Australia’s long-term prosperity depends on a thriving, well-coordinated research and development ecosystem that drives impactful innovation, addresses national challenges and supports economic growth.
This budget takes meaningful steps in the right direction — but it is a starting point, not a destination.
Below is a summary of the most significant budget announcements.
R&D Investment and Reform
The R&D Tax Incentive will undergo its most significant overhaul in years. Changes include a 4.5 percentage point increase in core offset rates, a reduction in the intensity threshold from 2% to 1.5%, and an increase in the refundable offset turnover threshold from $20 million to $50 million. The maximum R&DTI expenditure cap rises from $150 million to $200 million, while the minimum expenditure threshold increases from $20,000 to $50,000 — though firms below that floor can still claim if they have worked with a Research Service Provider or Cooperative Research Centre. Notably, supporting R&D expenditure will no longer be eligible.
CSIRO receives a welcome boost of $387.4 million over four years, as does the National Measurement Institute with $273 million over the same period. Australia's association with Horizon Europe — the world's largest R&D program — has also received funding, though the amount has not been specified.
New Institutions and Coordination
The Government will establish three new bodies with implications for the science and innovation sector:
- A National Resilience and Science Council, tasked with advising on R&D and innovation priorities and improving coordination between government and industry.
- A National Environmental Protection Agency.
- A Critical Minerals Reserve, complemented by $173.3 million in direct industry investment.
The Government will also introduce an east coast gas reservation policy.
Energy and Environment
- $97.2 million over five years to continue implementing the National Consumer Energy Resources Roadmap.
- $17 million in 2026–27 for circular economy policy and legislative functions, plus $24 million for solar panel recycling.
- $15.9 million over four years to strengthen the Australian Energy Regulator.
- $15.4 million over four years to expand and extend the Vehicle Electrification dealership program.
- $5.5 million in 2026–27 for the Australian Carbon Credit Unit Scheme.
- $21.7 million over two years for the Australian Space Agency.
- $550 million over ten years for climate-resilient infrastructure in the Pacific and Timor-Leste through the Australian Infrastructure Financing Facility for the Pacific.
Health
The Government announced a provision for future spending of $508.5 million over four years to increase disbursements from the Medical Research Future Fund, from $650 million in 2025–26 increasing to $1 billion annually from 2030–31. Funding will be held in the Contingency Reserve pending finalisation of the National Health and Medical Research Strategy.
Higher Education
An additional $2.5 billion will flow into higher education over the next decade through new Managed Growth Funding and Needs-based Funding systems — a structural shift aimed at broadening access and participation across the sector. However, issues surrounding the governments Jobs Ready Graduates (JRG) Policy remain unaddressed.
Where Funding Has Been Cut
Not all announcements represent new investment. Several significant reductions deserve close attention:
- $1.3 billion cut over 2026–27 to 2038–39 from the Future Made in Australia – Renewable Energy Superpower program, including reduced funding for the Battery Breakthrough Initiative, Solar Sunshot, and Hydrogen Headstart (capped at $1 billion for Round 2).
- $166.2 million cut over five years from uncommitted grant funding within DISR.
- $105 million cut over five years from the Industry Growth Program.
- No new research projects will be funded through Australia’s Economic Accelerator (AEA) beyond the 2025-26 financial year.
- No data or forward estimates were included in the budget papers for the National Collaborative Research Infrastructure Strategy (NCRIS).
