13 August 2014
The BCA paper is a welcome contribution to the industry/innovation policy discussion, particularly in the way it sets out a comprehensive reform agenda - Sections 7 and 8.
A useful addition to the paper would be how business itself will address reform through, for example, ensuring that people appointed to corporate boards bring capabilities and experience that can build and commit to long term strategic directions, how the community can have confidence in boards through transparent and ethical behaviour, and how boards will be drivers of innovation - rather than overseers of compliance and avoiders of risk.
The BCA paper gives some attention to the role of universities. I have some concerns about the discussion and analysis. The paper makes a point about the importance of international education (our third largest export) in which we can win on a global scale, but the industry rates very little mention in subsequent discussion. The significance of this industry to the Australian economy is widely unrecognised.
Australian universities are very strategically focused and there is huge potential for growth in the international domain. Many have appointed senior executives with international/global responsibilities. The BCA paper does predict a 73 percent growth in education exports to $26 billion by 2020. Revenue from international education makes a critically important contribution to university finances.
The paper also suggests prioritising research funding and encouraging a more collaborative research environment. It notes that the Commonwealth provides $2.9 billion per year for universities to undertake research. This amounts to 85% of universities' external research income of $3.4 billion. (Go8, July 2014) However, this amounts to only 14% percent of all universities' income. It is higher in the Group of Eight, at around 20%.
But, overall, universities spend an estimated $9.6 billion on research (ABS 8111.0, May 2014). The large difference between recorded external research income and total spend is due to the fact that universities fund the bulk of their research from their own internal resources and transfers.
The exact amount individual universities spend on research is not published, but across the sector it is estimated to be about 35 percent of all expenditure - but approaching 50 percent in Go8 universities. It is not clear how much of this the BCA would expect to be allocated to supporting industry relevant research, or what incentives would be provided to effect a reallocation.
We often forget that universities are in fact businesses competing vigorously in a global higher education industry. Universities are ranked internationally largely on the basis of their research performance. In turn, internationally ranked universities are attractive to international students. Collaborative research is also international in its orientation.
Some universities are among Australia's largest businesses - five with revenues in excess of $1.5 billion. They have strategic plans and are responsible to Councils for financial performance. They have research plans, strategies and priorities implemented in a business like way. Vice-Chancellors now must have business acumen as well as academic standing.
My observation and experience is that universities will collaborate with industry in research (and teaching) where it makes good business sense to do so - and academic criteria are met. Collaborations also emerge through the development of trust and understanding between parties, often led at a CEO/Vice-Chancellor level. Development of these relationships, which may involve multi-million dollar deals, takes time.
It is important therefore that research collaboration be approached in a 'business-to-business' framework and that we move away fro a "K-Mart" view of university collaboration - with university researchers positioned in aisles waiting for an industry call. It is also important that business people understand the "business of a modern university" - and university staff take the time to appreciate the demands of a business environment.
During 2018 Howard Partners is celebrating 20 years as an independent public policy research, advisory, and management consulting firm.
Howard Partners was honoured to have contributed to the Innovation and Science Australia Strategic Plan, Australia 2030: Prosperity Though Innovation, released in early 2018. Our Consultations Report and Expert Opinion Survey was released at the same time.
Howard Partners has recently completed the Performance Review of the Rural Innovation System for the National Primary Industries Research and Innovation Committee. Publication is expected shortly.
The firm has also recently completed an innovation narrative of the Canberra Innovation System for the period 1998-2018. Publication is also expected shortly.
Dr John Howard
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