Submission to Australian Government’s
Review of Research Policy and Funding Arrangements
September 2015
Front Cover:
TOP: CSU Rhyzolysineter Laboratory, Wagga Wagga; CSU Biomedical Science Building, Orange
BOTTOM: CSU Vineyard, Orange; CSU National Life Sciences Glass Houses, Wagga Wagga
Submission to Australian Government’s Review of Research Policy and Funding Arrangements
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Charles Sturt University (CSU) appreciates the opportunity to provide a submission to the
Government’s Review of Research Policy and Funding Arrangements. As a leader in
strategic, applied research focusing on significant challenges facing regional industries and
communities, CSU welcomes this review, in particular its focus on the importance of
engaging with industry and translating research into commercial outcomes.
CSU is a university of the land and people of our regions. We develop holistic, far-sighted
people who help their communities grow and flourish. Acknowledging the culture and
insight of Indigenous Australians, CSU's ethos is clearly described by the Wiradjuri phrase
'yindyamarra winhanga-nha' ('the wisdom of respectfully knowing how to live well in a world
worth living in'.) This is reflected in the research we pursue, the research partners we
engage with and the Higher Degree by Research students we train.
Charles Sturt University has a strong history of working with industry to deliver applied
research that enhances business profitability and competitive advantage and in doing so,
helps enrich the rural communities with whom we have enduring links. However, it can be
extremely difficult to pursue these essential goals and be fairly recognised for these
achievements in a higher education sector which will much more quickly acknowledge and
reward success as defined by a narrow set of esteem metrics.
A third of CSU’s external research funding comes from partnerships with industry, which
is double the sectoral average. Examples of some of CSU’s strong partnerships with
industry include:

Ongoing research collaborations of significant relevance to industry through the
rural research and development corporations including the Grains Research &
Development Corporation, the Australian Grape & Wine Authority, Meat &
Livestock Australia and the Rural Industries Research & Development Corporation.

The CSU-led ARC Industrial Transformation Training Centre for Functional Grains,
which involves collaborations with SunRice, Woods Grain, MSM milling,
GrainGrowers Ltd, Teys Cargill and Flavour Makers.

The National Wine and Grape Industry Centre which is a partnership with the NSW
Wine Industry Association and the NSW Department of Primary Industries.

Farming Systems Groups, including a Partnership Agreement between CSU’s
Graham Centre for Agricultural Innovation and Central West Farming Systems, the
Holbrook Landcare Network, and FarmLink Research.

Other multinationals including Fonterra.
CSU looks forward to further participation in the review process through the roundtable
process scheduled for October.
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Research block grants arrangements and collaborating with industry
Rewarding collaboration with industry
The issues paper and previous Government discussion papers such as Boosting the
Commercial Returns for Research have highlighted the importance of greater collaboration
between the university sector and industry and ensuring that research can be effectively
translated into commercial outcomes.
The design of research block grants is key to the dual funding model which the Government
can use to encourage sustainable collaboration and improved commercial outcomes.
CSU considers an ideal and transparent way to ensure this is to place a greater
weighting on the level of research income derived from industry sources within the
funding formulas. Where industry is willing to fund universities to undertake collaborative
research, it is evident that the research is of considerable value to them and can help them
deliver commercial outcomes. It is these sort of collaborative relationships that are based
on delivering industry value that should be encouraged.
This could be achieved by either increasing current weightings on industry income within
existing block grants or by establishing a new block grant for this purpose. Reviewing the
current HERDC research income categories, the research income sub-categories that
could be targeted are as follows:

Rural R&D

Australian Funding - Contracts

Australian Funding - Grants

Funding derived from non-university participants in CRCs

Funding derived from third parties contributing to CRCs
CSU considers that the Government should increase the reward for instances where
industry has seen it fit to fund projects which could drive behavioural change quite
effectively.
Such a change in funding arrangements may also help change perceptions about which
funding categories are most desirable and prestigious within the sector. Currently there is
a strong notion that Category 1 income as currently defined is the ‘premium’ source and
that other categories are less important for a variety of reasons.
The Government could also similarly target and reward university commercialisation
income.
ATSE Research Engagement for Australia report
The approach outlined above has similarities with the approach outlined by the Australian
Academy of Technological Sciences and Engineering (ATSE) in its Research Engagement
for Australia report. Both approaches utilise external research income as a proxy measure
of engagement and collaboration.
CSU welcomes the ATSE contribution, particularly the way it demonstrates that defensible
engagement and collaboration metrics can be developed, though we believe there is no
one single metric.
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CSU considers that caution should be exercised though in directly applying the ATSE
ratings in the allocation of funding.

The ATSE metrics include other public sector research funding, government
contributions to CRCs and some ARC and NHMRC programme funds. These
funding amounts represent well over half the funding captured by the metrics.
Utilising these metrics in funding formulae will therefore encourage more university
collaboration with government and focus on government priorities. While this could
have benefits, the issue at hand seems to be the low levels of university
engagement
with
industry
rather
than
with
government.

Two of ATSE’s metrics are based not on absolute measures but focus on
engagement per FTE and engagement intensiveness. These metrics are useful to
examine the levels of engagement productivity per researcher and relative
concentration on research engagement for the institution. However using these
metrics to directly allocate funding would be problematic. For example, a very
small research intense university would rate better on these measures than a very
large university which was less research intensive. This could result in the small
university receiving considerably more funding than the large university even
though the larger university undertakes considerably more research engagement
in an absolute sense.
Research adoption and extension
CSU considers that it is also important to encourage universities to work to ensure that
research findings are adopted and extended into industry practice. There are currently no
direct financial incentives for universities to reward this type of activity. It is acknowledged
however, that measurement of such extension can be difficult to quantify.
One straight forward approach which could be explored would be to reward universities for
funding they receive from industry to specifically undertake research extension and
adoption activities. The fact that industry is willing to pay for this adoption and extension
demonstrates that it is delivering commercial value to the industry.
Such an approach would require a new data collection and would require strict definitions
to ensure that the work relates to the extension and adoption of original research generated
by the university, rather than generic industry training. However, the data collection could
be conducted as part of the HERDC process, and the definitions could be applied and
enforced in the same manner as the definition of research is applied for HERDC research
income.
Simplifying block grants
The issues paper notes that the complexity of the allocation formulae of some block grants
undermines the policy intent by obscuring the intended incentives for university research
activity. CSU strongly agrees with this statement, particularly with regard to the
Sustainable Research Excellence Threshold 2 block grant. CSU recommends that this
block grant should be redesigned so that it provides clearer incentives for universities.
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Barriers to industry collaboration with universities
Industry is primarily though not exclusively interested in “near to market development” of
product and service as opposed to ab initio discovery. It's in the gap between near to
market and discovery where universities could perform more reliably as consortia or in
establishing firm partnerships. This tends not to happen because of the perceived roles of
Universities, and/or universities can be risk averse in this space and/or incentives for
university staff, such as promotion, are not always aligned with this positioning.
The higher education sector needs to move away from being focused only on selfreinforcing esteem indicators.
Career progression in the higher education sector, current reporting and evaluation
systems including HERDC and ERA and national and international rankings mean that that
the static model of research success measured by publication, income and trained
studentships prevails. There is still an aversion in the sector as a result to taking the next
step towards IP development if that risks limiting publication and other traditional outputs
which are considered to be of more value, of higher esteem and the only measures of
success.
This is not immediately attractive to the dynamic and driven world of industry – it does not
attract industry to engage with researchers and it does not give researchers the skillset or
scope to consider research success in other terms such as economic development,
commercial opportunity and/or longer-term societal impact.
Industry experience in competitive grant programmes
CSU considers that competitive grants programmes could be better aligned to the needs
of industry by ensuring more extensive representation of industry experts on grant
assessment and peer review panels for schemes which are dependent upon industry
investment and/or partnership. A quick review of the membership of the ARC College of
Experts highlights that its membership is exclusive to universities or the CSIRO. Such a
move would counter the (real or perceived) “ivory tower” phenomenon, where academics
are the only or main reviewers of other academics.
Greater emphasis could be given to the applicability of the research to industry benefit in
the assessment of applications in competitive grants programmes. CSU suggests that the
assessment criteria should be designed and applied in a manner which evaluates both
scientific excellence and potential for research benefit in a more balanced manner. This
has the potential to also foster greater engagement with industry in drafting proposals
knowing that there will be notable industry-skilled review. However, we would also
acknowledge that assessment processes will need to be carefully managed in light of
industrial conflict of interest considerations.
Related to this, CSU is supportive of the suggestion that changes could be made to
selection processes to increase the weighting given to industry experience in the
assessment criteria (see 3.2.15 in Issues Paper). Those who have worked in a relevant
industry are likely to have a better understanding of industry needs and can ensure that
research is appropriately targeted and that the findings can be broadly disseminated and
lead to industry benefit.
Encouraging industry participation in competitive grants programmes
One potential way of encouraging greater industry participation in competitive grant
programmes is to move to more streamlined application processes. Participation in lengthy
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and detailed application processes can be too costly for some businesses and are not well
aligned with the business models in terms of pending investments.
Holding a more streamlined first round application round would reduce the initial application
costs and would allow proposals deemed of low merit to be rejected at this stage.
Applicants and industry partners who were deemed eligible for the second round could
then invest more time in their application with the knowledge that they had a vastly
improved chance of funding success.
Colocation of industry and the university sector
As noted in the issues paper, in several high-profile instances, colocation of industry and
universities has led to flourishing innovation activity. This highlights the point that
geographical proximity to industry can be a key ingredient to research adoption, but it is
not itself a successful sole driver for innovative collaboration and this should be noted.
Rural Research & Development Corporation Model
A particularly successful model for research funding and collaboration are the
arrangements in place for rural research and development corporations, where revenues
raised from industry levies are matched by Commonwealth funding. The co-funding
arrangement acknowledges both the private benefits that accrue to industry and the
broader public benefits that arise from the research.
The model provides for industry to have a say in guiding research priorities and directing
public investment to priority areas. The close involvement of industry also provides for
greater likelihood of the application of the research in practice. The strengths of this
funding model were acknowledged by the Productivity Commission in its 2011 review of
the RDC system.
CSU considers that this model could potentially be applied to great effect in other sectors.
For example, in a sector such as mining, companies could be levied on their production
volumes, with proceeds used to undertake research that would improve mineral extraction
techniques that would be beneficial to all companies in the sector. However, such an
approach can only be implemented where there is strong industry support for the model.
Encouraging those working in industry to undertake Higher Degrees by Research
CSU is supportive of efforts to foster entrepreneurial skills and a knowledge of business
needs in Higher Degree by Research students. Addressing this issue is critical to ensuring
greater integration and sustainable connections between the research sector and industry
and to lift the numbers of researchers working within industry. It is also essential to
ensuring that investment made now will produce a generation of future graduates that are
industry-ready, industry-savvy and focused on careers across research and industry.
However, it is difficult to foster these skills in isolation from a business or industry
environment and the traditional HDR training models used within the higher education
sector in Australia are not currently flexible enough to expand into this domain. Moving
forward the sector needs to strongly consider a hybrid model of HDR training to include
coursework in entrepreneurial skills, business acumen, marketing and to support and cofund industry placements.
CSU considers that it would also be worthwhile to encourage and incentivise more
individuals already working within industry to undertake Higher Degrees by Research.
There are currently many disincentives to those already employed within industry
undertaking Higher Degrees by Research on a part-time basis as universities generally
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award most stipends and fee free places to full-time students. Even if they can gain access
to such a place, the stipend is unlikely to match the foregone income from having to move
to part-time work. Some universities have made in-roads in this space through alternative
investment models but it is not mainstream.
To remove these disincentives, the Government could establish a post-graduate award for
those working in industry, which would function much the same as the APA program, but
prioritising part-time students who are working in industry. Recipients of this award would
be guaranteed a Research Training Scheme place and would be required to continue their
employment in industry on a part-time basis to ensure full integration and industry relevant
thesis material.
The scheme could provide stipends at a premium rate to offset a larger portion of the
forgone income of the worker and/or it could require the employee to provide top-up funding
to the APA part-time rate.
The benefits of such a scheme is that those working in industry are already keenly aware
of challenges facing their business and can apply that lens in choosing their HDR topic and
undertaking the research. They are also more likely to be aware of the business conditions
facing their industry and are better placed to develop and apply the entrepreneurial skills
that are needed to deliver successful commercialisation of research.
Following completion of the degree it is likely that many will continue working within their
industry and apply their research skills and possess strong links with the research sector.
Those who choose to move to the university or government sector will possess strong links
with industry and knowledge of industry needs which would contribute to the sector more
broadly, and by extension influence teaching.
These students will also influence their supervisors and help them strengthen links with
industry. These students will also conduct their research alongside students who do not
have industry backgrounds and will be able to share their industry skills and insights.
Overall such a program would increase the diversity of research graduates and make
HDRs more attractive by providing a career path which allows for transition between
industry and academia. This is a gap that has not been filled since the ARC funded APA
Industry places were withdrawn from 2011 onwards.
While there are other incentives and schemes in place to encourage collaboration between
industry and the research sector (such as the R&D tax incentives), there is no mechanism
to ensure that the nearly $280 million of APA funds allocated annually by the Federal
Government (and the associated RTS funds provided for fee free places) are being
directed to meet the research needs of industry. Such a scheme would provide such a
mechanism and bring APA into closer alignment with the broader agenda
The funding formula for such a scheme could be driven by the share of income derived
from industry sources, such as those outlined above (see Rewarding collaboration with
industry).
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Other issues
Recognising importance of public good research
CSU is supportive of reforms that encourage greater collaboration with industry. However
it is important that government funds research that can add significant value to the
economy and other aspects of quality of life for the Australian population but may be difficult
to directly capture by a given industry sector.
For example, applied research that leads to advances in practice (such as the new
approaches to teaching children mathematics developed by CSU’s Research Institute for
Professional Practice, Learning and Education) may result in widespread economic returns
to the community, however it is almost impossible to charge the beneficiaries of this
research and yield a commercial return.
There is also research that is focused on public good outcomes such as the environment.
For instance, research undertaken by CSU’s Institute for Land, Water and Society, on the
relationship between water delivery and downstream water quality and ecology is informing
government decisions on the management of water flows, while CSU’s Graham Centre for
Agricultural Innovation is undertaking work on improving soil health which impacts on the
long term productivity of a number of rural industries
In cases like those listed above, the market may fail to fund this research as there is no
clear commercial return, or it is difficult to quantify that return. In cases like these, there is
a clear role for government to fund this research.
While CSU is strongly supportive of a greater focus on collaboration with industry and
delivering commercial returns, we would suggest this cannot be at the expense of all else.
It is critical that the Australian Government continue to fund these types of public good
research and in parallel not lose sight of the value of blue-sky research on balance.
Undertaking this sort of research is central to CSU’s mission, as encapsulated by the motto
taken from the writings of Charles Sturt, “for the public good”.
University rankings
The issues paper highlights the role of global university rankings and their limitations.
These global rankings have a strong influence on university behaviour and this impact may
be counter-productive to industry engagement. This is producing a research drive (and
diversion of funds) toward novel discovery in order to publish in high impact journals, while
the imperative of applied research can be less attractive. The incentive for a staff member
engaged in discovery is to go back and discover more, rather than passing the discovery
to partners who can understand/interpret an application and build on this for wealth
creation and broader societal impact.
As articulated in the Talloires Network Call to Action in late 2014, we need to “Influence
the global university ranking systems to take civic engagement seriously and to reduce the
negative effects of the ranking systems on the public service responsibilities of higher
education”; and “Increase acknowledgement and recognition for professors who perform
high quality community-engaged teaching and research, and public service”.
The impact that global rankings schemes are having on universities, underscores the
importance of ensuring that policy levers, such as research block grants, strongly
encourage collaboration with industry.
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International links
CSU considers that it is important for universities to develop strong links with industries,
not just domestically but also internationally. These links have the potential to deliver
export opportunities to Australia. Similarly, university links with overseas governments can
deliver value. For example, there are significant opportunities for Australia’s world-leading
ecologists and resource economists to market their skills to foreign governments that are
facing similar challenges to Australia in seeking to sustainably manage river basins.
Expenditure on research and development
The issues paper includes several enlightening charts on expenditure on research and
development by different sectors (Charts 1 & 3). These charts would provide further
insights if the expenditure figures were adjusted for inflation, or were shown as a
percentage of GDP. This would allow for a consideration of real expenditure and a look at
what share of our nation’s income is genuinely being invested in research and
development.
Professor Andrew Vann
Vice-Chancellor
Charles Sturt University
Professor Mary Kelly
Deputy Vice-Chancellor (Research, Development & Industry) Acting
Charles Sturt University
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