Reflections on the 2025 Federal Budget

The 2025 Federal Budget is a study in caution — a blueprint for stability in an election year. It delivers what it needs to politically: cost-of-living relief, tax cuts, and controlled messaging. But beyond the immediate optics, it raises a more pressing question for Australia’s long-term economic future: where is the ambition?

Specifically — where is the innovation agenda?

What’s in the Budget:

No enhancements or structural reform to the Research & Development Tax Incentive (RDTI), despite ongoing stakeholder calls for increased support, especially in the context of high compliance complexity for SMEs.

The Strategic Examination of the R&D Tax Incentive (SERD), announced in late 2023, is still in progress. No interim findings or timelines were provided in the Budget.

No new or revived innovation grant programs were introduced. Specifically

The Accelerating Commercialisation program, once the flagship federal initiative under the Entrepreneurs’ Programme, remains closed. It stopped accepting new applications in May 2023.

The Boosting Female Founders Initiative, which supported female-led startups with co-investment grants of $25,000 to $480,000, was cancelled in 2024. The 2025 Budget does not restore it.

No expansion or replacement of the former Incubator Support Program or CSIRO Kick-Start, both of which provided critical early-stage funding or technical expertise.

Funding is continuing under the National Reconstruction Fund (NRF), which has a $15 billion pool for loans, equity, and guarantees. However:

The NRF targets advanced manufacturing, clean energy, medical science, value-added resources, and critical technologies.

To date, funding has primarily supported established projects with existing capital structures.

The application process is lengthy and capital-intensive, making it inaccessible to most early-stage SMEs or startups.

What it means for business:

There is currently no national funding mechanism specifically designed for early-stage innovation. The closure of Accelerating Commercialisation, Boosting Female Founders, and other entry-level programs leaves startups with limited non-dilutive funding pathways.

The absence of changes to the RDTI, combined with the uncertainty surrounding the SERD review, creates a holding pattern. Many founders are reluctant to commit to R&D-heavy activities without clarity on future eligibility, refundability, or audit risk.

The NRF offers potential for some high-growth companies aligned with sovereign capability or energy transition themes. However, it is not a replacement for agile, innovation-specific grants—and it is poorly suited to startups without robust financial models or assets to secure debt/equity terms.

There is no strategy articulated in the Budget to support Australia’s commercialisation pipeline—from research to product-market fit. This gap poses long-term risks to Australia’s competitiveness in the global innovation economy.

Innovation by Name, Not by Design

The Future Made in Australia initiative sounds promising. But scratch the surface, and you’ll find a strategy overwhelmingly weighted toward green energy megaprojects and legacy industries. Nearly all innovation funding is tied to green iron, hydrogen, or clean manufacturing. These are critical sectors, yes — but they’re not the whole economy.

We saw $1.5 billion committed to a new innovation fund, but with scope confined to a few pre-commercial green tech areas. There’s no new national support for commercialisation, no broad startup incentives, no meaningful reform to the R&D Tax Incentive — still under review, still offering little certainty to the private sector.

In a world racing to lead on artificial intelligence, advanced manufacturing, medtech, agritech, and defence innovation, Australia is barely jogging.

Innovation has not been mainstreamed into our economic strategy — it’s been ring-fenced.

A Budget of Stability, Not Dynamism

To be clear: this is not a reckless budget. It does what it’s supposed to — maintain fiscal discipline, ease short-term pressure, and avoid economic disruption. But it’s also an exercise in holding still, not moving forward.

There is no investment to reposition Australia as an innovation nation. No forward-leaning incentives to build the next Canva, Atlassian or SPEE3D. No new venture capital stimulation. And without these, there’s no competitive foundation for the industries of tomorrow.

Industry Knows What’s Missing

Leaders like Steven Camilleri, Co-Founder and CTO of Darwin-born tech company SPEE3D, have already called out the gap. In his blueprint to reinvigorate Australia’s economy, he argues that the country has the resources, talent, and creativity — but lacks the strategic coordination to turn it into scale, export capability, and sovereign manufacturing power.

He’s not alone. The Business Council of Australia, the Tech Council, and multiple leading voices have called for innovation to be seen not as a “sector” — but as a strategic capacity embedded across our economy. That call, once again, was not answered.

The Message to Business? Tread Carefully

The allocation of almost $1 billion to the ATO for compliance activities sends a clear message: scrutiny is increasing, but support is not. If you’re a startup or scaling SME, you’ll find more oversight — and fewer tools to grow.

There is no meaningful relief on compliance burden, no push for digital transformation in small business, and no incentives for employer-led innovation. This is a transactional budget for business, not a transformational one.

Innovation Isn’t Optional

In a global economy driven by ideas, technology and adaptability, innovation isn’t a luxury — it’s the cost of staying in the game. Australia cannot afford to lag while the rest of the world retools its economies around IP, automation, and knowledge industries.

This budget doesn’t deliver that recalibration. It delivers safety — not strategy.

At ACTIO Group, we work with businesses across the Territory and Australia who are building that future anyway. Because growth still belongs to those who create it — even if policy doesn’t lead the way.

At the end of the day, this is only a political budget to defer agendas.