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Joint Select Committee on Trade and Investment Growth
17/03/2016
Australia’s future in research and innovation

BROWN, Ms Sarah, Policy Director, Research and Innovation, Universities Australia

PERKINS, Dr Caroline, Executive Director, Regional Universities Network

THOMAS, Professor Janette Barbara (Jan), Chair, Regional Universities Network

[09:35]

CHAIR: Welcome. These hearings are formal proceedings of the parliament. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make a five-minute opening statement before taking questions from the committee members.

Ms Brown : Universities Australia is the peak body that collectively represents Australia's 39 universities. There are a number of subgroups of universities in Australia, but all of their members are members of UA, so members of the Regional Universities Network are also members of Universities Australia.

The Australian university system provides the critical intellectual and research infrastructure that underpins national productivity, prosperity and innovation. Our universities deliver excellence in teaching, scholarship and research; support regional economies and communities; transform lives through educational opportunity in research; and have been at the forefront of Australia's soft diplomacy agenda. They provide the building blocks that will enable us to make the transition to a productive and internationally competitive innovation nation. In total, university education added an estimated $140 billion to Australia's economy in 2014. The value of the stock of knowledge generated by university research was estimated at $160 billion, equivalent to almost 10 per cent of Australia's GDP. Universities are central to Australia's ambitions to seize the new wave of economic prosperity and create an idea's boom.

Australia is experiencing significant economic and social change. We are entering a new era in which skills, knowledge and ideas will become our most precious commodities. Successfully navigating these changes will require Australian businesses and research organisations to work in partnership to create the new products, processes and industries needed to secure Australia's future economic prosperity. The low levels of industry research collaboration in Australia are well documented. Addressing this challenge is a key part of the government's National Innovation and Science Agenda. The adjustments to university research funding and the introduction of a new engagement and impact assessment will assist universities to increase our efforts in reaching out to industry and other end users of research in the collaborative effort needed to drive national innovation. This will build on the already significant collaboration occurring between industry and universities, but, of course, we do need to scale this up.

However, changes on the supply side of the collaborative effort around universities must be complemented by commensurate demand-side initiatives to encourage industry to become active partners in the national research and innovation effort. The NISA contains a range of initiatives, but it will be important to scale them up if they prove to be successful. Government policy, particularly through the design of the research and development tax incentive, has an important role to play in serving as a catalyst for change.

Beyond tax incentives, Australia needs to look at the balance between direct and indirect support for business innovation as it is supporting the translation of research. In addition, it is critical we move away from short-term, stop-start approaches if we are to create the long-term cultural change needed.

Prof. Thomas : Thank you for this opportunity. Regional Australia makes a really important contribution to economic growth, national prosperity and productivity and accounts for 40 per cent of the total economic output. Regional universities play a major role in overcoming Australia's geographic, economic and labour challenges to improve trade and investment performance. They are one of the largest and most visible assets in their regions and make fundamental contributions to regional Australia and its towns through teaching and learning, research and innovation, and services.

Regional universities unlock the human potential of one-third of the population who live in regional Australia and they drive regional innovation and regional economic, social and cultural development. They perform a growing share of Australia's highly ranked research, much of which is undertaken in close partnership with regional Australian industries and communities, but they also have global relevance.

The Regional Universities Network consists of regional universities headquartered in eastern Australia and are made up of the Central Queensland, Southern Cross, New England, Southern Queensland and Sunshine Coast universities. We have about five per cent or about 2,000 students doing a higher degree by research collectively. Our universities are relatively new but we are growing and focusing our research profile on areas of relevance.

The research at RUN universities is regionally embedded and applied, reflecting the distinctive concerns and interests of our regions but internationally connected. While they are nationally recognised, our key disciplines are also ranked at the highest international standards in the Excellence in Research for Australia assessment. They cover many of the STEM disciplines, including agricultural science, biological sciences, earth science, pure and applied mathematical science, nursing and other medical and health sciences. The RUN universities recognise the importance of translating research outputs to benefit Australians, and much of the research undertaken at the RUN universities is relatively applied and is performed in close partnership with the users of the research. We make fundamental contributions to regional innovation.

As the mining boom wanes, it is even more important to have economic diversification and innovation in regional Australia. Training skilled professionals to drive industries of the future and undertake fundamental and applied research is vital for innovation and productivity. We have worked together to progress research and innovation in regional Australia in vital national areas such as food and water security. An example is the RUN precision agriculture flagship, focusing on using technology and data to assist farmers in an environment of varying climate, volatile and discerning markets and the need for a highly skilled workforce. We are developing a water landscape future flagship to look at long-term water challenges from a multidisciplinary perspective, including the increasing pressure on water supplies and issues around water quality.

Regional industry, which includes many small to medium enterprises, must be further incentivised to collaborate with universities on research and innovation. We welcome discussions on tax incentives to assist SMEs invest in research. We face the additional challenge in regional Australia that many state government bodies do not invest significantly in research and innovation. University-industry engagement is vital for regional development. A more holistic and strategic policy approach to regional development, which includes developing university-industry collaboration, formally recognising the key role of regional universities or regional consultative committees and making regional universities eligible for regional development funding, is needed. We welcome the government's National Innovation and Science Agenda and its recent announcement that it will consult on revamping regional development policy.

CHAIR: What do you think Australian universities need to engage with the European Union's Horizon 2020 in their research and innovation programs? What benefits do you think we could gain if we were to move our thoughts towards that?

Ms Brown : From the universities' perspective, there are large pools of research funding available through these programs. A lot of the priority areas are very much aligned with Australia's priority areas, so we will get more bang for our research buck if we can be part of those international collaborations and join up to that larger global effort.

In Australia our dedicated support for international research collaboration includes the China fund and the India Fund. Before that we had a more broad fund. A committee inquiry recommended its continuation, but that has not occurred. We are lacking the ability to partner with the leading research nations around the world to boost our innovation efforts and I think, in terms of the work of Horizon 2020, they are very much focused on research translation and on getting the outcomes for research. I think that would also marry well with Australia's approach if we could have better access and be able to collaborate more strongly with those schemes and with those researchers.

Dr Perkins : I was just going to mention that the Global Innovation Fund, which is part of the National Innovation and Science Agenda, may offer more opportunities. Another option of engaging with Europe is via the Pacific because there are European citizens in the Pacific in Noumea. We, as a network, have a signed memorandum of understanding with the Pacific Island nations to try and engage with them in research. That is a potential source of engagement. I mean their interests are quite similar to ours in terms of agriculture, water security and impact of climate change on communities. That is an opportunity too.

Ms Brown : The global innovation strategy is a great part of the National Innovation and Science Agenda. Of course we would like to see it, if it is successful, expanded because it is a relatively small program and we think it should be, if it proves successful, of greater scale.

Dr Perkins : It is still to be rolled out. It is still in the formation process.

CHAIR: Do you need further government assistance in that regard?

Ms Brown : With international collaboration, it is made much easier by government involvement at that strategic level. Researcher-to-researcher collaboration internationally is going wonderfully; there are no issues there. It is about that more strategic level into priority areas; a government agreement and some government funds are really critical for engaging in some of these large programs because it requires that buy in to get the foot in the door.

CHAIR: Are regional universities more apt to look into regional research and development? For example James Cook University and Charles Darwin University, who have their bases in the regional areas. Are they more prominent in pushing for rural research?

Prof. Thomas : The Regional Universities Network is headquartered in regional Australia and that is our prime focus. So regional development and regional research is a key and core part of our business as the Regional Universities Network, but we also acknowledge that the work we do in integrating with our industries and communities in regional Australia has direct applicability globally and, indeed, we have global connections that reflect that. Food and water security research that is occurring in regional Australia has a direct and translatable impact into other nations. The network has relationships in developing nations to that end.

Ms BUTLER: You were listening to my exchange with Professor Kelso. Do you have any views about this question I have around what might be the impediments to not just licensing of IP or agreeing to the divvying up of IP but also getting involved in actual businesses that might be started by people who are looking to commercialise their own research?

Prof. Thomas : I think your comments around this—it may have been one of the other senators—were that this has not been one of our most successful things as an Australian sector, which is true. Some of that is cultural, and the drivers that recognise success in university research have not focused on that. Strategic, ambitious researchers and universities will go towards where the success is located.

In terms of driving the innovation that comes from business and universities working together there are two sides to that coin. On the one hand it is how we change the culture and the mechanisms for rewarding research in universities, and some of that is underway at the moment through things like the Watt review. On the other hand our businesses also have a low proportion of PhD-qualified staff when you look compared to other nations so there is often not the capability within the organisation to recognise and engage effectively with research as well. Making sure we have skilled PhD graduates who are also located in business, who can then work with colleagues in universities, can help drive that quite significantly, alongside other financial incentives that have been discussed. The IP, in my view, follows fairly naturally after relationships have been forged, shared problems have been identified and strategies to solve have been mapped out. That would come, in my view, as part of the contractual arrangements that you might have with a big business as to how you divide up the IP.

Ms BUTLER: I think we might be at cross-purposes. Rather than a PhD graduate going into an established business, I am talking about people starting their own businesses.

Prof. Thomas : Sure. Some universities have had spin-out companies successfully, particularly the more longstanding universities that have been around for 100-plus years; they have spin-out companies that come from them.

Ms BUTLER: I am not talking about the universities having the business. Say I do a PhD and my research is readily able to be commercialised. I think, 'I could solve problem X using research Y and I can do it in a way that makes money.' So I am going to go and start a firm. I am going to scale it up. It is going to be a global firm. I am going to use the benefit I have had from the work I have done in research, for which I have received a grant, for example. You can have an argument about who owns the intellectual property in the research, who the author of it is, on whose time it was produced, how it should be divided up. But I am really saying to you that, if venture capitalists, accelerators and incubators, in return for the initial investment not just of money but of skill and knowledge at the very point they are starting a business, which might be very successful, can ask for some form of return on that investment through a formalised small part-ownership of that business, is there any reason why universities could not conceptually do the same thing?

Prof. Thomas : Again, echoing the previous witness, I do not have any particular expertise in that area, but I would say it is a little bit like the investment that Australia makes in graduating doctors and engineers and accountants and so on—it is an investment that the Australian taxpayer makes in preparing the next generation of graduates, and they then return economic dividend through taxation.

Ms BUTLER: I understand that argument. I graduated from law and I went and became a lawyer. I was a lawyer in Australia for my entire career and I paid my taxes here. But say I had had an amazing business idea that I had scaled up into a global company. You will all appreciate the debate we have been having in relation to multinational taxation evasion. You will appreciate that some Australian companies go and do their IPO on stock exchanges outside Australia. Australia then loses that economic benefit. I think it is a more nuanced and complicated response to people who are establishing businesses than possibly is contemplated by that answer.

Ms Brown : I think there has been well-documented issue in Australia in terms of access to venture capital and start-up finance. I think that is a critical issue and we are hoping that the initiatives in the National Innovation and Science Agenda really help to address that. I still think there is an issue of scale and coordination. Lots of universities have created incubators and accelerators, but they are relatively small in scale. I think the incubator program through the National Innovation and Science Agenda is still quite small as well, and it is a bit of a pilot. What we need to do to make it easier is to have that scale and have the visibility and have it more accessible for our best and brightest so that they can see the path for their business instead of it being such a major challenge.

Ms BUTLER: But I am not asking: how do we make it easier for them to have successful businesses? I am saying that, if they do have successful businesses, partly because of the work that the Australian taxpayer has put into them, we then get a return on that that does not rely on them paying tax here.

Ms Brown : There have been initiatives in the past around that. If you look at the old R&D investment board and the investment it made in Cochlear all those years ago, it had a clause that said, 'When you get to a certain point, you need to start paying that back.' Cochlear basically paid for the entire scheme with their return on that investment. That is one model that Australia has tried. One of the things we have said in the past is that a lot of the issue for Australia is that we do not continue successful initiatives.

We do not continue to back a program and make it so that it is known and available to the business community over the long term. Name changes, changes in criteria and all that kind of thing really reduce the willingness of business to engage with these programs and where you have a scheme where the Australian government can take some of that equity. There are pros and cons around that, and I think, if you look at the UK, with Innovate UK, it had previously all been grants to businesses in terms of building up their innovative capacity, and now it is looking to move more to loans.

Ms BUTLER: Like our CEFC model, for example, you can do loans.

Ms Brown : Yes.

Ms BUTLER: So that is debt funding—I am just trying to conceptualise this. If you are providing grants, you cannot completely go to loans, right? You have to fund research that may never have a commercial application, otherwise you are not doing your job.

Ms Brown : Some of the schemes internationally start with grants and then, as the company matures and they need different kinds of finance, they move to loans at equity things, so they have got a continuum. You have got multiple series of gates that a business has to go through before they are allowed to access the next stage of funding for their innovative business. I think models like that are something that maybe Australia should be looking at, where it is not straight from the beginning, where it is the riskiest, that we move to it being an equity thing—at that point, it is a grant. Later on, when they have progressed down the technology transfer pathway and they have become a bit more mature is when you look at it.

Dr Perkins : The CSIRO Innovation Fund, which is part of the National Innovation and Science Agenda, aim to facilitate start-ups and keep the profits, I think, from that arrangement, so that is keeping money from ventures that are developed in Australia.

Ms BUTLER: And I wonder whether that might be a useful model for universities that are providing early-stage support.

Dr Perkins : They have got an accelerator part of their program. So, certainly, initially, you can test an idea through the accelerator and then, if it is worth developing, it would go to the Innovation Fund and various models of funding could then be looked at.

CHAIR: Moving away from Terri's start-up companies and—

Ms BUTLER: They are not all mine!

CHAIR: I notice that the Australian intake of students has been really excellent in the last couple of years and I think they are our third-highest export. How do we go about attracting more research students and having them retain residency in Australia at the same time?

Prof. Thomas : Very high-calibre international research students are attracted to countries like Australia, and Australia has been very successful in the international education industry anyway, as you have alluded to. The challenge is, I think, some continuity, some certainty, around things such as funding and that area of research being able to be continued in the longer term. I think the previous witness also mentioned things such as high-calibre postgraduate research and staff moving overseas to get jobs. That continuity of funding can challenge researchers, and it is something that universities work very hard to minimise through things like bridging, salaries and so on so, that between grants, they can retain their high-calibre researchers prior to being successful in getting another grant. That is a major attraction, but it is the case that there is a virtuous cycle: success attracts success in the research area. If you are able to retain high-calibre, world-class researchers, high-calibre research students will be attracted to work with those people in those research teams, and so you get this successful virtuous cycle occurring.

CHAIR: Thank you.

Ms Brown : And I do think the initiatives in the National Innovation and Science Agenda around some of the visa provisions for entrepreneurs and all those kinds of thing are very welcome initiatives.

Dr Perkins : And also collaboration with industry on PhDs could also help facilitate ventures.

CHAIR: So you are happy with the current visa arrangements?

Ms Brown : Yes. Universities Australia has worked a lot with the government around the visa system and about making sure that it remains robust and accountable but also facilitates our third largest export industry.

Senator WANG: Could it be further improved?

Ms Brown : The new visa arrangements announced in the National Innovation and Science Agenda are only being developed now, and so I think it will be important to see how they work and how they go, but we certainly welcome the intent. I think it is very important to have visa arrangements that allow us to keep the best and brightest of the students in Australia so that they can contribute to Australia's productivity.

CHAIR: In Australia, do they participate in work programs to help subsidise their costs?

Ms Brown : I will answer more in terms of work integrated learning. That is a key thing the university sector is trying to increase the levels of. Universities Australia, with key business groups and the Office of the Chief Scientist, has a strategy of improving opportunities for work integrated learning. That is also, I think, a key part of our international attractiveness. Our international students are very focused on their future employability and they will choose the country that supports that the most.

Dr Perkins : For PhD students, I think collaboration with industry, industry based PhDs, is quite a good way to retain people in the longer term—because it does potentially give them some employment, as well as allowing them to achieve their PhD. That is a good model we need to continue to pursue.

Ms BUTLER: The talent question is one that goes much further than visas. You alluded to the issue of career paths for academics and what it takes to be successful as an academic. It has been a while since I have looked at an enterprise agreement for academic staff in universities, but, from recollection, they are fairly detailed and prescriptive about publication obligations, workload obligations and so on. What can be done to acknowledge the different types of work that academics are being expected to undertake, while at the same time not further intensifying the already heavy workloads they seem to have? I assume you accept that proposition, but if not feel free to go ahead and contradict it.

Prof. Thomas : I think there are several parts to the workforce that makes up the higher education sector at the moment. As you have described it, that sort of enterprise agreement was pretty much for the continuous academic staff who are on teaching-research contracts. But there are other subgroups of academic staff, including those on research-only appointments, many of whom are contracted staff—three, four or five years at most. They would be dependent on continued research income and research outputs such as publications and the like. It depends which group you are referring to. The sector is moving towards having the academic profile made up of the continuous teaching and research staff, research-only staff, and, now, an increasing number of teaching scholars. It is about making sure that each of those categories are rewarded and recognised as contributing to the sector generally—and making sure that you are getting the best productivity out of each of those groupings. Gone are the days when there was an expectation for every single academic with respect to teaching and research as part of their workload. That is now becoming more refined and sophisticated across the universities. That helps accommodate different workloads.

From the research perspective, which is really the topic here, there are existing substantive academics who take on the role of academic research leaders. They then foster the incoming generation of researchers, many of whom have research-only contracts and aspire to move into a more substantive academic research-teaching position. There is a sophisticated approach to staff profiles and workload management going forward. It is the job of people like me to make sure that is working well. By and large, even with the constraints that most universities face, I think we do a pretty good job of it.

CHAIR: Thank you for coming today and for your submission. If you have been asked to provide additional information, please forward it to the secretariat by 31 March. If the committee have any further questions, we will put them to you in writing through the secretariat.