A Closer Look at the 2026 Federal Budget and Australia’s Research and Innovation System
In March, a major independent report commissioned by the federal government declared that Australia’s research and innovation system was “broken.” The report, titled Ambitious Australia, outlined recommendations on how to fix it. The 2026 federal budget provides the first concrete signal of how the federal government intends to act on these recommendations. While some aspects of the budget are positive, they may not be enough to address the deep-seated issues in the national research landscape.
Initial Positive Signals
At first glance, some headline numbers in the budget appear constructive. The government has pledged to “strengthen our science capabilities and institutions” through new investments. For instance, there is $387 million over four years allocated for the CSIRO, $273 million for the National Measurement Institute, $21.7 million for the Australian Space Agency, and $24.3 million over two years for the National Health and Medical Research Council (NHMRC).
The government has also committed to establishing a National Resilience and Science Council, which was one of the main recommendations of the Ambitious Australia report. This council will provide coordinated advice on research, development, and innovation investment, as well as help set priorities for $15 billion worth of funding in this area. This could reduce fragmentation and better connect public research to national industrial capability.
Another positive aspect is the removal of the cap on disbursements from the Medical Research Future Fund, which will progressively lift toward $1 billion per year by 2030–31. This change allows significant extra funding to flow to health and medical researchers. Additionally, subject to treaty negotiations, the government plans to provide funding for Australia to join Horizon Europe as an associate member. This would allow Australian researchers to lead projects and access additional funding to complement domestic schemes.
Not a Broad Expansion of Research
While these commitments are welcome, they are largely institutional life-support measures rather than a broad expansion of competitive, investigator-led fundamental research. For example, the Ambitious Australia report recommended that Australian Research Council and NHMRC funding allocations be returned to historical levels, reversing a 19% real decline over 12 years. This recommendation is not yet reflected in the budget.
Some of the budget’s commitments are also more about redistribution than expansion of public investment in research. One such measure, “Boosting Productivity – Promoting Research, Development and Innovation,” is partially funded by returning $800 million of uncommitted funding from Australia’s Economic Accelerator over five years, with an additional $1.4 billion in savings booked between 2030–31 and 2036–37.
The Economic Accelerator, established in 2022, was designed to bridge the gap between publicly funded university research and commercialisation. Scaling it back, while funding science agencies within the Department of Industry, Science and Resources, suggests a shift in focus from competitive, university-administered research funding toward agency-based applied science.
Strategic Shifts and Uncertainties
The government’s approach to stimulating private R&D investment is another point of concern. It seeks to unlock $400 million per year in additional R&D investment by young firms through increased tax offsets. However, this figure is a behavioural estimate, not a committed R&D outlay. It relies on assumptions about how Australian industry may respond to tax incentives, which have historically been ineffective in boosting business expenditure on R&D as a share of GDP.
There are many cultural and structural reasons for this persistent underperformance, and a simple tax offset adjustment is unlikely to resolve them on its own.
Another low-key inclusion in the budget notes that work is progressing to reform registration requirements so that universities can achieve research specialisation in chosen areas of focus. This process aims to redirect non-research-intensive disciplines and/or institutions toward teaching, potentially consolidating R&D investment at fewer, larger institutions. While this could benefit leading research-intensive universities like the Group of Eight, it might harm mid-tier research-active universities and their emerging academics.
A Holding Pattern
Overall, the 2026 budget represents a holding pattern for fundamental research in Australia. It keeps the lights on for agency-based science, doubles down on driving business R&D, and defers structural decisions about university research funding to a future date. In a chaotic global environment shaped daily by oil market shocks, these choices are not unreasonable. However, they leave Australia’s fundamental research system in a state of policy suspension at a moment when the Ambitious Australia report explicitly recommended decisive action.
The question is no longer what the Ambitious Australia report said. It is whether or when the government intends to act on it.
