ARM Hub backs R&D overhaul to boost advanced manufacturing

ARM Hub has backed the findings of the Strategic Examination of Research and Development, a government-commissioned review that argues Australia's R&D system needs stronger alignment with industry and clearer pathways to commercial outcomes.

The final report, Ambitious Australia, chaired by Robyn Denholm, sets out 20 recommendations to reshape national settings for research funding, incentives, data and workforce development.

Industry groups have long argued that Australia produces strong research but struggles to translate it into new products, scaling businesses and advanced manufacturing activity. The review's central judgement is that the system remains fragmented and cautious, with weak links between research activity and industry demand.

Professor Cori Stewart, Chief Executive of ARM Hub, said the report reflects challenges manufacturers face when moving from pilot projects to production.

"Australia has strong research capability. What we've lacked is alignment of our talent to Australian industry, as well as scale-up capital and the digital infrastructure to turn that talent into commercial outcomes," Stewart said.

ARM Hub is based in Brisbane and works with manufacturers to adopt digital and automation tools, including robotics and artificial intelligence. It runs programs that connect businesses with research providers and technical specialists.

Tax credit option

One of the most closely watched recommendations for manufacturers is a proposed production tax credit for advanced manufacturing. The review suggests a tax credit or subsidy to retain advanced manufacturing in Australia when it results from local R&D activity.

Such a mechanism would sit alongside existing R&D settings and could influence where firms choose to scale production after development work. It would also add a new lever in policy debates about sovereign manufacturing capacity, supply chain resilience and local value capture.

ARM Hub highlighted its potential relevance for manufacturers investing in robotics integration and AI-driven production systems. These technologies often require capital expenditure, process redesign and specialised staff, all of which can influence location decisions for scale-up.

Robotics focus

The review also proposes National Strategic Initiatives to fund translation activity in areas including AI, quantum, robotics and advanced manufacturing. The model includes proof-of-concept schemes and accelerator-style support focused on moving research into market applications.

For manufacturers, the practical question is how these initiatives would be structured and who would run them. Design choices will determine whether support reaches firms beyond the largest incumbents, including small and mid-sized manufacturers that often lack internal R&D teams.

While the report emphasises translation, it also flags broader structural issues that can slow adoption. Firms often face procurement, standards and compliance requirements that are not designed for rapidly evolving digital tools. Skills shortages can also limit deployment once a project moves beyond a trial.

Data infrastructure

The report calls for improved data infrastructure and stronger data sharing between industry and research. This aligns with the growing view that access to high-quality datasets constrains the scaling of industrial AI.

Manufacturers take widely varying approaches to data collection, storage and governance. Many sites still operate legacy systems and inconsistent data standards, making it difficult to run AI systems across multiple plants or compare performance across production lines.

Shared industrial datasets raise questions about confidentiality, security and commercial sensitivity. They also require common formats and governance frameworks. The review suggests a larger role for national coordination, rather than leaving data-sharing models to develop case by case.

R&D incentive changes

Another recommendation targets reform of the R&D Tax Incentive. The panel proposes streamlining the scheme and creating dedicated streams for startups and scaleups.

The report also notes government discussion about lifting the minimum annual R&D project expenditure threshold to AUD $150,000. That change would affect access for smaller firms that use the incentive for incremental development work, including process innovation on factory floors.

In manufacturing, R&D often involves iterative engineering and production improvements rather than large, discrete projects. A higher threshold could reshape how firms plan and document work, and shift the incentive's value away from smaller participants.

Workforce pathway

The review calls for stronger industry pathways for researchers and a dedicated research, development and innovation workforce strategy. It positions workforce development as a national priority alongside financing and infrastructure settings.

Manufacturers adopting collaborative robots and AI systems need engineers, integrators, technicians and data specialists, as well as managers who can lead technology-driven change on the shop floor. Workforce constraints can slow adoption even where funding and technology options exist.

ARM Hub said the key test will be implementation.

"This report names these gaps clearly and points toward solutions that could make a real difference for manufacturers, particularly on data infrastructure, tax incentives, and workforce. The question now is implementation," Stewart said.

ARM Hub will continue to engage with the policy process as the government considers the recommendations. Manufacturers can access guidance through its existing programs while policy decisions are developed.