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Last month the Australian Government released the findings of the 2016 Review of the Research and Development (R&D) Tax Incentive, proposing a variety of initiatives to improve the effectiveness and integrity of the tax programme and encourage additional investment in R&D.
Among the recommendations presented by the Panel was the introduction of a higher tax offset to encourage greater levels of collaboration between industry and publicly-funded research institutions.
The benefits that arise from deeper engagement between universities and industry are incontrovertible. As the R&D Tax Incentive Review Panel itself noted, businesses that engage with researchers on innovation “are three times more likely to experience productivity growth, improved sales and exporting activity”.
Nor can it be denied that Australia’s public research sector could do better to promote such engagement. Australia has the lowest rate of industry-research collaboration in the Organisation for Economic Co-operation and Development (OECD). Only three per cent of large firms collaborate with research organisations such as universities and research institutes in Australia, compared to the OECD average of 37 per cent.
Research expertise inside Australian businesses also lags behind that of comparator countries. Just 43 per cent of researchers in Australia are employed by private enterprise, compared to 56 per cent in Germany, 79 per cent in South Korea and 84 per cent in Israel.
But in measuring how our universities collaborate with industry against their comparators overseas, we should be careful also not to overlook the challenges of scale, population and location which are unique to Australia’s research environment.
Australia is an island continent with a smaller population and economy compared to the major economic blocs where other world-class research institutions and major industry research collaborations are based. Many multinationals in Australia do not locate major R&D activity here. Collaboration of the depth, magnitude and duration of the kind to which we aspire for international impact often requires decisions to be made from overseas rather than locally.
Convincing a head office in America, Europe, China or Japan to invest with a research partner located in another hemisphere is a challenging proposition. To be successful, Australian research institutes must be capable of demonstrating their capability for adding value to industry partners above and beyond what other universities closer to that head office can provide.
The growing prominence of industry university research clusters in Australia represents a significant step by universities towards meeting to this challenge. The benefits of clustering industry and research expertise to drive innovation and entrepreneurialism have already been demonstrated overseas.
In 1980 Warwick University founded Warwick Manufacturing Group (WMG) to reinvigorate the manufacturing sector and improve the competitiveness of UK industry. Since then the initiative has grown into an international exemplar of industry-university collaboration, occupying major buildings on the Warwick campus and accounting for 30 per cent of the University’s entire research activity. Through partnerships with industry, only 10 per cent of WMG’s £120 million annual research budget is funded by the Higher Education Funding Council for England.
In the Netherlands, the University of Twente and Saxion University of Applied Sciences are collaborating with industry and local government to link researchers with innovative SMEs and foster an innovative entrepreneur’s climate in the Twente region. Kennispark Twente is now the largest innovation campus in the Netherlands, home to around 400 companies and providing 6,300 jobs. Around 60 to 70 new start-ups are created annually through the universities of Twente and Saxion.
In Australia similar advances are now being built by universities to bring research and industry together. In June Monash University launched BioCurate, an $80 million joint enterprise in biomedical innovation with the University of Melbourne and based in Parkville – home to the Monash Institute of Pharmaceutical Sciences, the University of Melbourne and other members of the Melbourne Biomedical Precinct.
BioCurate brings the advanced commercialisation skills and funding needed to successfully leap the early stage valley of death that often results in discoveries failing to progress out of the lab and into clinical trials (or to be taken offshore very early on in their development). It will also help researchers translate those discoveries more rapidly into new medicines, with potentially huge health and economic benefits.
Australia’s research sector may not match some other OECD countries in terms of collaboration with industry but the reasons for this are complex, and cannot be reduced to institutional bureaucracy or a lack of entrepreneurialism among researchers. Industry-research collaboration on the scale to which Australians aspire relies on a combination of different endeavours.
It requires ongoing support and maintenance of very successful existing collaborative programs – such as the Cooperative Research Centres, which have been emulated around the world. It requires implementation of policies and initiatives that are capable of facilitating greater collaboration, such as the R&D Tax Incentive. Lastly, it requires investing in those existing locations where industry, universities and research institutes are co-located in the same precinct, drawn together by similar interests and strengths. Building on the capacity and capability of those clusters to transform them into genuine research ecosystems is one way Australian universities can develop research and innovation that is truly world class.
Watch Professor Margaret Gardner AO panel discussion from State of the Nation 2016.