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Standing Committee on Employment, Education and Training
01/03/2017
Innovation and creativity: a workforce for the new economy

PIPER, Ms Zoe, Partnership Programs Lead, Commonwealth Science and Industry Research Organisation

STEELE, Dr John Gerard (Jack), Director, Science Impact and Policy, Commonwealth Science and Industry Research Organisation

[12:32]

CHAIR: I now welcome the CSIRO to the table. Apologies that we are a little behind time. As you might have heard, we do remind everyone that these proceedings are legal proceedings of the parliament and warrant the same respect as proceedings of the House. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. Evidence given today will be recorded by Hansard and will attract parliamentary privilege. Do you have an introductory statement?

Dr Steele : Yes. Thank you for the opportunity to address the committee. I am sure that committee members are pretty familiar with the CSIRO's activities and how they go across a broad range of industry, community and environment areas. The role that the CSIRO has played for a number of decades has involved us collaborating with a large number of elements in the community, including other research institutes but also through to the other end with the users of knowledge, both industry and, in the public sector, stakeholders. CSIRO's current strategy is to build on that to try to play a role as Australia's innovation catalyst through building those connections, bridging across that spectrum. It is for that reason in our submission we emphasised a couple of programs which were about building connections between the Australian research community and with industry, thinking that that might be of primary interest to the committee.

The first one is an accelerator program that we have called 'ON', because you have to call it something fancy. That is an accelerator program that over the last eight months we have been running with additional support from the NISA program. Basically we have turned that into a national program that is open to Australian universities and publicly funded research institutes. So far over that period of time we have put 49 research teams through the early stage of the accelerator, which is called ON Prime. It is a pre-accelerator, and then out of that a number of teams have gone in to the accelerator programs. We have been doing that since August 2016. It has been quite an interesting and illustrative program. The numbers are really only part of the story. What is really interesting is the impact on the individuals and the teams who go through that.

I would like to quote from one of the participants in one of the ON programs, a professor from Macquarie University who is the director of one of their research centres and is involved in an ARC centre of excellence, and also the Australian National Fabrication Facility. He said:

I have been in senior positions for many years, and it has been my job to motivate and energise other people. This is the first time in two decades someone has energised me.

It is not that the program is directed towards that demographic. It is broad, but that gives you an idea of the changing circumstances that that program is actually producing. ON is designed primarily for publicly funded research teams and targets pre-commercial ideas. There has been an impressive list of projects that have actually gone through those. To give you an idea, one of them, called Kebari, is about how to develop a gluten-free barley which will then go in to beverages and foods for the one-in-five people in the western world who have to avoid gluten for health reasons. The ON program is about how you get that into the market, its commerciality and training teams in relation to that. That is going to be released in a beer, which I think is already released in Germany. The ON team went through the training on the commerciality of that.

Another example is Biora, a renewable chemical company that produces polymer coatings to be used in packaging of foods. That removes the BPA contaminant, which is one of the toxin issues around a lot of current packaging. The third one came out of Curtin University and a team that was working on a real-time pain assessment tool for patients who cannot talk. It is basically a facial recognition tool to detect the level of pain from facial characteristics, in order to get around that situation.

The second thing I would like to point to in our submission is that we are commencing an industry PhD program in the CSIRO in a very formal way that we have not before. Related to that also is a PhD industry continuing development framework. The committee is no doubt well aware of the OECD statistic that point to collaboration, including with industry, as being something where Australia is at the wrong end of the scale. So the question is what do you do about that? Maybe we will come to that during the discussion. What we see is that you can make an influence on the collaboration story by programs that assist STEM graduates to function innovatively inside industry—the cultural divide that you were going to in the earlier discussion with ANSTO. We are currently commencing a trial of an industry PhD program with Australian industries and Australian universities in the second half of this year. Our initial start will be 20 students. But it will scale up after that. We are entering in to it in a way that tests exactly what works, et cetera, although we have done quite a bit of planning around that.

The other thing going on is CSIRO's Data61, which is developing a continuing professional development framework. So over to Ms Piper.

Ms Piper : PhD students would be encouraged to maintain a certain number of industry engagement points, which they could get for a range of activities—everything from attending industry conferences right up to doing an actual industrial PhD. It would be similar to other professions such as law, medicine and engineering and so on where you are required to maintain points. We are currently collaborating with the Australian National University regarding that framework. The idea is to see if we can get a pilot up a bit later this year.

Dr Steele : Chair, we are in your hands.

CHAIR: Over to questions.

Mrs SUDMALIS: With the twenty students in 2017, you are going to try to measure something from that. What are your measurement criteria?

Dr Steele : The planning around the industrial PhD initially started with one of the Group of Eight universities in putting this together. In fact, with their school of engineering. The effectiveness with which you manage to get projects that service the requirements of the individual firms who are involved. That also conects back to the requirements of providing the earliest stage research experience for the students. So there is no diminution in academic standards. It is broadening it. It is probably going to be a longer PhD, in fact, and also includes a basically pressure packed MBA program of a commercial training component. It is important to work out what this looks like from both ends of the spectrum. It is not just to supply STEM push. It also has to be something that works very effectively from the point of view of the industry firms. That is where probably the larger delicacy in designing these right actually resides. It means that you have to pretty much try to work with firms with whom you have an existing relationship, who have familiarity with dealing with technology or who have an appetite to get in to that area and have a level of confidence in the research institution, whether it is a university or the CSIRO to actually give that a go.

That is very much dependent upon person to person connections. In the CSIRO we have a component that does quite a bit of work with SMEs, the SME engagement centre, which is connected into the industry department that builds the connections. We have a number of programs that provide postgraduate training support for postgraduates that connect with industry on a short term basis. We are also into the first year of a new program for post-doctoral support for programs that are going to be associated with companies. We are building up a suite of these. This one would be specifically engineered with the universities to ensure that you get the connections through to the SMEs, et cetera. We will end up with the numbers of students. That is part of it.

Mrs SUDMALIS: That is fascinating. That is the absolute key.

Dr Steele : But insofar as you are asking for a metric, the really important metric is how many of those management people in those companies knew about it, dedicated a significant proportion of their time each week to actually be involved in it, were part of the training experience from the point of view of the students, felt that the program worked from their point of view and were willing to keep on going. It is repeat business that works from the point of view of the SMEs, et cetera. That is the criteria that will be the challenging one that I would suggest we are going to need to be thinking about in three, four and five years' time.

Mrs SUDMALIS: It is a great incubator model.

Mr O'DOWD: Have you dipped your toe into the renewable energy versus the coal fired power stations and future energy requirements for Australia?

Dr Steele : Another part of the CSIRO has. Our energy group has been involved in work that has been doing modelling around renewable energy and the stability of energy systems, basically. I would direct you to evidence that was given to—am I allowed to do this without being impolite?—a Senate select committee a couple of weeks ago where our experts were giving evidence on precisely that point. It was misconstrued in the press, by the way, so it is worth going back to the original evidence. We are also involved in developing a low-energy road map which is being done for the Department of the Environment and Energy. It is for the department of environment to release that. I would anticipate that would be happening in the next three months, or something like that. If you would like me to provide further information in connection to the CSIRO in relation to that, I am more than happy to do so afterwards.

Ms BUTLER: On page 26 of the innovation submission that you made to, I think, the 2014 inquiry, you say:

CSIRO's posture is that an equitable return arising from the exploitation of the intellectual property should be given to CSIRO.

Does that mean you are actually taking a stake in ownership of those new firms that go through the accelerator program, whether it is working with Data61 or going through your accelerators? Is that something that is happening in CSIRO or Data61 now and is it becoming more common if it is?

Dr Steele : It is always fun when we get to the intellectual property question.

Ms BUTLER: It is more of a money question.

Dr Steele : Not as a result of going through the ON accelerator. The ON accelerator takes opportunities that arise from either the public funded research sector in universities, ANSTO or the CSIRO. It is entirely likely that the CSIRO will have an equity position in new firms that come out of work being done in the CSIRO that has been accelerated by going through the ON accelerator. It is also possible that as a consequence of that work going through the ON accelerator, it will start to become attractive to go for capital funding from the newly introduced CSIRO innovation fund. In that circumstance, because that fund is basically being run as a venture capital fund—albeit early stage and pre-seed—that there will be an equity position taken by that fund as a result of investment made by that fund. So there will be, if you cut it in the broader sense of the public sector, public sector equity interests.

Ms BUTLER: Ownership of private firms.

Dr Steele : Not necessarily controlling ownership.

Ms BUTLER: No, I would not have thought so.

Dr Steele : But private sector stake indirectly through those, either through the research institutes, and the universities often do this as well. I am a director of Uniseed. A lot of universities have equity positions in spin-out companies that come out of universities as well.

Ms BUTLER: Obviously there are different amounts that different capital providers expect to take, and then there are also different commensurate conditions that go along side that. It might be a position on that board. It might be some sort of less formal input into the governance or management of the company. Would you anticipate that would be a role that the CSIRO or Data61 would play in private firms that have come through or had some connection with the organisation?

Dr Steele : I think on this occasion Data61 is the same as the CSIRO, as it happens. Already that is the case. There are start-up companies that have come out of Data61 and its previous manifestation, NICTA, but now Data61, and also a number of spin-off companies that have come out of CSIRO where there is either a board membership or an observer on the board. We make a deliberate decision which of those we take, not just dependent upon what the equity position is but also, frankly, whether or not we are monitoring our interest or we are actively involved, and the right people to be involved, to actively manage the future of that company. So we already do that. What we always do is exit the Board before the company becomes a listed public company. It is always a dance with all of the other equity holders as to what is the right proportion and when to drop off in that process.

The other thing we do is manage our equity arrangements not through our board membership. It is a CSIRO policy that if we have equity in any particular company, we have a shareholders representative. So the CSIRO's interest as a shareholder is managed independently of that in order to make sure we are not confusing flesh and blood with control.

Ms BUTLER: But do you think that the fact that you would essentially have connections into a range of private sector firms would open up opportunities and synergies for finding placements for work integrated learning or finding opportunities for people coming in to connect with CSIRO in other ways? Does that give you opportunities to advocate for those firms as well as getting a return to government for their support and assistance, to give back to the community by allowing those sorts of opportunities to arise?

Dr Steele : When there is a spin-out company that has come out of the CSIRO, often there is a continuing relationship and quite often it is the case that that endures in a way that does not happen if it is a company that has come to the CSIRO. You can often get very good relationships out of those but when it has grown out of CSIRO you can often find that there is a more enduring relationship on a broader range of modalities of connection, et cetera. But I would not want it to be confused that we have any policy that suggests that there is a preference given to companies that come out of the CSIRO. We are actually quite deliberate about trying to make sure that we are open to all players, with the occasional exception when it is not something we do or it is something that we would not ever think of doing.

To go to the issue of how to build those connections, I can give you an example of what we do. By the way, Chair, if the committee happens to be in Melbourne, I invite the committee to think about visiting the Clayton facilities and, while you are going to see the Synchrotron, drop in to see Lab 22, which is adjacent to that. That is one way in which we engage with SMEs. There we have a 3D printing facility where we actually have companies come in and use the 3D printing facility. Half of the output of that 3D printing facility is prints that have been done by employees coming along and using those facilities. So they actually get familiar with using that piece of capital. They can work out whether or not they ever want to buy that piece of capital themselves. But that gives you a real intimacy. Because of its location in the Clayton area, we have been quite active through our manufacturing business unit in going out to the south-eastern Melbourne area. Even doing things like putting a stack of scientists on buses and doing a series of drop-ins to companies where you can breakdown the unknown and test, and then people get familiar. You have an exchange of ideas. Then those companies will go: 'I have this problem. I think I know who to call.' They may or may not know themselves but it is an entry. That is something that is really difficult with the research sector at the moment, especially with SMEs, and it is skin contact which actually solves that problem. Data61 does the same sort of thing in the ICT space quite actively as well.

Ms Piper : One of the advantages of spin-out companies is that you do have people go out into industry and have different experiences. With Data61's experience, they will often end up coming back in, so they bring a lot of that knowledge and connections to help inform the next round of that happening.

CHAIR: That is great. Time has beaten us. But thank you very much. We might write to you with some follow-up correspondence, if that is okay, particularly around your German case study about identifying and maintaining innovation and strategic advantage. Deputy Chair, are we likely to want to make any comment on the motion that we put today? If you would like to, we probably need to move a motion that you can speak to.

Ms BUTLER: Yes, I think it is important. We raised it in question time yesterday. So we are going to have to deal with it in some way.

CHAIR: We will just move a motion, which I think is fair enough, that the Chair and Deputy Chair can comment on the motion put to the committee today, which is the usual process. Those in favour?

Mr WALLACE: I second the motion

CHAIR: The motion is so moved

Committee adjourned at 11:53