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Wednesday, 1 November 2000
Page: 21883

Dr LAWRENCE (5:02 PM) —I am very pleased to take the opportunity to speak on the Australian Research Council legislation. It is very timely given that in Canberra this week we have a large number of scientists, working both in the public and private sectors, speaking to parliamentarians. They are trying to convince members of this place that we need to invest more in research and development, that we need to invest more in our public institutions and that we need to provide support for the private sector to engage in research. They are trying to communicate a sense of urgency; a sense of urgency which I must say is sadly lacking in the government.

I was interested recently to take part in a seminar which included, amongst other speakers, Mr Ashley Goldsworthy, who heads the business higher education roundtable. He urged the government—and he is a long-time supporter of the parties that form the government—to get out of denial mode. He urged them to help create a culture of innovation, to proclaim a vision, to identify niches for Australian companies and researchers and, in doing so, to restore our global credibility. I wish the government would listen.

It is clear that we need to recognise as a community the importance of our intellectual assets. The government need to support them. Unfortunately, as we heard again today, they seem more interested in either preserving the surplus for more tax cuts or not providing sufficient funding at all in this area. They do not appear to appreciate the need to accelerate research and development. To give you an example of what the decline has been, in the early nineties there were around 100 major companies which were members of the Australian Industrial Research Group. Today only 45 remain. Industry leaders have been saying things to me like, `They don't appear to be listening. They don't appear to get it. They don't appear to understand the urgency of these tasks.' The scientists who have been with us in Canberra this week are sending the same message. It would appear that even the minister for communications has belatedly understood that there are some problems. Just last week he was reported as saying the government are lagging and need to re-examine their priorities. Hear, hear!

The government should be listening to the Chair of their own Innovation Summit Implementation Group, David Miles. He has outlined in detail and in general what is required. In his report Innovation: unlocking the future, to which we have yet to see a response from the government, he says very clearly what the task is for this nation:

We must begin by grappling with what I regard as an area of past neglect, namely engendering a broad understanding of, and support for, the value of innovation, research and development. We can only achieve our goals of national prosperity and sustainable economic growth by understanding what innovation can do for us, openly acknowledging and rewarding those who achieve it, and by celebrating those achievements as a nation.

Secondly, we must have a world-class research base that will sustain long-term generation of ideas, the lifeblood of innovation.

And not sustained cuts! He goes on to say:

And lastly and most importantly, we must be internationally competitive by translating our ideas into tradeable products, processes and services. With such commercialisation, Australia will be an enviable innovative nation.

That is the agenda that has been set for the government, and they have been urged by as many people as possible to take action. Indeed just recently we saw the extraordinary circumstance where a range of business and science leaders got together to write to the government a public letter urging them to take action, again trying to underline the importance of investment in these areas. These are not costs—I hope the government understand that. Investing in education is a benefit to the Australian community. Amongst other things, these business and science leaders said:

We agree that if Australia is to sustain growth, increase the number of jobs and improve living standards—

all outcomes that I hope we support—

we have to develop and implement urgently an innovation action plan to underpin growth in existing and emerging industries and be a “knowledge-based society'.

It almost appears as if the government do not like to use the word `knowledge'. They think we have actually claimed that territory—and that is right in terms of policy—but we are quite happy for them to claim it too, and Australia simply has to do better.

The Chief Scientist's report The chance to change might, in my view, be renamed `The last chance to change', because this is a very urgent matter. Sadly, when we look at the provisions of this bill, we do not see any of that. There is not one new research dollar provided for in this legislation—not one extra dollar for university research, which since 1996 has been cut by $800 million from the operating grants arrangements. This bill simply rebadges existing funds. There is not one extra dollar, despite all of these urgings. Despite both the criticisms and constructive recommendations of a range of organisations and individuals, some of whom I have mentioned, and despite some rhetoric from those opposite—although not much enthusiasm, you would have to say—the government have not been able to find one extra dollar to invest in university research. The Prime Minister boasted today that he has found half a billion dollars extra to put into private health insurance, but there is not one extra dollar for research. Just think what the universities and research institutions could do with half a billion dollars—they would faint with excitement.

Secondly, this bill spreads the existing amount of money across a broader range of institutions, thereby reducing the net benefit to each institution. The government is talking about competition here. It is introducing a wider range of institutions to compete for the funds without one extra dollar. In fact, it is inviting the private sector to get into the public funds, so that the institutions which have previously been funded from the public purse have to compete with organisations which should, with appropriate government policy, be funding their own research and development. Ironically, after the disastrous impact of the Howard government's decision to cut the tax incentives for private sector research and development, the potential impact of the provisions of this bill will be to force universities to compete with organisations such as Telstra for the same set of funds. That will only drain research funds from our universities, forcing them to engage in commercial competitive practices which at the margin are important, but they should be focusing on what universities do best—learning, teaching and researching, and working with industry to commercialise those research findings where relevant. Universities, colleges, TAFEs and schools around the country need more funding, not less. This is simply another case of the Howard government's attitude which we are now hearing repeated on a number of occasions: learn to do less with more. It only applies to some sections of the community, mind you, but to the education sector, to the research sector, the message is: learn to do less with more.

Under the government's policy, regional universities may eventually be disadvantaged by the government's approach, which only guarantees three years of stability for such institutions. It is impossible to plan under those circumstances. As Kim Beazley has stated, if Australia is going to become a knowledge nation, all in the Australian community must be able to access quality education and educational facilities. There appears to be a view amongst members of the government that if you put more money into elite institutions, elite universities and elite schools, that is a use of which we should approve. But basically what it does is put money where it will do least good. If you put the same dollar into the struggling institution, the poorer school, the effect of that dollar will be far greater in terms of individual and community benefit. We believe that research, particularly that done by regional institutions, is one of the primary keys to building a brighter future for regional centres.

The bill also represents an admission that the number of funded Australian research students is likely to fall relative to the general student population, which is not a message we should be hearing at the beginning of the 21st century. The policy will fund only `up to' 25,000 postgraduate HECS exempt positions, and there are already 25,000 postgraduate students in the system, so it is a no-growth policy.

Lastly, the bill appears to afford—I worried about this, particularly given the current minister—a greater degree of government, for which read ministerial, influence as to the proper `destination' of research funds. We want peer review; we do not want review by the minister. This reduces the independence of the public research sector and runs the risk of stifling innovative use of scarce funds. It will be the government's agenda, not the research agenda.

Generally speaking, as I said at the outset, the government needs to be urged to greater action. This criticism is meant to get action—it is not criticism for criticism's sake. There is an extraordinary amount of consensus now in the community, as I mentioned earlier. Higher education, education, business and research are all speaking with the same voice. The only ones who are out of step are the government. Research and development investment in general has fallen dramatically since the Howard government came to office. Just to give you some examples, cuts to university operating grants of more than $800 million—some say closer to $1 billion—since 1996 have reduced Commonwealth investment in research by more than 11 per cent. That comes from their own budget statements. As a result, the government itself has had to concede that eight regional institutions are now operating at a deficit. The government is going to force our universities to close unless something is urgently done. We have all had representations of that kind. Every member of this place will have had universities come to them and make those claims. Things are stretched to the absolute limit.

The general research spending slump has been largely caused by a collapse in business expenditure on R&D, which was caused by the winding back of tax breaks with no replacement policies. If they want to argue that that is not the best policy, they have to substitute some others. We have just seen a dramatic decline through the absence of policy—a policy vacuum. After reaching a record high of $4.27 billion in 1996, expenditure then fell for the first time, and has continued to slide since then. And the government has been prepared to sit back and take no notice of it. Under Labor, Commonwealth spending on universities as a proportion of gross domestic product grew by 1.2 per cent between 1989 and 1994. It took a lot of effort to achieve that result and policy. Under the coalition, spending dropped to the lowest point since the commencement of Commonwealth funding for universities, at 0.8 per cent of GDP. What is clearly called for, as I have tried to indicate, is a radical approach to dealing with change and the development of effective policy initiatives to ensure that all Australians, regardless of where they live or work, have an equal opportunity to share in the benefits that are conferred by a high skill, high wage economy. The government does not seem to want to hear that. It is quite happy, as Mr Miles said, to have us become a `branch office economy' where all the major work is done elsewhere.

The Howard government's lack of understanding of this imperative can been seen in such actions as its budget cuts to R&D, its attacks on the tertiary education sector generally and its abolition of agencies such as the Energy Research and Development Corporation. Innovative programs have been cut back and most of the policy is ad hoc—a little bit added here to patch over a crack, a little bit there in response to industry, but not much response in general. In particular, cuts to the vocational education and training sector are significantly affecting the capacity of our education system to provide adult and life-long learning opportunities, let alone to provide for the growing number of secondary school graduates entering TAFE and vocational education and training institutions. Yet we will hear the minister boast about the increased funding and increased number of places. I do not know where he gets those figures from—I think they are entirely constructed in a fantasy world which only he inhabits. All the independent data show the opposite.

The recent report of the Chief Scientist, The chance to change, confirms the damage done to science and innovation by these policies, which have left an Australia perceived by the world to be floundering as an old economy and in desperate need of re-invention—and it is not just the Chief Scientist who sees it that way. Australian investment in research and higher education is out of step with those economies with which we like to compare ourselves and with which we are being compared. That is one of the reasons that the dollar is on the slide—not just for our current performance but for our anticipated performance. All of those other countries are investing heavily in education and research and development; we are conspicuously being seen not to do that, and we are being marked accordingly. Governments of nations such as the United States, Britain, Japan, Canada and South Korea have provided very significant increases in their education and research budgets. As I have indicated, Australia's expenditure, by contrast, has declined significantly, and all the international indices show it. The evidence is now there; the government cannot hide behind fudged figures.

Total Commonwealth spending on science and innovation over the past four years has fallen well behind productivity growth, and productivity growth is also slowing, after a decade of improvement. Indeed, spending on science and innovation is now 0.64 per cent of GDP, compared with 0.77 per cent in the last year of the Labor government. As the Chief Scientist's paper shows, we lie third last amongst the developed nations, the OECD, in investment in knowledge as a percentage of our gross domestic product. In the intensity of business research and development in domestic product, we are well down the list at 19th. Government expenditure on higher education has been cut substantially, and public sector institutions are being robbed of funds to provide extra funding for wealthy private schools. That makes no sense at all. It is extremely poor public policy. As a result, the proportion of those graduating from higher education and from our schools is falling for the first time in a decade. Fewer young people are going into science and engineering as a career path, yet we cannot have innovation in the new technologies without them. We are already facing serious shortages of people with information technology skills. They are being poached and taken overseas, and many of them will never come back.

Tertiary institutions, particularly TAFE colleges, face enormous financial pressure and often find themselves unable to invest appropriately in the information technology needed by students and educators alike. Our libraries, particularly with the declining dollar, are under enormous pressure. Those resources cost a lot and are usually in US dollars. The government appears to think that all we need to do is to allow the migration of workers from elsewhere to meet the shortage. However, I believe this is very short-sighted and not likely to happen. Why would they come here at the moment, when we do not have the resources to back them up? The research and development is not going on; the excitement is not here for bright young brains.

Let me give you some examples of that. Many people will be familiar with the name of a young man called Bryan Gaensler, who was the Young Australian of the Year in 1999. I think he gave the government and the Prime Minister a bit of a shock with the speech that he gave on that occasion. In an address at the time, he said:

It's almost as if the Government has announced a “Going Out of Business” sale, and the results have left our higher institutions in crisis—typical across the country are forced redundancies, major staff reductions across the board, increased class sizes, and the merging, and even closing, of various research departments. Enthusiastic and talented students are starting to look elsewhere, because there are no stipends or scholarships available to support them through their postgraduate studies. And an increasing fraction of those who do get the necessary qualifications to pursue a research career are subsequently getting out of the game, in search of a more lucrative and satisfying career path than the frustration of being one of hundreds competing for the few research positions on offer.

Game, set and match. About the same time, he said that he personally, and others like him, would be `absolutely insane to come back to Australia'—and this is a man who loves this country deeply. He said:

Money is not what drives scientists, but you are making a huge sacrifice to come back to Australia.

He also said that the future for Australian science was bleak unless urgent measures were taken. He made this comment nearly two years ago, and still nothing has happened. I think the following comment is a great insight. He said that when we talk about the `clever country', it is tinged with irony about what might have been. We do not really mean it anymore; it is about what might have been. He points to the squeeze on university research and the slashing of research and development tax initiatives as being at the root of these problems.

He is not alone. There are case studies like this all around the country—not just in our universities but also in associated institutions and in industry. One Western Australian researcher that I know well and respect, Professor Konrad Jamrozik, has moved to London. He works in the health area, and he has left Australia because he believes that the resources for researchers and the administrative burdens placed on them made his role here unmanageable. He points out the following contrast:

With the Blair Government in Britain there is a major influx of resources into both higher education and the national health system at a time when the screws are being screwed very tightly in Australia.

You will find many examples of that kind here at the moment. There is clearly a brain drain going on from our universities, and we cannot rely on filling the gaps we have in our skills base with people coming into Australia. We may get some, but they will not replace the high quality intellects that we are losing right now.

All of this, I hope, should send a very clear message that science, technology, innovation and research and development—however obvious they may be to everybody else as absolutely central to our becoming the knowledge nation—do not rate highly with the government. These statements demonstrate why organisations here feel they have no choice but to reduce their spending on innovation and to take their ideas for innovation offshore. No-one appears to care. The government have squandered the opportunity presented by the introduction of this bill at this time, after those many reports and the urging of the science and business communities. They should have taken this opportunity to improve the direction of funding of research investment in Australia.

The Minister for Industry, Science and Resources has been heard to say that the government is currently considering a series of measures to increase university research funding. And what do we see in this bill? The same old Howard government line: learn to do more with less. Let me translate this for the House before I conclude. What the squandered opportunity of the bill actually says is not `learn to do more with less' but simply `less learning, not more'. Despite the growing number of voices calling for urgent action in this area, the government has simply reshuffled the deck of funds. It is doing nothing to meet the urgent needs outlined by the many people who are now concerned about the direction that this nation has taken. It is time for some action.