A starting point, not a solution: The 2026–27 Budget for Australian science

The Budget scorecard for science

The 2026–27 Budget takes meaningful first steps on R&D reform but falls well short of reversing a decade of structural underinvestment. Australia’s science system needed a step-change; what it has received is a starting point.

National resilience, productivity and ambition are the Government’s central themes for the 2026–27 Budget. The measures announced signal genuine commitment to reforming Australia’s broken R&D system. However, the $1.5 billion over the forward estimates for research and science agencies is funded by cuts to existing research programs which does nothing to begin reversing the long-term decline in overall research investment.

The Budget at a glance

Key measures in the budget for science and R&D:

• Ambitious Australia implementation begins with establishment of a National Resilience and Science Council and R&D Tax Incentive reforms.
• $387.4 million for CSIRO over four years to support financial stability on top of $233 million announced at MYEFO (Mid-Year Economic and Fiscal Outlook) in December 2025.
• Commitment to lift Medical Research Future Fund (MRFF) cap from $650 million to $1 billion by 2031, subject to completion of the National Health and Medical Research Strategy.  
• Funding confirmed for Australia’s association to Horizon Europe, subject to treaty negotiations, enabling Australian researchers to access the world’s largest research funding pool and deepen collaborations with the EU and other associated countries.
• National Measurement Institute, Australian Nuclear Science and Technology Organisation (ANSTO), the Australian Space Agency and the Square Kilometre Array all receive funding.
• $1.8 million in 2026–27 for the Academy’s school science, technology, engineering and mathematics (STEM) programs, supporting teacher confidence and student capability.
• Cuts to offset new spending: ~$800 million in uncommitted Australia’s Economic Accelerator funds redirected and the Trailblazer Universities Program (~$86 million) wound up; $67 million cut to the National Environmental Science Program.  
• Not addressed: high-performance computing and data capability, long-term certainty for NCRIS, and a national R&D investment plan. 

Where the Academy's advocacy delivered

The details: Budget measures relating to science

Ambitious Australia implementation

In this Budget, the Government takes its first steps to respond to Ambitious Australia, the final report from the Strategic Examination of Research and Development.  

National Resilience and Science Council: the Budget establishes a new Council to provide advice to Government on research investment, improving coordination and enabling priority setting across the Government’s R&D programs in alignment with industry investment priorities.  

R&D Tax Incentive (RDTI) reform: The RDTI comprises around 30% of the Government’s investment in R&D and is its primary mechanism to incentivise business investment in R&D. Several overdue reforms are introduced to better target the R&DTI and reward genuine R&D activity:

• The maximum expenditure threshold rises from $150 million to $200 million, increasing the offset for core R&D.
• The offset rates for core expenditure are increased by 4.5 percentage points.
• Eligibility for ‘supporting R&D expenditure’ is removed.
• The R&D intensity threshold is reduced from 2% to 1.5%.
• The turnover threshold for the refundable tax offset is raised from $20 million to $50 million so that growing firms can access it for longer.
• Research activities under $50,000 must be conducted with a Research Service Provider or Cooperative Research Centre to be eligible for the tax incentive – encouraging industry–research collaboration.

Government expects the RDTI reforms to deliver a net $400 million increase in R&D by young firms.

Reducing the intensity threshold may inadvertently disadvantage capital-intensive research sectors. This will require careful monitoring. 

Raising the expenditure threshold will only benefit a few of the largest R&D-intensive companies, however it provides an incentive for these large companies to undertake additional R&D in Australia and may make Australia more internationally competitive and attractive for R&D activity. Previous increases to the threshold from $100 million to $150 million have not changed large business investment trends. 

The parallel reforms to venture capital tax settings to support early-stage commercialisation is welcome.

Government science agencies

The budget introduces a suite of measures aimed to boost productivity through promoting research, development and innovation.

CSIRO: The Government provides a $387.4 million funding boost over four years, and $38 million per year ongoing, to support financial stability. This is on top of $233 million for CSIRO at MYEFO. These investments follow a Senate inquiry into the funding and resourcing of CSIRO, which concluded that sustainable investment is needed to maintain Australia’s public-good research and sovereign science capability. CSIRO also receives funding for the part-life refit of the Centre for Disease Preparedness, and $4.5 million over three years for its Transport Network Strategic Investment Tool.

National Measurement Institute: $273 million over four years to maintain essential national measurement capability.  

ANSTO: An allocated $10.6 million over two years to continue radiological baselining, monitoring, and advise on safe implementation of nuclear technology in the context of the nuclear-powered submarine program.

Australian Space Agency: $21.7 million to deliver its regulatory and policy functions.

SKA radio astronomy project: Continued funding for Australia’s delivery obligations of the Square Kilometre Array.

Research funding

Medical Research Future Fund (MRFF): The Government has committed to lifting the MRFF disbursement cap from $650 million to $1 billion annually by 2030–31. This follows sustained pressure from the research sector, including the Australian Academy of Science. This will provide $508.5 million over four years to fund the staged increase. The funds will sit in the Contingency Reserve pending the completion of the National Health and Medical Research Strategy.  

National Health and Medical Research Council (NHMRC): The NHMRC is allocated $24.3 million over two years for operations and a feasibility study for a Research Grant Hub. Such a grant hub should seek to modernise and address the administrative burden of grant application and management processes.

Horizon Europe: The Budget also provides funding for Australia’s association to Horizon Europe, pending formal treaty negotiations. This will give Australian researchers access to the world’s largest pool of research funding, diversify Australia’s international research partnerships and deepen collaborations with the EU.

Higher education

The Government frames universities not only as education providers, but as critical national assets for economic transformation, advanced manufacturing, defence capability, health innovation and workforce development. However, this Budget reduces research commercialisation programs: the Trailblazer Universities Program (~$86 million) winds up and $800 million in uncommitted Australia’s Economic Accelerator program funds are redirected. These cuts will affect researchers who invested substantial time and resources in applications.

The Australian Tertiary Education Commission is tasked with advising on reforming university registration requirements to remove the condition of research breadth to enable universities to build scale in areas of specialisation and comparative advantage. This was a recommendation of the Ambitious Australia report.  

Artificial Intelligence (AI) capability

AI is identified as a key technology for productivity and economic growth. Measures to implement the National AI Plan include up to $70 million for an ‘AI Accelerator’ grant funding round under the Cooperative Research Centres program, to scale national AI capability and commercialisation.  

Additional measures include $105.9 million over four years to develop AI-enabled environmental approvals and data sharing systems, continued development of the Australian AI Safety Institute, and implementation of safeguards under existing frameworks. These are welcome steps, though sustained investment in AI research capacity, including compute infrastructure, will be necessary to realise Australia’s AI capability ambitions.

STEM education and engagement

Several STEM education and engagement programs received funding in the Budget. The Academy will receive $1.8 million in 2026–27 to extend its school programs directly supporting the confidence and capability of STEM teachers and students. These investments are welcome but do not provide longer-term program certainty. Single-year funding makes it difficult for organisations to plan, recruit and deliver effectively. The Academy will continue to advocate for a multi-year commitment.

Other funding commitments in education and engagement include:

• $1.2 million for CSIRO’s STEM Professionals in Schools
• $1.5 million for the Smith Family’s Let’s Count Program
• $0.7 million for the Australian Mathematics Trust’s Curious Minds Program
• $0.7 million to Froebel Australia’s Little Scientists program. 

Scitech and Questacon also receive funding to enhance science engagement activities in Western Australia.  

Environment protection reforms

The Budget commits to a suite of actions to implement the Environment Protection and Biodiversity Conservation Act 1999 environment protection reforms – including establishing the new National Environmental Protection Agency (NEPA), the Nature Repair Market and enabling environmental offsets.  

The Budget also allocates $105.9 million over four years from 2026–27 for the Department of Climate Change, Energy, the Environment and Water (DCCEEW) and NEPA to modernise environmental information, data and digital systems (including using AI) to speed up environmental approvals.  

The cost of these measures is partly met from savings of $2.2 billion over 14 years from the Climate Change, Energy, the Environment and Water portfolio, which includes a $67 million cut to the National Environmental Science Program (NESP) over 7 years. The Academy notes with concern that this is around a 38% decrease in the program’s budget ($9.6 million per year). The NESP funds partnerships between scientists and Traditional Owners, government, community and industry to conduct environment and climate research. This cut is a blow to Australia’s environmental research capacity.

Other positive measures include $91.8 million over two years for Great Barrier Reef protection and restoration, and $11.5 million in 2026–27 for Australian Marine Parks and ocean leadership.  

What the Academy is looking out for next

High-performance computing and national research infrastructure: Australia’s national supercomputers are oversubscribed and approaching end of life. The National Collaborative Research Infrastructure Strategy (NCRIS) faces a funding cliff in 2028–29. Neither was addressed in this Budget. The Academy urges the Government to commit to a national strategy for high-performance computing and data infrastructure before the next Budget.

A 10-year national R&D investment plan: Australia’s investment in R&D has been declining in for more than a decade – dropping well below the OECD average (1.69% vs 2.72% of GDP). A single Budget cannot reverse this. Ambitious Australia recommended reversing the decline in competitive grant funding to protect and support fundamental research. The Academy calls on the Government to mandate the new National Resilience and Science Council to develop a 10-year investment plan for R&D with clear funding trajectories to raise Australia’s R&D investment.

Multi-year certainty for STEM education programs: Single-year funding for programs like the Academy’s school STEM initiatives prevents effective long-term planning. The Government should move to a minimum three-year funding commitment for flagship science engagement programs.

The bigger picture: a system at a critical point  

The 2026–27 Budget signals increasing support for reform of Australia’s science system. But signal is not the same as investment. For the past decade, Australia’s spending on R&D has been declining, with both Government and business investment falling as a share of GDP. Australia now spends 1.69% of GDP on research – far below the OECD average of 2.72%.

Without a sustained, long-term increase in R&D investment, Australia will lose the scientific and technological capability it needs to drive economic growth, resilience and national wellbeing. This Budget takes the first steps. The Government must be held to account for the investment that must follow.