Universities¡¯ king-sized contribution to Australian innovation has a downside, because it funnels resources into strongholds of student recruitment rather than research driven by national needs, according to a panel reviewing the country¡¯s research and development system.

A newly released report says higher education¡¯s 35 per cent share of Australian R&D expenditure ¨C a A$14 billion (?7.1 billion) investment, much of it bankrolled from overseas students¡¯ fees ¨C ¡°comes at the cost of other strategic agendas¡±.

¡°The substantial reliance on international student revenue by Australian universities means that R&D capacity is linked to enrolment patterns in student markets,¡± warns the??for the government-commissioned Strategic Examination of R&D. ¡°It does not reflect the quality and impact of research or its contribution to national priorities.

¡°Setting R&D profiles in response to student enrolment can hinder building strategic research agendas. This would prevent prioritising local industry needs or aggregating effort and resources to achieve world-leading research and technology outcomes.¡±

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Research funding arrangements are a ¡°critical constraint¡± on publicly funded institutions, which need ¡°patient investment through [a] stable mechanism that can also deal with the increasing costs¡±, the paper says.

It says that competitive research grant money for Australian universities increased by 140 per cent between 2001 and 2022. Over the same period, funding for indirect R&D costs such as administration, utilities and maintenance grew just 49 per cent.

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Overall R&D spending crashed from 2.24 per cent of gross domestic product (GDP) in 2009 to 1.66 per cent in 2022, it says. ¡°R&D investment is below our peers. The need for change is inarguable.¡±

The paper examines other problems, including gaps in infrastructure and a dearth of experimental development. ¡°Our research output is laudable and our talent pool is substantial. Yet our economy and our culture have not been able to¡­translate research into products and services at meaningful scale¡­despite decades of inspiring rhetoric,¡± it says.

¡°Boosting a focus on R&D will prevent Australia¡¯s slide into mediocrity.¡±

Universities Australia said both sides of politics should take heed ahead of a looming federal election. ¡°In the face of declining government funding, universities have relied on international student revenue to fund critical research activities,¡± said chief executive Luke Sheehy. ¡°This is no longer a safe bet.¡±

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Australian Technology Network executive director Ant Bagshaw said Australia needed to do more to translate its ¡°world-class¡± research into ¡°real-world¡± impact. ¡°That means targeted investment in research translation, better incentives for industry to partner with universities, and a renewed focus on applied and experimental development.¡±

The Group of Eight said Australian research and development spending as a proportion of GDP lagged international norms by a full percentage point. ¡°Now is the time for bold economic leadership to maximise our future prosperity,¡± said chief executive Vicki Thomson.

The Australian Academy of Science said ¡°incremental adjustments¡± would never be enough to fix a research and development system that lacked scale and ¡°any semblance of strategic organisation¡±.

The review was recommended by the Australian Universities Accord panel last February and?flagged?in the May budget. The discussion paper, which was published on 12 February, describes itself as ¡°the beginning of a year-long process¡±.

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It poses 10 questions around issues including policy settings, funding sources and a ¡°national culture of innovation excellence¡±. Responses are due by 11 April, when the election campaign is likely to be in full swing.

john.ross@timeshighereducation.com