Budget cuts risk driving Australian government investment in productivity-boosting research to among the lowest levels in the developed world, global figures show, amid calls from Treasurer Josh Frydenberg's for business to invest in innovation to help grow the economy.

The Coalition has slashed $4 billion from research and development (R&D) tax incentives in the past two federal budgets, while clawing back millions of dollars in previously approved claims.

Treasurer Josh Frydenberg: "This is not about providing tax breaks for companies to do what they will be doing anyway, but rather putting the right settings in place to enable them to go a step further and back themselves to grow." Credit:Alex Ellinghausen

Mr Frydenberg on Monday angered business leaders when he challenged them to rethink spending on special dividends and share buybacks and instead back themselves and invest in R&D for the good of the economy.

An analysis of Organisation for Economic Co-operation and Development (OECD) figures shows sharply falling government incentives are already well below those of Slovenia and Greece.