Australia’s Tech Investment Struggles to Scale

Australia is at risk of falling behind in the global tech race as startups struggle to access government funding while big companies secure research and development incentives. Despite efforts to promote a “smart economy,” investment in tech remains low, prompting a federal review to overhaul funding policies.

Currently, tech investment accounts for just 1.7% of Australia’s GDP, barely shifting since the pandemic. The government has tapped a leading tech executive to lead a review of R&D incentives, aiming to ensure funding supports innovation-driven businesses rather than established corporations.

Many industry leaders argue that startups, rather than large corporations, should benefit from R&D grants. They stress that early-stage businesses drive innovation, but current policies make it difficult for them to secure necessary funding. Meanwhile, significant capital flows into established companies, limiting startups' access to critical resources.

Beyond government funding, the broader investment landscape also presents challenges. A heavy focus on low-risk assets like property and infrastructure has left growth-stage tech businesses struggling for capital. Experts believe targeted policy changes could redirect investment towards innovation, fueling advancements in AI, deep tech, and emerging technologies.

Looking ahead, increasing R&D investment to 4.6% of GDP could add $38 billion in productivity gains by 2035, with even higher potential if investment reaches 6.9%. For Australia to transform into a true tech powerhouse, it must shift from short-term returns and support scalable, long-term growth in innovation.

Source: The Australian, Gartner, PwC