Tech Council wants ambitious tech investment target to tackle lagging productivity growth
MELBOURNE, 12 November 2024 – The Tech Council of Australia (TCA) wants Australia to be ambitious by setting a target to drive Australia’s tech investment.
From research to reality: Scaling tech investment in Australia, a new report launched today at the TCA’s annual National Summit, shows lifting investment in research and development (R&D) and tech adoption would deliver substantial economic benefits and reverse declining productivity growth.
The report shows that increasing tech investment to 4.6% as a share of GDP could contribute an additional $38 billion to GDP in productivity gains in 2035. Lifting tech investment further to 6.9% could generate $167 billion in productivity gains.
TCA CEO Damian Kassabgi said setting a target for tech investment by 2035, which could be shared by government and industry, would spur action to address Australia’s lagging productivity growth.
“Australians enjoy some of the highest living standards in the world. To ensure we can keep growing, we need to see an uplift in productivity growth,” he said.
“Australia’s productivity growth has been declining for some time, which is one of our most pressing economic challenges. Achieving the level of growth we need to turn this around and see our economy thrive requires greater tech development and adoption.”
“Tech investment enables companies to commercialise their research and create new business models, making our economy more productive and resilient. There are also practical benefits to increased tech adoption, which can accelerate the growth of both small and large businesses.”
Australia’s tech investment – defined as the sum of research and development (R&D) and tech adoption spending – is currently equivalent to 3.9% of GDP. Without action, this figure is forecast to fall to 3.5% by 2030 due to the ongoing decline in R&D spending and a lack of growth in tech adoption. Modelling suggests this drop would cost Australia about $8.2 billion in 2035 alone, and a total of $25.3 billion over the next decade in lost productivity.
Mr Kassabgi said there are roles for both government and industry to lift tech investment.
“Businesses across the economy will need to increase R&D and tech adoption, and it’s critical that the policy settings are in place to support this action,” he said.
“Setting a shared tech investment target establishes a powerful framework for the tech industry, business, government and policymakers to work together to build a more economically secure and prosperous future.”
The From research to reality report recommends exploring policy changes to help lift tech investment and outlines five recommendations as a starting point for consideration, including to:
- Ensure tech investment policies are fit-for-purpose
- Address barriers to scaling tech companies from Australia
- Attract investment activity from R&D-intensive global companies
- Examine opportunities for strategic government investment to provide greater competition
- Create executive education programs focusing on opportunities to adopt technology
The research also provides a roadmap for lifting investment in R&D and tech adoption, including outlining the action required from startups, scaleups, multinationals and established large businesses.
“The results of this report show how vital tech investment is to our economy and the need for the tech industry, the wider business community and government to work together to create an environment that supports tech innovation and adoption,” said Laura Malcolm, Managing Director for Datacom Australia, a key sponsor of the report.
“The work we’re doing with our customers in the areas of AI, cloud and digital engineering clearly highlights how the smart use of technology can transform operations and performance, so it is critical that tech investment in Australia keeps pace with our global competitors. We’re also very supportive of the report’s recommendations around education focused on technology adoption and managing technology risk.”
The TCA will engage with industry and government to formulate a specific tech investment target.
“The Tech Council was founded to drive meaningful action that will enable Australia to harness the immense economic benefits of technology and grow the tech industry,” TCA Chair Robyn Denholm said.
“Our shared target to reach 1.2 million tech jobs by 2030 has been essential to growing Australia’s much-needed tech workforce. A commitment to lifting investment in R&D and tech adoption will be another proactive step towards fostering a thriving tech sector and strengthening our economy.”
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About the Tech Council of Australia (TCA)
The Tech Council is the peak body representing Australia’s tech sector. The Council represents companies throughout their life cycle, from early and growth stage companies through to large-scale global firms. It also represents firms in the broader tech ecosystem, including venture capitalists, advisers and tech-enabled businesses outside the tech sector.
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