Australia is wealthy — but not future-ready.

Rich in assets, but underinvested in innovation.

Australia’s economy has long ridden the waves of real estate and resource booms. With more than $11 trillion locked in property, it looks strong on paper — but this wealth, concentrated in inflated home values, does little to drive innovation. It masks a much deeper problem: the lack of meaningful investment in new industries, research commercialisation, and high-growth ventures.

It’s not that Australia lacks ideas. It’s that we still aren’t investing in them.

A Snapshot of the Australian Economy

To understand the scale of the problem, we need to look at how Australia’s economy is structured. The Reserve Bank of Australia’s May 2025 economic snapshot paints a revealing picture:

• Mining and resources account for 58.7% of exports, yet employ just 2.2% of the workforce.

• Health and education are the largest domestic industries, contributing 13.4% of GDP and employing over one in four Australians.

• Property dominates household wealth —but generates little in the way of new IP, innovation, or global competitiveness, and has left Australia with one of the highest household debt loads in the world.

• And critically, business investment in R&D remains stagnant at just 0.9% of GDP.

To put that in perspective, while Australia’s total R&D investment (public and private combined) sits at 1.68% of GDP, other countries are pulling far ahead:

• The United States: 3.5%

• The United Kingdom: 2.9%

• China: 2.4%

• OECD average: 2.7%

Most of these economies are not just investing more overall — they’re driven by the private sector. In many cases, businesses contribute over 70% of national R&D spend. In Australia, it’s less than 50%.

And yet, we’re not short on intellectual output — Australia produces over 4% of the world’s scientific publications. To put that in perspective, we account for just 0.3% of the global population, placing us among the top 10 countries for research output across many disciplines.

What we lack is follow-through. We fail to commercialise ideas, to turn prototypes into products, or to create the conditions for scaling innovative companies locally.

The consequence? High-potential ventures go elsewhere.

When Australia doesn’t invest in emerging industries early and seriously, we become a launchpad for innovation that lands somewhere else.

Kate Pounder, CEO of Tech Council Australia, addressed the difficulties Australian startups face in scaling;

“Australia remains a challenging place to scale a tech startup compared to leading countries like the United States, particularly due to funding availability."

She emphasised that this challenge is particularly pronounced in critical tech companies in capital-intensive sectors like quantum, AI, and robotics.

For example:

Cortical Labs
Makers of “DishBrain,” a biological computer using living brain cells, Cortical Labs has publicly stated it may move operations offshore due to a lack of domestic support. CEO Hon Weng Chong pointed to limited government focus on emerging technologies beyond quantum, and more favourable funding environments in the U.S., Europe and Singapore.

Q-CTRL
Q-CTRL, spun out of the University of Sydney in 2017, faced major hurdles securing early local support — prompting founder Michael Biercuk to open offices in Los Angeles, Berlin, and Oxford to access global capital and markets. In 2024, Q-CTRL raised an additional $86.3 million in Series B funding, bringing its total to $166 million — one of the largest raises in the global quantum sector. But Biercuk was blunt about the disparity:

“Australia has decided not to make investments in the local industry so far. That is what is holding us back.” - InnovationAus

He has called for a national rethink of industrial policy, including Small Business Innovation Research (SBIR) style programs, to bridge the gap between research and commercialisation, and keep world-class innovation anchored in Australia.

Loam Bio
Loam Bio, an Agtech company developing microbial technology to capture and store carbon in soil, originated in regional New South Wales. Despite Australia’s global standing in agricultural science, Loam Bio turned to U.S. and Canadian venture capital to fund its growth — raising over $105 million to expand operations and scale internationally.

These aren’t outliers — they reflect a broader failure: when Australia doesn’t invest in emerging industries early and seriously, we become a launchpad for innovation that lands somewhere else.

References
Image credits: Google DeepMind, Pexels, XK Studio
Reserve Bank of Australia – Economy Composition Snapshot (May 2025)
Australian Bureau of Statistics – Research and Experimental Development, Businesses
OECD – Main Science and Technology Indicators
Tech Council of Australia – Commentary on Industry Growth Program
MacroBusiness – Australian Property: An $11 Trillion Productivity Drain
The Australian – Cortical Labs mulls overseas shift
SmartCompany – Q-CTRL raises $86.3 million Series B extension
InnovationAus – Q-CTRL’s record raise and policy challenge
AuManufacturing – Michael Biercuk on quantum computing and deep tech policy