Proposed changes to Australia’s R&D tax system would expand eligibility beyond genuine research, concentrate benefits among a narrow group of firms, and proceed without clear costings.

The centrepiece proposals in the Strategic Examination of Research and Development (SERD) report, _Ambitious Australia_, would redefine what counts as Research and Development (R&D), leave the fiscal cost unexamined, and concentrate benefits on a very small proportion of Australian innovative businesses.

SERD has delivered a thorough diagnosis of what ails Australia’s R&D system. Chapters three and four prescribe a treatment built around a substantially expanded R&D Tax Incentive (RDTI) and a new venture capital architecture. The diagnosis is sound, but the prescription leaves three questions unanswered.

Since 2011, the RDTI has rested on a clear principle: eligible expenditure must involve genuine technical uncertainty that can only be resolved through systematic investigation based on established science. This definition follows the OECD’s Frascati Manual and is consistent with R&D tax incentive design across every comparable economy. It is the primary integrity mechanism in the program.

The SERD’s premium startup stream (Recommendation 5b) would extend eligibility to development and deployment, early commercialisation, and user testing. These activities occur after the core technical uncertainty has been resolved. The remaining uncertainty is commercial, not technical.

In a typical technology startup, the experimental phase may account for 15 to 25 per cent of total expenditure. Expanding eligibility to product development and commercialisation opens the offset to the remaining 75 to 85 per cent. No OECD........

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