Lab doors are slammed shut in Australia

By Greg Ansley

CANBERRA - Australian business is shutting its laboratory doors, despite hefty tax incentives and a renewed drive by the Federal Government to push the nation to the cutting edge of technology.

Business spending on research and development has fallen for the second consecutive year, shifting Australia further down the developed world's scientific spending ladder in terms of percentage of gross domestic product.

And businesses told the Australian Bureau of Statistics they expected to cut their research and development budgets by a further 10 per cent this financial year, plucking another $A350 million from private industry researchers.

Led by large declines in spending by manufacturing and mining and the closure of an increasing number of research and development departments, spending dived 4 per cent in 1997-98 to about $A4 billion.

In gdp terms, this represented a slide from a peak of 0.86 per cent in 1995-96 to 0.72 per cent - at a time when spending was rising in most other OECD countries.

"Despite significant Government assistance, Australian businesses are still lagging behind their international competitors when it comes to investing in research and development," said Industry, Science and Resources Minister Nick Minchin.

In its May budget, the Government allocated an additional $A800 million to science, including a six year, $A614 million boost to health and medical research, and $A17.5 million for the development of a new national biotechnology strategy.

But the Labour Opposition has accused the Government of playing catch-up after earlier pruning tax incentives for private industry research.

"The decline in business research and development spending is a direct result of the Howard Government's 1996 decision to cut the research and development tax concession from 150 per cent to 125 per cent," the shadow Industry and Technology Minister, Bob McMullan, said.

According to the Bureau of Statistics, 800 companies bailed out of science last financial year, led by a mass slamming of lab doors in the mining industry that saw research and development expenditure cut by a quarter.

With 550 businesses opening up new projects, the private sector suffered a net loss of 250 companies from its research and development base.

More than one in 10 mining industry scientific staff lost their jobs, with the manufacturing industry cutting its research and development positions by 7 per cent.

The only manufacturing sectors to significantly lift research and development spending were motor vehicle and parts manufacturers and the pharmaceutical and electronic industries.

Between them they pumped an additional $A100 million into new technology.

However, while a quarter of the companies still funding research and development cut their science budgets by more than 25 per cent, 43 per cent increased spending by 10 per cent and more.

And the sectors now being targeted as 21st century winners by the Government remain major spenders.

Computer software research and development budgets rose $A62 million to $A762 million, accounting for 19 per cent of the total.

Electronics manufacturers lifted spending by $A85 million to $A395 million to take a 10 per cent slice of the spending cake.

And pharmaceutical and veterinary spending rose by almost $A50 million to $A242 million.