Senator TIERNEY --Could you describe how the research infrastructure grants mechanism has been changed?

Mr Phillips --The research infrastructure program remains fundamentally intact in its purpose. The research infrastructure block grants, previously known as mechanism A, are distributed according to institutional performance in gaining Commonwealth competitive research grants. Previously, mechanism B related to support for the old CAE sector, and mechanism C related to larger items of research equipment and infrastructure shared between institutions. Mechanism B is now part of the research infrastructure block grant, and mechanism C is now part of the equipment and facilities program. But the purpose remains the same.

Senator TIERNEY --Page 22 refers to a transfer of funds from the ARC of $1.376 million to boost targeted research development. How has this been more effectively targeted to produce research outcomes?

Mr Phillips --This transfer enables the department to increase its staffing and administrative support to the Australian Research Council. It has a particular view to increasing the capacity for analytical support, evaluative support and, to a lesser extent, program support for the major granting programs.

Senator TIERNEY --I am just curious why you have taken out of the ARC pool, because the research that our committee did in the last year shows that the success rates were very low. It was somewhere around 20 per cent for ARC grants. All the evidence we gathered seemed to indicate that that should be around 40 per cent. Forty per cent were really worth funding, and they were missing out. I am just curious why you have moved money out of a pool that is fairly inadequate as a pool of money anyway.

Mr Phillips --The transfer was made at the initiative of, and with the support of, the ARC.

Senator TIERNEY --So it just thought that it would be better to focus on particular areas?

Mr Phillips --It felt that it was important to have an enhanced level of support, analytical capacity and evaluative capacity.

Senator TIERNEY --Can you just explain briefly how that mechanism would then work for that targeted money. You wanted it more on targeted projects rather than just the straight ARC evaluation, where this one is a fraction of a per cent better than that one.

Mr Phillips --The $1.376 million refers to a transfer of both administrative and staffing resources to the department. Those additional resources will be used in the support of the ARC in the delivery of its programs. They will enhance the ARC's capacity to evaluate its programs.

Senator TIERNEY --I misunderstood. So it is actually taking money out of research and putting it into administration?

Mr Phillips --Crudely put.

Senator TIERNEY --Probably very accurately put, I would have thought. One thing that came out of our findings is that the ARC is not properly backed in terms of administrative funding. So more administrative funds for the ARC are very welcome. But I just question why this actually had to come out of research money. Given that you have a low success rate, and people are getting very frustrated because 80 per cent of the projects are getting knocked back, you seem to be accentuating that.

Mr Phillips --As I say, it was at the initiative of the ARC and agreed to by the government.

Senator TIERNEY --Given the choice there was no more money, I assume? Obviously there is no more money if it made that decision. Anyway, I might pursue that one in other ways.

One of our problems in Australia is that a lot of the research and development done here is excellent, but not a great deal of it moves across to be commercialised. It may have moved across to be commercialised overseas, not here in Australia. Are any strategies being developed to turn that problem around?

Mr Phillips --That issue is being addressed not just in this portfolio but in a number of others--particularly by Industry, Science and Technology--in a number of ways. Specifically within this portfolio, I could point to a couple of initiatives.

The most significant recent one is the establishment of the collaborative grants process within the ARC's ambit. That new program involves joint Commonwealth industry research funded projects. It has been very successful to date, receiving applications of very high quality. The ARC, as you will understand, is focused principally in its activities at the basic research end of the R&D innovation cycle. The programs of the Department of Industry, Science and Technology are more focused at the market end. As you would be aware, Senator Cook has announced his intention to deliver a statement on innovation some time next year.

Senator TIERNEY --When you say that those collaborative grants are new, I was under the impression that they are in operation now.

Mr Phillips --They are in operation now, though they have only been place for two years.

Senator TIERNEY --That is what I thought. So what has changed in recent times?

Mr Phillips --More recently than two years?

Senator TIERNEY --Well, you seem to indicate that there has now been some change in terms of collaborative grants.

Mr Phillips --There has been growth in that program. We have had two years experience of that program to know its effectiveness.

Senator TIERNEY --Professor Leon Mann, in the higher education supplement in the Australian on 27 July this year, observed that the generally weak commitment of Australian business and the low mobility of research personnel between industry and higher education is a cause for real concern. So his focus is on mobility between industry and universities. Why is that so low? What can possibly be done about it? Are there any programs to create that mobility?

Mr Phillips --To a certain extent, the collaborative research grants activity will have that effect by increasing the level of interaction between academic researchers and people in industry. In the general higher education sector, there is a capacity for academics to have placements outside their institutions. That is encouraged by the government.

Senator TIERNEY --He is getting at that angle. In America, IBM researchers would work in universities for a time while people from the universities would work in IBM. A few months ago, I saw some excellent examples of that. But we do not seem to have a lot of it here.

Mr Phillips --The cooperative research centres program will enhance that type of interaction in this country. That is not a program of this portfolio.

Senator TIERNEY --The Wiltshire report has come in. When is the government going to act on that report and its recommendations?

Mr Phillips --I cannot answer that question in general.

Senator TIERNEY --In timing. I do not think we yet have a government response to that report.

Mr Phillips --That is not my responsibility.

Senator TIERNEY --The report came into the parliament. It had a huge range of recommendations. I am just checking whether the government has put together a response to them. Does anyone know?

Mr Peacock --I will comment on one of the points you made earlier about research and development. Another pilot program within the portfolio program that was started last year is research and development in Asia. It is a series of fellowships which is specifically targeted towards sending people offshore to take internships with commercial research organisations offshore to develop that capacity of turning their research into a commercial outcome. We gave seven fellowships last year. We expect to give about the same number this year.

Senator TIERNEY --The question was about the Wiltshire report, which came into the Senate about six weeks ago. Do we have a government response to that?

Mr Mutton --Yes. It was in June this year.

Senator TIERNEY --So what action has there been to the responses that the government has agreed to?

Mr Mutton --Most of the action has to be taken by NBEET. There are some legislative requirements and legislation is being drafted. It will be introduced next year.

Senator TIERNEY --Are those legislative changes the sum total of the response to the Wiltshire report? There were recommendations about the way in which NBEET works and that sort of thing that I would assume would not need legislative change.

Mr Mutton --That is right. Most of them fell to NBEET to determine. The minister's view of the report was that it was a bit inclined to try to dictate the minutiae of the way that NBEET organised itself and operated. He was more inclined to note some of the recommendations and ask NBEET to consider them. But legislative requirements and administrative requirements are being implemented.

Senator TIERNEY --Our committee reported on a number of recommendations for research infrastructure in Australia. I think our recommendation was that another $120 million be spent. Given what you have said about the ARC, I do not have a lot of confidence that we are going to get $120 million. Can you just comment on why those suggestions, which were based on a very exhaustive study across Australia and a huge range of institutions, are not being acted on.

Mr Phillips --As you would be aware, the government did agree to continue the research infrastructure program, which had been due to terminate, and augmented it slightly. That was the extent to which the government believed it was appropriate to go within the fiscal constraints operating in last year's budget context.

Senator TIERNEY --Within that increase, across all the different research mechanisms that we saw, there is probably a case for increased funding in all of them. We did not really see that robbing Peter to pay Paul was the way to go. So could you just outline briefly what areas did receive the increased funding, given the various research mechanisms that exist.

Mr Phillips --Principally, it was a continuation of the program, but there was some increase.

Mr Cusack --The original program was around $52.5 million. That went up to $56 million. It is now moving closer to $60 million. The total amount allocated is around $41 million. It goes to the infrastructure block grants program, which replaced the old mechanisms A and B programs, and the equipment of facilities program, which Mr Phillips referred to earlier, which is around $14 to $16 million. The ARC, if it has any spare funds, has the option of allocating a little more to that area. It has chosen to do so on several occasions. These would be $1 or $2 million--small amounts.

Senator TIERNEY --We had in the report considerable concerns about library infrastructure. The Boston Consulting Group recommended that $120 million would be needed to catch up. The government did not allocate that sum. It allocated only a small amount last year. Has there been any increase since that point, or are there any plans to increase library infrastructure?

Mr Cusack --The libraries per se are handled through the development branch.

Mr Creagh --The government has made available through the national priority reserve fund the sum of $5 million to investigate issues relating to system wide library infrastructure. Similarly, in the expenditure plans of institutions for the 1993 quality round and those funds being expended in the 1994 calendar year, another $6.5 million was allocated to libraries. An amount of $18.6 million was allocated to research and research infrastructure, some of which included expenditure on libraries.

Senator TIERNEY --What about expansion of the AARNET facility? Has specific money been allocated for that?

Mr Cusack --The AARNET allocations in the past have primarily come from the old mechanism C, or equipment facilities program. Judgments about networked projects are decided upon by the Institutional Grants Committee, which advises the minister on allocations under equipment and facilities.

Senator TIERNEY --Like the American Internet, in part, this has involved a lot of public money. We are at a stage now where a lot of private providers want to get on to the system. Is any strategy being developed to facilitate this and possibly recoup costs from the private sector?

Mr Phillips --You are moving now into the entire area of the development of the information superhighway and related facilities. As I think you, yourself mentioned earlier, there is the report of the broadband services expert group to come in. The government is developing a broader strategy in relation to the development of the information superhighway and related activities. The position of AARNET will be considered in that broader context.

Senator TIERNEY --I thought the Vice-Chancellors actually made some decisions in relation to further development on this very successful initiative.

Mr Phillips --As I understand it, the ABCC, which owns the AARNET, has decided to introduce progressively a system of user pays for access to AARNET.

Senator TIERNEY --That would be open beyond the universities or are you talking about university user pays?

Mr Phillips --As I understand it, and I am not privy to the full details at this stage of what they are intending, the user pays regime would apply to any user of the AARNET.

Senator TIERNEY --But the big change they have made, is it not, is to have a standard fee, regardless of volume?

Mr Phillips --Standard connection fee, yes. They are going to volume, basically.

Senator TIERNEY --For the private sector as well. There is a decision to deny ARC fellowships to researchers at the ANU Institute of Advanced Studies. Is that still the case or has that been reversed?

Mr Phillips --That remains current policy.

Senator TIERNEY --What is the rationale for denying them access to ARC grants?

Mr Phillips --The decision was taken on the basis of ARC advice that the Institute of Advanced Study is the only section of an institution specifically funded for research activity and fully funded for that purpose. It did not contribute to the increase in ARC resources through the redirection of operating grants beginning in 1988. Therefore, in the judgment of the ARC, given those two factors, it would be inappropriate for the IAS to participate in the competitive grants programs for the ARC.

Senator TIERNEY --You did not indicate when you were giving the different priorities for research whether that extra research money, that additional money, went to the ARC for competitive grants. Is that correct?

Mr Phillips --To its grants program?

Senator TIERNEY --Yes. Did they get an increase?

Mr Cusack --Could you repeat the question?

Senator TIERNEY --Well, it was basically to do with the competitive grant money going to the ARC. A recommendation from our committee was that be increased. Mr Phillips has already mentioned a number of areas of research that did not get increased funding through various mechanisms, so I was just checking whether that mechanism did get an overall increase in funding.

Mr Cusack --I might need to explain some of the complexities of the way the ARC budget looks. There are a number of government decisions that have led to the current package of programs which ARC advises on. Within those programs there are some blocks of programs where there is some discretion to shift funds. The ARC, in looking at the fellowships program, looks at it in the context of other programs that fit within that budget block. The amounts that go to different elements of the ARC programs varies from year to year. The amount set aside for fellowships has not varied significantly in recent times because there seemed to be higher priorities in areas such as large grants and the collaborative program that have been building up; and for certain programs and other programs that come under this program item.

Senator TIERNEY --It seems curious that it is a highly regarded mechanism. It is highly competitive. It is refereed by peers and stuck on about a 22 per cent success rate. Is it not of concern that half the really high quality projects are knocked back?

Mr Phillips --The success rate in the grants program you are referring to, Senator, is 21 per cent this year--up slightly from 19 per cent the year before. The amount of funds to be allocated to the grants program within the suite of the overall ARC's programs is something which the council itself is able to determine. The total sum of funding for research activities through this portfolio of course is a broader decision for government.

Senator TIERNEY --Is not that increased success rate largely due to the fact that smaller amounts have been allocated to slightly more people?

Mr Cusack --The average level this year is $53,000 for large grants, which is the same as last year.

Senator TIERNEY --Okay. I would just like you to comment on the status of the planned cuts to the CSIRO reported in the Sydney Morning Herald editorial of 15 June this year, which said the government was threatening to leave serious gaps in the Australia's scientific research base. I am sure the minister would like to comment on that.

Senator Schacht --Yes. One should not believe everything you read in the Sydney Morning Herald. That is untrue. This has been said before and may be put on the record, I suppose, one more time. There is a sense of weariness about it all.

Senator TIERNEY --I do not think you have said it to us though.

Senator Schacht --In 1989 the government took a number of decisions in the `May Statement 1989', as it was called, to supplement the base funding of the CSIRO, ANSTO and AIMS, the three major science agencies of which CSIRO is overwhelmingly the biggest as far as expenditure is concerned, to make up for what was perceived to be deficiencies in infrastructure and capital expenditure as well as some research. That money was a one-off five-year program to catch up on some of the deficiencies during the previous decade. That program was always a one-off and it ran out in this budget.

In this budget the government approved having a substantial proportion of the one-off funding added to the base funding for this triennium we are now in and for future trienniums. I think that if you took the one-off funding in May 1989 in today's figures it would have been around, for the three agencies, the high $50 million to $60 million. All up, the government--across the three agencies--made a contribution into the base funding of that amount of money of just over $30 million. That part of it is now no longer a one-off. It is now written into the base; into the triennium funding.

I think it should be pointed out when people start saying that this is a cut in government expenditure, particularly for CSIRO which is the biggest and has a budget of around half a billion dollars on appropriation, that CSIRO also raises an extra $200 million-plus from other agencies which pay it to do research, commercial sources, and so on. That is now running at around 30 per cent, which was the government target back in 1990, I think it was.

So even using some of the campaigners for CSIRO, the difference in my view can easily be obtained over the triennium by CSIRO successfully attracting more research funds from industry and from other agencies. This campaign to say that there has been these substantial cuts is just not factual.

CSIRO internally has established its own priority-setting program which Minister Cook has given lengthy answers in the parliament about. There has now been information given on that to the Senate standing committee on science and technology, in its present inquiry, that CSIRO had made decisions to reallocate funds from within its one-line budget to what it believes is the highest priority in outcomes and research in applied research. That meant that some divisions and some institutes may not have got as much money as they liked, but it is a one-line budget that the CSIRO gets for a triennium, and those decisions were taken by CSIRO senior management and the board, not by the government. So if there are some complaints from some people in CSIRO about lack of funding, they are matters that they should take up with the senior management and the board; because they are the ones that made those decisions, not the government.

Short adjournment

Senator MARGETTS --Perhaps I need to comment that, first of all, CSIRO seems to be spending an inordinate amount of time chasing up the funding, so it is actually taking scientists away from their research. Secondly, the more private funding it gets, the less chance it has of an inordinate amount of control over the research and a greater than proportional amount of time is taken out of pure research.

Senator Schacht --This is not the estimates committee that discusses CSIRO, but I will make a couple of comments anyway. CSIRO stands for the Commonwealth Scientific and Industrial Research Organisation. It is an applied research organisation. It is not a pure research organisation. Dr Stocker, the chief executive, on a number of occasions has estimated that at present the pure research done by CSIRO is less than 10 per cent of the total amount of research. Without apologies, that is the way it should be. It is an applied research organisation to help the development of Australian industry to be internationally competitive, technologically advanced, innovative and so on. I do not think you will find any dispute of those views with the board or certainly with Dr Stocker, as chief executive.

Therefore, if it is our pre-eminent applied research organisation funded by the public sector at the national level, it is only appropriate that scientists spend some time consulting and discussing with industry the relevant applied research and so on. In fact, unless they are having contact and spending time on finding out what the marketplace in the science and research area is about, much of their research would not be relevant to the outcome for industry, which creates jobs for Australia.

Senator MARGETTS --That in itself is not in dispute.

Senator Schacht --I think the scientists have to spend some time doing that. It is time well spent, in my view, because CSIRO, as an applied research agency, can make better connections with what industry wants.

Senator MARGETTS --I guess I am talking about writing submissions and doing that sort of--

Senator Schacht --Why should the scientists not write submissions like everybody else and go through a process of some contestability about the relevance of their research and their capability? That makes them better scientists, in my view, rather than worse scientists. Their going through some sort of process of having to refine their processes and abilities to explain to industry why they ought to be employed under contract to do relevant research for industry makes them better. That is an excellent outcome, not a negative one.

It has been raised here that probably no more than $20 million a year of the one-off May 1989 funding was not continued. That is $20 million out of a budget of well over $700 million a year. If you are suggesting to me that $20 million--

Senator MARGETTS --Adjusted for inflation?

Senator Schacht --It is even adjusted for inflation. With our low inflation rate at the moment there is hardly any adjustment at all, but $20 million out of $700-plus million a year in my view is not, taking the straight attitude of some of the protagonists in this debate, in any way a catastrophic adjustment. CSIRO would need to make only a couple of further industrial research collaboration programs to raise that money.

The third thing I want to say is that, yes, there have been some redundancies in CSIRO, but each year 600 to 700 people come and go from CSIRO as projects run out and new projects are started. That is the way it should be. If you want an open, innovative and dynamic organisation, you will have to have that number of changes going on. If you have a major research program in, say, minerals and you have a new program coming up in fisheries, presumably a scientist in the minerals area may not be appropriate to be employed doing fisheries research and vice versa. So there will obviously have to be flexibility in that area. I and the government make no bones about the fact that CSIRO is the pre-eminent applied research agency of Australia.

Finally, I want to mention the total budget for research. If you combine the money that we spend in my portfolio of DIST on research and that which DEET, Defence and DEST spend, the total federal government outlay for public sector contributions to research is now well over $3 billion per annum. It rates us about fifth or sixth in the OECD table.

Our biggest weakness in research in Australia is getting more private sector investment in R&D. Comparing the public sector percentages with the OECD average shows we are well up at the top of the table. Unfortunately, at the private sector level we are down towards the bottom of the table. If we could get the private sector up on R&D to a more appropriate level, we would be all better off.

One of the policy measures the government produced six or seven years ago was allowing the private sector 150 per cent tax deduction for expenditure on R&D. That is now starting to shift. More resources in the private sector are going into R&D, which is also opening up the economy to export and being export oriented. A lot more industries realise that to maintain their competitive edge internationally in the market place for exports they have to have relevant R&D. If you talk to the 700 companies that McKinsey identified last year as the new born global exporting companies, you will find that they usually rank expenditure on R&D as being their first, second or third top priority for their long-term future. So a change is going on, probably not as fast as most of us would like, but there has certainly been a big improvement.

Senator MARGETTS --I wish to ask you some questions in relation to page 98 of the DEET report. I also have questions which relate to pages 13 and 65 of the NBEET annual report in regard to the Boston Consulting Group's recommendation, which obviously the committee took up in its report, that at least $125 million go into university infrastructure to maintain research quality. I am trying to find out about the government's decision to increase it by $3.4 million and $7 million consecutively. The answer that was given was that it was last year's budget constraint. But I want to find out how the decision was made for those figures.

Mr Phillips --The decision on the continuation and the level of the program was made in the normal part of the process of the budget cycle through a new policy bid from this portfolio which was considered by the Expenditure Review Committee.

Senator MARGETTS --So your policy bid was for the full amount?

Mr Phillips --I do not think it is appropriate for me to comment on decisions which were taken by the ERC.

CHAIR --Does the minister want to add anything to that?

Senator Schacht --It is the budget process. In the broader context, the cabinet is setting priorities, as we repeat ad infinitum, and made judgments. As all ministers find out from time to time, you do not win everything that you would like.

Senator MARGETTS --Perhaps I can put it in a different way. Does the department agree that an increased investment is needed to maintain research quality up to at least $125 million?

Mr Phillips --If you are asking whether we accept the detail of the Boston analysis and the full methodology, I could respond that we have some points of difference about the methodology. In terms of quantum and government decisions, my earlier answer stays.

Senator MARGETTS --In terms of the government's response, from your point of view why was there not a longer cumulative amount? It has two small amounts consecutively. Given that there may be budget constraints from year to year, why was it not considered that there might be a cumulative amount approaching where the need was identified over a long period?

Senator Schacht --I am not a member of the ERC, so I have no access to its thinking on this issue. I was not in the room. Again, I think any argument about the allocation of funding is in the budget context. My colleagues can make judgments about the priority setting. They judged accordingly in the broader context. We could go round and round on this, and I will just keep saying the same thing. Every department puts up obviously well thought out submissions. But, in the broader macro-economic settings of the budget allocation, we all know that we do not win everything. There are always plenty more good ideas and proposals than there is money available if you want to keep your macro-economic settings in a reasonably good order. That is always the No. 1 priority for the government and particularly for the ERC.

Senator MARGETTS --I guess the reason this point is being laboured is that, if it was the opinion of the Boston Consulting Group and the committee that to maintain research quality you need at least this amount, that decision means that there is an acceptance that you can afford to let research drop in that sense.

Senator Schacht --As I said in the other answer I gave, we are spending--the figures would have been available to my colleagues and are available publicly--over $3 billion a year from the national budget in one form or another on research.

Senator MARGETTS --Does that include tax rebates on those R&D--

Senator Schacht --Yes, that is where the $3 billion comes up to. A lot of people would argue that the biggest issue we have to deal with is getting the private sector investing in R&D. The most important thing we can do about that is give this tax concession of 150 per cent. I have to say that when it was introduced it was a pretty big battle to get it accepted because certain agencies in the central level of the government did not think it was a very good idea in view of the revenue forgone. I think the revenue forgone on the 150 per cent tax concession is now running at $300 million a year. I think the government quite rightly has made the decision that the No. 1 priority is to get up the R&D level of firms doing their own R&D. But, even allowing for that, we have maintained public sector level of investment in R&D at a very high level. We hope the emerging trend in the private sector will continue for the rest of the decade so that we are competitive with comparable countries in the OECD on the overall spent on R&D.

Senator MARGETTS --I will go back to the mechanisms for this university research, but just to follow that up--

Senator Schacht --Just hold on a minute while I ask Mr Phillips what we spend and the ARC and universities as a general allocation spend on R&D.

Mr Phillips --There are different ways of cutting up that cake, of course.

Senator MARGETTS --Yes; that was to be my next question. Can you give us an idea of how that research cake, in terms of the research and development for industry, changed over a year or so before that 150 per cent deduction was put in place up to now? How is that industry based R&D funding progressing over time?

Senator Schacht --As I understand it, it was tabled maybe last year or this year in the statement that was tabled as part of the budget. The science statement gives detail. We will draw last year's and this year's to your attention. We try to draw from all portfolios the total spent on--

Senator MARGETTS --That is broken down?

Senator Schacht --It is broken down. I will not be held to an exact figure, but I think when the report comes through the money is separate from the ARC allocation and so on. Taking the moneys that are made as general grants to the funding of universities where the universities make judgments and have a budget for R&D they allocate to their faculties, that expenditure, along with the ARC allocation, is around $900 million.

Mr Cusack --It is around $1 billion, but there are different ways of calculating it.

Senator Schacht --But give or take which way you calculate it, all up for the ARC plus that allocated for the universities out of the DEET portfolio it is about a billion dollars, which is not an insignificant sum. The argument may well be that what the universities are spending that money on in making their own judgments about where they spend their R&D expenditure is their own choice. It is certainly arms-length from government, but it is R&D and it is calculated as research dough.

Senator MARGETTS --With the change of mechanism in the merger of mechanisms A and B, research infrastructure block grants, does the department believe--and we have been visiting this a little bit--that the X colleges who used to be funded under mechanism B can compete on an equal footing with the older universities?

Mr Phillips --Yes.

Senator Schacht --Most certainly, yes. In fact, I have spoken to some university vice-chancellors who have come from the old structure, from CAEs and so on. They think one of the great advantages of becoming a university is now being able to compete to get access to research funding, and they are becoming and more competitive about it. I have heard the complaint from vice-chancellors of the older universities that this is a bit unfortunate because they have got more competition for the research dollar. But there are some very good examples. The newer ones are not yet getting anywhere near the funding that the older universities, with long histories, get. But they are growing rapidly and it is based on competitiveness and contestability of your proposals--and that is the way it should be.

I will give you an example. If you go to the University of Central Queensland, which was formally a CAE, within a matter of four or five years as a university, it is now pulling in several million dollars a year on research in the area it is targeting; that area is issues relating to tropical agriculture and the tropics. It would never have had access to that money before. But it is competing successfully within a few years of being established as a university.

Senator MARGETTS --This obviously is a question on notice: can someone provide me with the amount of research infrastructure funding, for the years 1993, 1994 and 1995, for each university in Australia?

Mr Phillips --Yes.

Senator MARGETTS --Thank you.

Senator TIERNEY --There has been a report that the international citation index for Australian research has dropped over the last few years. Is the department looking at that or has it perhaps established some of the causes for that drop in our citation index rating?

Mr Phillips --The report you are referring to is one which was released recently by Paul Bourke and one of his colleagues at ANU. It shows a decline in the proportion of international citations going to Australian research. Bourke himself in that study does not attempt to speculate on any reasons behind that change. Also in his public presentations of that study he has not been able to speculate on reasons behind that change. The department is examining that report and, in fact, we have commissioned some further research to try to get behind those figures.

Senator TIERNEY --In terms of a report being available, what is the time frame of that?

Mr Phillips --I think we will have further data available to government in the early part of next year. There has been no decision taken at this stage as to whether there will be any further public reporting on that matter.

Senator TIERNEY --Last week on 9 November, in the Sydney Morning Herald, under the heading `Reforms put teaching at risk, says academic', Professor Peter Karmel said that reforms focusing on research to generate income result in underinvestment in basic research, and that is prejudicing Australia's standing in international scholarship. Have you had time to react or form any view on Professor Karmel's comments?

Mr Phillips --A number of points are caught up there together, I think.

Senator Schacht --You will probably say he is wrong.

Mr Phillips --It might be easier to disentangle them.

Senator TIERNEY --He is basically saying that the way in which we are moving with research in this country, particularly with the emphasis in universities of generating income, is putting teaching at risk. I assume that he means because effort of academics has shifted. That same shift means that, with chasing the dollar, there is less emphasis on basic research. This is Professor Karmel's comment. I am just getting a reaction, that is all.

Senator Schacht --I think the reaction is that this is part of an ongoing debate on the balance between teaching, pure research and applied research, which will never end. The fact that there is a healthy debate about it means that the system is not too bad, I suppose. It is as though you have to be an agnostic in this area, in that there is no perfect faith. There is an argument that will wax and wane about this. So long as the debate is healthy and all sides get their oar into the water, I think we are not too badly off. We have heard arguments before, for example, about how you should separate teaching and research at universities--`You should employ people who are good teachers, and let the people get on who are good researchers.' Other people say, `No, no, if you separate them, you end up with a no good outcome with either; you should mix them both up.

Universities want to try to find where they can get commercial outcomes with their research. They want to do this not only to raise funds but also because seeing a commercial outcome with research is very good motivation in that it will mean a more productive society at the end of the day. It is a matter of these universities making judgments about how they put their funds to work. I do not think we should discourage them from being involved, where appropriate, in applied research. But Professor Karmel is a very distinguished figure in education circles in Australia. He is probably pre-eminent in many ways. But these are philosophical issues which every estimates committee between now and until the Senate is abolished, will be--

CHAIR --Don't hold your breath.

Senator Schacht --Occasionally, I fantasise that one day before I die it will occur, but I am probably not going to be given that joy. Nevertheless, I am making the point that I recognise the fact that the abolition of the Senate is highly unlikely; therefore, I think it highly likely that at every estimates committee, between now and when it is abolished, we will at some stage have this discussion; it is healthy. But it is a bit hard to put it on the officials and, say, get stuck into Professor Karmel or somebody else. You can ask me to have a go, or the minister. But I think these are philosophical issues rather than issues dealing with estimates and expenditure.

Senator TIERNEY --With the exception that you do have a declining citation index, which would back what Professor Karmel is saying. Even though you say you can debate what the balance is, if you have a declining citation index, it probably indicates the balance is a bit out of skew.

Senator Schacht --Again, I have heard the other argument too: that a person's status as an academic is based on the number of publications and citations they have. If that is the only measure, if you base a person's status only on the ability to publish and the number of citations they have, we are in a bit of strife because how do you measure their ability to be a teacher? Again, there is a big argument about that. You cannot use a citation index as the only measure of the health of our tertiary education.

From an industry point of view--and I am in that portfolio--I would rather have one publication. If someone has only had one publication in their life but it had earned Australia $1 billion, I would have to say--rather narrow mindedly, you might think--that that is an outstanding citation, compared with somebody who had published 100 of which not one had led to one extra dollar of improvement in economic growth or the society; that they were just nice esoteric pieces of research but had never led anywhere other than just having been published.

I might be considered a bit of barbarian in some quarters of academia with that sort of view, and I suspect I am. But as far as the economic future of Australia is concerned, with someone who publishes once which leads to a big economic outcome, I reckon we ought to give them an Order of Australia, plus a percentage of the billion and say, `Here is an example that everybody else should follow.' But, again, I suspect Professor Karmel may have a different view about it and will produce learned documents to say that this is all wrong. But how do you measure a good teacher?

Senator TIERNEY --We are going to find out, are we not, with this new quality assurance?

Senator Schacht --Yes, of course, and that is the way to go.

Senator TIERNEY --Good luck.

Senator Schacht --It is better than nothing. It is better than trying to measure the basis of a teacher. A good teacher is only there on the basis that he or she had a lot of publications or citations. That is just as narrow and as limited as a number of other things that may be raised.

Senator TIERNEY --The cooperation research centre concept has basically got a good press, but I have heard some evidence that industries involved in those cooperation research centres are not pulling their weight in a number of areas. Do you have any concrete evidence of that?

Senator Schacht --The CRC is run by DIST.

Senator TIERNEY --I realise that.

Senator Schacht --I think that is a more relevant question for the DEET estimate hearing which was held two days ago. But, very quickly, the argument about private sector involvement in the CRCs is the nub issue of how you can get private industry to invest in a project with science agencies looking at an applied outcome on a specific project. For industry, it is a new concept because often they are asked to be in a CRC with their competitors. They are afraid that they may give away competitive advantage by being in an arrangement with the same industry, their natural competitor. I think some of them understand that there are more advantages in this area of collaboration than about losing some competitive advantage or competitive knowledge.

In the last round of CRCs, which, is now being considered by the appropriate committee, I think about 21 are being considered by the committee at arms-length from the government. We made it clear over the last 18 months when calling for these applications that we would like to see higher levels of commercial commitment in the percentages of the partnership, and that will be a matter for the review committee. I have had a brief look at the descriptions of the applications, and I think there is an increase in commercial commitment compared with the first round. I think there is a growing awareness from industry that the CRC concept has a number of advantages.

We have said from the outset that, with these 10, we will have 60 which will have been funded by the government by the end of next year. We have always said that some will fail, but that will not be a sign of failure of the overall program. It is designed that there be a failure. If you do not make it, if you do not cut the grade, you do not come back to the government for more funding or more time. You get seven years of federal government funding. By the end of that seven years, we hope those CRCs will have established a track record that will attract private investment and further commercial activity that can fund their activity.

At the end of the seven years, there is no more funding from us to keep them going. They all understand that. They all know that there is a sunset. That is unequivocal; it will come after seven many years. When you go to a CRC and talk to the staff, unlike a lot of the other institutions, the sunset clause is very much in their minds. They know they have to achieve a commercial outcome, otherwise they are out of a job. That is what the CRC program is about. Professor Slaytcher and others put it together. That was the concept, and I think it is correct and the program is working very well. If you want to go and see some good CRCs, we can certainly arrange that.

Senator TIERNEY --I have done that. Some of them are excellent.

Senator Schacht --Some of them are not probably as good as they should be, but that is the nature of the program.

Senator TIERNEY --The strategy that you have indicated to increase business involvement or funding will obviously roll through seven years. You will eventually get there over that time, but is there any mechanism for revisiting some of the earlier 60 CRCs? Obviously they are negotiated agreements, but is there any way in which they can be changed to get this higher involvement.

Senator Schacht --That is up to them. There is nothing to stop them going out and looking for partners. We encourage them to do so to keep evolving. Each CRC that I have seen, visited or talked to has a different corporate or organisational structure to suit the nature of the project. All evolve as they see the need to respond to industry. Some of the structures, after four years of operation, are more than halfway through the life of the first seven years of our commitment and are quite different in their structure and operation than when they first started. There is nothing to stop them restructuring themselves by attracting more partners. Some have had partners drop out. They found the research was not what they wanted or was not quite relevant and have attracted others. That is the way it is evolving, and we are pleased with that attitude because it shows flexibility in that they are not sitting still.

[4.50 p.m.]