23 Apr Australia’s Strategic Examination of Research and Development
The Australian Government has commissioned a strategic examination of Australia’s Research and Development (R&D) system and is seeking feedback on the discussion paper by the Department of Industry, Science and Resources. This article outlines DARE’s submission to the consultation hub (in April 2025), written by DARE Director Prof Willem Vervoort, with contributions from Dr Aaron Greenville, Prof Mark Jessell, Dr Mark Lindsay and Prof Lucy Marshall.
Overview:
The Strategic Examination of Research and Development discussion paper highlights many of the hurdles that limit private sector R&D and connections between research providers and private business.
As the ARC Training Centre in Data Analytics for Resources and Environments (DARE), we have worked closely with our industry partners over the last four and a half years. From this we have developed a clear understanding of the opportunities and hurdles in building public-private research collaborations. Many of these understandings are echoed in the discussion paper.
Particularly in the area where DARE is active, Data Science, which underpins artificial intelligence, there are specific hurdles that make rapid growth in R&D investment difficult. This is despite the clear opportunity for modern Data Science to increase productivity in Australian industry.
What is limiting significant investment into R&D?
At the DARE ARC Centre, we have identified three major areas that limit significant investment in R&D by industry partners:
- The mismatch in research delivery time expectations between industry and universities and associated risk profiles
- The difference in appetite for investment between large corporations and other industry investors
- The disconnection between research output delivery and adoption.
Mismatch in research delivery time expectations between industry and universities and associated risk profiles
In relation to the first point, universities rely heavily on postgraduate candidates to deliver the bulk of their research. While postdoctoral positions also deliver significant output, the bulk of the work is done by the postgraduate cohort, due to the much higher funding levels required for postdoctoral positions. The proportion of work done by the postgraduate cohort has increased over the last decades with the decline in full-time research assistant positions and the increase in teaching load on the permanent staff. This means that the main time window for delivery of output of research at universities is now three to five years. In contrast, industry expectations for research delivery are in the six- to twelve-month window and this often includes a phased approach with an opportunity to stop the project midway. This has been further exacerbated by the significant disruption and uncertainty in the global economy in the last five years. As a result, while universities are generally looking for an investment on the longer time scale, and can provide a competitive advantage at this scale, industry sees this long-term investment as a risk.
The ARC Linkage program, through its considerable 1:4 leverage of industry cash investments, alleviates some of these risks. It is therefore concerning that the review of the National Competitive Grants Program suggests that this program will be discontinued. Universities can sometimes operate on shorter timeframes, but then often charge much higher fees under consultancy agreements and thus lose competitive advantages with professional services. However, such short-term commitments also can be problematic as universities generally don’t have a pool of talent ready to fulfil such short-term contracts. In the DARE ARC Centre, we employed several research engineers funded by the industry contributions to fulfil shorter term research needs, but universities in general don’t have this option.
Difference in appetite for investment between large corporations and other industry investors
The second important issue is the difference in the appetite for investment in university research between large corporations and Small to Medium Enterprises (SMEs), which is also identified in the discussion paper. We have found that this is mainly because large corporations often have their own internal research capabilities. For example, large insurance companies, business consultancy and financial corporations maintain significant internal research units. This allows them to keep intellectual property in house and have a more direct and short-term research response. Any gaps in research capacity are preferably brought in via additional staff (for example recent PhD graduates) rather than through investing externally.
SMEs don’t have this capacity, as maintaining sufficient capacity would be too expensive. For these organisations, strategically investing in external provision of research is more attractive, especially if this comes with the potential to leverage the investment (such as through the ARC Linkage Program). Similarly, state government and semi-government corporations do not have the capacity to develop new research beyond what is in their charter or government brief. However, despite this appetite for investment in university research, both SMEs and government-associated organisations have limited funds available, as outlined in the discussion paper.
Disconnection between research output delivery and adoption
The final hurdle is the translation of research output into capacity at organisations. This is not new and has been a sticking point for decades. There is a general feeling that research output from major projects is often not ready for implementation and does not immediately lead to increased productivity or reduced costs. This was particularly a sticking point for DARE, working on the interface of novel Data Science and domain-focused industry partners. We have learned that successful implementation hinges on two factors:
- How actively the industry partner is involved in the actual research (i.e. joint discovery)
- The level of capacity-building that is included in the project, which comes at an additional cost for both parties.
Most research projects currently do not include a budget for implementation; in many cases this is a further step to raise the project discovery to a higher Technology Readiness Level (TRL). However, if Australia is aiming to raise its level of productivity, then building capacity in industry to use novel tools is crucial. This gap is currently filled by start-ups or is brought into organisations via strategic hires (again the freshly graduated PhD candidates).
Recommendations
As a result, we suggest the following strategies to create additional opportunities for industry to invest in R&D.
Firstly, we recommend putting more emphasis on the opportunities to co-design research based on industry investment. The current funding programs (ARC Linkage and CRC-P) have opportunities for this but are skewed too much to academic design (ARC Linkage) or industry control (CRC-P). This will require an increase in opportunities for industry and universities to jointly innovate via co-location and hubs and to freely exchange ideas. Some level of agreement around commercial in confidence might be required, but universities are already dealing with this in relation to medical research.
As the main drivers of research are SMEs, there might need to be stronger incentives to build cooperation between SMEs and large corporations, or alternatively, increased monetary support from governments for collaborations that include SMEs. Again, this could be achieved through innovation hubs where start-ups and SMEs work together, or potentially sponsored by the research division of a larger corporation. This can be achieved through targeted investment in longer-term hubs, but the level of industry cash commitment needs to be balanced by the TRL level of the expected outputs.
One way to achieve this is to increase opportunities for industry placements, not only for PhD candidates and Early Career Researchers (ECRs), but also for academics, for example via special study leave. At the moment, there is a hesitancy from industry as well as from universities in relation to industry placements. The universities still focus too much on academic output and h-indices and undervalue industry experience, while industry is not keen to provide the hosting and commercial clearances for academics to actively participate in the companies’ R&D. In DARE, we spent a significant amount of time negotiating industry placements for our PhD candidates, which were highly beneficial for both the candidates and the industry organisations, with several of the graduates securing jobs in industry and government after completion.
All the industry-linked grant opportunities should have a requirement and separate budget for joint capacity building with the industry partner. We proposed to include a “research translation liaison” in one of our recent grant applications, specifically charged with translating new research into to ‘business as usual’ in partner organisations. Building in funding for this type of translation in all grants can improve the visibility of the research outcomes to the investment partner. This type of funding could also be tied to the university block grants as a specific, dedicated component. A more national-level strategic approach could also be built for opportunities to establish pipelines for technology transfer. Potentially this is an area that could attract industry co-investment.