Higher Education Review Process

Setting Firm Foundations: Financing Australian Higher Education

7. key issues for research funding

• a. key principles for publicly funded research 

• b. overall levels of research funding 

• c. a broader national approach? 

• d. the distribution of public research funding

235  In today’s knowledge economy, investment in the generation and transmission of knowledge is essential for a nation’s long-term growth and advancement. The importance of research in this process is well recognised and was articulated by the Government in its discussion paper on research and research training, New Knowledge, New Opportunities released in 1999:

Knowledge is fast becoming a key factor determining the strength and prosperity of nations. Research—as a key source of knowledge and new ideas—is central to success in the new `knowledge economy'. Those nations with strong research systems will be well placed to prosper both economically and socially.
(Kemp 1999a, p1)

236  Australia’s universities play a crucial role in the national research and innovation system. They are pivotal in the development and training of Australia’s future researchers and undertake the bulk of basic research. Research undertaken by Australia’s universities is recognised internationally with many researchers holding world standing in their field of research. 

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a. key principles for publicly funded research

237  In considering the current shape of Australia’s publicly funded research programmes and possible future directions, it is important to establish the principles that maximise the outcomes of public investment. In its submission to the Review the Australian Research Council (ARC) (Submission 341, p1) lists the following key principles:

• Excellence and quality

• Focus and national priorities

• Coordination and partnership

• Accountability

• Efficiency and effectiveness

238  Largely driven by these principles, Australia’s framework for higher education research policy was subject to a full review in 1999. As a result substantial reform to higher education research programmes was introduced in 2001. Given the recency of these changes some submissions argue that it would be premature to introduce further change and that the results of the reform process need to have time to bed down and be properly evaluated. 

…it is important that the arrangements be maintained for at least the next five years to give adequate time to test their success or otherwise. It is likely that, by that time, a majority of universities will have developed a number of areas of research strength and contributed to an overall increase in research and research training outputs.
(University of Technology, Sydney, Submission 294, p5)

239 Other submissions argue that there is a need for further changes to maximise publicly funded research outcomes. These proposals for change focus on three areas:

• the need for increased levels of funding for research;

• the need to explore options for greater coherence, coordination and partnership across all of Australia’s publicly funded research organisations; and

• the need for changes to arrangements for distributing public research funding.

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b. overall levels of research funding

240  The funding initiatives associated with Backing Australia’s Ability are acknowledged and welcomed in many submissions. However, many argue that there is a need for a significant increase in research funding. The Group of Eight argues that there is a need for:

… a quantum increase in the overall level of resources – human, financial and physical – available for the national higher education research system’ and that these ‘are clearly not just matters for the Commonwealth Government. A major and sustained commitment is required also from industry, State Governments, universities and research organisations. 
(Submission 181, p2)

241  In its submission to the Review, the ARC noted that the level of higher education research expenditure is comparatively high by world standards (sixth out of 17 OECD countries in 2000) despite a decline from 0.43 per cent of GDP in 1998 to 0.41 per cent in 2000. The submission makes the point that ‘there is a relatively low level of private or business expenditure on R&D in Australia (13th out of 17 countries).’ (Submission 341, p7)

242  The Group of Eight (Submission 181) calls for measures to encourage greater involvement of industry in Research and Development (R&D), including reviewing tax incentives. Many other submissions to this Review also canvassed possibilities for enhancing incentives for industry partnerships with universities in R&D. For example:

International comparisons and the success of Australian initiatives such as those used to revitalise the film industry suggest that more generous taxation advantages for industry would strongly facilitate progress in meeting government priorities for increased industry-university collaboration in research and development.
(Deakin University, Submission 95, p7)

243  An issue related to the level of funding raised in several submissions is the pressure on universities to find matching funding:

A … concern that has increased in recent years is the extent to which general university resources are being called upon to meet the matching funding requirements attached to research funds from both Commonwealth and State Government agencies. There is a vicious cycle in which university resources are stretched more and more thinly, diminishing the quality of research infrastructure and the capacity to build research capacity over time.
(Group of Eight, Submission 181, p11)

244 To some extent this issue can be addressed through the mechanisms used to distribute research funding. This is discussed in a later section.

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c. a broader national approach?

245  During the course of consultations as part of this Review the national allocation of Commonwealth research funds across all agencies has been raised with a view to exploring options for greater efficiencies and coherence, with stronger collaboration between universities and other research agencies. This issue is also central to the Government’s National Research Priorities initiative.

246  Consideration of research financing needs to take account of the considerable publicly funded research that exists outside universities. The CSIRO, for example, has 6,400 staff located at sixty sites around Australia of whom two-thirds are qualified at tertiary level, more than 1,700 holding PhDs. Its research capacity is far greater than most universities. Based on its publications and citations track record, CSIRO ranks in the top one per cent of the world’s scientific institutions in eleven of twenty-two disciplinary fields of research.

247  Already CSIRO conducts much of its research in partnership with universities as well as other science agencies and private companies. CSIRO is the largest participant in the Cooperative Research Centres programme. However, potential exists to build on this process, allowing CSIRO and other research agencies to become a key part of the higher education reform process.

248  A number of submissions have called for greater co-operation and strategic alliance between the agencies receiving public research funding.

249  The joint submission from five of Australia’s leading Government Funded Research Agencies (GFRAs, Submission 154) emphasises that GFRAs and universities have complementary roles in the context of Australia’s innovation system. The GFRAs argue that:

Australia can ill-afford internal competition that encourages fragmentation or a decreased propensity to collaborate, rather than promoting complementarity and cooperation. In part because of its size, dispersed population and industrial structure, Australia suffers from a lack of concentration in its research efforts when compared to many other countries – including those with which it competes economically and for research leadership. An important outcome of the review should be to encourage and facilitate the development of mechanisms, including the creation of physical or virtual centres of excellence, which help develop a more focussed research effort on important problems.
(Submission 154, p8)

250  Other submissions have put forward more radical approaches, suggesting the need to open up all of Commonwealth research funding to greater competition. Edith Cowan University in its submission to this Review argues that:

… the research funding for CSIRO and other publicly funded research institutions should be accessible by universities.
(Edith Cowan University, Submission 225, p4)

251  Implicit in these arguments is the question of why publicly funded research continues to be conducted outside universities. Transfer of all or part of the publicly funded research effort to universities may allow radical transformation of the higher education system, creating critical research mass in a number of universities and providing the basis for world class, global scale university research across a wide range of endeavours. At the same time it would provide the capacity to drive a national system of innovation responsive to research priorities set by the Government.

252  For both economic and strategic reasons a case can be made for a more nationally consistent approach to publicly funded research. Questions to be considered include the extent to which the research funds of government agencies and universities should be opened to mutual merit-based competition and the extent to which research alliances could drive a more collaborative approach to innovation in the national interest.

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d. the distribution of public research funding 

253  Currently, the Commonwealth has two main mechanisms for distributing research funding. These are through the Department of Education, Science and Training (DEST) and through the Australian Research Council (ARC) and the National Health and Medical Research Council (NHMRC). A proportion of the DEST funding is performance-based and the remainder makes up part of the base block grant to universities and is not separately identified. All of the ARC and NHMRC funding is contestable. These arrangements reflect the outcomes of the 1999 review of the research policy framework. 

254  The issues paper Developing National Research Priorities, which was released in May 2002 advised that competitive research programmes administered by the ARC and NHMRC would be encompassed by the National Research Priorities framework but that priority setting would not apply to university block funds ‘at this stage’. The consultative process revealed widespread support for including ARC and NHMRC grants within the priority setting regime. However, the suggestion that block grants should be exempt received a mixed response. The submission from the National Tertiary Education Industry Union (National Research Priorities, Submission 83), for example, strongly endorsed the proposed position, and recommended that university block grants be quarantined from the research priority setting exercise. Others, such as the submission from Professor Woffenden, the Chief Executive Officer of the AJ Parker CRC for Hydrometallurgy (National Research Priorities, Submission 62), noted that 

The decision not to apply the priorities to industry support programmes and university block funding reveals a potentially serious weakness in the framework…. Opportunities for synergy are patently missing at present.

255  In its submission to the Review the ARC addresses the issue of current funding arrangements for research and argues strongly for the need for change:

The dual funding system for university research in Australia ... is ... unnecessarily complex. It is a system, which is neither transparent, accountable, effective nor efficient in the allocation of resources, whereas the processes for allocating funds for research and research training should be competitive in nature, as simple as possible to administer and readily intelligible to researchers, institutions, students, industry and the wider community.
(ARC, Submission 341, p2)

256  The University of Western Australia argues that there is another problem associated with current arrangements:

In universities without a pervasive research culture (and hence without a strong teaching-research nexus) the teaching component does not have to support such staff research activity, yet the Relative Funding Model assumes that it does. At the sector level, this amounts to a significant cross subsidy from research intensive to non-research intensive institutions.
(The University of Western Australia, Submission 175, p10)

257  The ARC proposes a phased reform agenda. Step one, which could begin to be implemented with the 2004 application round, would see:

The ARC to assume responsibility for the funding of all of the direct costs of the research it sponsors, that is, to include in the funding agencies’ grants, the Chief Investigator salaries and project-specific infrastructure, currently funded through the RIBG program. This step would rebalance the system in favour of contestability by changing the current balance from 40:60 to approximately 60:40 in favour of contestability.
(ARC, Submission 341, p20)

258  Step 2 would see the introduction of a single contestable funding system: 

The transfer to the funding agencies of the responsibility and resources for funding the indirect costs of the research they sponsor, taking the balance to 30:70 in favour of contestable funding.
(ARC, Submission 341, p2)

259  The ARC proposal would see some breaking of the funding nexus between research and teaching. The University of Adelaide argues strongly for:

Decoupling of the research and the teaching components of operating grant funding [on the basis that operating grant funding is] distributed on the basis of undergraduate teaching load, rather than on the basis of research performance, and is not subject to monitoring of outcomes at either Commonwealth or institutional level.
(University of Adelaide, Submission 135, p3)

260  A number of submissions to the Review take an opposing view. For example, the University of Tasmania (Submission 153) argues that any moves to reduce block grant funding 'would have crippling impacts on the capacity of universities to develop longer-term strategic direction in their research'. The AVCC makes a similar point: 

The approach of all universities to learning is imbedded in the fundamental interrelationship among teaching, learning, research and scholarship. The nature of the interrelationship means that the Government’s base operating funding of universities must support the full range of scholarship expected of university academic staff. Operating funding cannot be narrowed down, and reduced, to be for ‘teaching’ alone if ‘university’ is to retain any sensible meaning in Australia.
(AVCC 2002b, p3)

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performance-based funding measures

261  Several submissions to this Review focus on the recent introduction of performance-based funding for DEST funded programmes and argue for a review of the measures used. In particular, many would like to see less emphasis on quantitative measures and more on qualitative measures. 

Current research funding is too closely tied to purely quantitative measures of both inputs (competitive research funding) and outputs (publications and RHD completions). We would argue for a greater role for qualitative measures as one element in the determination of research funding along with some form of disciplinary ‘indexation’ that would ensure that performance is measured in ways appropriate to the discipline concerned.
(Australian Association of Philosophy, Submission 47, p2)

The current system rewards academics for the quantity, rather than the quality, of publications. A publication in a journal with a 100% acceptance rate receives the same funding (around $3 000) as a publication in a journal with a 5% acceptance rate. This provides a ready explanation for the observation that the quantity of publications has increased markedly in Australia over the past ten or fifteen years while the citation rate (a measure of impact or quality) has steadily fallen.
(Phelan, Submission 16, p3).

262  Phelan suggests that the acceptance rate of publications should be taken into account in the allocation of research funding, and recommends the use of a bonus scheme to reward quality research. 

263  The high weighting given to completions (currently 50 per cent) in the allocation of research training funding was also of concern to some. James Cook University (Submission 197, p10) argues that it is severely impacting on the research effort of smaller institutions. It claims that completions in large resource rich institutions ‘can be manipulated by over enrolment through the use of large numbers of fee-waiving scholarships, and international students’ and that a floor should be set to ensure that institutions receive a minimum number of research training places.

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some possible responses

264  A number of possible options have been raised in relation to the issues covered in this chapter. While not an exhaustive list, these questions have been included for consideration and discussion:

• Should the Government look at options for improving incentives for business investment in R&D? If so, should taxation measures be considered?

• Should a greater percentage of Commonwealth research funding be contestable? How can the publicly funded research of universities and government funded research agencies be better co-ordinated in order to build world-class research infrastructure?

• Should the nexus between research, scholarship and teaching, as currently recognised in the Commonwealth operating grant to universities, be maintained?

• Should the current performance measures applying to Commonwealth block grant research programmes be reviewed to focus more on quality? What measures might be used?

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