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We need researchers to collaborate with industry if we’re to be an innovation nation. Shutterstock

The ‘lucky country’ needs to be re-invented

Despite a lot of talk about the importance of science, technology, engineering and maths (STEM), technical innovation and improved interaction between the research universities and industry, little has improved in recent years.

In our vision for innovation we see changes that drive the kind of industry-academia based interaction Australia needs. Tax changes, a restructure of how universities are funded, broader training for post-graduate students to include industry engagement and changes to some anachronistic institutions such as CSIRO.

It was into this situation that the Industry Mentoring Network in STEM (IMNIS) program was founded last year, as an Australian Academy of Technology and Engineering (ATSE) initiative. IMNIS was founded as a scalable, inexpensive intervention to enhance the commercial knowledge and focus of STEM post-graduates, thus enabling long-term cultural change.

IMNIS matches senior PhD students with successful industry mentors, and has run pilot programs in biotechnology in Victoria, and minerals and energy in Western Australia over the past six months. So far the student uptake and mentor involvement has been enthusiastic.

IMNIS is not the only program to educate graduates in commercial science, although its focus on networking and widespread volunteer mentoring does differ from training or placement schemes.

While IMNIS should help, and will certainly help individuals, all the schemes are collectively only a small part of the cultural change necessary for a technically innovative society.

Chasing excellence

We now have a university business model and research incentive scheme that does little to reward either university or industry for cross fertilisation. Research university business models are based largely on selling education to international fee-paying students.

Meanwhile, the incentive for industry collaboration is low, whereas the drive to achieve a high rank in the Excellence in Research for Australia ERA scheme, which favours research publications over industry collaboration, is high.

So what is to be done? Many are suggesting solutions. ATSE has commented on the ERA structure, and everybody believes quality research should be rewarded. On the other hand, the ERA is now a bureaucracy in itself.

Every university group has a view on ERA and quality research outcomes, but what is “quality” in research anyway? Right now it is mostly a self-referencing system: quality research is publication in quality journals, and citation by others in said quality journals, a virtuous circle.

Quality research defined this way is supported by the Australian Research Council (ARC), National Health and Medical Research Council (NHMRC), and obtaining funding from these sources – but not commercial sources – is also defined as a quality research measure, hence the circular virtue for those receiving grant funding.

R&D tax incentive

Over the past decade we have seen an erosion of industry directed support programs at federal and in some cases state level. The one incentive that has demonstrably delivered, even for small companies, is the R&D tax incentive.

The previous scheme rewarded big business such as mining and banking and ignored the small entrepreneurial companies and new industries. The current R&D scheme rewards small companies and provides needed non equity diluting capital for R&D.

AusBiotech, the industry body for the Australian biotechnology and life sciences sector, has many examples of companies that brought clinical trials to Australia and have reached their value inflection point sooner and been able to invest more intensively in research as a result. This is ultimately good for the waiting consumer and good for the economy.

However, not all recipients fulfil the policy intent. Some large companies are “gaming the system” by reframing “business as usual” activities as research. So if we’re to maximise the benefit from the scheme for the country, we need to tighten eligibility criteria to ensure the purpose of the incentive is delivered.

What history has shown is that for all tax, education and grant schemes, we have become the crafty country, across the spectrum of society. For industry, the definition of research appears to have become very wide and in education allowable taxpayer financed education has reached ludicrous levels.

One suggestion is that the R&D incentive should be structured to encourage industry to collaborate and fund universities. But why should industry do this? What makes university research more beneficial than projects run by industry? Universities are all “R” and little “D”, even if they have tried to access more funding by claiming translational activities.

Instead of more special pleading, we need real commitment to collaboration.

Post-graduate training

With new data indicating that only 10% of current PhD students in STEM will gain a permanent academic position, we need urgent changes to broaden graduate opportunities. Australian PhD graduates are well regarded overseas for their scientific training yet they have little knowledge of industry.

Industry will hire these bright young scientists for their talent yet could end up firing them for their personal style if they cannot work in teams and communicate effectively.

Universities are now rushing to address these issues. But the university sector is not rewarded for industry collaboration, nor does it really value it.

Universities largely subsidised the on cost of ARC/NHMRC grants, yet they seek “commercial” rates for industry collaborations. And why not, as only the former has ERA and ranking value? Yet the message it sends to university staff and potential industry collaborators is that the university does not consider research done with industry as priority research, it is of lesser value and quality and almost tradesman like.

We cannot build an innovative culture while trapped in a mindset of special pleading, and where purist mentalities prevail like old aristocrats disdaining trade. We will not change without major reform in our structures and thinking, which means for researchers and industry its not about more funding to do more of exactly what they are doing now, without major change to institutional structure and reward.

Broad reforms

Transforming to an “innovative culture” will require broad reforms in attitude and an acceptance of change. CSIRO is one organisation that could do with reform in this area.

CSIRO has been lumbering along for years trying many models of operating, and it’s clearly the most logical group for translational research, leaving the pure research for universities.

We advocate for a disaggregated CSIRO, composed of semi-independent commercially-driven institutes, which persist only as they address the needs of Australian industries, with those CSIRO functions of public good folded back into university affiliated institutes.

Outside academia, we can re-examine the R&D incentive to push the creation of new innovative companies, rather than largely just supporting existing players. Targeted capital gains tax relief is another tool that can encourage risk taking research investment in new small to medium enterprises with less off-target leakage to major and multi-national corporations.

We also need reward systems for universities to collaborate with industry, reward systems for staff within those universities that truly value industry collaboration and other community engagement, and universities training students to engage with industry as a natural part of their activities.

It will require a cultural shift, to be sure, but we see the addition of such measures detracts nothing from, and in fact provides resource to, the pure research function of universities.

This article is drawn from a conversation with Dr Tony Radford (Director IMNIS) and Dr Anna Lavelle (CEO AusBiotech).

This article is part of our series Why innovation matters. Look out for more articles on the topic in the coming days.

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