Science and innovation

report

There are widespread and important economic, social and environmental benefits generated by Australia's $6 billion public funding support of science and innovation.

  • On the basis of multiple strands of evidence, the benefits of public spending are likely to exceed the costs.
  • But, given a host of measurement and methodological issues, it is not possible to provide anything other than broad estimates of the overall return to government contributions.

Major improvements are needed in some key institutional and program areas.

The adequacy of existing program evaluation and governance arrangements is mixed, with some notable shortcomings in business programs.

The net payoff from the R&D Tax Concession could be improved by allowing only small firms access to the 125 per cent concession, changing the thresholds for tax offsets, amending the base for the 175 per cent incremental concession and considering a narrower, more appropriate, definition of R&D. This should increase the amount of new R&D induced per dollar of revenue and achieve more spillovers.

Strong public support of Rural R&D Corporations with a public good orientation is justified, but the level of government subsidies for some narrower, industry-focused arrangements is likely to crowd out private activity and produce weaker external benefits outside the supported rural industry. However, industry will need time to adjust to new arrangements.

Collaboration can generate significant benefits. The CRC program is, however, only suited to longer-term arrangements. There are complementary options for business collaboration with public sector research agencies and universities that could provide more nimble, less management-intensive, arrangements.

There are grounds for dealing with problems in the governance and intellectual property frameworks of universities, weaknesses in their commercial arms and shortcomings in proof-of-concept funding.

  • However, the pursuit of commercialisation for financial gain by universities, while important in its own right, should not be to the detriment of maximising the broader returns from the productive use of university research.

The structure of funding for higher education research has increasingly eroded the share of block grants. Further erosion would risk undermining their important role in enabling meaningful strategic choices at the institutional level.

The costs of implementing the Research Quality Framework may well exceed the benefits. The benefits from the 2008 RQF round could be improved if its funding scales provide more significant penalties for the poorest research performers than apparently currently envisaged. In the long run, a transition to less costly approaches, such as those that target poor performing areas, should be considered.