{"id":1724,"date":"2026-03-22T13:30:25","date_gmt":"2026-03-22T13:30:25","guid":{"rendered":"http:\/\/www.ayercut.com\/index.php\/2026\/03\/22\/australia-was-once-a-world-leader-in-innovation-a-new-report-shows-the-system-is-now-broken\/"},"modified":"2026-03-22T13:30:25","modified_gmt":"2026-03-22T13:30:25","slug":"australia-was-once-a-world-leader-in-innovation-a-new-report-shows-the-system-is-now-broken","status":"publish","type":"post","link":"http:\/\/www.ayercut.com\/index.php\/2026\/03\/22\/australia-was-once-a-world-leader-in-innovation-a-new-report-shows-the-system-is-now-broken\/","title":{"rendered":"Australia was once a world leader in innovation. A new report shows the system is now \u2018broken\u2019"},"content":{"rendered":"
<\/span> Sinem G\u00f6r\u00fcc\u00fc via Better Images of AI<\/a>, CC BY<\/a><\/span><\/figcaption><\/figure>\n

Australia\u2019s research and innovation system is \u201cbroken\u201d and needs \u201cbold reform\u201d, according to a major new independent report released on Tuesday.<\/p>\n

Titled \u201cAmbitious Australia<\/a>\u201d, it\u2019s the culmination of a strategic examination of research and development in Australia, commissioned by the federal government in December 2024. It was led by Tesla chairwoman Robyn Denholm.<\/p>\n

Ambitious Australia joins a long line of reports stretching back to the Hawke-Keating era in the 1980s and \u201890s, when public spending on science, research and innovation gained a substantial boost. <\/p>\n

By the end of the 1990s, the fastest-growing component of Australia\u2019s export mix was high-value, complex, finished products. Correspondingly, Australia\u2019s rate of productivity growth<\/a> was running well above the OECD<\/a> average. <\/p>\n

We are now in a very different world. As this new report shows, Australia has fallen behind its peers on many fronts. <\/p>\n

Diagnosing the problem<\/h2>\n

If the report did nothing other than highlight how fragile Australia\u2019s hard-won prosperity is, it would still have performed a valuable service. And on this point, it does not hold back.<\/p>\n

The report<\/a> notes Australia\u2019s manufacturing as a share of gross domestic product (GDP) is the lowest among developed economies in the OECD. <\/p>\n

Australia also has among the lowest share of spending on research and development in the OECD at 1.69% in 2023\u201324. This is from a peak of 2.24% of GDP in 2008-09. <\/p>\n

And between 2010 and 2020<\/a>, Australia\u2019s productivity growth was the weakest it had been in six decades. <\/p>\n

Of course, correlation is not causation. But in most countries, manufacturing is where businesses make the biggest commitment to research and development. It is hardly surprising that as manufacturing has declined, so, too, has spending on innovation.<\/p>\n

Rethinking our reliance on resources<\/h2>\n

The economic concept of \u201ccomparative advantage<\/a>\u201d suggests a country should specialise in producing the things it can with a lower opportunity cost than its trading partners.<\/p>\n

The problem is that in pursuit of comparative advantage, successive federal governments have allowed Australia\u2019s resources exports \u2013 such as iron ore and coal \u2013 to crowd out high-value manufacturing. <\/p>\n

The task of this review was twofold.<\/p>\n

First, it had to think through the reconstruction of our entire research and innovation system. This includes neglected \u201cblue sky\u201d research, which doesn\u2019t have immediate practical use, but which has led to world-changing inventions.<\/p>\n

For instance, work on black hole mathematics<\/a> played a key part in the invention of WiFi<\/a> at CSIRO.<\/p>\n

Second, it had to ensure the system was \u201cfit for purpose\u201d as part of broader industrial policy to build new areas of competitive advantage in global markets and value chains.<\/p>\n

The report\u2019s recommendations<\/h2>\n

After a lengthy consultation process, the report proposes a comprehensive \u201cplan for action<\/a>\u201d, with 20 recommendations, including:<\/p>\n