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Thursday, 5 April 2001
Page: 26534

Dr KEMP (Minister for Education, Training and Youth Affairs and Minister Assisting the Prime Minister for the Public Service) (10:56 AM) —I move:

That the bill be now read a second time.

It is now widely recognised that innovation is one of the keys to economic prosperity and will be a major driver of economic growth in the 21st century. That is why we must grasp the opportunity now available to further develop the partnerships between the education, research, business and government sectors necessary for Australia to generate and act on ideas. This bill is an important step in the implementation of a comprehensive strategy that will see Australia harness its talents and resources to remain a nation at the forefront of innovation.

Innovation can be described as the process of developing skills, generating new ideas through research and turning those ideas into successful commercial outcomes. Government has two roles to play in a successful innovation system. Firstly, it must provide the economic, tax and educational framework that will allow innovative businesses to operate effectively and to ensure that people have the right skills and knowledge. Secondly, it must provide direct targeted support in areas where private sector funding is not appropriate or available. This government is delivering on both these fronts.

During the term of this government our economy has enjoyed an unprecedented period of economic growth, averaging 4.5 per cent in the last three financial years, coupled with low inflation and impressive employment and productivity performances. We now have an internationally competitive taxation system, with low company tax rates and a GST to replace the former inefficient indirect tax system. We will soon have a new capital gains tax system that will encourage entrepreneurial behaviour. On the education side, the real value of the Commonwealth's investment in education has risen from $9.4 billion in 1995-96 to $11.1 billion in 2000-01.

In January this year, the Prime Minister announced a package of measures, the government's innovation action plan, Backing Australia's Ability, that are the next steps in the government's strategy to directly encourage and support innovation. The current bill deals with the elements of the innovation action plan that are to be delivered through Australia's high quality higher education sector.

Universities have a vital role in the innovation system. They are the nation's leading providers of training for our future research work force and generate much of the new knowledge that drives innovation. Although our investment in higher education research and development as a share of GDP is already high by international standards, the government has recognised that further investment in higher education research, research infrastructure and skills development is needed.

This bill provides the first instalment of the $1.47 billion in additional funding being provided over the next five years to boost research and higher education in Australia. This funding will be critical to strengthening our already strong research base and to developing and retaining Australian skills. Together these elements will ensure the flow of the new ideas which underpin innovation.

The government's innovation strategy includes doubling funding for the national competitive grants administered by the Australian Research Council over the next five years. The extra $736 million will improve the competitiveness of researchers' salaries and increase the support available under the discovery and linkage elements of the ARC's grants program. The additional funding will be focused on areas in which Australia enjoys, or wants to build, a competitive advantage.

Complementing this substantial increase in grants funding will be a total of $583 million over five years in extra funding to maintain and build up the research infrastructure in our universities. Three hundred and thirty-seven million dollars will provide the infrastructure needed to support project funded research from ARC and National Health and Medical Research Council grants. Two hundred and forty-six million dollars will be available to upgrade the basic infrastructure of universities, such as scientific and research equipment, libraries and laboratory facilities.

The government also seeks to strengthen Australia's skills base, encourage a wider interest in science, mathematics and technology and retain and attract back to this country the best Australian researchers. Our strategy includes building Australia's capacity in key enabling technologies such as information and communications technology and biotechnology.

This bill encompasses two key components of the strategy. The bill establishes the new Postgraduate Education Loans Scheme, PELS. PELS is designed to encourage life-long learning and to help Australians upgrade and acquire new skills. It is expected that the loans provided under this scheme will amount to some $995 million over the next five years and will assist about 240,000 students in their aspirations to undertake further advanced education.

The bill also provides the initial years of the $151 million over five years for additional university places in the priority areas of information and communications technology, mathematics and science. The new funding will support an additional 2,000 university places each year, rising to nearly 5,500 places a year, as students continue through the system; or 21,000 equivalent full-time student places over the five years.

A component of the doubled ARC funding will be used to support 25 new Federation fellowships each year to retain, or attract back, the very best Australian researchers. Each fellowship will be worth an internationally competitive $225,000 a year in salary for five years.

The bill will also introduce some amendments to the Higher Education Contribution Scheme and related schemes to streamline their administration and provide important protections in relation to the public's investment in these schemes. The bill will give the minister the discretion to impose a cap on the maximum amount of debt students can accumulate to discourage irresponsible use of the schemes and excessive fee increases. Other provisions in the bill will make it easier for universities to operate in an electronic environment consistent with the requirements of the Electronic Transactions Act 1999.

The bill includes a minor amendment to the States Grants (Primary and Secondary Education) Assistance Act 2000 to ensure that the government's commitment to maintaining special education per capita funding levels is honoured. A minor increase in funding will ensure that the full level of funding required is available so that independent schools are not disadvantaged by the new arrangements for special education per capita funding introduced in the act.

The bill also amends the States Grants (Primary and Secondary Education Assistance) Act 2000 by increasing the funding for establishment assistance to new non-government schools for the 2001-04 program years, in line with current estimates of demand.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Laurie Ferguson) adjourned.