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Budget Blueprint 2024: Invigorating our future

May 13, 2024

Our 2024–25 Budget Blueprint paper focuses on three areas critical for Australia’s long term success—system-wide tax reform, picking up the pace and impact of the climate and energy transition, and boosting Australia’s innovation and productivity.

‘Invigorating our future’ outlines reforms to boost our research capacity and stimulate investment to revitalise Australia’s productivity and competitiveness on the world stage.

We need to usher in a new era of productivity, dynamism, and innovation in the Australian economy. To achieve this, we must increase expenditure in technology, labour mobility, and initiatives to spur innovation and genuine competition.

The story of Australia’s innovation and productivity growth makes for sombre reading. Our productivity is in a rut, at its lowest rate since the 1970s. This stagnation is beyond an economic problem—it's holistic, cultural, and emblematic of the complacency that now permeates our national identity. The same can be said about our diversification, and poor integration into APAC markets. Australia ranks 93rd for economic complexity, just ahead of Uganda. We punch above our weight in terms of quality of research, and innovation.

To address these deficiencies, we outline two key focus areas: research and investment. 

We see two key target areas for research funding reform: firstly, toward basic, curiosity-driven foundational research to strengthen our sovereign research capacity, and second, toward outcomes-driven translation of applied research to bear economic fruits.

Building Australia’s early-stage investment capacity—and by extension the startup and innovation ecosystem—will support diversification, long term prosperity and productivity. The investment ecosystem is fundamental to building new markets, jobs, companies, and industries. It is time to address the commercialisation bottlenecks that exist for our home-grown technologies.

Summary of recommendations

  • Boost research capacity
    • Increase government spending in research and development as a percent of GDP on par with the OECD average 
    • Increase funding to develop Australia’s foundational research capacity
    • Employ an outcomes-driven approach to government research investments
    • Increase PhD stipends and exempt part-time stipends from tax
    • Fund mechanisms to retain and effectively engage talented international graduates
    • Establish an Australian Institute of Applied Ethics
  • Stimulate investment
    • Invest in venture funds themselves instead of startups
    • Exempt investment in startups from the unrealised gains exemption on super balances
    • Introduce an ‘educated investor’ exemption for the proposed overhauled sophisticated investor test
    • Exempt startup acquisitions from proposed merger reforms

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