Parliamentary RDI Working Group proposes legislative act to increase funding for research and development

In its new report, the Parliamentary Working Group on Research, Development and Innovation proposes introducing a legislative act on the financing of research and development and drawing up a statutory plan for R&D funding that would extend beyond the spending limits period. The working group also proposes introducing a permanent and more extensive tax incentive for research and development activities.

The Parliamentary RDI Working Group appointed in June has now completed its work. The parties in parliament, all of which are represented in the working group, are committed to the target of raising research and development expenditure to four per cent of GDP by 2030 and to increasing central government research and development funding as needed in order to meet the target. This would require an increase of 1.33 per cent in public research and development expenditure, assuming that the public sector accounts for one third of R&D investments and the private sector for two thirds.  

The working group proposes a new legislative act to increase the funding. The act would set the annual level of central government R&D expenditure in a way that would raise public sector R&D expenditure to 1.33 per cent of the GDP by 2030 under the projected economic development. 

In its report, the working group stresses that introducing an act on R&D funding is a very exceptional procedure that is justified due to the crucial importance of research and development for society. Achieving the target for R&D expenditure will not be possible without investments from the private sector. Much attention should be paid to achieving and further strengthening the leverage effects needed to reach the four per cent target.

Alongside the act, the working group proposes drawing up a statutory plan for research and development funding extending beyond the spending limits period. The plan would specify the policy guidelines for and content of long-term research and development activities and establish basic principles for the allocation of R&D funding. The plan would be prepared in a parliamentary process, and it would further strengthen commitment to long-term research and development funding and policy. The plan establishes the key conditions that must be met during its implementation. 

The working group also proposes introducing a permanent and more extensive tax incentive for research and development activities. The tax incentive would complement direct subsidies for research and development, and international comparisons suggest that it would encourage SMEs in particular to scale up their research and development activities. 

In its report, the Parliamentary RDI Working Group also establishes principles for developing the research, development and innovation system. The set of ten principles constitutes the basic guidelines, jointly approved by the working group, that should inform the development of Finland’s research, development and innovation system in the years to come. 

“The solution we have achieved is pivotal and historical. We would like to thank all of the parliamentary groups and everyone else involved in the work for reaching a common agreement. Raising RDI funding has now been set as a common goal, and we have reached a shared understanding of the concrete means through which we can achieve it. Predictable long-term research, development and innovation funding is the most important single factor in improving Finland’s future growth and wellbeing,” says Matias Mäkynen, Member of Parliament and Chair of the working group. 

The working group’s proposal includes a number of conditions that must be met during its implementation. It is essential to ensure that the set of measures proposed by the working group is implemented effectively and that additional investments are targeted appropriately. The drafting of the legislative act and preparation of the plan for R&D funding extending beyond the spending limits period must begin without delay.

The aim of the set of measures proposed by the working group is to boost competence, productivity and competitiveness, strengthen growth and capacity for renewal, increase central government finances and improve our ability to maintain the welfare society. To ensure that investments in research and development are successful and produce the desired outcome, we also need comprehensive solutions that secure the availability of skilled labour and capital, accelerate the growth of research and development-intensive companies and enhance their ability to utilise international expertise and technology.

Prime Minister Sanna Marin’s Government decided to set up a parliamentary working group to advance Finland’s research, development and innovation objectives in April 2021. The term of the working group was 18 June–31 December 2021.

Inquiries: Matias Mäkynen, Member of Parliament and Chair of the working group, tel. +358 9 432 3059, Antti Pelkonen, Science Specialist and Secretary-General of the working group, Prime Minister’s Office, tel. +358 295 160 533