Australia’s research and development spending decline continues

Revive your interest in universities, businesses told, as interest rate hits historic low

June 4, 2019

Australia’s universities said that a downbeat assessment by the nation’s productivity watchdog demonstrated the need for the government to uncap higher education funding, and for more businesses to start “tapping into the university brains trust”.

Universities Australia said its members were the antidote to a “troubling” slowdown highlighted in the latest Productivity Bulletin, a report card compiled more or less annually by the Productivity Commission.

The report shows that investment in research and development fell last financial year, reversing a slight gain registered the previous year following a three-year slump. Spending has declined to around 13 per cent below a 2012 peak and is only about 4 per cent above 2006 investment levels, the report suggests.  

“This slowdown is troubling for the nation’s economic growth,” said Universities Australia chief executive Catriona Jackson. “As the Productivity Commission notes, private sector R&D investment is often in new technologies, which complement skill development and innovation in the labour force.

“We urge businesses to take a closer look at what our university system can do to help your firm innovate and grow. Researchers and experts in our nation’s universities can help businesses maximise returns from their R&D investment.”

Ms Jackson cited Universities Australia-commissioned research released last year, which suggested that university-business collaborations generated a 450 per cent return on investment. The modelling found that the 16,000 Australian businesses in formal partnerships with universities had earned A$10.6 billion (£5.8 billion) through these relationships.

The Productivity Commission report, released on the same day that Australia’s Reserve Bank cut interest rates to a historic low of 1.25 per cent, says that the share of businesses that are innovators “is no longer growing”. It says Australia has relatively high productivity, and slowdowns have been “more persistent and extreme in many other countries”. Nevertheless, Australia’s levels “remain below the best performers”.

It blames mediocre investment for a labour productivity rate well below the “long-run trend”. Ms Jackson said this underlined the need to remove the cap on funding for student places at universities – something most commentators think is highly unlikely following the Coalition government’s May election win.

“Educational attainment plays an important role in driving productivity growth,” Ms Jackson said. “Universities need flexibility and funding to deliver our skilled graduate workforce.”

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