“The 2026-27 federal budget recognises the difficult economic environment facing the government, but it comes at a time when Australia cannot afford to take its foot off the accelerator on skills, research and innovation,” said Carolyn Evans, chair of Universities Australia, reacting to the budget – which was delivered on May 12.
“We understand the government is operating in a tight fiscal environment and trying to ease pressure on inflation while lifting productivity and growing the economy,” she said.
“But Australia will not become more productive or competitive by investing less in the people and institutions that drive productivity.”
She welcomed a range of research and innovation measures, describing them as “a package of measures to boost research, development and innovation, which we welcome”.
Evans highlighted initiatives including the establishment of a National Resilience and Science Council, steps toward greater research specialisation, startup commercialisation incentives, participation in Horizon Europe and increased Medical Research Future Fund disbursements.
“These are all very positive,” she said, while adding that “what’s critical is that investment in research and development continues to grow so that Australia can reverse its long-term decline in R&D investment and lift national productivity”.
Meanwhile, Universities Australia CEO Luke Sheehy warned that funding and reform settings were not keeping pace with expectations on universities.
“We welcome the focus on R&D in the budget, but it can’t simply come from moving funding from one pot to another,” he said.
He added that universities were facing growing pressures across regulation and operating costs.
“Universities are bearing the brunt of increased regulation and costs at a time when investment in teaching and research is not keeping up,” he said.
Universities are bearing the brunt of increased regulation and costs at a time when investment in teaching and research is not keeping up
Luke Sheehy, Universities Australia
Sheehy went on to point to gaps in major reform programs.
“It’s disappointing to see no further investment in the Australian Universities Accord and only a partial response to the Strategic Examination of Research and Development in this budget.”
One of his strongest criticisms focused on the decision to end Australia’s Economic Accelerator (AEA).
“The AEA was designed to help turn Australian research into Australian companies, Australian industries and Australian jobs,” he said. “You cannot talk about building a Future Made in Australia while cutting one of the country’s key research commercialisation programs.”
“Our university researchers also deserve funding stability and certainty,” he said. “Our system can’t do more of the heavy lifting with less.”
At the vocational level, Jenny Dodd, CEO of TAFE Directors Australia, said the budget included measures benefiting TAFE. “However, these were not the budget’s focus,” with attention instead on housing, tax reform and intergenerational opportunity, she pointed out.
She highlighted changes to apprenticeship incentives as the most significant skills measure.
The government is “sharpening its impact on investment,” with large employers to lose access to apprenticeship incentives for new starters from July 2027, while small employers remain supported.
“TAFEs have long worked with a plethora of small employers who individually employ one or two apprentices,” she explained
Dodd also pointed to migration-related skills reforms, including faster trade recognition pathways for skilled migrants and training aligned to priority sectors such as AUKUS and aged care.
On higher education, Dodd said most measures had been previously announced, including continued implementation of the Universities Accord, the proposed Australian Tertiary Education Commission, and equity participation initiatives.
From the research-intensive university sector, the Group of Eight welcomed the government’s decision to associate with Horizon Europe, calling it a “nation-building and strategic investment in Australia’s economic security, innovation and long-term productivity”.
The Go8 said the move would embed Australia in global research networks and help “accelerate research breakthroughs, fast track the commercialisation of Australian discoveries, create high-value jobs, and connect our brightest minds with the world’s most ambitious research and innovation networks”.
It said Australia would be “in the box seat to influence the settings of Horizon Europe’s next framework” from 2028.
The group also said member universities would match the government’s contribution to the Horizon Europe association fee, describing universities as “a central pillar of Australia’s national research capability – investing around $10 billion annually in national R&D”.
