2020/21 Federal Budget Analysis

The 2020-21 Budget comes amid one of the worst recessions in Australia’s history. The Government’s Budget strategy includes major spending measures that seek to stimulate economic activity and reduce unemployment.

This Budget has been crafted on an assumption that a COVID-19 vaccine will be available by mid-2021. As a result, many stimulus measures are fixed-term or one-off spending.

This breakdown provides further detail on several major Budget 2020-21 measures that affect the science, technology, engineering and maths (STEM) sector.

Additional university places

In a speech ahead of the Budget, Education Minister Dan Tehan announced an increase in the Commonwealth Grant Scheme of $298.5 million over 4 years from 2020-21. This would fund an extra 12,000 Commonwealth supported university places (additional to any new places resulting from the Job-Ready Graduates Package).

Support for university short courses

The Budget also includes $251.8 million over two years for 50,000 Commonwealth supported short courses at universities. These courses will focus on teaching, health, science, information technology and agriculture.

$1 billion in university research support

The Budget includes a $1 billion boost in 2020-21 to research funding for universities through the Research Support Program – known as research block grants. This scheme provides universities with financial support for the baseline cost of research and universities have flexibility in how they spend this money. Allocations will be calculated on the current RSP funding method based on a university’s competitive income and engagement income.

Strategic University Reform Fund

There is also a $41.6 million over four years from 2020-21 to establish a Strategic University Reform Fund to bring together universities and local industries to partner on innovative reform projects.

The Research & Development Tax Incentive

In the 2018-19 Budget, the Government announced changes to the Research & Development Tax Incentive to implement some of the recommendations from the 2017 review of this scheme. These changes would have restricted eligibility for these business tax breaks for R&D spending – and would have seen R&D investment fall by almost $1.8 billion over four years.

Legislation to implement those changes has been subject to an inquiry by the Senate Economics Legislation Committee – and STA gave evidence to hearings in June. The 2020-21 Budget include changes which would return $2 billion to research and development over four years.

The specific changes outlined in the Budget papers include:

• The start date for the revised R&D tax incentive measures would now apply only after the 1^stof July 2021 (this removes the previous concerns about retrospective tax clawbacks);
• The increase in the R&D expenditure threshold outlined in the legislation would remain - with the new threshold being $150 million a year;
• For companies with a turnover of less than $20 million:
  • The refundable tax offset is being set at 18.5% above the claimant’s tax rate; and
  • The $4 million cap will be removed.
• For companies with a turnover above $20 million, the marginal R&D premium will be the claimant’s company tax rate plus:
  • 5% above the claimant’s company tax rate for R&D expenditure between 0% and 2% R&D intensity for larger companies;
  • 5 percentage points above the claimant’s company tax rate for R&D expenditure above 2 per cent R&D intensity for larger companies.

Manufacturing collaborations

In the week before the Budget, the Prime Minister announced a Modern Manufacturing Strategy worth $1.5 billion over five years. It includes:

• $1.3 billion over five years from 2020-21 to establish the Modern Manufacturing Initiative to support manufacturing projects building long-term business collaboration at scale, translating research into commercial outcomes and bringing new products to market, and integrating local firms to deliver products and services into global value chains;
• $107.2 million over four years from 2020-21 to identify and address critical supply chain vulnerabilities by providing manufacturers support through the new Supply Chain Resilience Initiative;
• $52.8 million over three years from 2020-21 for a second round of the Manufacturing Modernisation Fund, which co-funds capital investments that help manufacturers scale-up, invest in new technologies, create and maintain jobs, and upskill their workers;
• $30.0 million over two years from 2020-21 to the Advanced Manufacturing Growth Centre to continue to support projects, in consultation with other Industry Growth Centres, to build the capability and competitiveness of the manufacturing sector in alignment with the National Manufacturing Priorities; and
• $20.0 million in 2021-22 to Industry Growth Centres, including the Advanced Manufacturing Growth Centre, Food Innovation Australia, METS Ignited and MTPConnect in support of the Modern Manufacturing Strategy

Research Translation Scoping Study

This Budget commits $5.8 million in 2020-21 for the Department of Education, Skills and Employment to undertake a scoping study to analyse options to improve translation and commercialisation of research. STA has been a strong advocate for a Research Translation Fund to drive this work at greater scale.

Women in STEM cadetships

A Women in Science, Technology, Engineering and Mathematics Industry Cadetship scheme will be established with $25.1 million over five-years. The scheme will support for 500 women working in STEM industries to complete an Advanced Diploma. It will combine study and work-integrated learning experiences.

Women-founded startups

The existing Boosting Female Founders Initiative will receive an extra $35.9 million over five years. The program delivers grants ranging from $25,000 to $480,000 for female founded startups to expand into domestic and global markets. This funding will also go towards providing expert mentoring, and advice for women entrepreneurs.

The budget contains several measures to improve STEM skills for students. These measures target early education through to year 10. There is a total of $27.3 million over five-years including:

• $9.6 million over five years from 2020-21 to the Australian Academy of Science to deliver curriculum resources and professional learning for Foundation to Year 10 teachers;
• $5.7 million over five years from 2020-21 to expand the Early Learning STEM Australia program to Foundation to Year 2 classrooms
• $4.8 million over five years from 2020-21 to enhance teaching practices through partnering teachers with STEM professionals
• $4.4 million over five years from 2020-21 to support approximately 120,000 disadvantaged 3 to 5-year olds through The Smith Family’s Let’s Count program; and
• $2.8 million over five years from 2020-21 to Froebel Australia to build the skills of early learning educators to deliver STEM learning in preschool and childcare.

ARC, NHMRC and MRFF

With the exception of funding for vaccine development in the MRFF and the NHMRC all three major funds have maintained their competitive funding levels in this budget. There has been some movement within the funds, for example $12.5 million over three years for research into Australia’s distinct history, society and culture as part of an ARC Special Research Initiative.

National Collaborative Research Infrastructure Scheme funding

Overall NCRIS funding has not changed in this Budget. The 2020 Research Infrastructure Investment Plan (RIIP) maintains the 12-year $1.9 billion funding commitment. Four new projects have been announced within this funding:

• $36.3 million over three years from 2020-21 for the early implementation of the Sea Simulator project to support the Great Barrier Reef Restoration and Adaption Program;
• $8.9 million over three years from 2020-21 to boost the capabilities of the Humanities, Arts, Social Sciences and Indigenous e-research platforms;
• $8.3 million over three years from 2020-21 to establish new synthetic biology research infrastructure to facilitate rapid responses to emerging disease and biosecurity risks and address critical gaps in technological platforms and informatics;
• $7.6 million over three years from 2020-21 to upgrade the Australian Community Climate and Earth System Simulator (ACCESS) to boost Australia’s capacity to respond to future climate disasters and emergencies.

Supporting healthy oceans

$47.4 million over four years has been committed in this Budget (and $7.8 million for each year thereafter) to manage Australia’s oceans. This includes:

• $28.3 million over four years from 2020-21 (and $7.8 million ongoing) to enhance the maintenance of Australia’s marine park network, including increased science and monitoring activities, expanded Indigenous engagement in park management and more pro-active enforcement of compliance with marine park rules;
• $14.8 million over four years from 2020-21 to remove ghost nets (discarded fishing nets) from Australia’s northern waters; and
• $4.2 million over four years from 2020-21 to support Australia’s engagement with the International Partnership for Blue Carbon and the Asia-Pacific Rainforest Summit.

Mental health

The Australian Psychological Society – an STA member – has welcomed a Budget 2020-21 decision to double the number of Medicare-funded psychology sessions for the next two years. This measure is estimated to cost $100.8 million.

Regional research

The Budget commits $41.0 million over three years from 2020-21 to establish the Securing Raw Materials Program and the Regional Cooperative Research Centres Project to support research and development activities in regional areas.

International research partnerships - India

As part of the Comprehensive Strategic Partnership with India, the Australian Government has made a $62.2 million commitment over 4 years. This includes:

• $19.5 million from 2020-21 to support the science, technology and innovation partnership with India;
• $14.2 million to enhance the business and education relationship with India and the Indian diaspora in Australia; and
• $12.7 million from 2020-21 to establish the Australia-India Cyber and Critical Technology Partnership

Commonwealth Scientific and Industrial Research Organisation

As a result of COVID-19 disruption, CSIRO’s commercial income is expected to fall by around $500 million. This Budget includes an allocation of $459.2 million over four years to cover this shortfall. This includes $5 million to upgrade CSIRO’s agriculture and grazing research facilities.

Geoscience Australia

In June, a $124.5 million boost was announced for Geoscience Australia to expand its Exploring for the Future program. This will extend geoscientific mapping of mineral, groundwater, and energy resources in northern (and some southern) parts of Australia.

Australian Renewable Energy Agency (ARENA)

The Budget commits $1.9 billion over 12 years ($628.5 million over the forward estimates) to continue funding for ARENA, expand the Clean Energy Finance Corporation and invest in the National Electricity Market. This is part of the Investment in New Technologies strategy.

This funding includes:

• $1.4 billion over twelve years from 2020-21 (including $223.9 million over four years to 2023-24) to continue funding ARENA to provide research and development investment for emerging low emission technologies to increase their commercial readiness;
• $70.2 million over five years from 2020-21 (including $55.7 million over four years to 2023-24) to support the development of a technology neutral regional hydrogen export hub to boost regional economies;
• $50.0 million over three years from 2020-21 to establish the Commonwealth Carbon Capture Use and Storage Development Fund, for research into reducing the abatement of energy generators;

Bureau of Meteorology

The Budget commits an extra $254.6 million to the BOM over the next four years including:

• $225.6 million over three years from 2021-22 (and $143.7 million per year ongoing from 2024-25) to maintain a proactive asset maintenance schedule consistent with industry best practice and allow the BOM to safely respond to multiple concurrent weather emergency events during times of natural disaster;
• $29.0 million in 2020-21 to supplement revenue for the Bureau’s aviation  meteorological services program following a downturn in aviation activity due to COVID-19; and
• funding to improve the security, resilience and reliability of the Bureau’s Observations Network infrastructure.