobby the government for a $1.4bn research and development tax incentive for business in Canberra this week, with support from medical technology giant Cochlear and Australia’s peak industry body.

Calls for new research and development incentives are growing as Australia falls behind OECD countries in how much business spends on R&D as a share of the economy.

Jim Chalmers has called for proposals on boosting productivity in Australia ahead of his economic reform roundtable in August, stating that any ideas on tax needed to be revenue neutral or positive over time.

The Business Council of Australia wants a new flat-rate R&D tax incentive premium of 18.5 per cent over the company tax rate, applicable to all companies. Its report will be used ahead of an innovation roundtable taking place in Canberra on August 1.

The peak body expects the new approach will cost on average $1.41bn a year over the next decade but that the net fiscal impact will be “neutral” when accounting for the additional tax revenue government would get.

It expects the incentive to unlock $7.72bn in annual economic output, with $5 of value for every $1 of government expenditure.

“Empowering businesses to make R&D investments is critical to making our economy more productive and innovative, and for delivering greater prosperity for all Australians,” BCA chief executive Bran Black said.

Business Council of Australia chief executive Bran Black. Picture: NewsWire/Martin Ollman

Atlassian chief of staff Amy Glancey.

While Mr Farquhar will address the National Press Club this week on the topic, the company’s chief of staff, Amy Glancey, said on Sunday the growth in R&D spending by major Australian companies was slowing.

“Australia has always been ideas rich, but we’ve fallen short on our potential to commercialise and sell our ideas to the world – this is a big missed opportunity,” Ms Glancey said.

“Further investing in research and development will supercharge our tech industry, helping turn those ideas into thriving global businesses homegrown from our own backyard.”

Australia lags significantly behind global peers, spending just 1.7 per cent of GDP on R&D compared to the OECD average of 2.7 per cent.

Former industry and science minister Ed Husic has said the economy is too reliant on “good fortune” and Australia’s productivity is stagnating because of a lack of R&D investment.

The BCA also wants to introduce a concessional 10 per cent tax rate for profit from R&D commercialised in Australia, as well as streamline compliance and reporting requirements for the incentive, consolidating R&D grants into fewer nationally significant programs.

The BCA claims R&D expenditure by large Australian businesses has declined by $2.9bn in the decade to 2022.

Cochlear chief executive Doug Howitt said policy reform was critical to getting more R&D done in Australia, “By removing the current cap … in Australia we can encourage companies to do more R&D,” Mr Howitt said.

Last week, the Australian Academy of Science proposed its way of boosting R&D investment in Australia. It argued for incentivising large business R&D investment by applying either a 0.25 per cent or 0.5 per cent R&D levy to businesses with annual revenue of $100m or more that can be discounted if those businesses invest in R&D.