Australian budget bankrolls R&D overhaul by ‘moving funding’

Australia’s government has promised to overhaul tax perks for research and development and improve the coordination of its research grant schemes, in the “first stage” of its response to the Strategic Examination of Research and Development (Serd) report.

The 12 May federal budget also includes a A$387 million (£207 million) lifeline for the beleaguered science agency Csiro and a A$509 million increase in allocations from the underspent Medical Research Future Fund (MRFF).

The government has also made unspecified provisions to fund Australia’s involvement with Horizon Europe and meet “infrastructure obligations” for the Square Kilometre Array radio telescope project.

But these investments will be bankrolled by cancelling the remaining A$800 million promised through the research commercialisation programme known as Australia’s Economic Accelerator, and redirecting billions of dollars more of grant funding earmarked for future decades.

In a bittersweet budget for universities, higher education institutions will be charged A$11 billion a year to fund the operations of the National Student Ombudsman. And while net overseas migration forecasts have been revised upwards, the current turmoil in visa processing appears unlikely to end.

Lobby groups have welcomed Canberra’s early embrace of the Serd panel recommendations while bristling at the method of funding it. “We understand the government is operating in a tight fiscal environment and trying to ease pressure on inflation,” said Universities Australia chair Carolyn Evans. “But Australia will not become more productive or competitive by investing less in the people and institutions that drive productivity.”

CEO Luke Sheehy said the budget’s focus on R&D should not involve “moving funding from one pot to another”. The Csiro bailout was appreciated but “university researchers also deserve funding stability and certainty, and this budget rips A$800 million away from them”.

While the government had already announced the scrapping of the Economic Accelerator and the boost to Csiro funding, its decision to proceed with Serd recommendations had not been telegraphed. The reforms include a revamp of the R&D Tax Incentive (RDTI) and the establishment of a “National Resilience and Science Council” to advise on research, development and innovation (RDI) policy and coordination.

“Australia’s RDI system is getting long overdue attention with positive changes to the RDTI and venture capital regulatory regime”, said Tech Council of Australia CEO Kate Cornick, a member of the Serd panel. But Australian Academy of Science (AAS) president Chennupati Jagadish said the commitments had been made without a “material increase” in government science funding.

“These initial reforms are only a welcome first step and more is needed,” he said. “A truly coordinated science system cannot be built without courageous decisions about structures and priorities.”

Budget documents note a “provision” to commit a little over A$500 million to increase annual disbursements from the MRFF, from the current A$650 million to A$1 billion next decade, “pending finalisation” of the National Health and Medical Research Strategy.

“This will allow medical researchers to make life-saving discoveries without depleting the underlying capital of the fund,” the AAS said.

But the Council of Australian Postgraduate Associations (Capa) said this “bare minimum” boost had only been achieved through cuts elsewhere. “Funding the MRFF increase by axing the Australian Economic Accelerator is robbing commercialisation to pay translation,” said Capa policy and research officer, Maxim Jon-Buckley.

“A ramp that does not reach one billion dollars a year until 2030–31 will not arrest the loss of early- and mid-career medical researchers Australia is experiencing right now. The mid-career attrition curve will not wait four years for a disbursement schedule to catch up.”

Capa also criticised the establishment of a levy to fund the National Student Ombudsman. “The government created this office; the government should fund it.”

The A$11 million annual levy “seems excessive”, Monash University higher education expert Andrew Norton noted on X.

The budget papers also reveal a A$20 million allocation for “enhanced scrutiny” of onshore and offshore student visa applications. “Hopefully ‘enhanced’ also means more consistent,” Norton commented.

The budget includes predictions that net overseas migration will total 295,000 this financial year, falling to 245,000 in 2026-27 and 225,000 in 2027-28 – an upward revision of 50,000 over the three years, according to migration expert Abul Rizvi.

“[Treasury has] increased the forecasts to align with what’s actually happening,” he said. “The…tightening of student policy has helped [reduce net migration], but it hasn’t helped very much.

“It means that the high refusal rates, in order to drive down application rates, will continue. [It is] a very poor way of getting net migration down, but that’s what they’ve decided to do.”

john.ross@timeshighereducation.com