THE AUSTRALIAN FINANCIAL REVIEW
Research black hole plagues universities
By Robert Bolton, Education Editor
12:01AM MAY 13, 2019
The Group of Eight universities say Australia’s R&D capacity is going to take a hit because universities can no longer sustain a funding model which relies on foreign students to subsidise research.
Last week Labor promised in government it would give $170 million tax break for businesses that collaborate with universities on research.
But the G8 said Australia would need to find an extra $20 billion a year in government and private sector money if it wanted to achieve Labor’s pledge of lifting R&D spending to 3 per cent of GDP by 2030.
Chairman of the G8, Dawn Freshwater, said out of the $6.4 billion a year spent by the top universities on research in 2016 only $2 billion came from the government: the rest came from students doing unrelated courses.
Her concern about spending shortfalls was backed by the former chief defence scientist, and now vice-chancellor at the University of Newcastle, Alex Zelinsky, who said research-finance organisations such as the Australian Research Council and the National Health and Medical Research Council were underfunded.
And the government’s former innovation guru Bill Ferris said business was not getting enough government incentive to invest in research.
The G8 warning over its funding model came a week from polling day as both parties avoid big commitments to research.
In the recent budget, the government said it would inject $7.8 billion into the Medical Research Future Fund, which was a scheduled payment, but it took $345 million away from research block grants and shaved money off the Australian Research Council (ARC) and the National Collaborative Research Infrastructure Strategy (NHMRC).
Labor said it would return universities to demand-driven funding and give them $300 million for infrastructure, but education spokeswoman Tanya Plibersek said she was “not anticipating any other large spending commitments in the university sector in this campaign or in our time in government”.
Labor also said it would set up an inquiry into the research industry.
The last straw for the university sector was the $170 million collaboration tax break. Publicly vice chancellors welcomed it but privately said it was half what they had been hoping for and reinforced the thinness of Labor’s research commitment.
One of the university sector’s biggest problems is a lack of infrastructure for research projects.
Universities get 25¢ to spend on infrastructure (in block grants) for every dollar they get for research from the ARC and the NHMRC.
The G8 has called for this to be lifted to 50¢ in the dollar, which would cost about $350 million.
The ARC’s research funding has taken a cut in real terms. It has $760 million to hand out in 2018-19, which is 20 per cent less than the high point in 2012-13. The G8 has asked both parties to restore $200 million in ARC funding.
And it has called for a new “translational fund” to convert university research into practical applications.
The Abbott government created the Medical Research Future Fund to convert medical research practical applications and the G8 said it wanted to see a new fund turn ideas developed by the ARC into practical applications.
Professor Freshwater said Australia was behind Germany, Canada and the UK in its commitment to R&D. Israel spends 4 per cent of GDP on research compared to 1.9 per cent in Australia.
She said this was ironic in view of a report last year from London Economics that estimated research done by G8 universities returned $10 for every $1 of taxpayer money invested in it.
Professor Zelinsky at the University of Newcastle, which is not part of the G8, said he understood the public when they pushed back against research outlays because often they couldn’t see the benefit of money being spent at universities.
The political problem
He said politicians seemed to have lost interest in research.
“I think they’ve done focus groups and no one is responding. I think because of unfortunate politics of a few years ago, innovation has become a dirty word.
“I see Labor is going to give industry a tax cut if they hire a younger person or an old person. Why don’t you give them a tax cut if they hire a PhD?
“And that would be someone who could transform their business. That’s part of the problem. Australian business doesn’t know how to do R&D.”
Mr Ferris, author of Australia 2030, Prosperity Through Innovation, said political leaders had gone quiet on innovation, partly because they needed to spend money on programs like the National Disability Insurance Scheme or reduce tax for lower income earners.
It was hard to see how a Labor government could get to a projected 3 per cent spend on GDP by 2030.
‘Challenge for government’
“That’s a challenge for government, but it’s a challenge for business. It’s a massive increase in the next 10 years.”
He said Labor’s $170 million collaboration incentive offered firms a 10 per cent tax break for co-operating with a university or hiring a PhD. But he had recommended a 20 per cent tax break which was the sort of rate needed to “shift the needle”.
He also wanted to see government focus on direct investment, not only tax breaks.
Co-operative Research Centres were a good example, using government money to finance research projects which encouraged business to collaborate with researchers and attracted other investors into a project.
He said many Australian companies were spending less than 1 per cent on R&D but realistically they needed to be thinking of 15 to 20 per cent. Government could make a difference by identifying the priorities.
Labor said if it gets into government it will launch a review of research. It has nominated former chief scientist and former ANU vice-chancellor professor Ian Chubb to run the review.
The terms of reference relate to interference in the allocation of science and research funding, rather than the overall amount of spending or incentives.
Professor Chubb told The Australian Financial Review: “I don’t want this to be about readjusting the deck chairs. It’s about buying new deck chairs and deciding where they should be put. I applaud that and I’m looking forward to the review, if Labor win.”
Robert Bolton writes about higher education, training, schools and early education.