Within a month, Prime Minister Malcolm Turnbull is expected to unveil an innovation statement. It's an early opportunity for his government to set a new direction for the way that universities and industry work together to harness knowledge generation and drive improved productivity.
While new Education Minister Simon Birmingham has sensibly parked proposed higher education changes, the lack of resolution continues to hang over us. The sector has welcomed the signals of open consultation and agrees that the issue needs to be resolved soon. Few outside the political classes want to see a divisive election contest over university funding.
Universities were looking down the barrel of a 20 per cent funding cut, wrapped in a deregulated fee structure, and feeling cornered into charging higher fees to compensate. Without adequate funding for the true costs of research, universities have had to find ways to cover the research and innovation investment needed to maintain a world-class university system in a highly competitive international environment.
Historically, some research funding support has come from cross-subsidisation through tuition. We know that this is a band-aid approach to a fundamental problem which creates distracting arguments within universities and divisive blaming behaviours externally. Our starting point must be that both teaching and research need to be funded adequately and not at each other's expense.
Nor can Australia afford a set of policies that narrowly focuses our national research effort among a handful of older universities by relying on criteria that reward past success over future potential. This year, 'Times Higher Education' named 16 Australian universities in its worldwide list of the top 100 universities under the age of 50. That is a stunning national achievement, made possible because Australian research funding has been broad-based and our policy settings have encouraged younger universities to aspire, seek excellence and innovate.
It is widely recognised that Australia has a problem when it comes to university-industry collaboration. There is simply nowhere near enough of it.
I do not accept for a minute that it's impossible to change the incentives under which universities operate to drive greater industry collaboration. There are many steps that university leaders can take to create the conditions in which more research can be translated into real outcomes which benefit Australian industry.
First, we can reinforce through the ways we measure, value and reward academic achievement that research impact is everyone's business. Swinburne is one of a number of universities that now provide equal recognition for income that our academics earn through collaboration with industry, rather than placing a premium on competitive grants awarded by government. We also ensure that we measure academic success not solely by counting the number of peer-reviewed papers in academic journals, as has traditionally been the case in most universities.
Second, we can promote industry engagement at every level of our universities – from good undergraduate industry-based learning experiences, which are instrumental in developing good business linkages, through to the development of entrepreneurial skills for PhD candidates.
Third, we can provide dedicated support to identify and assess opportunities for commercialisation arising from our research, to source expert advice and to find matches with development partners.
Ultimately, universities are highly attuned to the many economic and financial drivers created by governments. They have shown themselves to be eminently capable of adapting their business models to respond to new economic drivers and incentives. To see this, we need look no further than the liberalisation of international education which led to Australian universities spearheading the creation of what's now one of our largest export industries. More recently, universities have responded strongly to the demand-driven higher education system to create more places for capable Australian students.
Universities are comprised of rational people and they are among the most rational of economic actors. In the innovation statement, Malcolm Turnbull has an opportunity to drive the creation of new measures that explicitly recognise the impact of university research, just as other countries such as the United Kingdom have done. By changing the incentives for collaboration, the government can change the country.
Tax incentives critical
While there is much that universities can do to drive research impact, it is critical that the government also turns its attention to the design of tax incentives for companies that undertake research and development activity.
Each year, taxpayers contribute $2.4 billion in tax relief for business, purportedly to encourage innovation in the private sector that might not otherwise occur. This sum represents more than a quarter of the Australian government's total support for science, research and innovation.
We need to ensure that, in the Prime Minister's words, this investment is creating 'additionality', not just allowing businesses to reduce their overall tax bill while doing things that they would have done anyway.
If, as seems increasingly likely, there is a reduction in the headline rate of company tax as part of wider tax reform, it makes sense for the government to take the opportunity to eliminate wasteful tax concessions and to redirect that investment into programs that produce desired behavioural change.
Much is riding on the forthcoming innovation statement. Much can be achieved if the government can find the right economic levers to spur the innovation Australia needs.
This opinion piece by Swinburne Vice-Chancellor Professor Linda Kristjanson was published in The Australian Financial Review.