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Wednesday, 1 November 2000
Page: 21814

Ms JULIE BISHOP (11:25 AM) —It is timely that on the day that we celebrate `Science Meets Parliament' we debate legislation that represents the fundamental reform of research funding structures in Australia. This is a move that will benefit Australian researchers and the institutions, firms and country that they serve. I believe it was Bismarck who noted in 1867 that politics was the art of the possible. But it was Peter Medawar, writing a century later in the New Statesman, who retorted that research was the art of the soluble and that both were immensely practical-minded affairs. In the debate before this House today we see these two immensely practical-minded affairs running side by side.

Amidst the attention directed to the Sydney Olympics over the past month or so, questions of research and development and of general scientific endeavour have been receiving much attention and many varied responses. Some commentators have had cause to laud the achievements of nations such as Ireland and Israel and, by extension, policies that governments in those nations have adopted. Others have called for more tax breaks for R&D. Others have called for the scrapping of existing tax breaks. Still others have sought a greater commitment from industry on business expenditure for R&D, as it has fallen as a proportion of GDP over the past decade. Yet, amidst the clamour to comment, the success of the coalition government in rescuing Australia from an R&D quagmire has been somewhat overlooked. During the term of the previous government, business expenditure on R&D in Australia was 25 per cent lower than the OECD average, and Australia slipped to 24th in the OECD on this measure. Despite the posturing of the opposition today on its alleged funding policy and despite its posturing over the past month with regard to the CSIRO, it is salient to recall that CSIRO's research program was compromised in the 1995-96 cut of $60 million in triennial funding. At the same time, research infrastructure in our universities was running down to a level that the Boston Consulting Group would later indicate required at least $125 million in annual funding just to restore it to a level approaching international competitiveness. Particularly ill served by the previous government's R&D policies were the burgeoning new economy industries—communications and information technology. As an illustration, in 1995 Australia had to import over $20 billion worth of technology. That was Labor's legacy. Judge them by what they do, not by what they say.

Recently the Minister for Communications, Information Technology and the Arts was able to tell an audience in Sydney that three highly respected international studies had praised Australia's recent economic and research progress. The Goldman Sachs July 2000 `Global Economics' paper concluded that Australia was `tech-literate', and the recent OECD Growth Project singled out Australia as one of the six truly fast-growth economies of the 1990s. The global ranking system of Merrill Lynch had Australia in a tie for second place overall and third behind the US and Sweden in the crucial category of technology. Interestingly, one of the three key variables in that ranking was R&D spending as a share of GDP. R&D is central to maintaining and enhancing this reputation for excellence, and that is why this government has invested so heavily in the National Innovation Summit, establishing the Innovation Summit Implementation Group, and why the government has sought to determine how best to reform our R&D institutions and policies.

On 21 December last year, the Minister for Education, Training and Youth Affairs released Knowledge and innovation: a policy statement on research and research training. This new framework for the provision of research funding at the higher education level included stronger incentives for industry collaboration, a new quality assurance system, better quality training with improved completion times for postgraduate study and an additional $10 million for research into issues facing rural and regional Australia. The framework itself complemented the earlier Wills review of medical research and the reforms implemented under the Ralph review of business taxation. A key feature of the report was the number of recommendations in relation to the Australian Research Council, the ARC. The ARC was founded in 1989, under the Employment, Education and Training Act 1988, and it has advisory responsibilities to the minister on the distribution of research funding. The specific recommendations of the Knowledge and innovation report relating to the ARC included the re-establishment of the ARC as a properly independent body with a broader membership and a more strategic role, and the transfer of the management of current targeted research grants to the ARC, whilst retaining a balance between basic and applied research.

The bills before the House will implement the important reforms identified by that report. Specifically, the government's reforms to the role of the ARC include: enhanced responsibilities in the provision of strategic advice to the government on research in universities; transferring the management and administration of the programs, under a new national competitive grants program, from DETYA to the ARC; and new governance and structure arrangements for the ARC, reflecting the need to link university research with the innovation system, increase flexibility and responsiveness in research programs and improve the capacity to identify and respond to emerging needs of research excellence and national priorities. The ARC will be reoriented, established as an independent agency within the Education, Training and Youth Affairs portfolio. So, its clear role will be as the provider of strategic policy advice to the federal government on matters related to research in our universities. The ARC will also be required to fulfil a somewhat different but very important role, that of increasing awareness and understanding of the outcomes and benefits of research amongst all Australians. Under these reforms, the ARC will also be given the responsibility of administering a new national competitive grants program. Through peer review, the ARC will be better able to identify and respond to emerging areas of excellence in research.

An important reform of the ARC will be the appointment of program managers heading up six discipline areas: biological science and biotechnology; engineering and environmental sciences; mathematics, information and communication sciences; physical and earth sciences; social, behavioural and economic sciences; and humanities and creative arts. This is a particularly significant reform that brings the ARC grants administration into line with international best practice as these program managers will oversee the conduct of the peer review process that underpins the new programs, Discovery and Linkage, to which I will refer in a moment. They will liaise and communicate with the research community and users of research and they will identify emerging disciplinary and cross-disciplinary developments.

The reorganisation of the ARC's funding schemes into the two programs, Discovery and Linkage, reflects the ARC's and the minister's view—as articulated in his report—of the two important but interrelated roles for the ARC in the Australian innovation system. They are to foster and support basic fundamental research—the seed corn of the innovation system—and to foster and facilitate linkages between that basic research enterprise and the balance of the innovation system here and overseas. The specific objectives of the programs are worth recording in this place. For the Discovery program they are to support excellent fundamental research, to assist researchers to undertake their research in the best possible conditions, to expand Australia's knowledge base and research capability, and to encourage research training. For the Linkage program they are to encourage excellent collaborative research, to contribute to a strong knowledge economy, to create opportunities for cooperation, to facilitate international linkages and to encourage industry oriented research training.

I am indebted to Professor Michael Barber, Pro Vice Chancellor (Research and Innovation) at the University of Western Australia in my electorate of Curtin, who has confirmed to me that these reforms are exciting not only for the ARC but for the university sector and the nation generally as they will establish the ARC as a potentially very effective national research agency that will operate in line with international best practice and will be able to support strategically Australia's innovation system. Professor Barber has indicated that the Discovery program is particularly important for Australia since the university sector is the major player in basic fundamental research in Australia and the ARC is the major funding agency supporting such research. There is an interesting study that was jointly commissioned by the ARC and the CSIRO which analysed the USA patent register. Apparently, 91 per cent of private sector Australian invented US patents cite publicly funded research as their basis, with 58 per cent from the universities. Those are pretty significant statistics. From my discussions with Professor Barber and others at the University of Western Australia, as well as with people at the CSIRO, I am able to say that these reforms are supported strongly by the Western Australian research community.

The member for Dobell raises the issue of funding—as argued for by the Innovation Summit Implementation Group and by the Chief Scientist in his response to the government's request for a science capability review. While there are and there will always be enormous competing demands for funding and in the allocation of priority funding, I will certainly support any funding increases that recognise the importance of science, engineering and technology for the future wealth and development of Australia.

There are a number of examples of excellent research by researchers in Western Australia who have had the benefit of ARC funding. I mention just two by way of demonstration of the benefits that can flow to this country. The Centre for Offshore Foundation Systems, one of the ARC's special research centres funded at approximately $800,000 per annum, undertakes fundamental research into the mechanics of seabed sediments and into novel foundation systems in such soils. It is of immense importance to the development of the North West Shelf. The centre now has international links with other major centres of offshore engineering in Oxford, Tokyo and Texas. Professor Mark Randolph is a true world leader in offshore engineering and the work being done at this centre is a great example of the world-class research that is of fundamental importance to Western Australia and therefore, of course, to Australia.

Secondly, I mention Professor Paul McCormick and the Research Centre for Advanced Materials and Mineral Processing, which works in the area of materials science and engineering, particularly aimed at adding value to the Western Australian mineral industry. One of the spin-off companies owned by the University of Western Australia has just ended a joint venture with Samsung Corning to commercialise technology that was developed in the centre in Perth. Samsung Corning will invest $7.5 million to build a pilot plant in Perth to make nanoparticles, which are apparently very important in the development of materials and devices that underpin nanotechnology, described by many as one of the next enabling technologies of the 21st century. So these are just two examples of Australian Research Council funded research contributing directly to the wealth of this country.

The Minister for Education, Training and Youth Affairs announced yesterday the $210 million in federal government funding for new research grants for 2001-03. There will be funding for 1,300 new projects in all of the six disciplines of the ARC programs, including research into the semiconductor industry, quantum computer technology, information technology and the finance industry in the area of e-commerce, as well as industrial relations, child reading disabilities and crime prevention strategies, so it is a very broad cross-section. I believe that increased funding, together with a reform of policies, programs and structures, will be essential for Australia to reap the benefit from the proposed changes to the Australian Research Council. I also believe that there is no substitute for significant new investment, as well as incremental government funding that maintains existing programs.

The minister has commented in this place that insularity is an enemy of innovation. By restructuring the Australian Research Council, researchers and industry will be brought closer together, to the benefit of Australian R&D generally. The ARC board is to include eight appointed members from across industry, academia and the wider community, joining five ex officio members, including departmental secretaries, the Commonwealth's Chief Scientist, the chairman of the NHMRC and the chief executive officer of the ARC. That CEO, a new position, will be a person who combines talents in research and management and brings those talents to the service of the Australian Research Council. To better measure achievement and progress, the ARC will produce for the minister an annual strategic plan outlining the objectives for the following three years. Performance indicators will be used to gauge how those goals are being achieved. Furthermore, the second bill we are considering will create performance based block funding schemes for research and training purposes in accordance with the recommendations of the Knowledge and innovation report.

As a result of all these changes, the ARC will be better equipped to serve Australian researchers. The reform of the council continues the coalition's good work on R&D in Australia. That commitment to R&D is now bearing fruit in areas that I canvassed earlier, such as communications and IT. Nonetheless, there is still much to do. While public expenditure on research and development in Australia is higher than the OECD average, 0.84 per cent compared to 0.71 per cent, industry expenditure is still 62 per cent of the OECD average. The onus really is on the corporate sector to become research and development champions. I believe we should be comparing our trends not just with the OECD average but with trends in other comparable advanced economies and societies. As the director of the White House Office of Science and Technology, Dr Neil Lane, has said:

The federal investment in science and technology is about as good an investment as you can possibly make with the American taxpayer's money.

I happen to concur with that view with respect to Australia. But we also need a change of attitude from the corporate sector in terms of business expenditure on R&D. As a matter of fact, Dr Lane will be a keynote speaker this evening in Parliament House, and I very much look forward to his further comments on the United States experience. Hopefully, the substantial reforms to business taxation in Australia implemented as a result of the Ralph review will also go some way towards remedying current trends in research and development, although, as I said, we require the corporate sector to become champions or sponsors, not just seeking R&D for the purposes of tax matters. So, as science meets parliament on this day, I commend this bill to the House.