The Australian government has been urged to make sweeping changes to improve the nation’s research and development (R&D) system by a much-anticipated independent review it commissioned into the sector.

The review, led by Australian-born Tesla chair Robyn Denholm and first announced in 2024, saw a panel of four experts spend more than 12 months examining Australia’s R&D capabilities amid falling domestic investment in innovation.

Its findings and recommendations were handed to the government in December 2025, but only released on Monday night.

Titled Ambitious Australia, the review’s 126-page final report argued the nation needed to implement “bold reform” to revive its R&D sector, including reforming tax incentives to stimulate private sector investment.

Australia’s total R&D investment has fallen over the past 15 years to below 2 per cent of annual GDP – below that of other similarly developed countries – and industry experts have warned the nation has struggled to capitalise on its innovations or lost them overseas.

“Business R&D has dropped 35 per cent since 2009, and the nation now ranks 105th in the world for economic complexity,” the expert panel wrote in their final report, warning the figures were “not abstract statistics but warning lights”.

A discussion paper released by the panel in 2025 found Australia's economy was “unprepared to achieve sustained growth” due to a “siloed” R&D system and a “largely indifferent” business community.

Their review has now pushed the government to procure more Australian innovations and establish its own National Innovation Council – a body already used in countries such as Sweden and the Philippines – to oversee Commonwealth R&D funding.

Review recommends changes to R&D support, tax, and super

The expert panel’s strategic review found Australia had “a once-in-a-generation opportunity” to share the benefits of innovation across the economy and to avoid “a future too dependent on being the ‘lucky country’”.

Among its 20 key recommendations, the panel suggested using national strategic initiatives to “accelerate foundational and applied research, as well as translation and development projects”.

This included work “spanning science, technology, engineering and mathematics (STEM) and humanities and social sciences (HASS), alongside enabling technologies such as artificial intelligence (AI), quantum, robotics, and advanced manufacturing technologies”.


Australia's industry minister says the government will consider the R&D review's recommendations 'over coming months'. Image: Shutterstock

The review found researchers needed greater funding and support, and recommended the government improve funding for competitive grants, which it said had been “in real decline for over a decade”.

It also recommended improving support for startups through “reform and simplification” of the “vital” Research and Development Tax Incentive (RDTI) scheme.

The government should “incentivise startups through a premium RDTI segment providing streamlined access to improve benefits for high-potential firms”, the report suggested.

The review also recommended reforming superannuation regulations to “remove barriers to higher private equity investment” and to allow individual workers to invest their super into high-growth Australian R&D firms.

Panel experts also called for “urgent action” to develop workers’ skills and attract talent into STEM and HASS fields, “with a focus on embedding entrepreneurial and industry pathways for researchers, and aligning migration and education systems".

Report chair Robyn Denholm said Australia could not run a modern economy on “an outdated and fragmented research, development, and innovation system”.

“If we want future prosperity, we have to build it – boldly, deliberately, and at scale,” she said.

“We cannot afford to wait."

Industry bodies push government to act

Industry groups representing business and education sectors welcomed the release of the independent review of Australian R&D and called on the federal government to implement many of its recommendations.

The Tech Council of Australia, which represents both startups and numerous Big Tech companies such as Apple, Google, and Microsoft, said the review’s recommendations “could significantly strengthen Australia’s ability to build and scale technology companies at home”.

Its director of policy and government affairs, Lucinda Longcroft, said incentivising startups through more supportive RDTI and superannuation schemes would help fix “one of the biggest barriers facing Australian technology companies” – scale-up capital.

“Reforms that strengthen venture capital settings and make it easier for superannuation funds to invest in high-growth firms will help more Australian companies grow here rather than being forced to look overseas for funding,” she said.

Science and Technology Australia (STA), which represents scientists and technologists, said it urged the government “to respond to the review with the necessary ambition”.

STA president Jas Chambers said she welcomed the report’s recommendations on bolstering the STEM workforce and improving investment in grant schemes and research infrastructure, including the application of more appropriate indexation.

“Just as households are feeling cost-of-living pressures, the research system is feeling the pinch of increasing research costs, from consumables to specialist equipment to wages,” she said.

“A new indexation rate must reflect the true cost of doing research, which is rising faster than the current rate applied.”

The Business Council of Australia, which represents some of Australia’s largest corporations, said reforms outlined by the strategic review would help attract greater business investment in Australia.

Universities Australia CEO Luke Sheehy said the review had delivered “a roadmap to build Australia’s innovation future”, and it was now “up to the government to make the most of this opportunity”.

The federal government said it would “carefully consider the report and its recommendations and how it might respond”.

Minister for industry, innovation, and science, Tim Ayres, said Australia needed “a modern and fit for purpose research and development system”.

“This report charts out a long-term reform roadmap for me, and for the government to consider over coming months,” he said.