If the Government's top priority is productivity, slashing the CSIRO budget does not make sense

The Government has been so keen to tell everyone who will listen that one of its top priorities is productivity. This makes their decision to slash funding to the CSIRO all the stranger.

After winning the 2025 election, Treasurer Jim Chalmers summed up what the Government’s focus was going to be by saying “[The] first term was primarily inflation without forgetting productivity, the second term will be primarily productivity without forgetting inflation.”

They commissioned the Productivity Commission to do five reports on the pillars of productivity in our economy. They held an economic reform roundtable that was meant to focus on productivity.

So, it was a big surprise last week when the CSIRO announced that it was cutting 300 to 350 jobs. This is precisely the opposite of what a government that was trying to improve productivity would do.

Research and development is one of the major drivers of productivity and the CSIRO has a long track record of making productivity enhancing breakthroughs.

Clearly, they were worried about a backlash because in the CSIRO press release they spun the cuts as “evolving its research direction to focus its efforts on where it can deliver the greatest national impact”.

Making sure the CSIRO is conducting research in the right areas is a worthy goal and one that it should always be looking at. But you don’t do that by cutting total research funding. You might cut some areas, but you then redeploy those resources to focus on more important areas.

If you hire less researchers, then you’re doing less research.

This was highlighted when in the same press release the CSIRO announced that it was focussing its efforts on “increasing the productivity and resilience of Australian farms” and then announced 45 to 55 job cuts in the Agriculture and Food research unit.

Another area it identified as a key focus was “mitigating and eradicating biosecurity threats”. While also announcing 100 to 110 job cuts from the Health and Biosecurity research unit.

They were “addressing the pressing problem of climate change” while (you guessed it) cutting 130 to 150 jobs from the Environment research unit.

This wasn’t a strategic refocus. Rather it was taking a knife to an already bloodied organisation that had faced years of cuts. These latest job cuts came on the back of over 800 over the last 18 months.

Each year the cost of doing research increases. Wages, rents, equipment, and utilities all increase in price. If funding does not at least match this then research will have to be cut.

Over the last 15 years funding has grown at an average rate of 1.3% per year. Well below the cost of doing research.

Funding for the CSIRO when measured as a proportion of the economy is now at a record low. Lower even than funding under Tony Abbott’s Government.

The lack of money for the CSIRO extends to all government funding for research and development. Of the 35 developed (OECD) countries, Australia ranks a dismal 27^th. In fact, just to lift Australia to the OECD average, we would need to spend an additional $10 billion per year.

These cuts make even less sense when you put them into the current international context. The Trump administration has recently cut US$3 billion in direct research funding and axed more than 3,800 research grants.

US science institutions are being forced to let go highly valuable employees. Now is a once in a generation opportunity to snap up some of that talent.

Instead, the Albanese Government is following Trumps lead and cutting when it should be hiring.

Why is it doing this?

Because Labor wants to reduce the budget deficit. This is like trying to save the apple farm by cutting down the apple trees and selling them as firewood.

This all highlights the costs of being a low tax country. Apparently, we can’t even afford to invest in the technologies that will drive our economy into the future.

Productivity is important to Australia’s long run economic wellbeing. It will take more than speeches, reports, and roundtables to increase it. If improving productivity is the Government’s aim, then they should at least be prioritising research and development.