The overall quality of the Australian research sector is high by OECD standards but Australia’s performance is poor when it comes to translating publicly funded research into collaboration with business. We rank last out of 26 OECD countries on the proportion of businesses collaborating with higher education and public research institutions on innovation.

On 7 July 2015, the then Minister for Education and Training, the Hon Christopher Pyne MP appointed Dr Ian Watt AO to conduct a review of research policy and funding arrangements. The review was given the task of developing options to strengthen Australia’s research system and encourage greater collaboration between universities and business and other research end users to enable Australia’s high quality research to be translated into economic and social benefits for the nation.

Extensive consultation with the university and business sector was a central feature of the review. Seventy-six submissions were received in response to the issues paper, Review of Research Policy and Funding Arrangements for Higher Education. Dr Watt conducted roundtables and held meetings with universities, research bodies and institutes, business and industry leaders and government representatives over a period of four months to inform the recommendations of the review.

Higher education research expenditure is 30 per cent of Australia’s gross expenditure on research and development (R&D) and is therefore an important, but by no means dominant component of Australia’s R&D spending. Change to policy settings for higher education research funding can be expected to yield improvements in Australia’s innovation performance but, alone, cannot transform that performance. In that context, the review developed recommendations which in broad terms aim to:

• ensure the quality and excellence of Australian university research and research training • allocate funding through Research Block Grants (RBG) in a simpler and more transparent manner
•  provide incentives to universities to increase and improve engagement and collaboration with business and other end users
• encourage universities to engage in research commercialisation and knowledge transfer with business and the broader community, including through funding incentives and a focus on more effective management of intellectual property (IP)
•  ensure that competitive grant criteria recognise the quality of the proposal and support the opportunities for commercialisation and collaboration with business.