Economy and our future
Australia is a prosperous nation, but our future prosperity is no longer guaranteed.
For decades, our economy has been underpinned by natural resources, global trade, and a strong research base. Yet increasingly, national reports are pointing to a structural challenge: we are not translating our strengths in research and talent into sustained economic growth, new industries, and high-value jobs.
The Ambitious Australia report released in March 2026 makes this clear. Australia’s research and innovation system is fragmented, under-coordinated, and too often fails to turn ideas into products, businesses, and global competitiveness. Investment is spread too thinly, collaboration is inconsistent, and the system places too little emphasis on scaling innovation into real economic outcomes. As a result, we are not fully realising the “innovation flywheel” that drives productivity, jobs, and national prosperity.
At the same time, the economic outlook is tightening. Treasury’s Intergenerational Report 2023 shows that Australia’s growth is expected to slow over the coming decades, driven by an ageing population, lower productivity growth, and structural shifts in the global economy. While incomes are still projected to rise, they will do so at a significantly slower rate than in the past, placing pressure on living standards, government budgets, and long-term economic resilience.
These challenges are compounded by deeper structural issues:
Australia ranks low in economic complexity, reflecting limited diversification beyond resources.
Manufacturing capability remains relatively small compared to peer economies.
Productivity growth has slowed, both domestically and globally.
The transition to net zero and rapid technological change are reshaping global industries and competition.
In short, Australia risks becoming a country that generates great ideas, but sees them commercialised, scaled, and captured elsewhere.
We need to connect what we already do well to a system that delivers impact at scale. A strengthened partnership with the European Space Agency (ESA), enabled through a barter arrangement, provides this mechanism.
ESA operates one of the world’s most effective models for translating research into economic outcomes. Through its juste retour principle, national contributions are returned through industrial contracts, research programs, and capability development, ensuring that investment flows directly into domestic industry, innovation, and jobs.
For Australia, this means access to a mature, coordinated innovation system that addresses many of the structural challenges identified in national reports. And for ESA (and NASA), the language is astronauts - astronauts provide a seat at the table during decision making.
1. Turning research into real-world outcomes
ESA programs are designed to move ideas beyond the lab into technologies, infrastructure, and commercial applications. Participation embeds Australian researchers and companies into mission-driven projects where translation is not optional, but fundamental. This directly addresses Australia’s long-standing gap between research excellence and commercialisation. Projects make things happen - not just agreements or plans. Projects.
2. Creating scale and focus in national effort
One of Australia’s key challenges is fragmentation. Too many programs, spread too thinly. ESA missions are, by design, large-scale, coordinated efforts that align government, industry, and academia around shared goals. A barter partnership provides a focal point for national capability, concentrating effort in areas where Australia can play to win.
3. Unlocking industry growth and high-value manufacturing
ESA contracts flow through supply chains creating opportunities for advanced manufacturing, robotics, communications, data systems, and downstream services. This supports the growth of high-skilled, export-oriented industries, helping diversify Australia’s economy beyond resources.
4. Connecting Australia to global markets and capital
By participating in ESA programs, Australian organisations gain direct access to European markets, partnerships, and procurement pathways which wouldn’t otherwise be possible. This reduces one of the biggest barriers faced by Australian innovators: scaling beyond a relatively small domestic market.
5. Accelerating capability in critical technologies
The technologies required for space (optical communications, automation, AI, remote operations, advanced materials, satellite manufacturing) are the same technologies shaping the future economy. ESA collaboration accelerates capability in these areas, with spillover benefits across sectors including mining, defence, energy, and healthcare.
6. Building a workforce for the future economy
Mission-led programs inspire, train, and retain highly skilled talent. They create clear pathways from education through to industry, helping address Australia’s long-term skills challenge and strengthening the pipeline of engineers, scientists, and innovators.
7. Providing a clear national narrative for innovation
Perhaps most importantly, participation in a high-profile international mission provides something Australia has lacked: a unifying, ambitious goal. It signals that Australia is serious about innovation; not just as policy, but as a national priority tied to economic growth and future prosperity.
Current R&D statistics
Australia is ranked 105th of 145 national economies for economic complexity. From the recently released Ambitious Australia report, Australia derives around 50% of export revenue from selling our natural resources like iron ore, gas and coal, and our agricultural products.
We have one of the lowest shares of manufacturing in the Organisation for Economic Co-operation and Development (OECD). And while mining contributes roughly 10% of gross domestic product (GDP) it directly employs 2% of the workforce.
Comparison of Australian Spend vs OECD Average
2024/5 OECD Spend on R&D: 2.7% of GDP
2024/5 Australian Spend on R&D: 0.52% of GDP
2025/6 Australian Spend on R&D: 0.53% of GDP
What does this mean? We have an over-reliance on commodities, making Australia susceptible to boom-bust cycles. It creates limited knowledge building. We are less able to participate in complex sectors such as AI, quantum and space.