2. Australian Government Research Investment

2.1
Chapter two provides an overview of Australia’s research funding system. In particular, it provides a breakdown of Australian Government investment in research across Commonwealth portfolios and research sectors.

Commonwealth funding

2.2
Commonwealth research funding is dispersed through a range of means, different portfolios, and various research funding programs. There is no central body or department responsible for administering research funding.
2.3
For example, in 2017-18, the Australian Government invested $10.3 billion in research and development (R&D). This R&D investment was dispersed:
through six methods of funding allocation;
across 14 Commonwealth portfolios; and
over 119 R&D initiatives.
2.4
Of the 119 R&D initiatives, around 60 were different Commonwealth competitive grant programs administered across six portfolios.1
2.5
Table 1 shows a breakdown of these R&D initiatives by portfolio.
Table 2.1:  Australian Government investment in R&D by portfolio 2017-18.
Portfolio
Total Investment ($M)
Programs
Industry, Innovation and Science
4729.20
22
Education and Training
3078.86
8
Health
1045.15
27
Defence
488.70
8
Environment and Energy
443.00
12
Agriculture and Water Resources
347.80
19
Foreign Affairs and Trade
106.29
1
Social Services
27.98
5
Veterans’ Affairs
8.97
5
Infrastructure and Regional Development
5.72
5
Attorney-General’s
3.34
2
Prime Minister and Cabinet
2.00
1
Treasury
1.75
1
Communication and the Arts
0.41
3
TOTAL
10289.17
119
Source: Extract from Department of Education and Training, Submission 92, Attachment A.
2.6
The Department of Industry, Innovation and Science explained that over three quarters of Australian Government investment ($7.9 billion) in 2017-18 was provided through the following mechanisms:
R&D tax incentive;
University block grants provided by the Department of Education and Training;
Competitive grants administered by the National Health and Medical Research Council (NHMRC) and Australian Research Council (ARC);
the Commonwealth Scientific and Industrial Research Organisation (CSIRO); and
the Defence Science and Technology Group.2
2.7
Australian universities receive the largest proportion of Federal Government funding for research. Figure 2.1 shows a breakdown of R&D investment by research sector. Of the $10.3 billion invested in R&D, $3.6 billion went to higher education or universities, and $3.3 billion went to businesses.3

Figure 2.1:  Australian Government investment in R&D by sector 2017-18.

Source: Department of Industry, Innovation and Science, Science, Research and Innovation Budget Tables Snapshot 2017-18.

Education Investment Fund

2.8
Since the Government has not elected to proceed with the Education Investment Fund (EIF), Australia’s research institutions and universities lack access to this specific funding for indirect research costs which include new equipment, laboratories or renovation of existing facilities. In 2008, EIF was established to provide co-investment for critical infrastructure and research in Australian research institutions, universities and TAFEs. The $3.9 billion fund now lies dormant in the Future Fund. Research institutions, universities and TAFEs now are forced to fund infrastructure through vastly depleted operating grants.
2.9
The Committee acknowledges the complexity of the Australian research funding system, including the different stakeholders involved and the different methods used to disperse Commonwealth funds.

Diversity and fragmentation

2.10
The Committee’s terms of reference asked the Committee to consider ‘the diversity, fragmentation and efficiency of research investment’. Fragmentation is often used to characterise the research funding system. However, it is important to differentiate between fragmentation of research investment and funding, and fragmentation of funding processes.
2.11
Evidence to the inquiry suggests that while the former is considered a strength of the current system, it is the latter that is considered inefficient, costly, time consuming and an administrative burden.
2.12
For example, the Committee was told that the range of different funding opportunities and grant programs is an essential part of the current system. Griffith University noted that:
…diversity, also characterised as fragmentation, of research funding programs is within reason a positive attribute of the current system.4
2.13
Diversity of research funding was considered necessary to accommodate Australia’s broad research interests, provide for different research disciplines, and support each stage of the research pipeline from basic to translation research. In other words, diversity of funding allows for Australia to provide research programs that are fit for purpose. This was articulated by Charles Sturt University in its submission to the inquiry:
Diversity of funding schemes is necessary to support the full expanse of real-world challenges Australian research seeks to solve. Diversity is essential in primary research to focus design on need.5
2.14
The University of Newcastle noted that a range of competitive grant programs allows for flexibility in the research funding system. Specifically, the University of Newcastle highlighted the flexibility to fund:
research from all discipline areas;
targeted calls when required;
novel and emerging areas of research; and
a balance between basic and translational research.6
2.15
Deakin University also supported the diversity that exists in the current research funding schemes.7

Fragmentation of process

2.16
The Committee heard that the key issue for the research sector, in particular universities, is a lack of consistency across the research funding landscape. For example, each of the 119 R&D initiatives has separate administrative processes and arrangements.
2.17
This fragmentation was repeatedly raised as costly and challenging for researchers, with repeated calls for better coordination of research funding arrangements.
2.18
The University of Sydney described the impact of this fragmentation on research outcomes:
While governments often deem it desirable to develop new research funding schemes in areas of priority, it is equally important to ensure that the research funding system remains coherent and well-managed. A proliferation of programs, with different objectives, funding rules and processes undermines efficiency and ultimately reduces the likelihood that the outcomes desired by governments are achieved.8
2.19
A particular focus of the Committee’s inquiry was university research funding. Many of the issues raised in relation to funding Australia’s research sector were particular to university researchers. For example, while diversity of research funding opportunities was supported, many challenges were identified with the administration of these opportunities.
2.20
For university research funding, these issues can be distilled into five key themes; that the research funding system:
is fragmented, inefficient and an administrative burden on researchers and research institutions;
disadvantages particular researchers – especially early and mid-career researchers, Indigenous researchers, women, minority groups, and those within regional universities;
is risk averse – favouring researchers with proven track records, and research that is considered safe;
is difficult for industry to navigate; and
is underfunded overall.
2.21
The following chapters discuss these issues more fully.


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